Pune Property tax: 1,000 locks to shut out defaulters

Pune:
This is an open and shut case of a different kind. The tax collection department of the Pune Municipal Corporation has demanded that it be supplied with 1,000 locks so that it can seal those properties whose owners don’t pay their tax by June 30. It has issued tenders for the purchase of these locks.
Once the PMC gets the list of those who have not paid the bills by the month-end, stern action will be taken against them by sealing their properties, tax collection department chief Vilas Kanade told The Indian Express on Thursday.
The PMC had launched a scheme in April, wherein citizens have the opportunity to file their property tax by June 30 and avail themselves of a 10 per cent rebate. The rebate, however, is applicable to only those who have cleared all the tax arrears on their property so far. The rebate amount will be deducted from the tax for the next year.

This year, we rolled out the plan in the beginning of the financial year to provide people with an opportunity to clear their property tax dues by the June 30 deadline. So far, 2.5 lakh property owners have paid their tax, amounting to Rs 130 crore. The response to the scheme has been good and we expect to collect tax from three lakh properties out of a total of 6.4 lakh registered properties in the city,” Kanade said.
“However, those who still do not pay after the set deadline will face action in the remaining nine months of the current fiscal. As part of this, we have asked the civic administration to provide us with 1,000 locks to seal their properties. A tender to this effect has been issued and we will soon get these locks.

We are going to distribute the locks to our ward offices and provide them a list of tax defaulters. Accordingly, these officers will go and lock the properties,” he said.
This year, the PMC had dispatched the tax bills by March to enable early payment of taxes, so as to enable citizens get the 10 per cent rebate. The 10 per cent, thus saved, will be deducted from the next year’s property tax as it was not possible to do so this year owing to the election code of conduct.
Tax dues
* 6.4 lakh registered properties.
* Rs 130 cr property tax collected from March.
* June 30 last date of 10 per cent rebate scheme

Realtors wait to hear FM music Assetventures

The ministry of housing has taken kindly to the set of demands put across by the real estate developer associations.

The ministry officials are meeting their counterparts in the finance ministry to ask for specific stimulus for the real estate sector.“Liquidity is still a major concern for the sector andthe government needs to provide specific stimulus for its revival,” a senior official in the housing ministry told FC Estate. He added that the ministry would approach the finance ministry to structure the incentives in a way that it generates fiscal concessions for the sector.In fact, over the last week the real estate associations Naredco (National Real Estate Development Council) and Credai (Confederation of Real Estate Developers Association of India) had put across a slew of demands to the secretary, ministry of housing.Though officials of housing ministry remain tightlipped over the exact concessions demanded, developers are expecting that the government will allow an extension of the loan restructuring facility beyond June 2009. The present provisions allow a developer to go for one-time restructuring of debt. Though developers have been able to raise money through the qualified institutional placement (QIP) route over the last couple of months, liquidity still eludes them.“A moratorium on the payment of interest and extension of time for restructuring of debt taken by the real estate developers will help us execute projects on time,” Rohtas Goel, president Naredco told FC Estate. He further said that the finance minister’s move to ask banks to lower their borrowing rates is a welcome step. “I am hopeful that the move will extend the affordability of loans to a large number of people and for the manufacturers and suppliers. The move will help in reviving the real estate sector through reduction in home loan rates.”Further, if the government allows a developer to avail overseas funds through external commercial borrowings (ECB), it will ease cash flow to the sector. At present, ECB is prohibited for housing development. “ECB in housing construction will supplement the funds from banks and financial institutions and, in the long term, reduce the cost of finance, thereby reducing the price of houses in the country,” said Pradeep Jain president Credai (NCR).Further, if the group housing and integrated township development is brought within the definition of infrastructure it will also help in the sector’s revival. “This will ensure a wider finance window for these projects. As a safeguard, a developer may be required tobuild at least 100 residential units in such projects,”quipped Goel.However, how much of these demands actually pass the muster of finance minister remains to be seen.

The great SEZ rush skids on slowdown, land issues Assetventures

Almost half the proposals to be taken up by the Board of Approval involve developers wanting to curtail their plans.
Also Read Related Stories News Now - Vascon Engineers puts Guj IT SEZ project on hold - Opto Circuits plans to invest Rs 150 cr in Hassan SEZ - Software sector banking on tax benefit extension - Satyam staff get new portal on learning services - Board of Approval to meet on June 19 for SEZ approval - Satyam granted 1-yr extension to complete SEZs Also Read Related Stories News Now
- Sensex volatile; ACC down 4% - NEWSALERT: Inflation in red, at -1.61% - SpiceJet hikes fuel surcharge by Rs 400 - Most active stocks on the BSE - Mahindra firm in volatile market; MHRIL IPO to open on June 23 - Asian markets in red; Hang Seng sheds 356pts More When the Board of Approval for special economic zones (SEZs) meets on Friday, liaison and corporate affairs executives will jostle for space in the narrow corridors on the ground floor of Udyog Bhavan, which houses the commerce department.
In stark contrast to last year, however, few of them will be pushing proposals for new zones. Demand dynamics brought on by the global slowdown and persistent land acquisition problems are forcing developers to alter their plans.
As a result, almost half the proposals that the inter-ministerial panel headed by Commerce Secretary Rahul Khullar will consider have to do with extensions to acquire land or cancellations of these tax-free enclaves that were supposed to catapult India’s exports into the big league.
Of the 58 SEZ proposals on the agenda, only two are for setting up new zones; 23 zones are applying for an extension of the validity period and two — from K Rajeha Universal — are seeking de-notification on the grounds that the economic downturn has resulted in lower demand.
Then there is Mansarovar Industrial Development Corporation that has decided to expand the focus of its zone from handicrafts to information technology-enabled services (ITES), and to split the 131 hectare-zone.
“The developer has requested that due to the present downturn in the economy, the additional sectors (ITES) may kindly be permitted to be included in the SEZ,” the commerce ministry said in its note for the BoA meeting.
Similarly, financial constraints have forced Diamond Software Developers, which was setting up an SEZ focused on information technology (IT) and ITES in Noida, to drop its plans.
Meanwhile, companies such as Parasvnath SEZ have had to move the proposed 10.11 hectare Biotech SEZ from Ranga Reddy district in Andhra Pradesh to Medak in the southern state owing to legal hurdles in land acquisition.
Similarly, with only 63 per cent of the land acquired, Rajasthan Explosives and Chemicals has sought more time for developing a multi-product zone.
Plagued by insufficient demand for space, land acquisition problems and the liquidity crunch in the first half of 2009, nearly 27 developers with all approvals in place had already sought more time to operationalise SEZs. Ministry officials said the number could go up to 50 at Friday's BoA meeting and much more at subsequent meetings.
According to the norms, an SEZ has to be up and running within three years of receiving the formal approval, which is only given after land is in the developer’s possession.
When the economy was growing at 9 per cent, there was a rush to set up SEZs. Between February 2006 and May 2009, the government gave formal approvals to 568 proposals, nearly 60 per cent for IT. Of these, 315 have been notified, which means they can claim tax and duty benefits.
But work has been completed and exports are taking place in only 90 zones. So, only 16 per cent of the formally approved proposals are contributing to India’s exports.
Exports from these 90 operational SEZs are projected to grow 38 per cent to over Rs 1,25,000 crore in 2009-10, as against Rs 90,000 crore last year. This will, however, be just a quarter of the Rs 5,00,000 crore projected if all the formally approved zones were to become operational.
Government officials, however, said this was only to be expected. “When we started giving approvals, we expected at least one-third of the approved SEZs to fall by the wayside. But the slowdown and restrictions on state governments acquiring land could see more projects not seeing the light of the day,” said an official who was associated with SEZ policies and approvals for over five years.
“The number of approved zones is already high. The serious players are here to stay and our focus will be to facilitate SEZ-related matters,” added another official.
Experts said with prospective clients putting their expansion plans on hold, developers do not want to take risk and build zones. This is because, unlike the real estate business model, SEZs require a long gestation period before developers see any financial gains.
“Scrapping unviable zones is a systemic correction. When the business cycle is on an upturn, the zones will bounce back,” said Aradhana Agarwal, senior fellow at ICRIER and reader at Delhi University’s Department of Business Economics.
PricewaterhouseCoopers Executive Director Vivek Mehra, who is advising many developers, said the downturn had lowered demand for space in the IT zones. Besides, the extension of the Software Technology Park scheme also meant that the rush for SEZs has come down.
“There are pressures on timeline and builders, who have put in more than the requisite 25 acres, are looking at other options. Even if you de-notify now, you have the option to seek a re-notification later or a set up a zone with a smaller land area,” he said.
Developers seeking extensions include fraud-hit Satyam (three zones), Infosys (two zones), NIIT, and ONGC-promoted Kakinada SEZ in Andhra Pradesh.
The former commerce ministry official said the manufacturing sector-related SEZs, which have not shelved their plans, could stage a comeback over the next eight to 10 months if production shifted to low cost destinations.
For the moment, the absence of demand and liquidity crunch has also forced real estate major DLF to get conditional approval to scrap four of its notified zones, while its plea to get another of its Delhi-based zone has already been accepted.
Gitanjali Gems, which has permission to set up nine SEZs, has also applied the brakes on its plans. Although the company has decided against going ahead with a proposed zone in Nanded, the development of six zones in Gujarat and Maharashtra is yet to pick up. Only one SEZ in Hyderabad is expected to be operational, but that is one-and-a-half years away.
In pharmaceuticals, chemicals and biotech, most of the 16 notified SEZs have been non-starters. Apart from the projects of Divi’s Laboratories, Biocon and Serum Institute of India - the first among the notified SEZs in 2006 – the others are still under implementation. Issues such as land acquisition, delays in developing physical infrastructure, setting up of plants and regulatory approvals from the US and Europe are delaying the projects, sources said.
“The development of a pharmaceutical SEZ may take three-seven years as pharmaceutical plants need quality water, effluent treatment plants and good physical infrastructure,” said Hitesh Gajaria, head - pharmaceuticals and executive director, KPMG India.
Even government-promoted projects such as development of Kandla Port Trust’s Rs 7,000 crore port-based SEZ is in pause mode.
“A majority of the developers want to see how the situation evolves in the coming days. So, they do not want to scrap their plans for the zones as of now. But there is an oversupply issue in zones,” said Abhishek Goenka, partner at consulting firm BMR & Associates.

Home, asset sales ease pressure on Unitech to raise equity capital

India’s second largest developer by market value, Unitech Ltd, has sold more homes than expected and raised more than Rs1,000 crore from asset sales this year, and has no immediate need to raise money through an additional share sale, managing director Sanjay Chandra said.“We are not under pressure to raise equity capital,” Chandra said after a meeting of shareholders. “We have been able to sell more than expected and our asset sales have been good,” he said.The company has sold 4,000 apartments, covering 4 million sq. ft, in the last two-and-a-half months as demand revives in a property market recovering from a downturn that left developers strapped for cash last year. Unitech had a target of raising Rs1,700 crore this year from a sale of assets such as hotels.It has sold 4,000 apartments in under three months as demand revivesUnitech has rescheduled all of its outstanding debt of Rs7,800 crore and plans to reduce it by another Rs900 crore within this month, Chandra said.Sales have also started to pick up. “The volume of sales that we are seeing now is more than what we saw in 2006,” Chandra said. “Home prices have come down by 25-30% on an average.”Shareholders approved a resolution to allow the company to sell one billion equity shares through instruments such as a placement of shares with qualified institutional buyers or stock sales to overseas investors.The company can raise more than Rs8,500 crore at current market prices, but hasn’t decided on the timing or the route of a share sale, Chandra said. In April, Unitech raised $325 million (Rs1,553.5 crore) through a placement of shares with institutional buyers to reduce debt.The shareholders also approved a plan for the company to offer Rs1,150 crore of warrants to the promoters, including the Chandra family. Unitech will sell 227.5 million warrants at Rs50.75 a share to the promoters.The promoters will have to pay 25% of the amount for the warrants, around Rs271 crore, within the next 15 days, Chandra said. With the issue of warrants, the promoters’ stake in the company is expected to rise from 51% to 61%, Chandra said.Unitech expects to sell 20 million sq. ft of developable area in fiscal 2010. The company plans to launch homes in the Rs10-20 lakh range under its Uni Home brand in Gurgaon, Greater Noida and Chennai. In Greater Noida, Unitech recently launched an affordable housing project with 10,000 units and it has received 2,000 enquiries, Chandra said.The company has also increased prices by 2% in two of its projects in Gurgaon, a suburb of Delhi. “We have increased the prices in our ongoing projects just two weeks ago. We will evaluate whether there is a need for raising the prices in other projects as well,” Chandra said.Chandra also said that Unitech Wireless, the telecom unit of Unitech, will launch mobile services in the December quarter of this year.Unitech Wireless, in which Telenor SA of Norway has a 67% stake, has already placed orders with network providers Alcatel-Lucent SA and Huawei Technologies Co. Ltd. The telecom unit will have a capital expenditure of Rs10,000 crore over the next three years, Chandra said.Unitech’s share price rose 2.13% to close at Rs88.90 on the Bombay Stock Exchange. The benchmark Sensex was up around 0.5% and the BSE Realty Index gained 1.63%.

Property prices set to rise Assetventures

Property prices in India which have been on the decline for several months on account of the credit crunch, are set to rise, according to Mr R.R. Nair, Director and Chief Executive, LIC Housing Finance Ltd.
“People cannot expect a further fall in property prices. That stage is over. Builders had lowered prices when they were in trouble in the last few months. For builders, the liquidity position has eased and the cash flows have improved. They have also cleared off existing inventories. Therefore, there is no reason for them to lower prices,” he said.
As the demand picks up, property prices will go up. This could happen in the next five-six months, Mr Nair, head of the second largest housing finance company in India, said.
“By how much the price will increase, will depend on the builders. In some pockets, they have started quietly increasing prices. However, it has not happened universally,” Mr Nair said in an interview to Business Line.
Moreover, builders had not increased prices in the last 15-18 months. Because of all this, there is a “good possibility’ that property prices will rise, he said.
Citing reasons for renewed housing demand, Mr Nair said that with a stable government in place, people feel that the economy will improve, the liquidity situation would be better and the soft interest regime will continue. They also feel that property prices have bottomed out. This is precisely why there is a renewed interest in buying homes, he said.
The property prices had seen a correction in the last two quarters as demand for housing had dried up. Builders had been forced to lower prices as they were sitting on a large inventory. Some builders who had planned luxury projects had converted to standard projects.
“With the economy looking up, there is confidence among builders that they can raise funds either through loans or through equity or QIPs. That is why builders have regained enthusiasm and started working on the projects”, he said.
Growth pick-up
The housing finance company has seen growth pick up from end- February. In March, the company had a 42-per cent growth. For April and May put together, there was a 120 per cent growth in approvals and a 50 per cent growth in disbursements.
Most of the growth for LIC Housing Finance has come from retail finance, Mr Nair said.
The company has revised its business growth target upward from the 25 per cent it set for itself at the beginning of this fiscal.
“With the first two months of this fiscal registering a 50-per cent growth in disbursements, the growth should be in the range of 30-40 per cent this fiscal”, Mr Nair said.

Unitech may issue a billion shares

Hopes to mop Rs 8,500 crore; promoters could raise stake by 5%. Bolstered by the sharp run-up in its share price after the recent private placement, the country’s second-largest realty firm Unitech today took shareholders’ approval to issue up to a billion shares to raise more funds.
At the current market price of around Rs 87 a share, the company could bring in around Rs 8,500 crore through this route.
In addition, the company would raise Rs 1,150 crore through a preferential issue of convertible warrants to promoters at Rs 50 each. Each warrant is convertible into one equity share.
“The real estate market has bottomed out and investors are showing an interest in realty companies. Even though we do not need to raise funds immediately, we want to be ready as the market sentiment is very bullish,” said Sanjay Chandra, managing director, Unitech.
In April 2009, the company mobilised Rs 1,625 crore through issue of fresh shares to select foreign and domestic investors. Of the funds raised through QIP, Unitech used Rs 700 crore for repayment of a part of its debt, which is about Rs 7,800 crore.
“Our sale of assets in the past two months has fetched us more than the expected amount and we expect to mop over Rs 1,700 crore by the end of this fiscal, as against Rs 1,600 crore expected earlier,” Chandra added.
Till date, the company claims to have raised nearly Rs 1,000 crore through the sale of its two hotel properties and a commercial office space in Delhi NCR.
The company also got shareholders’ approval to issue 227.5 million convertible warrants on a preferential basis to promoters at Rs 50 for each. The promoter group will pay 25 per cent of the total amount in the next 15 days. On conversion of the warrants, the promoters’ stake in Unitech will go up by 5 per cent. It is 51 per cent currently.
On the listing of its real estate investment trust (REIT) on the Singapore Stock Exchange, Chandra said the market in Singapore was not good enough to get the desired money through public issue of its commercial assets.
“We were able to raise more money by selling our assets to high net worth individuals and will continue to do so this year. The listing of REIT would take another year,” said Chandra.
The company has booked over 4 million sq ft of residential space in the past two months and expects booking of around 20 million sq ft of space by the end of this fiscal year.

Govt moots for low cost housing

Updated: 16/06/2009 11:39 PM IST Top Stories Govt moots for low cost housing Rajat Guha Tuesday, June 16, 2009 (New Delhi) EMail Print BlogComments: Read (0) Post Rate the story Housing for the poor tops the UPA government’s agenda. The Budget may bring cheer to those looking to buy houses costing less than Rs 30 lakh. In order to revive the demand in the real estate sector, the government is considering the need for cheaper loans for buying houses.
Low cost homes could become cheaper still. The country's new Urban Development Minister, Jaipal Reddy, on Tuesday, met Finance Minister Pranab Mukherjee and proposed that low cost housing should be given cheaper loans.
The rate should be at 6.5 per cent for houses priced below Rs 5 lakh and about 7.5 per cent for houses below Rs 20 lakh.
“We have given our wish list to the Finance Minister. We want loans upto Rs 5 lakh at 6.5 per cent and loans upto Rs 20 lakh at 8 per cent, while loans above Rs 30 lakh be at 7.5 per cent,” Reddy said.
Apart from suggesting cheaper housing loans, Reddy also sought more budgetary allocations for projects under the Commonwealth Games and UPA's flagship scheme for urban renewal.
Now, with banks already forced to cut interests, these new proposals will have to wait to hear the final word from the finance ministry, but one thing is clear that the UPA's ‘aam admi’ agenda will put low cost housing right on top priority.

India 'most attractive' retail market

India still continues to be 'red hot' when it comes to a preferred destination as a retail market. India has reclaimed the top position amongst 30 nations in the results of the 8th Annual Global Retail Development Index (GRDI) revealed by global consulting firm A T Kearney. Low inflation, reduction in rent in smaller cities helped push India's score (68) above Russia (60), China (56), UAE (56), Saudi Arabia (56), the study shows. For the fourth time in five years, India has been ranked the most attractive for retail investment as global retailers including Wal-Mart, Carrefour and Tesco continue to expand in the country.The GDRI helps retailers prioritise their global development strategies by ranking the retail expansion attractiveness of emerging countries on a set of 25 variables including economic and political risks, retail market attractiveness and the difference between GDP growth and retail growth. In 2008, Vietnam toppled India to become the 'most attractive' retail market but tables changed as recession swept through continents. AT Kearney now believes that 'larger and resilient developing countries' such as India are most likely to lead the economic recovery. The global recession has made prime real estate locations increasingly available in many developing markets. It also has made acquisition valuations of many local-market retailers very attractive, says the report.Slower retail sales are causing Indian retailers to delay expansion plans and restructure their operations. But this has opened the window of opportunity for global retailers and many, including Wal-Mart, are continuing expansion plans as Indian consumers grow increasingly affluent, brand conscious and familiar with global retail formats.

Report puts India on top of retail potential index

New York: India has regained its position at the top of an annual rating of countries' retail sector potential that is being released a week after Ikea, the Swedish home retailer, said it was abandoning an attempt to open stores there.
The authors of AT Kearney's 2009 Global Retail Development Index said that India's largely unmodernised retail sector remained attractive to both domestic and international retailers, in spite of government regulations that prevent 100 per cent foreign ownership of retail stores.
"Overall ... the country risk is low and the market potential is still very high, making it the most attractive option for growth," the report says.
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Wal-Mart, the largest US retailer, opened a partly-owned cash-and-carry warehouse store in Punjab last month in a joint-venture with Bharti Enterprises, while Tesco and Carrefour are also planning joint venture stores.
Hana Ben-Shabat, one of the report's authors, said foreign companies including Jean-Claude Biguine, the French hair salon, Inditex's Zara and Arcadia's Top Shop were also developing arrangements to establish their brands with Indian consumers.
"Maybe the model won't be owning the establishment, but getting the brand into market place," she said.
AT Kearney argues that the economic recession has increased the opportunities for cross-border investment by those retailers who are still generating significant cash-flow as a result of the depressed costs of assets and real estate.
India remained ahead of both Russia and China in the index, and pushed Vietnam out of the number one slot amid concerns about the impact of the global recession on Vietnam's export-based economy, and the collapse of the country's real estate bubble.
But the report notes that Vietnam will allow foreign companies 100 per cent ownership of food retailing from January.
Ben-Shabat also noted that in Russia the impact of the slump had reduced the potential cost of assets, increasing existing interest in deals and acquisitions of a number of significant players.
In China, in third place, the report notes increased foreign interest in smaller format convenience stores, rather than the supermarkets and hypermarkets.

Budget 2009: Govt should provide stimulus to real estate sector

Although, Indian economy as a whole has largely been insulated against the global economic slowdown, the Indian real estate sector has been severely been affected keeping in sync with the fortunes of the global real estate sector. Demand dynamics of one large industry decide the fortune of its ancillary industries. The ups and downs of the real estate market have serious implications on companies whose future is linked to the housing and infrastructure demand in India.
The risk straddle includes industries such as furniture, granites, ceramic tiles, paints, power cables, glass, electrical equipments and interior designers among others, which exemplifies the significant backward and forward linkages that the real estate sector has with the economy. There is a need for the Government to provide a stimulus for the industry so as to revive this ailing spectrum of sectors. And what better time can there be, than the forthcoming budget!
Some of the measures that should be taken by the Government are as follows:
• Given the demand for and emphasis of the Government of India on affordable housing (through lower interest rates on loans upto Rs 30 lakhs) there is a need to reintroduce tax holiday under section 80IB for housing. • Tax holiday available to hotels under section 80ID to be extended 10 years from existing time limit of 5 yrs. The gestation period in hotel industry, itself, stretches from 4 to 5 yrs. • To garner resources for providing liquidity to the Indian real estate industry, there is a need to: o Re-introduce 'tax pass through' status for domestic venture capital funds that invest in the Indian real estate sector; o Clarify that the Real Estate Mutual Funds are to be treated as equity oriented fund; o Extend the external commercial borrowing scheme to the entire Indian real estate sector including Special Economic Zones and not just 100 acre township, hotels, hospitals in view of the moderate international costs of borrowing; • Encourage states to reduce stamp duty to 5 percent and to provide a system of credit for each stage of sale i.e. levy on value addition. • Increase in deduction available under section 24(b) to Rs 300,000, against, existing limit of Rs 150,000 for self occupied houses. • Increase the basic exemption limit under provisions of Wealth tax Act to Rs 50 lakhs against existing limit of Rs 15 lakhs keeping in perspective the price of property, etc. • Service tax provisions should be amended as follows: o It has been clarified that no service tax should be levied in case pre-construction sale of residential complex where the seller and the buyer enter into an 'agreement to sell'. Similar clarification should be issued for pre-construction sale of commercial complex. o Service tax on renting immovable property should be abolished • To reduce the cost of procurement of capital equipments for construction purposes there should reduction/ rationalization of customs duty (exemption from special additional duty) and excise duty (8 percent to 4 percent)
In summary, the above measures would go a long way in providing much needed succour to the Indian real estate sector in these difficult times.

Lehman Property Boss Returns

Mark Walsh, the lead executive who loaded Lehman Brothers Holdings Inc. with toxic property investments, is part of a group chosen by Lehman to take over the bankrupt firm's real-estate private-equity arm.

Mr. Walsh and a team of former Lehman colleagues are setting up a new stand-alone business to manage the private-equity portfolio. They stand to profit if the portfolio of distressed assets -- for which they once paid top dollar -- recovers only some of its value.
The arrangement is a remarkable second act for 49-year-old Mr. Walsh, formerly Lehman's global head of real estate. When it filed for bankruptcy protection last September, Lehman directly held roughly $43 billion worth of real-estate loans and assets, exposure that played a key role in its collapse.
Federal prosecutors continue to investigate, among other things, whether Mr. Walsh and his team improperly valued commercial-real-estate holdings to prop up Lehman's balance sheet.
New Jersey Attorney General Anne Milgram also has filed a civil suit against Mr. Walsh and others accusing them of defrauding the state's pension funds by misrepresenting the value of Lehman's real-estate holdings.
Anton Troianovski/The Wall Street Journal The InterContinental hotel in New York's Times Square is among the property investments made by Lehman Brothers Real Estate Partners.A lawyer for Mr. Walsh declined to comment
While helping strike deals using Lehman's own balance sheet, Mr. Walsh also oversaw a separate unit called Lehman Brothers Real Estate Partners. Set up as a trio of private-equity funds, the unit eventually invested in $5.6 billion worth of deals, attracting some of the nation's largest pension funds as backers. Lehman itself also contributed about 20% of the unit's capital.
Properties in the portfolio include the 34-story InterContinental hotel in New York's Times Square, 60 hotels in the United Kingdom, and a commercial-real-estate development in Mumbai called Santa Cruz. About three-quarters of the portfolio is located outside the U.S. And it is valued at about 50% of its original purchase price, according to people familiar with the matter.
To maximize recovery for creditors, Lehman's restructuring advisers Alvarez & Marsal have been trying to find a buyer for the unit since late last year. Dozens of prospective buyers expressed interest, but it winnowed the group to five finalists, including AREA Property Partners, formerly Apollo Real Estate Advisors LP, and a group led by Raymond Mikulich, the former co-head of the group who left the firm in early 2007.
Lehman's estate eventually chose a management group that had run the business for years, which includes Mr. Walsh and executives Brett Bossung and Mark Newman. Lehman will retain its roughly 20% stake and hold seats on the new firm's oversight committees.
The group paid about $10 million for the business, according to a person familiar with the deal. The number was low, say people familiar with the matter, because continuing management fees are likely to be consumed by the costs of managing the existing properties.
The fund also will shrink the size of its most recent vehicle, a $3.2 billion fund, closed just days before Lehman's collapse. The fund will forgo about $1.6 billion in uninvested capital from investors, limiting new management fees.
The funds' new managers and Lehman creditors will thus only profit if the value of the properties increase over time. Lehman's investors agreed to "reset' some incentive fees for the managers, giving them payouts if asset values rise above their current distressed levels.
Typically managers would receive 20% of the "carry," or cut of certain profits, but that figure is expected to be lower for the new management, according to people familiar with the transaction.
"We fully support this management team and believe not only that they are best equipped to maximize the value of the assets," a Lehman spokeswoman said, "but also that they will be extremely successful in the growth of the new platform."
The transaction follows similar spinouts by the Lehman estate, including its flagship private-equity fund and its venture-capital unit.
The largest of those deals was a management buyout of Neuberger Berman, Lehman's money-management unit, which is 51% owned by its employees, with Lehman retaining the balance.
The Lehman group's sale comes at a time of crisis for the real-estate fund industry. During the boom years, funds run by Wall Street banks and boutique firms funneled billions of dollars from pension funds and other big investors into highly levered bets on office buildings, shopping malls, warehouses and other commercial property around the world.
Funds at Goldman Sachs Group Inc., Morgan Stanley and elsewhere have been marked down by more than half their equity value. Industry experts and investors, known as limited partners, expect the losses to mount.

Pay your property tax online in Bangalore Now

Starting July, you can pay your property tax online! No more standing in 

queues and waiting for assistance at help 
centres. Pay your tax using VISA/Mastercard 
online without incurring any extra charge for the card itself. More options, more forms and easy ways -- it's going to be less taxing for those already on the taxpayers' list, says the BBMP. 

The online system will be in place for the next `block period' (2009-10), which begins on July 1. 

"We took the decision while discussing the action plan for 2009-10 at a meeting of revenue officers with outgoing commissioner S Subramanya on Wednesday," BBMP deputy commissioner (resources) U A Vasanth Rao said. 

"We'll also hold training sessions before the system becomes operational in full capacity," he added. 

By going online, the Palike hopes to redress many tax issues of the current block period. Reducing manual process, extending services to property owners outside the city and accepting only completely filled forms are some corrective measures. 

The new system will also have a provision for taxpayers who want to pay by cheque. They can do so by downloading the filled-up form and submitting it at the respective help centres. 

The online module is being developed by the National Informatics Centre and IDBI bank has agreed to provide the `payment gateway' free of any extra charge on the card user. 

This is unlike the system currently followed in Chennai, Hyderabad and Delhi. Two new forms 

The new `block period' will also have two kinds of forms available online. One is `Form IV' for properties with no changes in built-up area or property usage, and `Form V' for those with changes in these parameters. 

"Taxpayers will have to use the appropriate form. But with the property database getting updated, the software should continuously update the taxpayer database," Vasanth Rao explained. 

How it works 

-- One can opt to pay online through a link on BBMP website (www.bmponline.org) 

-- Enter your application number in the box and get access to details of previous tax paid 

-- Fill up mandatory fields along with the tax calculated and submit it 

-- Pay your tax online using VISA/Mastercard 

-- Download the acknowledgement receipt on submission. A hard copy of the same will also be sent by BBMP 

-- If you want to pay by cheque, download the filled-up form and submit it along with the cheque at your help centre

Incentives to protect heritage properties In Mumbai

In a bid to rein in the steady metamorphosis of bungalows into highrises, art deco single-screen theatres into multiplexes and quaint two-storeyed buildings in South Mumbai into towers with glass and steel façades, the state government is planning to award incentives to owners of listed heritage properties. 

The Mumbai Heritage Conservation Committee is studying ways to reward conservation of the remaining vestiges of city’s architectural history. This may range from waivers on property tax, entertainment tax rebate in case of theatres, soft loans or grants for restoration of the property, declaring special zones for heritage, liberal use of heritage TDR or giving income tax benefits on money spent on conserving such properties. 

“Under the current heritage regulatory framework, there is a substantial liability on the home owner once his property is listed as a heritage structure with no benefit for him,” said Pankaj Joshi, executive director of Urban Design Research Institute (UDRI). 

On instructions from the state Urban Development Department, the heritage committee is now studying reports submitted by the Bombay Environmental Action Group (BEAG) and another by a committee under former heritage committee chief DM Sukthankar so as to make heritage conservation viable in Mumbai. “We are compiling extracts from each of the regulations to prepare revised heritage regulations for the city,” said heritage committee chief DK Afzalpurkar. 

The BEAG report, for instance, recommends the practice in Hyderabad where no building permission is issued if the owner deliberately allows his property to deteriorate and crumble eventually. “In order to make it viable for owners, we have also recommended that they be allowed to have commercial establishments in residential zones as long as the listed structure is maintained as it is,” said Shyam Chainani of BEAG. 

City-based historian Sharada Dwivedi points out that when the heritage listing was initially done, several privately owned heritage structures were listed as grade 3 just because the owners were financially incapable of maintaining the high standards of façade and interiors meant for grade 2 structures. “Today many of these have been bought over by builders and razed down.”

THE NR EYE: Overseas Indians may shift focus to real estate market

With the market sentiment buoyant over the prospects of a stable and investment-friendly government at the Centre and a distinct exchange rate advantage, overseas Indians may once again turn their attention to the rapidly-recovering real estate market in India.
More so, as market regulator Sebi (Securities and Exchange Board of India) has begun deliberations with experts to set up a framework for Real Estate Investment Trusts (REITs). In April last year, Sebi had prepared norms for real estate mutual fund. But the launch of real estate MF was delayed due to the market meltdown.
The realty sector, battered by the financial crisis, is looking at the real estate investment trust (REIT) market to lift the spectre of gloom.
Over the past 3-4 months, the global REIT market has witnessed a sharp pullback, recording an equity infusion of $8.7 bn. Equity infusion by investors at this point in cycle suggests that they see value and opportunity at current price levels.
According to a recent research by brokerage Motilal Oswal, the improvement in the global REIT market will positively impact commercial real estate in India, which lacks any monetisation vehicle at present. If the recovery in REIT demand continues, it might prompt leading commercial real estate players such as DLF, Unitech and IBREL to re-draw their REIT plans.
A real estate investment trust or REIT is a vehicle for a company that invests in real estate, which helps in reducing or eliminating corporate income-tax. An REIT is a trust that uses the pooled capital of many investors to purchase and manage real estate assets and/or mortgage loans.
It is a security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. It receives special tax considerations and generally offers investors high yields. Like other corporations, REITs can be publicly or privately held. Experts say REIT provides a similar structure for investment in real estate as mutual funds do for investment in stocks.
Real Estate Mutual Funds (REMFs) are the Indian avatar of the international REITs platform, adapted to the existing Indian mutual funds platform. The asset management company (AMC) invests in a range of real estate assets around the country and creates a fund based on those assets. Investors can buy shares in those funds, which are traded on a daily basis on stock exchanges. The value of the shares depends on the value of the underlying real estate assets.
If the sector needs quick money, these funds are liquid assets, which can be sold conveniently. The flexibility of investment will offer a great sense of confidence as they can liquidate their investment faster than the physical assets.
As for their potential in the current context - while everybody is now working on entry and creating assets, the important question of who will buy these assets to provide an exit to the developers / investors needs to be addressed. The leveraging allowed in case of Indian REITs is the lowest (at 20 per cent of the value) compared to 35 per cent in case of Malaysia, Hong Kong, Singapore, and Taiwan and 200 per cent in case of Korea. This could result in a lower yield - and because it is not really leveraged, the risk taken is also more.
According to Shobhit Agarwal, Joint MD — Capital Markets, Jones Lang Lasalle Meghraj, products like this should be more for low-risk–low-return investors, or most suited for risk-averse investors.
Speaking to Express Estates, Dr Devinder Gupta, CMD, CENTURY 21 India, opined that with the formation of a stable government at the Centre, the realty sector has a high expectation from the new government.
Fortunately, the sentiment part which has contributed significantly to make the market depressed in last FY 08-09 is now reversing and is reviving on optimistic side. These sentiments have a huge impact on the level of consumer confidence and reviving of market. This has been reflected in report coming from different cities showing revival of real estate transactions.

Indian realty pulling a lot more money from private equity, NRIs

After foreign institutional investors (FIIs) lapped up realty stocks in the recently concluded equity placements by property majors, India-focused private equity players and non-resident Indians (NRIs) are loosening their purse strings in the real estate space.
Delhi-based realty major Parsvnath Developers said on Thursday it has signed an agreement with realty fund Red Fort Capital to invest Rs 90 crore in its premium luxury project in Delhi, making it the first PE deal in the housing segment in the June quarter.
Red Fort picked up an 18 per cent stake in Parsvnath Landmark Developers Pvt Ltd (PLDPL), which is developing the 16.84-acre project in Civil Lines in north Delhi.
SUN Apollo Ventures, an international property fund, picked up a 15 per cent stake in Mumbai-based Keystone Realtors for Rs 300 crore earlier this year, after a long lull in the PE-realty space.
“PE is getting back in real estate as valuations have become reasonable, confidence is reviving and end-user demand is coming back. Though demand for premium housing is down, investors and buyers are showing interest in good projects,” said Anuj Puri, chairman of Jones Lang LaSalle Meghraj (JLLM), an international property consultancy.
FIIs oversubscribed for stocks in the qualified institutional placements (QIPs) of Unitech and Indiabulls and bought stake sold by the promoters of DLF, the country’s largest developer, indicating a renewed interest by investors in property space.
In a separate development, Maharashtra Chamber of Housing Industry (MCHI), a realty developers’ body, said on Thursday its twelfth India Realty Expo 2009 held in Dubai saw 106 flats worth Rs 65.33 crore being booked.
“Around 86 flats worth Rs 80.18 crore are in the pipeline for NRIs when they come to India in July-August on their annual vacation,” Zubin Mehta, chief executive of MCHI, said.
The expo evoked an encouraging response, with 2,700 NRIs visiting the exhibition during June 4-6, the release said. “The softening of real estate prices and home loan interest in India were the key reasons that attracted a large number of NRIs during the expo,” Mehta added

Housing sector back in business Assetventures

Spurred by price corrections, new launches, lowering of interest rates, increase in sales inquiries and, more importantly, the newfound mantra of
‘affordable housing’, the real estate industry has started showing signs of recovery.

Industry body Assocham has gone to the extent of saying that the real estate recovery is possible in the coming three months. A recent Assocham Business Barometer (ABB) survey has found that anticipating strong policy measures for the real estate in the forthcoming Budget, embattled realty majors see positive signs of recovery taking place within the next three months as affordable housing projects rev up demand and improved cash flows address their liquidity concerns.

As per the survey, a whopping 92% of the respondent developers considered affordable housing as the most dominating segment to shore up the demand in real estate sector. And the policy actions supplementing the robust demand in the housing sector are likely to hold the key for a speedy recovery phase in the sector.

Although the findings of this survey may seem to be too optimistic, particularly in view of the prolonged slowdown in the industry, but taking the current positive signs in the property market into account, both industry majors as well as experts feel the real estate recovery is not a distant dream. And they have ample reasons to believe this.

Firstly, after a gap of more than a year, some real ‘actions’ are being witnessed in the realty market, including the high-profile launches of some major projects coupled with increased sales inquiries. Along with that, some realty majors are also said to have recorded an overwhelming response for their upcoming projects.

For instance, the Jaypee group claims to have booked all the 3300 apartments of Jaypee Greens Aman, its new residential project in Noida, within 24 hours of their launch, while Capital Greens, DLF’s first residential project in Delhi, is claimed to have showed bookings of 1,400 flats on the first day itself. Such instances only prove that buyers and strategic investors are once again warming up to the sector, though in a restricted manner.

Secondly, the Indian economy recorded a better-than-expected growth rate of 6.7% in 2008-09. “The GDP growth rate, clocked in tumultuous times of global financial crisis, lends credibility to the presence of real domestic demand and consumption continuing to fuel the economy, though albeit at a reduced growth rate,” says Neeraj Bansal, associate director - advisory services, KPMG.

Thirdly, sensing a near-term economic recovery and, resultantly, expecting the realty sector to outperform other sectors in the months to come, fund managers are reposing their faith in real estate. This explains why in the month of April, mutual fund houses increased their exposure in the realty sector to Rs 308.16 crore as against Rs 98.76 crore in March, translating into a whopping 212.03% rise in the exposure.

Fourthly, there is a renewed faith of overseas investors also, stemming from the series of steps taken by developers to improve their financial position.” Unitech has, for instance, cut debt by Rs 2,000 crore while DLF has repaid Rs 1,700 crore of loans in the past year. And similar is the case with lots of other large and mediumsized developers,” says Bansal.

Fifthly, home loan disbursements by the country’s top lenders, which signal the actual demand for homes, is also improving. HDFC saw its fourth quarter disbursals going up by 17.5% at Rs 12,400 crore, while LIC Housing saw an increase of 42% and 22% in March and in Q4, respectively. Moreover, a general softening of interest rates has also helped developers cut their borrowing costs by as much as 300 basis points.

Realty firms focus on ‘affordable’ homes to boost sales, profits Assetventures

To boost slowing demand in the realty sector and tap the growing market for affordable housing, realty firm Unitech Ltd will build 20,000 homes this year, priced between Rs10 lakh and Rs30 lakh, launching its first such project in Chennai this month.
India’s second largest property developer by market value on Tuesday launched its new initiative branded Uni Homes, which will have apartment sizes starting at 660 sq. ft. 
The realty firm said its second such project will be constructed in Manesar in Haryana, on the outskirts of New Delhi. The apartments in Chennai would cost around Rs10 lakh and those at Manesar around Rs15 lakh, it said.
Faced with falling sales on the back of an economic slowdown, India’s realty companies have been launching what they call affordable housing because they say there is robust demand in this segment.
Earlier this year, Unitech had launched a project in Gurgaon, south-east of New Delhi, where apartments are priced between Rs28 lakh and Rs40 lakh. All 750 homes were sold in 45 days, the firm said. Encouraged by the response, it launched another project, also in Gurgaon, with prices at Rs35-45 lakh. It has so far sold 180 of the 200 flats in that project.
In May, Mumbai-based Tata Housing Development Co. Ltd launched a low-cost housing project branded Shubh Griha in Boisar, around 50km north of Mumbai. The apartments of 283 sq. ft, 360 sq. ft and 465 sq. ft would cost between Rs3.9 lakh and Rs6.7 lakh, the company said.
In March, Mumbai-based developer Lodha Group launched Casa Bella, an integrated township project in Dombivalli, a Mumbai suburb, where apartments would cost between Rs11.7 lakh and Rs24.3 lakh.
In August, Bangalore-based realtor Puravankara Projects Ltd launched a unit called Provident Housing and Infrastructure Ltd to construct apartments priced at Rs10-20 lakh in cities such as Bangalore, Chennai, Hyderabad, Coimbatore and Mysore.
In May last year, Omaxe Ltd, another New Delhi-based developer, set up a subsidiary called National Affordable Housing and Infrastructure Ltd to build homes in the Rs3-15 lakh category in smaller cities such as Sonepat in Haryana, and Nimrana and Bhiwadi in Rajasthan.
“There is a demand in the affordable housing segment. Interest rates have come down and that helps because people can take loan at a cheaper cost,” said Anshuman Magazine, managing director of CB Richard Ellis, a real estate consultancy firm. “There is also a renewal of confidence among buyers.”
Unitech expects to start its Uni Homes projects in Hyderabad, Bangalore, Kolkata and Lucknow. 
The company said these projects will all be well located. “The project in Chennai will not be very far away from the city.”
Unitech plans to invest Rs1,700 crore this year to build these homes. 
“This is just the construction cost,” the spokesperson said. “Land for the projects has already been paid for,” the spokesperson said.
The real estate company says it owns around 8,000 acres of land in various cities, on which it can develop some 500 million sq. ft of residential and commercial space.

Demand for homes inching up, but recovery likely to take months

Home sales in India are trickling back in some sections of the market, but industry watchers say a rebound is months away as buyers await further price corrections.
Builders have begun new projects after a year-long hiatus, and are also swapping older premium project proposals for cheaper ones to restart sales as they try to beat a severe cash crunch.
“While the market has turned up, I don’t expect it to be back to 2007 or 2008-beginning levels for another six months or eight months,” said Rajesh Goenka, chairman, Axiom Estates, a real estate agency servicing overseas Indians, mostly in the earning bracket of $100,000-300,000 (around Rs47.5 lakh-Rs1.5 crore) a year.
Indian realtors have spent months battling a severe cash crunch as high interest rates and a slowdown kept buyers away and funding from investors dried up. But, a spate of interest rate cuts and a sentiment revival have encouraged builders to focus on middle-income buyers by launching new projects or re-marketing older ones as mid-income properties.
Unitech Ltd, Parsvnath Developers Ltd and India’s top listed real estate firm DLF Ltd redesigned projects and cut costs to appeal to a wider consumer base. Demand is swaying towards affordable housing. 
In the quarter to March, half of the homes sold were in 114 new projects of the 2,000 available for sale, according to estimates by realty rating and research agency, Leases Foras Real Estate Rating and Research.
Even though builders say new projects are being lapped up, home loans are not picking up as fast, suggesting that the homes were picked up by investors, said Pankaj Kapoor, founder and chief executive, Leases Foras.
Homebuyers say that the ground reality hasn’t changed much. Prices haven’t fallen as anticipated with builders’ standing guard, hoping prices will continue to firm and investors, too, hope for a return in pricing.

India realty expo in Dubai sees deals worth Rs 65.33 cr sealed

The 12th India Realty Expo 2009 held in Dubai saw 106 flats worth Rs 65.33 crore being booked, a senior real estate industry official said.  
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"106 flats worth Rs 65.33 crore were booked (during the expo)," Maharashtra Chamber of Housing Industry (MCHI), CEO, Zubin Mehta, said in a press release issued here.  

"Around 86 flats worth Rs 80.18 crore are in the pipeline when the NRIs come down to India in July-August on their annual vacation," Mehta added.  

MCHI is a leading body of real estate builders and developers.  

The expo evoked an encouraging response with 2,700 NRIs visiting the exhibition in three days during June 4-6, the release said.  

"The softening of real estate prices and home loan interest in India were the key reasons that attracted a large number of NRIs during the expo," Mehta said.  

Fifteen leading developers and builders showcased their properties at the realty expo.  

Home finance institutions which participated in the expo included HDFC, DHFL and Bank of Baroda, the release said.

"Majority of the walk-ins was Mumbai-specific and this reflected into an opportunity for the developers to close a few deals during the expo itself," MCHI's Co-ordinator and Co-Chairman, International Exhibitions, J S Augustine, said.  

That the expo took place in Dubai when the first signs of an economic revival globally were being witnessed also made a positive impact, he said.  

The exhibition, which was inaugurated by Consul (Commerce) to the Consulate General of India, Dubai, Partha Roy, aimed to provide a one-stop solution to all the needs of NRIs intending to purchase a property in India, the release said.  

MCHI's President, Pravin Doshi, describing the response as "encouraging", said that "this encouraging response denotes the demand and popularity of housing in India by NRIs in the Middle-East."  

The 15 developers who participated in the expo were Ajmera Builders, Mayfair Group, Akar Creations, Better Homes, Everest Developers, Hiranandani Constructions, Marathon Group, Nahar Group, Nirmal Lifestyle, Nyati Group, Our Town, Pathy Housing, Pranjee Group, Rustomjee and Total Environmen

Allahabad City UP witnesses boom in real estate demands

With the culture of individual houses and palatial bungalows waning 

fast, the city is adopting the flat culture, which is 
considered to be safe, secure and 
useful for social activities, especially for the older generation. It is here that the role of Allahabad Development Authority assumes great significance. 

Allahabad Development Authority which originated in 1974 was formed under the provision laid by the Uttar Pradesh Urban Planning & Development Act of 1973. ADA development projects began with smaller projects & constructions but soon progressed and changed the city's look with its magnificent works. Uttar Pradesh being one of the most important states of India, politically and hence Allahabad, an important city of the state with long historical and cultural background, attracts a lot of people and tourists from all over the world thereby necessitates the establishment of development authority to overlook planned development of the city. 

The development authority aims to fulfil its responsibilities for the development of the city by constructing state-of-the-art infrastructure for its residential and commercial projects in a well planned manner, by adhering to the master plan laid out by the authorities. 

ADA also started many housing schemes like Avantika, Kalindipuram, Juhi, Badri, Parivartan, Shantipuram, Nirupma, Agnipath, Ekanki, Devghat, Trivenipuram, Katju, Ambedkar, Dev-Prayagam, Nav-Prayagam, Chandpur Salori, Asdullapur and IDH Compound Housing Scheme. Apart from these, Allahabad Development Authority is also working in conjunction with private builders and developers in order to give a progressive direction to the development process of real estate in Allahabad. 
The latest real estate developments in city primarily focus on building hotels, guest houses, Dharmashalas, restaurants, retail shops and other tourists' activity spots. The real estate property prices in city are also mounting as more and more people are heading towards the efficient business opportunities the city offers. For the purchase, sale or renting of any property in Allahabad, you receive full assistance from the property dealers in the city.

Allahabad City UP witnesses boom in real estate demands

With the culture of individual houses and palatial bungalows waning

fast, the city is adopting the flat culture, which is
considered to be safe, secure and
useful for social activities, especially for the older generation. It is here that the role of Allahabad Development Authority assumes great significance.

Allahabad Development Authority which originated in 1974 was formed under the provision laid by the Uttar Pradesh Urban Planning & Development Act of 1973. ADA development projects began with smaller projects & constructions but soon progressed and changed the city's look with its magnificent works. Uttar Pradesh being one of the most important states of India, politically and hence Allahabad, an important city of the state with long historical and cultural background, attracts a lot of people and tourists from all over the world thereby necessitates the establishment of development authority to overlook planned development of the city.

The development authority aims to fulfil its responsibilities for the development of the city by constructing state-of-the-art infrastructure for its residential and commercial projects in a well planned manner, by adhering to the master plan laid out by the authorities.

ADA also started many housing schemes like Avantika, Kalindipuram, Juhi, Badri, Parivartan, Shantipuram, Nirupma, Agnipath, Ekanki, Devghat, Trivenipuram, Katju, Ambedkar, Dev-Prayagam, Nav-Prayagam, Chandpur Salori, Asdullapur and IDH Compound Housing Scheme. Apart from these, Allahabad Development Authority is also working in conjunction with private builders and developers in order to give a progressive direction to the development process of real estate in Allahabad.
The latest real estate developments in city primarily focus on building hotels, guest houses, Dharmashalas, restaurants, retail shops and other tourists' activity spots. The real estate property prices in city are also mounting as more and more people are heading towards the efficient business opportunities the city offers. For the purchase, sale or renting of any property in Allahabad, you receive full assistance from the property dealers in the city.

Maharashtra mulls giving equal share to wife in property

The Maharashtra government is seeking legal advice on making it mandatory for giving equal property right to wife, Revenue Minister Patangarao Kadam has said. 

The present norms stipulate that the wife getting share in property is 'discretionary' and not mandatory, the minister said. 

"The government is seeking advice from Law and Judiciary Department on making it mandatory to give equal right to the wife in property," Mr. Kadam informed the Legislative Council in a written answer on Tuesday. 

In order to implement the proposal, the government needs to amend the Succession Act. The issue would also be discussed in the Cabinet meeting, he said. 

Earlier, the government had decided to register the wife's name on 7/12 extract (land ownership record) along with the husband's. However, registering the wife's name depended on such a 'request' being made by the husband, he said. 

Arun Gujarati (NCP) raised the issue and asked the Government to give details on registering the wife's name in 7/12 records.

Rs10 lakh for a flat in Pune (Assetventures)

When was the last time you heard about a Rs10-lakh flat in the city limits?


President of the Pune chapter of Confederation of Real Estate Developers Association of India (Credai) said that a Rs10-lakh flat was probably sold in the late 1990s, while a few others said it was early 2000.

Forced by the slump in the real estate sector, many builders in the city have turned their focus into affordable housing projects in the price range of Rs10 lakh to Rs13.5 lakh.

Credai vice-president Rohit Gera said builders are just reacting to what the market demands at this moment. "Even a year back, nobody would have thought of a flat in the range of Rs10-12 lakh," he said, adding that with the client base now changing because of the slowdown, the demand for the smaller-sized homes is on the rise.

A recent analysis by property consultant Jones Lang LaSalle Meghraj revealed that the buyers have adopted a conservative approach and prefer budget-friendly homes.

Mohammed Aslam, the Pune head of Meghraj, said while the demand for luxury units is extremely curtailed, there is still a market for I BHK flats in the range of Rs12-16 lakh and 2BHKs to some extent.

Kolte-Patil Developers, known for its high-end projects, is among the constructors entering the affordable housing project. 

"With the recession, we realised the need to concentrate on the lower segment as well," said Gayatri Kunte, manager (corporate communications), at Kolte-Patil Developers. The company plans to begin work on 'Umang Homes' at Wagholi, where flats are being sold Rs11.22 lakh for a 1BHK to Rs14.22 lakh for a one-and-a-half BHK.

Other builders have followed suit. Darode-Jog Properties has launched 'Greenland County', priced at Rs12 lakh and above on the Simhagad Road. "We have always been associated with premium segment and up-market areas in housing in the past," said Sudhir Darode, director of Darode-Jog Properties.

Tricon Builders is launching a 1BHK apartment project at Undric called Sunshine Hills and with 1BHK houses are priced at Rs13 lakh and onwards. "There is a good response for these flats as not many developers were catering to this segment earlier," said Rinku Shewani, partner at Tricon Developers.

Others like Bhandari Associates and Suyog Development Corporation, who have also entered into the affordable housing projects, said the current market situation has forced them to cut rates as well as size.

Magar and other builders explained that most of these projects are coming up on the land banks, located in the fringe areas.

Realty companies resorting to discounts (assetventures)

Realty companies are resorting to discounts to sell commercial properties in 

order to improve cash flows and reduce mounting 
debts. 

DLF, the country’s biggest real estate firm by market capitalisation, has recently sold its 66% stake in a special purpose vehicle that owns eight acres at Prabhadevi in Mumbai for Rs 310 crore, which analysts feel was at a discount. 

It is also eyeing to raise around Rs 2,000 crore by selling two commercial properties in the city. Unlisted firm K Raheja Universal recently sold a plot in Santa Cruz in north Mumbai for around Rs 60 crore. 

Mumbai is not the only city witnessing distress deals in the commercial property space. Bangalore-based Sobha Developers is learnt to have put a plot in the country’s IT capital on the block with a ticket size of Rs 100 crore. India’s second-largest firm by market cap Unitech, too, is going all out to sell some of its commercial properties to pay down debt. 

In the past few months, it has sold its Marriott Courtyard Hotel in Gurgaon for Rs 232 crore and an office property in Saket, New Delhi, for Rs 500 crore. 

The combined debt of DLF, Sobha and Unitech is estimated to be at Rs 25,000 crore. Vimal Shah, managing director, Akruti City, a city based real estate firm, said: “While the residential space has started looking up, commercial properties do not have buyers. Many big builders all over India are cautious with their commercial complexes.” 
In the past three months the commercial property rates in New Delhi, Mumbai and Bangalore have witnessed a 30-45% decline in price. Rates could fall further if analysts are to be believed. 

Anuj Puri, country head, Jones Lang LaSalle Meghraj (JLLM), a property advisory firm, said: “It seems that the commercial property market will take at least a year to revive. Presently only the residential market looks stable and their rates may not fall for some time while commercial property could still see some correction in prices.” 
“Many big builders have come up with proposals of selling commercial properties in Mumbai and New Delhi,” opined Pravin Doshi, chairman, Acme Group, a Mumbai-based real estate developer.

In real estate slump, developers pin hope on service apartments (asetventures)

After being launched in cities like Delhi, Bangalore and Pune, service apartments will soon be a reality in Tier II and III cities. 



Considering the growing number of corporate honchos visiting the tri-city, Ludhiana and Amritsar, real estate developers will soon introduce service apartments in these cities. 


Another reason that has evoked developers’ interest in service apartments is the slump in the real estate industry. 



The negligible sale of apartments in the tri-city has forced them to convert these into service apartments. 


Service apartments, which are fully-furnished with all facilities, are an alternative to five-star hotels. Unlike a normal apartment, a service apartment is given only on lease or rent and is a good option for travelling professionals and nuclear families. 

Soon, Omaxe will launch a few limited service apartments in Omaxe Royal Residency on Pakhowal Road, Ludhiana. These apartments, with an area of 650 square feet each, will be launched in July.

“Ludhiana has marked its presence in India as a commercial city. It has many industries, which result in a number of corporate heads visiting this city. These apartments will offer them a nice and cheaper accommodation compared to hotels,” Avneet Soni, director of Omaxe Limited, said. 



Manoj Kashyap, regional director of JLL Meghraj, added: “As there is no movement in the real estate market for the last many months, developers are trying various options keeping in mind the demand. The firm is working on the modalities and research on behalf of several national developers eager to launch service apartments in the region.”

DLF sees property prices firming up Assetventures

DLF Ltd India's largest listed real estate firm, sees signs of recovery in the country's beaten down residential property sector and expects prices to start firming up, a senior official said on Monday.

Still, Rajeev Talwar, group executive director at the developer, said projects needed to be priced aggressively in order to sell.

Talwar told Reuters in an interview a stable government and a view that the economy may be improving would help demand for real estate, after a property slump that analysts said has seen prices crashing by up to half.

"I think we've done a fair amount on price correction, realistic pricing or aggressive pricing as it may be called," Talwar said.

"I think all Indians have imposed their faith to very immediate economic revival, rather than long term," Talwar said.

"I think all Indians have imposed their faith to very immediate economic revival, rather than long term," Talwar said.

Last month's decisive victory by the ruling Congress party-led coalition has fuelled market optimism that reform measures will help drive economic growth.

The main stock index .BSESN is up about 90 percent from an October low.

"So it would stand to reason that 'yes'," he said when asked whether he expected the housing market had bottomed out.

"In fact why only bottom, if demand is rising, prices should be hardening or firming up. At least the trend would be to move upwards, rather than to go downwards," said Talwar, a former member of the country's elite Indian Administrative Service.

Real estate stocks have nearly tripled from their March low, but remain about 74 percent below their early 2008 peak at the end of a three-year bull run in property prices.

The past 18 months have seen a rough run for Indian property companies.

Heavy debt and a slowdown in fund flows to real estate projects in India forced the founders of 63-year old DLF to sell shares to institutions last month to raise funds.

DLF's founders, K.P. Singh and family, raised $783 million by selling 9.9 percent stake in the firm [ID:nDEL155233], which cut their holding to 78.6 percent.

Talwar said the founders intended to maintain their current holding.

"I think what they have announced is that no, there is no further scope of disinvestment," he said.

AFFORDABLE HOUSING

India, which is plagued by homelessness in its cities, needs an estimated 25 million homes, and Talwar said public-private partnership is key to helping bridge that gap.

He said mid-range housing to serve the country's "bustling middle class" would make up the bulk of DLF's residential business.

Recent project launches by DLF have been priced aggressively and sold quickly as a result.

For example, a new development in Delhi sold 1,400 flats within 24 hours of its April launch.

"I think the lesson that we've drawn from the last year, year and a half is that if you price your product appropriately or competitively there is a market which is waiting to lap it up," he said.

"There is a demand if pricing is appropriate, aggressive, and competitive. People need to see the value for money."

DLF sees property prices firming up Assetventures

 DLF Ltd India's largest listed real estate firm, sees signs of recovery in the country's beaten down residential property sector and expects prices to start firming up, a senior official said on Monday.

Still, Rajeev Talwar, group executive director at the developer, said projects needed to be priced aggressively in order to sell.

Talwar told Reuters in an interview a stable government and a view that the economy may be improving would help demand for real estate, after a property slump that analysts said has seen prices crashing by up to half.

"I think we've done a fair amount on price correction, realistic pricing or aggressive pricing as it may be called," Talwar said.

"I think all Indians have imposed their faith to very immediate economic revival, rather than long term," Talwar said.

"I think all Indians have imposed their faith to very immediate economic revival, rather than long term," Talwar said.

Last month's decisive victory by the ruling Congress party-led coalition has fuelled market optimism that reform measures will help drive economic growth.

The main stock index .BSESN is up about 90 percent from an October low.

"So it would stand to reason that 'yes'," he said when asked whether he expected the housing market had bottomed out.

"In fact why only bottom, if demand is rising, prices should be hardening or firming up. At least the trend would be to move upwards, rather than to go downwards," said Talwar, a former member of the country's elite Indian Administrative Service.

Real estate stocks have nearly tripled from their March low, but remain about 74 percent below their early 2008 peak at the end of a three-year bull run in property prices.

The past 18 months have seen a rough run for Indian property companies.

Heavy debt and a slowdown in fund flows to real estate projects in India forced the founders of 63-year old DLF to sell shares to institutions last month to raise funds.

DLF's founders, K.P. Singh and family, raised $783 million by selling 9.9 percent stake in the firm [ID:nDEL155233], which cut their holding to 78.6 percent.

Talwar said the founders intended to maintain their current holding.

"I think what they have announced is that no, there is no further scope of disinvestment," he said.

AFFORDABLE HOUSING

India, which is plagued by homelessness in its cities, needs an estimated 25 million homes, and Talwar said public-private partnership is key to helping bridge that gap.

He said mid-range housing to serve the country's "bustling middle class" would make up the bulk of DLF's residential business.

Recent project launches by DLF have been priced aggressively and sold quickly as a result.

For example, a new development in Delhi sold 1,400 flats within 24 hours of its April launch.

"I think the lesson that we've drawn from the last year, year and a half is that if you price your product appropriately or competitively there is a market which is waiting to lap it up," he said.

"There is a demand if pricing is appropriate, aggressive, and competitive. People need to see the value for money."

Real estate developers homing in on residential projects

While the sudden rise in demand for affordable residential housing in the last couple of months has given the much-needed relief to real estate developers, commercial and retail segments continue to face the heat of oversupply, combined with declining rental rates and lower demand from investors.
As a result, developers have deferred a majority of the ongoing commercial and retail projects, which were scheduled for completion in 2009-10, and are instead focusing on the residential market. In fact, according to real estate consultants Cushman & Wakefield, developers will be forced to defer 41 per cent of the projected office space supply in 2009.
“Out of 76 million sq ft of commercial (office) space projected across eight cities by many developers, only 45 million sq ft is expected to be completed in 2009. In the retail segment, out of the 14.5 million sq ft of projected space, only 3.6 million sq ft is expected to enter the market,” Cushman & Wakefield’s Executive Director Kaustav Roy said.
The supply overhang in commercial and retail segments is expected to continue for another 12-18 months, feel experts. At the same time, a sharp decline in the price of residential units — in terms of per sq ft rate as well as size — has resulted in a sharp increase in demand. As per conservative estimates, 60 million sq ft of residential space has been lined up for launch in 2009. One of the key reasons for this poor demand in commercial and retail segments is the non–availability of Real Estate Investment Trusts (REITs), which could not take off because of complex legal hurdles and the sudden crash in the stock market in 2008.
While many of the real estate companies — such as DLF Asset Ltd, Unitech, Indiabulls Real Estate and Purvankara, among others — were planning to raise resources through REITs’ listing, only Indiabulls successfully raised $286 million by listing its REITs on the Singapore Stock Exchange. The failure of REITs to take off has affected the financial position of developers and, in turn, further delayed the completion of ongoing retail and commercial projects.
“In the past one year, everything has been against the commercial real estate. Private equity vanished from the markets, while the government increased risk rating on the real estate sector. The failure of REITs to pick up added to the financial crunch of the developers,” commercial real estate services company CB Richard Ellis’ Chairman and Managing Director Anshuman magazine said. “Developers are not in a position to complete their commercial projects due to a lack of funds, a demand-supply mismatch and falling rentals,” he added. The country’s largest developer, DLF, has already received an approval to denotify four of its SEZs. In addition, it has also temporarily stopped construction work on nearly 16 million sq ft of office and retail mall space out of the 62 million sq ft of planned construction.

Dubai has seventh costliest office property market globally

According to a report by real estate consultancy firm, CB Richard Ellis, as reported by Emirates Business 24/7, emirate of Dubai falls seventh in the list of costliest office market globally with an occupancy cost of Dh449.90 per square foot per annum.
Three of the most expensive office markets worldwide are Tokyo, London and Moscow, according to the report, Global MarketView Office Occupancy Costs. Abu Dhabi came in at 11th in the rankings, with a cost of $91.21 per sq ft per annum.
Current financial crunch has made huge dent on the world's office markets with the most expensive ones considerably less expensive than six months ago, the report said. Financial service providers have been responsible for driving up the rents of prime office space in recent years, particularly in the dominant global financial centres.

Mumbai slips to No. 6 on global office rental list

Mumbai, which became the second-most expensive office property market globally one-and-a-half years ago at the peak of a real estate boom in the country, has now slipped out of the top-five list, as per a survey of 170 cities by real estate consultant CB Richard Ellis. The city remained at the sixth position among the world’s costliest office markets.
The cooling realty prices have also brought down New Delhi from the number eight position globally in November 2007 to the 12th slot in the latest ranking released on Thursday.
“The latest ranking highlights the decrease in rentals due to a reduction in demand. However, Mumbai continuing in the top 10 list and Delhi being at 12th place globally reflects the shortage of prime office supply in India,” said CB Richard Ellis South Asia, CMD Anshuman Magazine.
Office rentals in Mumbai fell 31% since November 2007 from $189 per sq ft a year to $131 per sq ft now. Similarly, office rentals in New Delhi also fell 31% from $126.7 to $86.9 per sq ft a year. Mumbai ranked fifth in CBRE’s last survey released in November 2008, while Delhi was placed 13th. CBRE conducts the surveys every six month.
Tokyo (Inner Central) tops the latest ranking with a rental of $183 per sq ft. It over took London’s West End that led the pack in November 2007 with $329 per sq ft rental, just ahead of Mumbai then. London’s West End is placed second with rentals almost half of what they were at their peak.

DLF puts Andheri project on the block

DLF, India’s largest real estate firm by market capitalisation, is learnt to have put its commercial property in Andheri, a Mumbai suburb, on the block. This project was being developed with Akruti City, and the asking price for the property is said to be at least Rs 500 crore.
The project is spread over 1 million sq ft in the MIDC area of Andheri. Sources familiar with the development said DLF has approached a couple of Mumbai-based property consultants and brokers to execute the transaction.
According to a senior official at a property consultant firm, the decision to sell the asset was taken a week ago. DLF is also believed to have sounded out prominent builders and individual investors. DLF holds 75% in the project with Akruti holding the rest. This is the second big ticket project that DLF has put on the block in the recent past.
Last month, DLF finalised a deal to sell its stake in Hindoostan Mill in Central Mumbai to a Chennai-based investor for Rs 310 crore.
“DLF, which was developing the project with Akruti, is looking to sell the property for Rs 5,000 per sq ft over the actual cost of construction,” said the official. Interestingly, the prevailing market rate in Andheri is around Rs 10,000 per sq ft.
The rationale behind selling the property at half the price is its size. Currently, the project has only a basement and the ground floor. It is divided into two parts by a road with one part covering 7.16 lakh sq ft, with the balance 2.84 lakh square feet on the other side.
An official with DLF confirmed the deal, though the company spokesperson said, “The company would not like to comment on this issue.” It is not clear whether Akruti too would be selling its stake at this point. When contacted, Vimal Shah, MD, Akruti, refused to comment.
DLF had earlier announced that the project would be ready by the end of this year. The company is believed to be selling it to raise capital to repay its debt of around Rs 14,000 crore. A potential buyer will also have to pay for the construction cost that DLF has incurred. DLF officials had earlier announced that they could raise money by selling portions of the land from their existing land banks.

Fortune Park Hotel launches third property in Bangalore

Fortune Park Hotels Limited, ITC's wholly owned subsidary, on Wednesday launched the launch of its 29th property, 130-room the Fortune Park JP Celestial, in the city.
The hotel, owned by the the JP Group and now managed by Fortune Park Hotel, is a contemporary business hotel that offers state-of-art- conference and banquet facilities, Pawan Verma, Senior Executive Vice President, ITC Ltd-Hotels Division told reporters here on Wednesday.
This is the third Fortune Property in Bangalore and fourth one in Karnataka, he said.
Currently, out of the 29 operational hotels, 14 are in the south, he said.
Fortune, whose properties are all management-contract run, except for a sole owned property, proposes to construct two hotels of its own with a total investment of Rs 100 crore.
"We plan to have our hotel in Bangalore and Coimbatore", he said, adding that they will be subranded under Fortune Select.
"This calendar year we have opened four hotels- Lavassa, Manipal, Jaipur and Bangalore and later this month we will open a hotel in Mussorie", he said.
There were also plans to open hotels later this year in Gnadhinagar, Goa, a second property in Hyderabad and a third property in Mumbai

Indian real estate back as favorites of NRIs and PIOs

With the India Realty Expo 2009 opening in Dubai on Thursday, Indian real estate is back on the radar of NRIs and PIOs, says Zubin Mehta, CEO, Markets cheer election resultsSectors and stocks to look out forPick stocks on fundamentalsFive facts on stock fallsShort-term plans are safe bets MCHI. The reverse is also true, says Sandeep Joshi, CEO of EventPro International. Global property investments are making a comeback, searching for Indian HNIs, who would be willing to buy property abroad.
With slick presentations and smart brochures, backed up by an even better sales pitch, projects in Mauritius, Australia, Thailand , UK and even the USA, are being offered to the Indian HNI willing to buy property abroad, says Joshi.
"With media reports talking of sales picking up in the residential segment, in the past five months, the global property market feels that the Indian HNI has money to invest and their aim is to get a piece of this. The only question is whether the sales pitch would be interesting enough," says Joshi.
At the Gulf Real Estate Conference in Bahrain last year, Manju Yagnik, vice-chairperson of Nahar Group, who pitched investments in Indian real estate, to GCC-based developers, had a cospeaker in her session, who pitched Australia and Thailand real estate options.
"When a Bahraini delegate asked him about returns on investments in these locations, he was candid enough to admit that they were merely projected returns and that no one could guarantee that these would actually happen, within the time-frame suggested in the presentation. The same issue comes up, when Indian HNIs are wooed by global property consultants," she says.
The post-election political stability and continuation of existing pro-reform economic policies, has been a positive for global property sellers, says realtor Bharat Malik. "The global market scenario is bad. India is seen as being economically better off, plus there is the realisation that Indian HNIs have money to invest. So, logically , you would have global projects pitching for Indian investments," he says.
In line with this, Abdul Majeed Ismail Al Fahim, chairman, Pearl Dubai FZ LLC, which is developing the 'Dubai Pearl' , in the UAE, maintains that India would be 'an integral part of our growth strategy'.

Over 100 malls to spring up in India by end-2010: Report

Keen on matching supply with demand, real estate developers may spring up more than a hundred malls spread over 30-million sq ft in the country by end-2010, a report says. 

"Between now and 2010, an additional 31,846,504-square feet of mall space will be created across India through just over 100 new shopping centres," findings from a report titled 'Mall Realities India 2010', said. 

However, 54 per cent of expected mall supply in 2008 was deferred to 2009-10, the report compiled by real estate consultancy firms, Cushman & Wakefield and Jones Lang LaSalle Meghraj, said. 

"As far as retail real estate in the top eight was concerned, as much as 11-million sq ft of expected mall supply in 2008 was deferred to 2009-10, which was a reduction of 54 per cent from the projections made at the beginning of 2008," it said. 

Of the over 30-million sq ft of malls to be added by end-2010, India's north zone is leading with a total of 14,790,000 sq ft. 

"That translates into 45 malls expected in the North Zone with 24 in the Delhi NCR (National Capital Region) itself," it said. 

West Zone is the second-most prolific region in terms of additional projected mall supply of 7,438,504 sq ft through 47 malls, it said. 

South and East Zones total up a projected mall space at 5,865,000 sq ft (through 29 malls) and 3,753,000 sq ft (by way of 13 malls), respectively, it said. 

"Interestingly, while most projects in North, West and South Zones are in and around Tier II cities, in the East, the majority of developments are to open in or around West Bengal's capital Kolkata," the findings said. 

The list of properties scheduled to open in this period are located across metros, mini-metros and Tier II towns, including in Delhi, NCR, Mumbai, Pune, Aurangabad, Raipur, Bangalore and Siliguri, among others.

Rays of recovery - ASSOCHAM sees real estate recovery in 3 months

According to ASSOCHAM, anticipating strong policy measures for real estate in forthcoming Budget, embattled realty majors see positive signs of recovery taking place, within next 3 months as affordable housing rev up demand and improved cash flows address their liquidity concerns.

Mr Sajjan Jindal president of ASSOCHAM said that based on an expert group of 25 real estate firms, found 88% of respondent CEOs sensing a quick revival in the sectoral activity within next 3 months as developer’s strategic shift towards affordable housing and a significant price correction in the housing projects have pepped up the sale of residential property.

As per the Survey, a whopping 92% of the respondent developers considered affordable housing as the most dominating segment to shore up the demand in real estate sector. The policy actions supplementing the robust demand in the housing sector is likely to hold the key for a speedy recovery phase in the sector.

With developers concentrated efforts to target the lower and middle income consumer group during the downturn, 84% of the surveyed CEOs signaled the least impact in the affordable housing segment.

According to the Survey, at a time when luxury housing more than 50%, SEZ 40% to 50%, retail space 30% to 40% and commercial space 20% to 30% were witnessing steep contraction in demand, affordable housing was the single most resilient segment with a minimal contraction of 0% to 10%.

On the policy front, the surveyed CEOs sought single window clearances for all schemes under affordable housing in the line of SEZ clearances to enable fast development of units and achieve the short fall of about 26 million houses at the earliest.

However, a majority of 76% of the ABB respondents viewed the stimuli given to the sector through fiscal and monetary measures as inadequate to help boost the demand to supply scenario. However, of all the measures taken by the RBI and the commercial banks, 64% of the respondent CEOs were of the view that RBI’s allowance to banks to restructure loans to developers has been the most successful in improving the liquidity for real estate sector.

In the present market scenario, 60% of the surveyed CEOs perceived resurgent stock market as the most prominent source of finance to fund the sector’s cash requirement, followed by 28% viewing bank credit as the best viable option. Almost 92% of the respondent CEOs strongly agreed to the need to unify stamp duty on property across all the Indian States. The surveyed developers also sought reduced stamp duty charges to increase revenue and avoid duty evasion.

Among other policy issues, respondents asked for a central regulation body, recognition of real estate sector as industry, further relaxed norms for ECB and FDI along with a need for speedier and hassle free statutory approvals.

The Survey found that metropolitan cities has been the worst affected market segment whereas tier II cities have been seen as the most promising one to boost up the sector as commercial activity moving to these cities and their greater yield has given a tremendous impetus to investment in the these market segments.

Meanwhile, among the 6 metropolitan cities, the financial capital of India, Mumbai has been ranked first as the most saturated in terms of real estate assets followed by Delhi NCR and Bangalore whereas Chennai, Kolkata and Hyderabad were ranked fourth, fifth and sixth respectively.

Real Estate Buyers are ready to come forward to invest if price is right assetventures

Land monopoly is not only monopoly, but it is by far the greatest of monopolies; it is a 

perpetual monopoly, and it is the mother of all 
other forms of monopoly.” 

Said former British Prime Minister Winston Churchill and that’s the sense of power felt by those who hold land. The thinking of Indian developers is no different. They went on a drive to amass huge land banks, only to see themselves in deep trouble when the real estate market slowed. Nonetheless, amidst all the gloom and doom surrounding the sector, they have managed to survive the slowdown. With the successful closure of a number of qualified institutional placements (QIPs), a number of builders have managed to tide over cash flow problems for now. This has turned the tide in favour of the industry. 

Besides, the developers have resorted to measures such as selling non-core assets, cutting down prices, reducing apartment sizes, borrowing from banks, and pledging of shares to keep themselves afloat. Thus it seems that there is light at the end of the tunnel for sector, though the length of the tunnel is still not known. 

Industry scenario 

With a stable government in place, the sector may be in for some pleasant surprises. 

Affordable housing and rural housing are part of the agenda of the new government at the Centre. Leading builders were the first ones to react to this need and launch new projects with prices ranging from Rs 4 lakh (depending on location) to Rs 50 lakh (though not really affordable). 

Both listed as well as unlisted developers such as Lodha Developers , HDIL, Unitech, Puravankara, Omaxe, BPTP and DLF made a foray into affordable and midsegment housing. A recent entrant in the affordable housing segment is the house of Tatas, under the brand name ‘Shubh Griha’. Though it is difficult to arrive at a price point for defining affordability , some of these projects have seen good response from the customers. In fact now a number of private equity players are also keen on the affordable housing segment. HDFC Realty, Red Fort Capital and Kotak PE are believed to be eyeing this segment. 

The story so far 

In the last two months the BSE Realty Index has gained 20% (since 9th March) whereas the benchmark index, Sensex rose by 54%. This surge in the equity market coupled with increased buyer interest has had a positive impact on stock prices of realty companies. The beaten down stocks are again finding favour with investors. Though one still cannot directly say that this will ensure increased sale of units, it reflects the change in investor sentiment about the sector. 

However, it is only the developers with proven track record and construction capabilities that are benefiting from this change in sentiment. 

Sales offices and under construction project sites that bore a deserted look till a few months back are now buzzing with walk-in customers. With a manifold increase in the number of inquiries, it just shows that buyers are willing to come forward and buy as long as the prices are reasonable. This will help them to avoid over leveraged position. 

Since it still continues to be a buyers market, customers are not willing to pay a premium for any under construction property. In fact it is for this reason that ready flats are finding more takers. Builders are thus offering easy payment schemes to instill confidence in the minds of people. For e.g., in some projects buyer needs to pay only 20% of the value of the flat and the rest 80% (through EMI) would start only after the property is delivered . Data shows that new launches with reduced prices and smaller size apartments are seeing higher sales now. Bangalore and Hyderabad registered a low absorption rate (ratio of units sold to units launched) compared with Mumbai, Chennai and Gurgaon because the number of new launches in the affordable segment was low in these regions. 

Financials 

With over 195 million sq. ft of ready and under-construction property in the market and hardly any takers, residential sales are the saving grace. DLF’s quarterly revenue for March’ 09 reported a whopping 73% decline. Following closely were HDIL and Puravankara, with a 63% and 56% drop in revenues. Similar was the trend in net profit margins (NPM). Puravankara’s NPM halved to 21.5% compared to the same quarter in the previous year. For DLF and HDIL it was much worse. Almost three-fourth of their profits have been wiped out. Higher sales of low margin mid housing segment were a cause of this drop in margins. 

Had it nor been for Reserve Bank of India directing banks and financial institutions to help them restructure their loans, most of them would have defaulted on their loan payments. Cumulatively, DLF, Unitech, HDIL and xx have managed to restructure close to Rs 4,100 crore of debt through commercial banks and mutual funds. DLF has repaid 1,700 crore of debt while Unitech managed to reduce its debt Rs 2,000 crore. This has helped them to not only reduce their debt equity ratio but also interest outflow. 

Going ahead 

Given the current scenario, the response to various newly launched projects shows that ‘right price’ has played a key role in their success. Realty prices have been rising since the last three-four years. Places like NCR, Bangalore and Mumbai where prices had gone up by 300%, have seen the maximum correction. Still there are few locations where builders have been maintaining absurd prices because of their improved liquidity position. But this would only lead to piling up of inventory, which will further tighten the cash flow position of the builders. With the approaching rainy season, sales would anyway be subdued. If the industry has to come out of this slowdown, dussehra would be an important time. 

In the six metros, 53 per cent of the 930-million sq.ft (as per Liases Foras) available realty stock is unsold; putting downward pressure on prices and lease rentals. We could thus expect a further 10-15 % correction in prices till Diwali, depending on the location. 

However, it is advisable for buyers to select the property of their choice and budget so that they do not waste useful time in doing the groundwork during the festive season.