Is it the exact price for the property? Perhaps this is the question that keeps on creeping in people’s mind ever since they make up their mind to buy or sell a property. So it is important to spot the right price for making a successful real estate deal. There are certain things which every one should keep in mind to arrive at the decent levels of property-valuation and deal are:
1. Excellent roads in the border of and within the society add value to the property.
2. Value depends on the profile of the locality where the property is located.
3. Connectivity with transport equally important for buyer’s point of view. In fact, property in surrounding area to these facilities makes sound investment proposition.
4. People avoids locality that are nearer to riot prone area or communally polarized.
5. Not to mention, green atmosphere, civic facilities like safe drinking water, continuous power supply and proper drainage system are the first choice of the buyer.
Australia investment bank manager Babcock & Brown hopes to invest in $2 billion of Indian property and infrastructure assets within three years and has poached nine investment bankers from ABN AMRO for the task.
Mr. Jaginder Singh Pasricha, executive director for business development in India, told Reuters the infrastructure specialists he pinched from the Dutch bank had started their fund on Monday.
Pasricha has spent the last year formulating a strategy for spending up to 40% of a $1 billion Asia infrastructure fund. This week he put together a new team in one fell swoop.
He said,”We know we’re the new boys on the block”.
The new Babcock & Brown team will approach Indian companies building roads, ports, airports and power plants.
Further he said,”We’d look to partner companies with some existing expertise with infrastructure”.
He added, “It could be a contractor with a few projects who needs a bit of hand holding and, if possible, a bit of capital”.
Investors have been increasingly drawn to Indian infrastructure as the government estimates about $500 billion will be needed to build new roads, airports and power plants by 2012 to keep pace with a fast-growing economy.
‘Affordable homes business’ is going to be the next big trend in Indian real estate sector. Global private equity firm Warburg Pincus will invest $75 million in Unique Affordable Homes Pvt Ltd, part of the Jaipur-based Mannat Group company. The company will build affordable housing projects in North and Western India. In its first pure play real estate deal in india, Warburg Pincus will provide an initial equity line of up to $ 75 million to the venture. The deal was facilitated by Asipac. AZB & Partners provided legal advice to Warburg Pincus, while Chir Amrit Law Chambers assisted Unique Builders on the transaction.
Unique Builders, since its founding in 2003, has completed nine real estate projects – four residential and five commercial projects – mostly in Rajasthan. The company has a large land bank in Jaipur and its surrounding areas, and it plans to launch more projects in the residential, corporate/commercial and township sectors.
Unique Builders is now venturing into affordable homes with modern amenities on a large scale. The first of such projects under this joint venture with Warburg is MyHaveli @ Mannat-1, a 3,510-condo multi-family high-rise community project on Ajmer Road, which was launched in November 2007. The venture intends to invest approximately $150 million in this seed project. The company also has similar projects on the drawing board at two other locations in Jaipur, as well as in a number of other cities across Rajasthan, according to a release.
The firm’s past and current investments in India include Bharti Airtel (formerly Bharti Tele-Ventures), Ambuja Cement, Alliance Tires, Dainik Bhaskar, Gangavaram Port, Housing Development Finance Corporation (HDFC), Havells India, Kotak Mahindra, Max India, Moser Baer, Nicholas Piramal, Punj Lloyd, Lemon Tree Hotels and WNS Global Services.
Ahmedabad-based realty player JP Infrastructure Pvt Ltd (JPIPL) is in initial phase of talks with a foremost PE fund to raise around two hundred crore. The company is also planning to come out with an initial public offer and had selected Cushman & Wakefield in December preceding year for valuation of its assets.
According to a source the realtor is seeks to divest about ten per cent. The company will have 6 months to one year time to come out with an IPO while making way for the PE firm to exit. In the meantime, it is planning a big township project in Ahmedabad, retail malls in Vadodara and Surat, corporate park in Lower Parel in Mumbai.
Mutual fund (MF) houses are rejoicing the securities and exchange board of India’s decision to allow MFs to launch real estate schemes. In fact, they have been waiting for almost two years to get the nod from the stock market regulator. For late comers, you don’t need lakhs or crores of rupees to invest in real estate anymore. You can buy a share of the pie with few thousands, just like you do in any other MF scheme.
How does it work? The MF will collect money from people like you and invest it in realy and related assests as per Sebi norms. The units will be listed in the stock exchange and, just like any scheme, the net asset value of the scheme will be declared everyday. That means, you can track how much your investment has grown on an everyday basis.
That was for the concept? But is it such a great news for individual investors? Mr. Suresh Sadagopan, Ladder 7 Financial Planners chief financial planner, says, “The real estate investment trusts which already exist have high ticket size of 25 lakh or above. Now, with a few thousands, people will get an opportunity to invest in real estate MF”.
But don’t run to the bank to withdraw money to invest in REMF. First, understand the risk behind it. Before that you should also keep in mind that REMF will essentially help you diversify your portfolio. That means, you have to decide what percentage of your total portfolio will be invested in real estate . Also, like any sector, real estate may also go through cycles. Sure, we have seen the prices skyrocketing in the last few years. But what goes up may also come down. So, you should have time on you side if you are investing in the real estate sector.
With interest rates remaining high and real estate prices yet to show any decline, the growth in demand for housing loans is on the decline. The growth in housing loans, which was 25.8% (Rs 46,019 crore) during the period ended February 16, 2007, has declined to 12% (Rs 26,930 crore) during the period ended February 15, 2008, the Reserve Bank of India (RBI) has said. The outstanding housing loans as on February 15, 2008, is Rs 251,688 crore.
According to the RBI report on Monetary and Macroeconomic Developments, credit growth is slackening. The expansion in bank credit to the commercial sector moderated during fiscal 2007-08 and remained within the Reserve Bank’s policy projection in April 2007, after a strong pace of credit expansion for three consecutive years. Non-food credit by scheduled commercial banks (SCBs) expanded by 22.3% (Rs 4,19,425 crore) year-on-year as on March 28, 2008, compared with 28.5% (Rs 4,18,282 crore) a year ago.
The personal loan segment showed slower growth during the year. While personal loans witnessed a rise of 30.6% to Rs 104,225 crore during the period ended February 16, 2007, the rise declined to Rs 58,669 crore, a growth of 13.2%. The growth in loans to the real estate sector declined to 26.7% (Rs 11,361 crore) against 79% (Rs 18,770 crore) in the previous year. It said,“The deceleration in credit growth relative to the acceleration in deposit growth has led to a decline in the incremental credit-deposit ratio, year-on-year, of SCBs to 71.9% as at end-March 2008 from 84.3% a year ago”.
On the other hand, the corporate sector continued to rely on a variety of non-bank sources of funds such as capital markets, external commercial borrowings (ECBs) and internal generation of funds. Resources raised through domestic equity issuances during 2007-08 (Rs 48,153 crore) were 68% higher than those a year ago. Net mobilization through external commercial borrowings (ECBs) during April-December 2007-08 increased by 54% over the corresponding period of the previous year.
Mobilization through issuances of commercial paper (CPs) during 2007-08 was nearly three times the issuances during the previous year. Internal generation of funds continued to provide strong support to the funding requirements of the corporate sector, despite the profits after tax (PAT) of select non-financial non-government companies witnessing some deceleration in April-December 2007-08 compared with the corresponding period of the previous year.
Unitech Ltd plans to launch a mid-income project of 1,200 square feet houses in Greater Noida
NKID is a large infrastructure project near Kolkata being developed by a consortium including Unitech (40%) and Salim Group (40%) and Universal Success (20%) of Indonesia. The project is spread over 37,830 acres of which govt has handed over 13,457 acres (35%) for development, includes the recent, 12,500 acres handed for a Chemical SEZ. at Rs.2750 – sees potential demand. This will be followed by Residential launches in Chennai and Hyderabad shortly. The company is also accumulating more land parcels in Mumbai through slum rehab, will disclose once formalities completed.
Tata Realty and Infrastructure Ltd declared about agreement with the Southern state of Tamil Nadu to build a special economic zone for information technology.
The project, which will see an investment of more than 30 billion rupees, will include a convention centre and a luxury hotel and serviced apartments that will be built in a joint venture with Indian Hotels Co Ltd, another Tata group company.
The first phase of the 4 million square feet zone will be completed by the end of 2009, with the entire project ready by 2011. Special economic zones are large tax-free industrial enclaves created to boost industrial and export growth.
KOCHI: Dewa Projects Private Ltd., a venture promoted by a group of NRIs based in Kuwait, will build a super luxury apartment complex on Marine Drive in Kochi. K. Venugoplan Nair, chairman of the company, said the project would set new benchmarks for residential property.
The apartments will have a 10-year warranty. Kitchen, bathroom fittings, doors and other fittings would be provided by top companies in Germany, Italy, Australia and Canada. The complex will have six towers comprising 400 apartments surrounded by four acres of landscaped garden. It will have a quake-resistant structure. The price of a three-bedroom apartment will be more than Rs.3 crore.
The company has substantial real estate holding in major cities including Bangalore, Chennai, Thiruvananthapuram and in the Andaman & Nicobar Islands.
The company was investing Rs.3,000 crore for the Kochi project. , which would be completed by 2011. It had conducted a study which revealed that Kochi had high potential in the real estate sector. Luxury apartments were in short supply, Mr. Nair said.
Chandigarh: DLF, a leading real estate player in the country, plans to invest Rs 1,250 crore for the development of its multiplex business. The company has planned to add minimum 500 screens in the next four to five years across the country.DLF’s entertainment arm DT Cinemas will set up a megaplex, which will have 12 screens with a total capacity of 2,500, as part of their upcoming project, Mall of India, at Gurgaon.Expected to be one of the country’s biggest malls, it will cover an area of 40 lakh sq ft.DT Cinemas announced the opening of their multiplex at DLF Infocity, IT Park, Chandigarh. Infocity covers an area of 1,90,000 sq ft and most of the space has been leased out. The mall will start operating within the next 10-12 days.
Kajal Aijaz, CEO, DT Cinemas, said that with the multiplex offering state-of-the-art facilities like Christie cinema projection system, excellent acoustics, wall-to-wall carpeting, extra legroom with comfortable slideback seating and push back armrests for the audience, they were eyeing about 66 per cent occupancy at the multiplex in the first year.With DLF planning to set up another 120 malls in different parts of the country, DT Cinemas would be the chief attraction in most of these malls.
Apart from Ludhiana and Jalandhar, where multiplexes would be opened in a couple of years, the company is also opening multiplexes at Savitri-GK2, Shalimar Bagh, Vasant Kunj and Saket in Delhi and Star Mall, Gurgaon, this year, Aijaz said.DT Cinemas will also set up multiplexes in Hyderabad, Chennai, Kochi, Bangalore, Mumbai, Pune, Ahmedabad, Goa and Kolkata.
The Ascott Group (Ascott) has acquired its first serviced residence with more than two hundred units in Ahmedabad. The investment is a joint venture with The Rattha Group (Rattha), a company in the field of exports, infrastructure development and leasing. Ascott has invested more than two hundred fifty million rupees for the project and will take a 40 percent stake in the joint venture, with Rattha holding the remaining. With the latest addition, Ascott’s portfolio in India grows to 1,398 units across six properties which are currently under development.
Ms Jennie Chua, Ascott’s President & CEO said, “Citadines Ahmedabad Parimal Garden marks our entry into West India and extends our footprint beyond the southern cities of Bangalore, Chennai and Hyderabad”.
India is taken as the one of the fastest rising economy in the world and in this present economic status, real estate has appeared as one of the most beneficial investment sectors for domestic as well as overseas investors. The economy and the real estate sector in particular are high on its ride to prosperity.
As economic growth curve rises, real-estate growth happens. India has become known as one of the most attention-grabbing investment areas for domestic as well as overseas investors. Real estate has big potential demand in almost every sector. Real estate boom is supported by its own prosperous economy on a sustainable basis.
Growth of the property market is not an effect of reformation; but fast development that witness for India riding the high growth wave. With the development of private property rights, real estate has become a key area of business. Purchasing real estate needs a considerable investment, so the real estate industry has evolved into different fields.
Doha: All most thirty builders from various parts of India are showcasing their projects at Homes of India, the largest Indian property expo in Qatar, at the Ramada Plaza hotel.
The two-day expo was opened yesterday by Dr Mohan Thomas, President of the Indian Community Benevolent Fund.
The expo will showcase projects in Cochin, Kannur, Thiruvananthapuram, Thalassery, Thrissur, Munnar, Jaipur, Delhi, Hyderabad , Mumbai, Pune, Bangalore and Chennai .
This year’s expo has been brought to Qatar by Bangalore-based event management company Studioline Conventions and Bahrain-based International Trading Company.
Studioline’s CEO Michael Vasanth sid: “We have noticed the trend of Indian investors across the globe, who look for return on investment. People buy a second or third home not to live in but as an investment opportunity in the fastest growing real estate market of the world.”
Real estate in India has been one of the fastest growing sectors. The appreciation has been tremendous, with return of around 50 % over a period of almost two years.
Foreign investors too foresee high yields from Indian real estate due to its growth potential.
Zirakpur, Chandigarh, April 24 : The Piya Charitable Trust and Foundation, Chandigarh, has taken the initiative of providing at no cost primary education to the children of construction workers in Savitri Enclave at Zirakpur.
In addition primary education, it also make available healthcare facilities, nutritious diet, study material, uniform and vocational training for the rehabilitation of street and slum children. H I S Grewal, Deputy commissioner, S A S Nagar, announced a grant of one lakh to the NGO.
Sudha Sharma, Chief commissioner of income tax (retd) had taken the initiative of forming a trust in the name of her younger daughter, Piya, who lost her life in a road mishap, at the age of nine. She is being aided by her elder daughter, Puja Sharma and the wife of DGP (retd), Jagat, Kiran Jagat in running the NGO since the last 9 years.
Project director, Puja Sharma said the flourishing real estate business has provided jobs to migrant labourers in abundance.
The NGO provides benefit to nearly One hundred fifty slum children in Panchkula and thirty children in the Silver City. She said the trust has fifteen paid staff members besides dozens of friends who help voluntarily.
Realty major Parsvnath Developers said it has launched its first integrated commercial mall project at a cost of Rs 120 crore in Jamnagar, Gujarat.
Parsvnath Developers launched its first integrated group housing and commercial mall project in Jamnagar, which is being developed on total land area of 13,200 square meter with an expected realization value of Rs 120 crore spread over three financial years, the company said in a filing to the Bombay Stock Exchange.
Parsvnath has two projects in Ahmedabad where the company is developing mall cum hotel project at Vejaipur and commercial project in Vastrapur.
Money invested in real estate, for income and capital growth, grants stable and expected returns, parallel to bonds. Like other investment option, this too, has certain threats attached to it. Following are the elementary factors affecting the value of a particular property.
Location: The location of a building is a important factor in determining its market price. A property investment is likely to be held for some years and the attractiveness of a given location may change over the holding period. As such, part of a city may be undergoing regeneration, in this case the perception of the location is likely to improve. In contrast, a shopping center development may affect the appeal of an existing residential property.
Physical characteristics: The type and utility of the building will affect its value. Utility refers to the benefits an occupier gets from using the building. The risk factor is depreciation.
Tenant credit risk: The value of a building is a function of the rental income that you can expect to receive from owning it. If the tenant defaults, the owner loses the rental income. However, it is not just the risk of outright default that matters.
Lease length : The length of lease is an important consideration. If a building is let to a good tenant for a long period then the rental income is assured. This is one of the attractive features of property investment. It is important to consider the length of lease.
Liquidity: All property investment is relatively illiquid to most bonds and equities. Property is slow to transact in normal market conditions. In poor market conditions, it will take even longer to find a buyer. There is a high cost of error involved.
Tax implications: Apart from income tax, which is to be paid on rental income and capital gains, there are two more levies to be borne by the investor — property tax and stamp duty. These levies vary from state to state and can effect on investment returns.
High cost of investment: Real estate values are high with respect to other forms of investment. This puts it out of reach of the common people.
Risk of single property : Purchasing a single property exposes the investor to definite risks related with the property and does not provide any profit of diversification.
Official issues: While stock exchanges promise to a certain extent, the legitimacy of a trade in equities or bonds and thus protect against bad delivery or fake and forged shares, no parallel safety net is offered here.
SatyaVani Green Homes, Hyderabad-based real estate developers and part of the SatyVani group of companies, has decided to invest over ten million dollars in Udhodayam Green Homes.
Mr. P Surya Prakash, Managing Director, SatyaVani group of companies, said, “UGH will set an example on how construction industry can built a better tomorrow by not adding to the global warming concerns. We have designed our projects in such a manner that people would not have to sacrifice their comforts and will live in a healthy environment”.
UG Homes is largest integrated green homes township at Annojiguda on the Hyderabad-Warangal highway. The project, coming up on areas 12 acres, will have 1800 units built on green norms that will emit least gases into the atmosphere, thus not adding to the global warming concerns.
The residential units at UG Homes will be equipped with solar panels to generate power to be used by the residents.
With Raheja IT park and Infosys campus up in the vicinty, and thrust being given to Warangal as an IT destination, Annojiguda has the potential to become a hub for IT comapnies in the near future, Prakash said adding that work on three others projects coming up in-Begumpet, an apartment in Kondapur and 107 villas in Gagillapur too has started.
The stock of unoccupied properties with real estate developers in the main technology hubs of Bangalore and Chennai is mounting and indications are that their problems will only get worse as software companies head towards greener pastures.
In Bangalore’s Whitefield suburb, once a magnet for IT firms, supply outstripped absorption by 3,00,000 square feet in 2007 and about 8% of the developed area remained vacant, data from real estate consultancy Cushman & Wakefield (C&W) show. Prices are stagnating and the situation is deteriorating. In the first three months of 2008, the demand-supply mismatch was more than a million square feet.
If Whitefield is in a bad way; the Old Mahabalipuram Road (OMR) technology cluster on the outskirts of Chennai is deep in the doldrums, with just nine deals in the whole of 2007. Of the four million square feet that came into the market last year, only 1.7 million square feet were absorbed even as rentals fell by 18% and the vacancy rate was up to 11%, again according to C&W data. Most of the more than half a million square feet that entered the market between January and March have gone a begging.
The turmoil in the global financial markets has cast its shadow on India’s largest real estate deal. Delhi-based developer BPTP Ltd, which was banking on overseas institutions to fund the acquisition of 94 acres of prime land at Noida for Rs 5,006 crore, has sought an extension to pay the first installment of the money.
On March 12, BPTP Ltd, promoted by entrepreneur Mr. Kabul Chawla, had bagged the rights to develop the land. The deal required it to pay the first installment of around Rs 1,251.5 crore (25% of the bid amount of Rs 5,006 crore) to the Noida authorities within 30 days. That deadline expired earlier this month and the company has now sought a 60-day extension.
It now has 60 days to pay the amount with an additional 14 per cent interest impost. The extension request has been granted, said a senior BPTP executive. He further added, “We will pay the money before the 60-day period ends”.
The executive, who requested anonymity, added that BPTP had almost closed a deal with some foreign banks to raise the required money. But the banks, caught in the sub-prime crisis, went through a management overhaul and the loan to BPTP got stuck.
India’s real estate developers, especially the mid-sized ones, have been facing a liquidity crunch since last year. Developers can no longer tap the external commercial borrowing route, while domestic borrowing costs have gone up on account of tight-fisted monetary policy, which is likely to harden further in days to come.
In addition, the stock market has taken a beating with real estate stocks falling off their recent highs. Other sources of funding for instance — the London Stock Exchange’s Alternate Investment Market or listing real estate investment trusts abroad — are also not feasible in current market conditions.
The tender that BPTP won, beating bigger players like DLF and Omaxe, has an “exception clause” that allowed the company to seek an extension to pay the first tranche.
Failure to make the payment within the extended deadline would result in the award being scrapped and a fresh tender being announced, Noida officials said. The earnest money amount of Rs 100 crore will also stand forfeited.
BPTP Ltd had a turnover of around Rs 1,100 crore and a net profit of Rs 220 crore in financial year 2007-08.
Jodhpur based High Pointe Real Estate Pvt Ltd plans to come up with a heritage boutique hotel, Mehran Heritage, in Jodhpur by November 2008. The hotel is mainly targeted at foreign and business travellers that come to Jodhpur, due to its proximity to business centres like New Delhi and Jaipur.
Mr. Mukesh Agarwal, Director, Mehran Heritage, said, “Rajasthan has an intriguingly rich cultural heritage that draws travellers, not only within India, but also from abroad. This project will be an endeavour to showcase some of this rich heritage”. The 20 room property is situated on one acre in the south wing of the ‘Nimhera House’, which is Maharaja Thakur Shaitan Singh of Nimbhera’s old home. The company has invested over Rs one crore to refurnish the palace.