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.
Tuesday, June 9, 2009
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.
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.
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.
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.
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."
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