Real Estate: Buyers willing to come forward at the right price

“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.
http://economictimes.indiatimes.com/Features/Investors-Guide/Property-market-on-a-high-rise/articleshow/4601877.cms

Original Booking in Mantri Celestia Hyderabad By Affinity Solutions

Hyderabad Property/Hyderabad Apartments/ Hyderabad Flats/Mantri Celestia Hyderabad/Hyderabad Real Estate Property Dealer/Hyderabad Properties/ Hyderabad Bangalore/ Hyderabad Apartment/ House for Sale Hyderabad/ Mantri Celestia Gachibawli Hyderabad

Mantri Celestia Gachibowli Hyderabad
Mantri Celestia is for those who are looking for homes that combine elegance with functionality, superior design with quality construction, and luxury with economy. Celeste by Mantri is spread over 11.5 Acres of land in Gachibowli, 7.5 acres for residential and 3.5 acres for commercial. Spread over7 towers, G+23 floors, premium locality of Gachibowli Hyderabad.

Location of Centrum Park Gurgaon
Mantri Celestia Wipro Junction, Gachibowli Hyderabad.

Common Amenities of Centrum Park Gurgaon
Gymnasium, Health club,Steam Room, Sauna, Table Tennis Room, Indoor games, Aerobics hall, Super market, Ladies & gents Parlour, T V Room, Squash court, Space for Crèche, Multi purpose hall/Party hall, Billiards room, Outdoor Amenities, Swimming Pool, Landscaped Garden, Children play area, Senior citizen’s area, Jogging / Walking Trail, Tennis courts, Basket Ball post, Outdoor Exercise Area.

Type Size & Price
Types-------Size(sq.ft)----Price INR(sq.ft)
3 BHK----------1198-----------2590
2 BHK----------960------------2725
2 BHK----------965------------2725
2 BHK----------970------------2690
2 BHK----------980------------2725
3 BHK----------1198-----------2725

About Mantri Developer
The speed, at which Mantri Group have journeyed in this industry and the incredible volume that they have built, is a sign of the deep passion and expertise that they have in Real Estate. With a track record of delivering 1.4 homes everyday since inception on time. Mantri Group has further diversified into Retail, Hotels, IT and premium housing townships all over South India. Industry leaders state this is the fastest growth achieved by any developer in the field of Real Estate in India.

About Affinity Solutions (P) Ltd
Affinity Consultant is a Real Estate Consultant in India operating since last 10 years. A.K. Jain heads a team of dedicated professionals with more than 10 yrs of experience in real estate services handling the entire project in India. Affinity Solutions (P) Ltd. is a paramount name among Indian real estate consultants and service providers with all leading brands likes DLF, Parsvnath, Ansal, Omaxe, TDI, Unitech, Emaar MGF etc.

For More Information Contact
AFFINITY SOLUTIONS (P) LTD
Mr. Dependra Nath - 9603649027
Mr. A.K.Jain – 9811159064
16469150050 (US), 442030516831 (UK)
http://www.affinityconsultant.com
affinitycredit@yahoo.co.in

Retail real estate struggles to survive

Pune retailers are unable to expand due to liquidity crunch and subdued demand, hampering development of malls

Retail real estate in Pune, which was hitherto a hot property, has started losing its fizz. Cash crunch, falling growth numbers and subdued demand are taking their toll on thesectors. It’s the ripple effect at its worst. Retailers are not able to expand their presence, which, in turn affects mall development.
“Owing to volatile market conditions, insecurity of jobs, there has been a decrease in the number of footfalls in the malls in Pune. The footfalls also vary from location to location and depend on the new schemes introduced from time to time to attract customers,” Kishen Milaney, property consultant, Kaypee Shelters, told FC Estate. Also, during the present uncertain times, even those who do visit the malls do not necessarily end up buying things, he added.
The city, according to him has about 60 business locations in the heart of the city, as well as in the newly developed residential zones and IT parks.
“About 20 to 30 malls of various sizes are in the making. It is not clear how many will be completed as some are looking for better brands. Some may even change hands,” Milaney said.
Big Bazaar, which has six stores of various sizes spread across Pune, says luxury items like furniture and electronic goods had taken a hit.
“Today, there are many malls being planned — however, due to the economic slowdown, we expect many of these to see only partial occupancy until things improve,” said Anand Dutta, head (retail) Pune, Jones Lang LaSalle Meghraj.
However, the real estate developers are pinning their hopes on the IT sector and believe that the fact that Pune, as a traditional automobile manufacturing hub, will continue to provide impetus to the city's retail realty sector.
Over the past 3-4 years, Pune has seen considerable growth in the IT sector, placing it close behind Bangalore and on par with Hyderabad. In the same period, the retail sector has ramped up to introduce a number of malls in response to the increased spending power and demographic changes.
There are about six under-construction malls, each measuring over 5 lakh sq ft. At present, Pune's retail-scape accounts for approximately 5 million sq ft.
There are about four-five townships of over 100 acres each planned in the city, and retail would be an inherent component of each of these. The scheduled townships will open up new frontiers, as will the proposed international airport.
Manoj Singh, store manager of Big Bazaar in Fatimanagar, is upbeat. “The footfalls have increased by 20 to 25 per cent in March 2009 compared with March last year. For example, on March 27, Maharashtra’s New Year’s day, we had a full house and did good business. On weekends and the first week of every month, we still attract good clientele,” he said.
http://www.mydigitalfc.com/real-estate/retail-real-estate-struggles-survive-293

Foreign investors in real estate locked for 3 years

NEW DELHI: Foreign investors
in Indian real estate cannot sell their stakes to another foreign investor before three years,With this, FIPB has overruled a provision in FDI policy that exempts foreign players from the rule in cases where fund
transfer is from one non-resident to another. Till now, this three-year lock-in was applicable only on foreign investment in real estate and not on investors.

The FIPB view is contrary to the stand taken by the department of industrial policy and promotion (Dipp), the nodal agency that formulates FDI rules in the country. Dipp’s view is that a foreign investor can repatriate funds if it offloads its stake to another foreign investor as the actual investment in a project would remain intact and only its ownership would change.

"Though Press Note 2 of 2005 has an enabling clause to permit sale of investment between two non-residents before the end of lock in, it has not been allowed so far,” an official in the commerce & industry ministry said.

The issue came up in the last FIPB meeting, when the board took up private equity fund 2I Capital’s request to sell its investment in Delhi-based real estate firm Uppal Housing to Mauritius-based fund ICP Investments.

The company had sought approval for transferring 1.9 crore shares in the Indian real estate company to the Mauritian company. According to the company’s proposal, the fund transfer involved no repatriation of funds but physical transfer of shares from one investor to another.

Though Dipp had recommended giving permission for sale of 2I Capital’s shares to ICP Investments, FIPB rejected it. Dipp argued the sale of shares was permissible between two non-residents within the lock-in period , but FIPB rejected it.
http://economictimes.indiatimes.com/Markets/Real-Estate/Foreign-investors-in-real-estate-locked-for-3-years
/articleshow/4312054.cms

India Developers Face Risk of Cancellations, Credit Suisse Says

-- DLF Ltd. and other Indian developers are cutting prices on increasing risks that buyers will back out of purchases made at the market’s “peak,” forcing developers to write off earlier profits, Credit Suisse Group said.

DLF, along with Parsvnath Developers Ltd. and Orbit Corp., have more than 20 percent of their revenue booked since 2006 as outstanding, Mumbai-based analyst Anand Agarwal wrote in a report today. The company, India’s largest real-estate company, has lowered prices for a project in Chennai by as much as 14 percent, the report said.

“Wherever possible, customers are looking to walk out of transactions entered at the peak of the real-estate market,” Agarwal wrote. “Many real-estate companies have recognized revenue on percentage completion against future cash inflows on contracted sales. Some of these transactions could be canceled, leading to write-offs.”

The Bombay Stock Exchange Realty Index has dropped 36 percent this year, compared with an 8.6 percent slump on the benchmark Sensitive Index. Home sales in India have tapered as the global financial crisis and slowing economic growth reduced the availability of home loans and hurt spending.

DLF will cut prices in new projects over the next three months to revive a slump in home sales, Vice Chairman Rajiv Singh told reporters on Feb. 2. The developer reduced prices at a project in Bangalore and Hyderabad, according to reports in the Business Standard this month.

Outstanding debts at DLF amount to about 38 percent of its total revenues between the 2006 and 2009 fiscal years, while Parsvnath and Orbit have ratios of 29 percent and 20 percent, respectively, Credit Suisse estimated.

Worst Performer

DLF has dropped 44 percent this year, the worst performer among the 30 companies making up the Sensex. Parsvnath has retreated 26 percent during the same period, while Orbit has lost 32 percent.

A rebound in Indian developers may only take place in six months’ time, when signs emerge that asset prices are halting their slump and as liquidity recovers, Macquarie Group Ltd. said in a report today. The Reserve Bank of India reduced interest rates to an unprecedented low on Jan. 2 and Governor Duvvuri Subbarao said on Feb. 18 there’s “certainly room” to lower rates further.

“This is a tough time for the real-estate sector because of tight liquidity and slowing sales,” Macquarie analysts Unmesh Sharma and Gautam Duggad wrote. “Stocks remain under pressure due to the lack of visible triggers in the near term.”
http://www.bloomberg.com/apps/news?pid=20601091&sid=awM55fELjLxY&refer=india

A futures contract on real-estate?

Nupur Pavan Bang

“Why don’t we have a futures contract on real-estate to hedge the risk of land prices going down?” asked Rahul, a quiet but sharp student. Professor Nicky was taken aback by his question. Where most of the students in her class had difficulty understanding the basic concepts of hedging, this young boy was asking about an instrument which was, well, not so simple, to say the least.

Professor Nicky turned the question to the class to test how much the class knew. And she was in for a pleasant surprise. There were a few hands in the air.

Rachna: “It will be difficult to introduce real-estate futures because the valuation of the underlying product would be difficult. The real-estate market in India is highly fragmented. The prices of land differ widely based on factors such as location and usability, that is commercial, industrial, residential or agricultural”

Praveen added: “Besides, such a market would be very illiquid in India as only prime commercial and residential properties would probably be traded.”

Index of prices

“But, what is the problem here?” interposed Rajshree. “Can’t we create an index of real-estate prices? Just like we have stock indices? We can club the properties belonging to a particular city according to property types”.

Professor Nicky saw a few perplexed looking faces and decided to intervene even though she was happy with the way the discussion was proceeding. She took over from where Rajshree had left.

“See, just like we have an index for FMCG companies or IT companies or banks, similarly, we can create an index of real-estate Prices. Of course these indices will be city or region-wise indices. We would need to determine a base year”.

“Since it would be very tiresome to include all residential property transactions in the index, we take transactions that are above a minimum amount of, let’s say, Rs 25 lakh. Now we can take a weighted average of all the transactions on a weekly or a fortnightly or monthly basis to find the changes in the index.

“However, the index may not give a true and fair picture as the recorded value of these transactions with the government is generally very low to save taxes. But then, it will still be better than having nothing. And slowly, as we move ahead and learn, the issues of heterogeneity and pricing will be sorted out”.

“Ah! If I recall correctly, Chicago Mercantile Exchange and Chicago Board of Trade have such futures traded on such contracts for cities such as New York and Los Angeles. In fact, they also have futures contracts on Real Estate Investment Trusts” exclaimed Richa.

“The students have really started reading,” thought Professor Nicky. “With the job scenario being bleak, many students have become serious and are trying to read more so that they can have an edge over their batch mates in an interview”!

Benefits of futures

“Yes, both the US and the UK have real-estate futures traded on their commodity exchanges for most of the major cities in the country. But can somebody tell me what the benefits of real-estate futures are?” asked Nicky.

Before Nicky could point towards a raised hand, Rohit rattled off, “Hedging for investors and builders, diversification, price discovery, increased information availability and flow, investment tool…”.

“Okay…okay…enough…so all of you are aware of the benefits of real-estate futures. But who has heard of the London Fox?” Thankfully no hands went up this time. Nicky was almost beginning to feel that she was not required in the classroom at all as the students had answers to all her questions.

Keeping them at bay

“London Futures and Options Exchange (FOX) started trading in four property futures contracts in May 1991 and had to suspend trading in October 1991. The reasons were mainly that these contracts were not economically viable. Arbitrage was not possible as short-selling is not allowed in the underlying spot market, which is true in India also.

“Also, the housing indices for various cities would be highly dependent on each other, albeit with lagged effect, due to the cascading effect in the real-estate markets. The transaction costs were also huge, which kept the investors and hedgers at bay.

“Hence, before introducing these futures, the government will have to do a lot of ground work to ensure that they work efficiently and provide the desired benefits to investors and hedgers”.

The class looked satisfied. Everyone had contributed something and everyone had learnt something new. Nicky looked proudly at her students and called it a day.

(Praveen, Rachna, Rahul, Rajshree, Richa and Rohit are students of IBS Hyderabad, class of 2009. Nupur is an Assistant Professor of Finance at IBS Hyderabad.)
http://www.thehindubusinessline.com/iw/2009/02/01/stories/2009020150471400.htm

UTVi presents the Real Estate show - about property investment

With the economic meltdown, there has been a debilitating effect on property in many major cities. Keeping in mind the instability and the depreciating value of what was once thought of as the best source of investment.

Does property as a means of investment loose its value?? These debates throw up questions like HOW does one search and invest in residential property and how does one guard himself from defaulting real estate dealers.To answer all the above, in the first segment of this week's episode of REAL ESTATE, UTVi's experts will guide Feroz Shaikh in his search for property in the IT city, Hyderabad followed by a session on quick investment tips for residential property by Shobit Aggarwal from Jones Lang La Salle - Mumbai, a Global Real Estates services firm.Moving on, the real estate experts of our channel will give details on the best and most affordable options in Bangalore while our expert property lawyer Sujoy Kumar will analyse the case of Anjali Bhardwaj and suggest ways of getting 100% money back from the defaulting builder of the Zirakhpur project.Further on, the show will also focus on 'budget homes' and will do a reality check on the Vasai-Virar stretch in Mumbai. And lastly, our Architect Sonali Rastogi will show practical yet easy ways of revamping small basement space into an efficient office area.

A must watch for all the people who have been struggling for space and looking for accommodation around the country. To get your update on the essential know-how before you think of investing your precious time and money in buying a house, tune in this Saturday 24th January at 9 am only on UTVi!http://www.maaproperties.com/Pages/ModuleContent.aspx?Module=News

At Maa Properties, we have in-depth knowledge of property markets, extensive experience, specialized skills and resources necessary to provide an entire range of reliable and responsive property management services. No matter how far away you are currently located, our online services enable you to take charge of things and efficiently handle all property-related transactions back home.

We would like to take the opportunity to welcome all the community members living world wide to our real estate portal.(NRI)For More Information about Real Estate Hyderabad, India visit: http://www.maaproperties.com/
http://www.newdesignworld.com/press/story/7517