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.

Stir at Gole Mkt over eviction plan

Plans to conserve Gole Market as a heritage building means 27 

establishments located there will now have to shut shop. 


On Wednesday, shopkeepers of Gole Market protested the move to evict them. They claimed they had not been provided with alternative space to shift. The shop owners have demanded that alternative space be provided to them which were similar in size and of same rent as the ones leased out to them in Gole Market. Some of the well known establishments in the area are Galina Restaurant, Gujarat Fishery and Sagar Restaurant. 

"Gole market is a heritage building and we want to restore it. Hence no commercial activity can be allowed there. Even the traffic department has said a market there disturbs traffic circulation besides adding to nuisance value for local residents. We might build a small museum there in the future but giving the market back to the traders is out of question. The traders want a new site at the same rate which is not possible. We have already taken possession of eight shops,'' said a senior NDMC official. 

Said Narayan Shamnani, president of Gole Market Merchant Association: "NDMC had promised to rehabilitate us elsewhere. But now they are asking us to vacate without providing us with alternative space. We will not accept this. We have been functioning from Gole Market for over 60 years now. If need be we will organise a protest march at Jantar Mantar on Thursday.'' 

He added: "In reply to an RTI filed by us, NDMC in 2006 had said it was not dislocating us but proposing to shift each shopkeeper to a vacant plot available in the complex for a period of 54 weeks. Afterwards, we were given alternative spaces to shift out in. But the sizes of shops were so small and these shops were allocated in areas like a subway in Palika Bazaar or Sarojini Nagar, where it is impossible to open up restaurants or meat shops. When we did not accept their alternative, they sealed four shops.'' 

Traders in Gole Market pay anything between Rs 200 and Rs 2000 as rent for prime rental property. Said Raj Kishore Bansal, who owns Royal Store: "My family has been functioning from here since 1937. We can't just be expected to vacate and leave." 

Due to the dilapidated state of Gole Market, the building had been declared dangerous. One of Delhi's oldest surviving colonial markets, it was constructed in 1912 and unauthorised construction along with lack of proper maintenance had led to part of the heritage beauty of the building being destroyed, said NDMC officials. 

Apart from facade restoration, NDMC is also planning interior restoration and upgradation of the surrounding structure. The project cost which was initially estimated at about Rs. 6.31 crore has now escalated to about Rs 8.53 crore

Good NEWS Real estate recovery in next three months: Assocham

ndia's realtors believe the sector will see signs of recovery in the next three months, according to the Associated Chambers of Commerce and Industry of India (Assocham). 
A survey report by the industry lobby said 88 percent of chief executives of real estate firms see a quick revival within the next three months as developers shift towards affordable housing and property prices undergo significant correction. 


The Assocham Business Barometer report is based on a survey of 25 real estate firms conducted between May 15 and May 25. 


The survey report said a whopping 92 percent of chief executives considered affordable housing to kindle demand in the real estate sector, with about 84 percent saying this segment had been least impacted by falling demand. 


It said while the luxury housing segment witnessed a demand contraction of over 50 percent, special economic zones (SEZs) by about 40-50 percent, retail space between 30-40 percent and commercial space by 20-30 percent, affordable housing was the most resilient segment seeing a contraction of 10 percent or less. 


The chief executives called for sought single-window clearances for all schemes under affordable housing, as is done with SEZ proposals, to bridge the shortfall of about 2.6 crore dwelling units at the earliest. 


About 76 percent of the respondents said the stimulus given to the sector through fiscal and monetary measures was inadequate. 


Of all policy measures, 64 percent of respondents were of the view that the central bank's move to allow banks to restructure loans to developers has been the most successful in improving liquidity for the real estate sector. 


Additionally, 60 percent said a resurgent stock market would be the most prominent source of finance for the sector, while 28 percent thought bank credit was the most viable option. 


Hefty funds raised through the qualified institutional placement route in the stock market (exceeding Rs.8,000 crore) along with debt restructuring would allow the developers to address their liquidity concerns. 


Mumbai has been ranked as the most saturated in terms of real estate assets followed by Delhi, Bangalore, Chennai, Kolkata and Hyderabad.

The Nevert Tiring Tata co plans infrastructure, real estate project worth Rs 20k cr

Tata Realty and Infrastructure Ltd (TRIL) on Wednesday announced plans to 

develop real estate and infrastructure projects, worth Rs 
20,000 crore, over the next 
three years. 

In Mumbai, it is set to bid for the second phase of the 36-km Metro rail - Charkop to Mankhurd via Bandra - in partnership with Mitsubishi, the monorail project as well as the proposed Navi Mumbai airport, said TRIL managing director and CEO Sanjay Ubale. 

Ubale said at a news meet that TRIL would also submit bids for the Navi Mumbai railway redevelopment project, the trans-harbour link between Sewri and Nhava and invest Rs 11,000 crore in real estate, including SEZs and mixed development plans across the country. Other investments will include Rs 5,000-crore on roads and Rs 4,000 crore on other infrastructure projects. 

The infrastructure company also plans to redevelop bus terminals in tier-2 cities and set up warehousing facilities across the country. On the real estate front, TRIL is currently developing a state-of-the-art 25-acre IT/ITES SEZ in Chennai. The project, costing about Rs 3,800 crore, will also house an international convention centre, the first of its kind in that city. 

Two other IT SEZs are coming up in Ahmedabad and Hinjewadi in Pune. In Amritsar, the firm has started developing a 7 lakh sq-ft retail complex. In Gurgaon, it is evaluating a residential and mixed used development on a 35- acre plot for the middle income group. 

Ubale said land parcels of Tata group companies in and around Mumbai would be unlocked for development purposes.

To Overcome slow down Realtors eye state's affordable housing plans

Hit hard by the slowdown, real estate players are now going innovative and trying to partner with the government to beat the low demand. Markets cheer election results
Sectors and stocks to look out for
Pick stocks on fundamentals
Five facts on stock falls
Short-term plans are safe bets

Real estate players are looking to tap the 4.33 lakh people, who were not allotted houses in the MHADA scheme and have approached the government with a proposal where they can cater to these potential buyers.

The Builders’ Association of India (BAI), which includes 10,000 real estate players throughout India, has written to the chief minister of Maharashtra requesting him to appoint MHADA and CIDCO as the nodal agencies for carrying out projects under the controversial Slum Rehabilitation Authority (SRA) scheme. Only 3,683 of the 4.33 lakh applicants were allotted houses in the random selection on Tuesday.

In a letter, a copy of which is with ET, BAI asked for MHADA and CIDCO to be appointed as the “official agency for development” for executing SRA projects. “These agencies could offer free rehabilitation component houses to slum dwellers by constructing multi-storied building as already provided in the SRA,” the letter added.

“While, on one hand, there is a low demand due to the slowdown, there are over four lakh buyers, who are willing to shell money to buy houses,” said Anand J Gupta, general secretary, BAI.

Under the BAI proposal, the government and the real estate players can come together and form a JV and accommodate these potential buyers. If the proposal is accepted, it is believed that the real estate players, who are going through quite a rough patch for a while now, would tend to benefit.

Good News Real estate market could recover by Diwali

After a long time we are witnessing real estate developers taking pride in reducing or slashing rates in Mumbai, Thane and Navi Mumbai to encash on
the existing demand in the real estate market.

The good deals may be offered for a few weeks or for the first ten properties or for a killer deal for a time-bound two days or similar schemes but yes, the writing is clear on the wall that the willingness to connect with the "real" pricing has dawned on the developers to sell at reduced prices to encourage more and more sales.

With the new UPA government there are a lot of hopes and it will be interesting to see how the next few months unfold for the property market. We still need a great deal of transparency to be infused in the way we deal in the property market.

The sales teams in the builder/ developer offices are at their all-time creative best with sales tactics. This is also a good sign and a dawning that if the wheel stops there will be a crisis of sorts of the kind witnessed earlier this year, when sales plummeted big time.

They now understand clearly that with buyers unwilling to relent on unrealistic pricing, there is an even greater need to price competitively, maybe with a lower profit margin, than holding on to the price and project as the interest meter runs. The mantra for developers in the present times, I guess, is to be aware of the markets (realistic demand and supply) and the competition, which the buyers know today.

For a buyer to understand the market more clearly before making a decision, he/she must understand at which juncture the market is hovering; also, with fresh developments in the political arena, what the impact will be in coming months. An important point to note would be that, yes, there has been a correction up to 15 to 30% already in the market post December 2008 and prices have come to September 2008 levels, which were already high in any case and up on account of the festival demand which happens nearly post monsoons by default.

After a correction, slowdown, or a 30% reduction, one should not expect the markets to gallop again, but the next couple of years at least will be stable, as after a correction you cannot go up again quickly. With a stable government we can expect more rational policies but a stock market kind of jerk in prices will be unrealistic in the property prices and may be termed speculative. Let us be sensible for once; just when things have just started moving a little, let us not think of killing the golden hen and taking out all eggs at one time.

A good 2BHK in the suburbs is not less than Rs 6 to 8 million, which is not cheap by any standards. Our city still does not have the appropriate
infrastructure to support high pricing in the suburbs, especially with connectivity issues , and with a lot of developers under a liquidity crunch it is essential to send out the right signals. The buyer today is under tremendous pressure even when it comes to documentation and with many banks tightening the belts on approvals , it is essential to invest in a project which offers 100% complete paperwork.

All of us know that with the archaic legal systems we live in, there are always loose ends somewhere and this is one area all developers should focus on. Nearly 78% of buyers in today's market would opt for a loan to procure the new property and most would prefer a loanto-value ratio (LTV) of around 80-85%, which typically means that if the title is not clear and transparency of the paperwork is missing, the deal will not happen.

The uncertainty and fear factor still weighing heavily on a buyer's mind gets manifested in the fact that 59% of respondents on a survey would like to buy only a ready possession property or a property nearing completion as past trends have shown delays in construction.

With the current economic slowdown, they are more concerned today about possession timelines. Only about 20% home buyers are keen to invest in properties at their launch stage at attractive prices, and even that, only of selective developers who have a track record. This is as per a survey that a leading bank conducted after the recent Thane exhibition. The developers need to work very hard to win this confidence.

In order to capture the client who is looking to buy a home in today's market conditions, one should look at microanalysis on both demand and supply first. The maximum demand is in the price range of Rs 40 lakh, going up to the Rs 1 crore bracket, and that too, for ready-to-move into homes.

Looking at the buyer's mind, if he is looking at Malad, he wants to try to find a house in Andheri, or similarly, if he is looking at Navi Mumbai, he wants to experience Chembur or Ghatkopar or any other location where he can compromise and get it within a particular price range.

Of course, when he is out on the field he wants to know if rates have bottomed out in the location, project or surrounding location. This typically means a delayed decision of the informed buyer; from the time he puts together his first potential shortlist, it can easily be a period of a month or two. If builders start telling them they will increase prices, they will go to the nearest competitor. In a buyer's market, they know they can pit one against the other.

The coming weeks will be interesting, with stock markets climbing, recession clouds disappearing and the hopes that the new UPA government will bring in fresh policies for the housing industry. With all this, there is a strong chance that there may be a great deal of movement during the Diwali period.

The cycle had slowed down in Diwali 2008 and can come back with a bang September 2009 onwards, but this depends on prices being stable. It may be an opportune moment through the end of the year to sell as much and increase liquidity and focus on new projects. So, let us hope with this competition, the buyer encashes.

The Views Expressed are Personal and not guaranteed

US firm REMAX forays into India as india is seen as best option for real estate investment

US-based realty brokerage firm REMAX has forayed into India aiming to tap potential offered by middle-class families in the country, with
its business in America hit by the ongoing slump in the property market.

"Our business in the US is down by about 20 per cent in last 18 months...India is strong market and the strength of middle-class families are increasing day-by-day. These families are expected to be actively involved in property transactions," REMAX Senior Vice-President (International Development) William E Soteroff said.

Apart from newly developed properties, the company would also deal with secondary sales, he said, adding, "We will also try to organise the disorganised property brokerage business here".

"We have already appointed the master franchisee of India and he will now appoint 30-35 regional owners representing all the states. These regional owners will finally appoint the broker associates for the ground level operations," Soteroff said.

He noted that the company would mainly offer brokerage service in residential segments.

Soteroff said the country has a potential to have about 20,000 broker associates under REMAX in the next 5-10 years.

One of The Major Real Estate Co Unitech sells Saket office for Rs 450 cr

India's second-largest real estate firm Unitech has sold its office building in Saket, New Delhi, for around Rs 425-450 crore to an
unnamed property investor, following over six months of negotiations with several prospective buyers.

Unitech MD Sanjay Chandra said the deal amount is over Rs 500 crore, but didn't disclose the buyer's name. People familiar with the negotiations said the buyer is a Delhi-based industrialist, who plans to lease out spaces in the 2-lakh sq ft building to other companies. They said the deal amount is between Rs 425-450 crore. The building is ready and was earlier supposed to house Unitech's corporate office, which is currently in Gurgaon.

Unitech had been expecting more than Rs 500 crore for the office building and was earlier in talks with HDFC to sell it. The financial institution has in the past denied holding talks with Unitech on this but had said the Saket property was mortgaged with it as collateral for a loan worth Rs 30 crore given to Unitech. The downturn in the real estate sector and extraordinary level of debt that Unitech had piled on its balance sheet forced the company to put several of its assets, including the Saket office building and the Gurgaon hotel, on the block late last year. The downturn made it difficult for Unitech to sell its properties.

After several months of negotiations with several buyers, the company had sold its hotel in Gurgaon for Rs 231 crore to a car dealer Roop Madan early this year.

Unitech had a total debt of Rs 10,000 crore, as of December quarter and found it difficult to keep pace with its repayment schedule. Loans due to several banks and mutual funds were restructured, after Reserve Bank of India allowed restructuring of commercial real estate loans.

As part of its deleveraging process, Unitech also went in for a qualified institutional placement (QIP) to raise around Rs 1,600 crore last month. The company has now announced that it aims to raise further equity in the company to improve its debt to equity ratio which helps in bringing down the cost of funds for the company.

Unitech will also issue warrants to the promoters who plan to pump in Rs 1,000 crore in Unitech to raise their stake, said a company executive on conditions of anonymity. The holding of Chandra family has dropped from 64% to 51% post-QIP.

Dubai Major Real Estate Co Plans Offices in Metros

Sherwoods Independent Property Consultants is to open an office in New Delhi this summer as investor appetite grows amid a shortfall of four million residential units in the Indian capital. The Dubai-based real estate adviser, which has three offices in UAE as well as a strong presence in Europe, predicted on Tuesday New Delhi will have a buoyant housing market with rising demand among the burgeoning middle class as India’s economy booms. Sherwoods estimated that there is a supply shortage of around four million homes in the capital. Puniet Singh, CEO of Sherwoods Independent Property Consultants (India) Private Limited said: “Sherwoods is targeting all metropolitan cities in India, including New Delhi, Mumbai, Kolkata, Chennai and Bangalore as well as tier-2, urbanised cities such as Hyderabad, Pune, Chandigarh, Gurgaon and Noida.”

As well as showing signs of recovery from the global crisis, interest rates in India have from fallen from 11.5 percent to 9.25 percent, making mortgages cheaper. The Indian economy is likely to grow at 6.6 percent in the current fiscal year on the back of new investment proposals, economic think-tank Centre for Monitoring Indian Economy (CMIE) said in a report on Tuesday. “We believe this is a highly favourable time for real estate investments as India is now showing strong signs of recovery and opening excellent opportunities in the mid to long-term horizon,” Singh continued. “India’s resiliency is of particularly strategic importance because growth has levelled out in other major global markets, putting India in the spotlight as a new prime destination for real estate investors.”

Right Time to Buy house, don't rent - message from the housing sector

The economic slowdown has hit home sales and sent prices plummeting. The flip side: home rents have shot up.
Rents went up by around 30 per cent in major cities, including Delhi and the national capital region (NCR) last year, as more and more consumers, hit by the slowdown, preferred living in rented houses to investing huge sums to buy properties, industry officials said. "The slowdown has fuelled the rental market. On an average, the residential rental has gone up 30 per cent in the last one year in Delhi and NCR. In many areas, it went up even 50 per cent," Rajesh Goenka, chairman of Axiom Estates, the London-headquartered provider of property services in India, told reporters. Added Pradeep Khanna, chairman of Khanna Properties, a west Delhi-based brokerage firm: "The rental for a normal two-bedroom set in Delhi and NCR was about Rs.7,000 per month one year back. However, today it is very difficult to get a decent two-room set on the same rent even in remote localities." According to industry officials, the high cost of properties and slackening supply of houses have fuelled rentals in Delhi. "People need a house to live in, and not everyone can buy one. With prices still beyond the reach of a large section of the middle class, staying in rented accommodation is the only option left," Goenka said. "Even the potential buyers are on a wait-and-watch mode now." Priyanka Prasad, a jewellery designer, echoed similar views, saying she had to shift home from north Delhi to west Delhi because of high rents. "I was paying Rs.7,500 for a two-room set in the Kamla Nagar area in north Delhi. However, this year the landlord asked for Rs.12,500. This was out of my budget, so I shifted to Dwarka, where I got a similar house for Rs.8,500," Prasad said. The trend in the housing rental sector is just opposite to the commercial and official rental markets, where prices fell 30 per cent last year, according to reports by global real estate consultant Cushman and Wakefield. Sameer Nayar, managing director and Asia Pacific head of the real estate unit of Credit Suisse, said supply was more than the actual demand in the office rental sector. "Office rentals are going down because the supply is more than the actual demand. However, in the residential property sector, the demand is much higher. Naturally, the rent will go up," Nayar said.

Great News Demand OIf Real Estate on Rise Demand begins showing up in India again, say real estate firms

There is a surge in buying interest in all-inclusive ‘affordable’ flats being built for mid-income budgets
The BSE Realty Index surged the most on Monday as the Bombay Stock Exchange Sensex hit the upper circuit for the first time. The 14-stock index closed 23 per cent higher at 2,968.75, rising around 37 per cent over the last month.However, it is still around 63 per cent lower from last year (April 16, 2008). On Monday, the broader market index, Sensex, closed 17.34 per cent higher at 14,284.24 points. Analysts and firm officials are upbeat about the revival of the realty sector. They say if fundamentals such as credit market situation, interest rates and housing demand improve further, there can be a faster revival.“The real estate sector will see a revival faster than what was envisaged earlier. But the rise in stock prices, too, has been swift. The sector always lags behind the stock market in terms of time lines,” said Ambareesh Baliga, vice-president and research head at Karvy Stock Broking.“We can expect a revival in the real estate sector now because a lot of policy directives, including approval of external commercial borrowings, special economic zone status, FDI (foreign direct investment) in real estate, lower interest rates and overall availability of credit to the real estate sector, may happen,” said Amitabh Chakraborty, research head, Religare Securities.Real estate officials that Financial Chronicle spoke to are confident that the worst is behind them and that they are hoping to see better days ahead. “The market is likely to see fresh liquidity infused in the system after a prolonged downward swirl. The real estate index performance on Monday also suggests that the suitable time to make real estate purchase has arrived,” said Rajesh Vardhan, managing director, Vardhman Group.Rajeev Talwar, executive director, DLF, said a stable government is good for the revival of the real estate sector. “There is urgent requirement for urban housing reforms. There is humungous requirement for housing for people. Rules and regulations should not put more constraints on fresh supply hitting the market,” said Talwar. However, some analysts say Monday’s performance may not be sustainable in the long-term because the fundamentals of the real estate firms and the economy have not changed much.“Lot of shorts have built up in these companies and they are still not covered. Even their futures are trading at a discount. Hence, I think the companies are not going to have any immediate benefit (out of this market rally),” said Priyadarshi Srivastava, head of sales, IDBI Capital.

Jai Ho Congress Return OF UPA ALso Boosts Real Estate Sector

UPA’s return to power, that too with near total majority, has brought smiles on the faces of people associated with real estate and industry sectors in the Tricity. They feel that the Congress-led government would now be in a position to take some radical decisions for revival of the economy, which would affect both real estate and industry sectors. As slowdown has affected industry and real estate business in Chandigarh, Panchkula and Mohali, now people associated with these two sectors are expecting revival of economy in the next few months. As UPA allies like Rashtriya Janta Dal, Lok Janshakti Party and Samajwadi Party have been marginalized this time, industrialists and real estate developers feel this would give a free hand to Congress-led UPA to take some radical decisions including foreign investment for the revival of economy. MPS Chawla, president, Chandigarh Industries Association, said that stable government in the Centre would improve the economy. He said that as government would not have any undue pressure, economy would witness upward trend in the next few months. To revive the economy, government should announce special package for the small scale industries and trade sector, he said, adding that currently industries and real estate sectors are worst affected, which needs immediate relief. He demanded that government should slash interest rates. Vishnu Goyal, general secretary, Haryana Chamber of Commerce and Industries, said that a majority government is a good sign for the economy as political stability would ensure faster revival of the economy. He said there are around 400 small scale industries in Panchkula which needs immediate relief package as slowdown has affected them. Real estate sector in Mohali is already witnessing slump due to slowdown as construction of houses is more than their demand. To attract buyers, developers have already announced various sops including discount between 40 to 50% in a hope to revive the ailing real estate market. Vijay Arora, president, Peermuchhalla Builders Association, said that they expect UPA government to announce real estate policy which would revive the market. He said that the market is in a bad shape due to recession and higher rate of loans. Stable government in the Centre would bring stability to the economy, he added

Indiabulls Real Estate latest developer to tap QIP route

The real estate arm of the Indiabulls group of companies has announced plans to raise money through a share sale, becoming the third real estate developer to raise money through this route in recent weeks.

Equity issue: An Indiabulls office in Mumbai. The company has informed BSE that its shareholders have approved the stock sale. Prashanth Vishwanathan / BloombergWhile the company didn’t specify what the funds would be used for, an analyst said it could be for its power business.
Indiabulls Real Estate Ltd, India’s fourth largest real estate developer by market value, plans to raise up to $600 million (around Rs2,900 crore) through a qualified institutional placement (QIP), the company said in a statement to the Bombay Stock Exchange (BSE) on Monday. The QIP, or sale of shares to investors such as banks and financial institutions, opened on Monday.
Indiabulls told BSE that the company’s shareholders have approved the QIP issue. The company didn’t disclose details of the number of shares it plans to sell or the price at which it would do so.
Morgan Stanley is lead manager to the issue. The allotment of the shares will be made around Friday, according to the draft prospectus submitted by the company, and which can be seen on the National Stock Exchange’s website.
This is the third instance of a real estate company raising funds through an equity issue in recent times.
On 16 April, Unitech Ltd, India’s second largest developer by market value, managed to raise as much as $325 million in a QIP to repay debt and fund projects.
Last week, DLF Ltd, India’s largest developer by market value, said its promoters had sold a 9.9% stake in the company for Rs3,860 crore, to raise money to buy out hedge fund DE Shaw and Co. LP’s investment in DLF Assets Ltd, also promoted by them, and to infuse fresh capital into this company.
“I think more such issues are likely,” Vedika Bhandarkar, managing director and head of investment banking, JPMorgan, had said at the time of DLF’s share sale. “When the volatility was very high, investors were unwilling to put their money to work. Now, that has changed. They are willing to put money if they understand it is good for the company. Investors are focused on large stocks.”
An analyst said Indiabulls would use the proceeds of the QIP to fund its power projects in Maharashtra and Chhattisgarh.
Indiabulls Real Estate has a 71% stake in the group’s power business.
“The company, according to is draft prospectus, has only around Rs1,000 crore of debt. So it does not look likely that it is raising funds to repay debt like most real estate developers are doing,” an analyst with a domestic brokerage firm who did not want to be identified said. “I think even this debt was taken for their power business and not their real estate business.”
Indiabulls’ officials were not available for comment on Monday.
Indiabulls plans to develop power plants in Amravati and Nashik in Maharashtra and Bhaiyathan in Chhattisgarh.
In February 2008, Indiabulls Power Services raised Rs1,600 crore from steel czar L.N. Mittal and hedge fund Farallon Capital Management, through the sale of a 37.5% stake.
Shares of Indiabulls Real Estate soared 38.51% to close at Rs205 per share on the Bombay Stock Exchange, in the few seconds for which trading was allowed on Monday before being suspended for the day because the exchange’s benchmark index breached the upper circuit level.
The Sensex ended the day 17.34% up and the BSE Realty Index, up 23.45%.