It is the best time to look around for a value buy in real estate. With lower price points in locations which were not within your wallet’s reach, buyers are scouting for good ‘value’ bargains at this time.
And with developers going big on affordable home launches, the timing may just be one of the best for buyers seeking a steal deal.
Anshuman Magazine, CMD of global real estate consultancy CBRE says that value buying is happening mostly in suburban locations as that is where the current supply is.
Dax Properties is setting up a 18-hole golf course-centric luxury retreat and township at Shadnagar near here which will entail investment of five hundred crore rupees.
The golf course will be spread over 130 acres on a 300-acre site earmarked for the Golf Retreat project, according to Mr Masood, MD of the Bangalore -based Dax Properties, part of Countryside Realtors.
Further he said, “We believe India has potential to serve golf lovers offering golf tourism in a majestic lush green environment where one could also buy luxury villas being developed on the property”.
Best Western India, the Indian affiliate of the international Best Western brand, opened its 13th operational property.
Branded as ‘Best Western Classic Avenue’, the 60-room, four-star luxury property is the second in Kerala after Kochi.
Best Western, among the world’s largest chain providing marketing, reservations and operational support to over four thousand independently owned and operated member-hotels in more than 80 countries.
According to Mr Sudhir Sinha, President and COO, Best Western India, occupancy rates have looked up by 20 – 25% to 65 %-plus since the lows registered during the recession period from September last.
Mr K. P. Sahadevan, Managing Director, Best Western Classic Avenue, said that an additional seventy rooms would be added to the property over the next three to four years to raise it to five-star category.
Raising home prices may anticipating festive season demand.
Mr. Niranjan Hiranandani, MD of Hiranandani Group, said “It is not very wise to increase prices drastically now”. Further he said, “The market has just recovered and buyers are returning back”.
The shortening of supply due to a 45% decline in new projects in tier-I cities has also enhanced the prospects of higher prices.
Mr. Abhisheck Lodha, director of Lodha Developers, said, “We have sold around 2.5 million square feet in the last quarter and are expecting to sell over 1.5 million square feet during the last quarter of this year”. Further he added, “Normally, the festive season is when there are a lot of bookings in the real estate sector”.
Retail investors are regaining confidence in the primary market but they seem to be gradually making their presence felt in the secondary market.
Leading retail brokers say that they are seeing an increment in the number of clients returning to the market. The only difference is that investors are taking small bets, and quickly booking profits even if they are not large.
Growing retail investor interest can also be gauged from the fact that indices tracking the SME space have outperformed the key indices in the run-up to five thousand level touched by Nifty during intra-day trading.
In a move that could have implications for the process of land acquisition for industry, the Dharwad district administration has introduced a system to prevent delay in processing applications linked to land conversion.
The Deputy Commissioner, Mr Darpan Jain said that though according to Section 95 of the Karnataka Land Revenue Act, 1964, permission for conversion of land use had to be granted within 45 days, the current method was causing unnecessary delay and there was no means for the applicant to know the status of his application.
Mr. jain further said, “We have decided to re-engineer the process of land use conversion so that the process is simple and on the spot”.
Under the new system, applications for land conversion from applicants in Hubli and Dharwad would be collected at a counter established on the premises of the Deputy Commissioner’s office. In the remaining three taluks of the district, applications would be accepted at the counters established in the offices of tahsildars, he added.
He said that a single counter for Hubli and Dharwad would save the time lost in forwarding applications from the tahsildar’s office to the Deputy Commissioner’s office.
Under the system, details of applications would be entered into a computer system and application would be verified taking into account the enclosed documents, the number of which had already been reduced.
The Naveen Patnaik Government’s failure to help companies take possession of land has delayed implementation of 14 mega industrial projects.
Top representatives from Posco-India, Tata Steel, ArcelorMittal India Ltd, Jindal Steel & Power Ltd, SSL Energy Ltd, Uttam Galva Steels Ltd, Essar Steel Orissa Ltd, Bhusan Power & Steel Ltd, Aditya Aluminium Ltd, Welspun Power & Steel Ltd, Vedanta Aluminium Ltd, Jindal India Thermal Power Ltd and Bhushan Steel Ltd attended the meeting.
The 14 projects had proposed investments of Rs 2 lakh crore but have invested Rs 21,031.71 crore only. Though 45,607 acres were required for the projects, the State Government had allotted them 14,131.90 acres till date.
Most companies have not been able to take possession of land for their respective projects primarily due to opposition from people living in the area who face displacement. The other issues were availability of water, supply of power, and rehabilitation and resettlement.
The Minister asked senior Government officials to resolve the problems facing the industries and also advised the companies to expedite land acquisition.
Home buyers will now know if the land on which their building stands is free of outside claims after a recent RBI circular mandating builders mortgaging the land to raise money to disclose it in all advertisements and brochures. RBI has asked lenders to ensure that all publicity material relating to the sale of real estate make a mention of the bank’s lien on the property so that home buyers are not kept in the dark. RBI aims to prevent prospective buyers from being lulled into the belief that the flats they own are on ‘free-hold’ land through this move. In Mumbai flatowner gets rights over his house through membership of a cooperative housing society. The land is not owned by the society unless it is transferred through a conveyance.
Indiareit Fund Advisors is setting up its second real estate fund with a corpus of five hundred crore rupees and expects to raise the money from investors by the end of this year.
The group had earlier floated Indiareit Fund, a $450-million real estate fund in 2006 and the proposed new Rs 500-core fund is over and above this. The Piramal Group has a presence in sectors, such as healthcare, diagnostics, glass manufacturing and real estate.
Said Ramesh Jogani, managing director and CEO, Indiareit Fund Advisors: “The Piramal Group is setting up a new domestic real estate fund and we are in the process of raising an overall corpus of around Rs 500 crore for it. This fund will invest in projects in Mumbai, New Delhi and Alibaug, a tourist town near Mumbai, and will be restricted to the residential segment. The new fund, apart from having a real estate focus, may also invest jointly with the existing fund.”
Bajaj Auto vice chairman Madhur Bajaj, who in his personal capacity owns over 350 acres of land under Emerald Acres, plans to liquidate a large portion of his land-holdings to unlock value as the real estate sector looks up after the downturn.
He said that he has no plans to venture into real estate development in next ten years and would prefer sell outright large parcels of land to developers or sell through plotted schemes.
Further he added “We don’t have any expertise in construction and so we don’t want to get into development at this stage. We are in the process of valuing the land price and would put it for sell soon.”
He further stated that Emerald Acres has nothing to do with the Bajaj group, as he had purchased land in the past four years through his personal money.
Emerald Acres owns land in the stretch between Mumbai and Pune highway and the largest piece of 124 acres is located at Lonavala, a hill station near Mumbai. The rest are in eight other locations including Murbad near Thane and Khandala, another hill station.
Mr. Bajaj further said, “A township can come up at the Lonavala land and all other plots are uniquely located. We are planning to sell these so that we can buy more land maximise the value.
The tax on income from house property has all along been on one’s potential income and not on one’s actual income unless the latter happens to be greater than the former. The Direct Taxes Code strays away from its basic objective by factoring the cost of construction or purchase where rateable value has not been fixed by the municipal authorities.
Briefly, what is proposed by the DTC is income from house property would be deemed to be the actual rent receivable or the presumptive rent, whichever is greater. And the presumptive rent is deemed to be 6% of the rateable value fixed by municipal authorities or if it is not so fixed, then 6% of the cost of acquiring the house.
Under the extant regime, market rent is a significant factor in determining the potential rent. The Government perhaps feels that figuring the market rent is difficult given the various subterfuges adopted, such as camouflaging a part of the rent as interest-free or concessional deposits, etc.
Therefore, it seems to have plumped for the rateable value which to be sure is also premised on the market rent without being property-specific. But then the danger of this approach is the municipal authorities do not bestir to revise the rateable value every year. In the event, what is considered for income-tax purposes may be outdated and inappropriate even though it may be appropriate for levying municipal tax.
Textile company Raymond plans to move towards realty sector. The initial project would be to develop the surplus land of 15-20 acres in Thane, where its factory is located. Mr Gautam Singhania, Chairman and Managing Director, Raymond, said in a press conference that the primary focus would be in the residential segment and funding would be from internal accruals. He further said, “This proposal is in line with the strategy of the company to unlock value of the land.” Further he added that it was subject to shareholders’ approval.
India’s FDI inflows reached to 41.5 billion dollars last year, constituting 9.6% of its gross fixed capital formation, against just 1.9% annual average in 90s.
India attracted 41.5 billion dollars in FDI last year, its outward flows or overseas investments amounted to 17.7 billion dollars, roughly 4.1% of its gross fixed capital formation. This is in sharp contrast to its meager annual average overseas investments of 110 million dollars for last decade, when such outward investments comprised 0.1% of its gross capital formation.
The FDI stocks of India, which were just 1.6 billion dollars in 1990, zoomed to 123.3 billion dollar in 2008, constituting 9.9% of GDP, against a paltry 0.5% of GDP in 1990. In the case of China, such FDI flows, which were 20.7 billion dollars in 1990, leapt to a whopping 378 billion dollars last year.
In the case of cross-border mergers and acquisitions, Indian companies’ net sales surged from an annual average of 282 million dollars during 90s to 4.4 billion dollars in 2007 and to 9.5 billion dollars in 2008. Against this, Indian companies’ purchases of overseas firms which averaged 104 million dollars annually between 90s rose to a peak of 29 billion dollars in 2007 and came down to 11.6 billion dollars last year in the wake of the onset of the global economic and financial crisis.
Two Indian companies, Tata Steel and ONGC, found a place among the top hundred non-financial transnational companies from developing countries, ranked by foreign assets in 2007.
To bring in more transparency to its accounting procedure, Bangalore-based real estate developer Lalith Gangadhar Constructions will maintain an exclusive construction escrow account with Kotak Bank for the LGCL-Ashlar project it is developing in Garden City.
The Rs 150-crore project comprises 63 villas on 7.75 acres, each carrying a minimum price tag of Rs 2 crore.
The developer plans to launch two more luxury format projects. The company will keep the budgeted construction cost for the project in a separate construction escrow account from payments received from the home-buyers. The funds here will be used solely for project construction.
The Chennai-based El Forge Ltd is selling its land at Thuraipakkam for ten crore rupees as part of its restructuring plan. The company, which made a loss of Rs 18 crore last year on a turnover of Rs 87 crore, will make a substantial profit on the transaction.
Company officials do not want to disclose the profit figure, pending conclusion of the transaction. The transaction is likely to be concluded in October and as such, the profits will be reflected in the accounts of the third-quarter.
The plant and machinery at Thuraipakkam have been moved to Appur, where a new facility has come up at an investment of hundred crore rupees.
Mr K. V. Ramachandran, Vice-Chairman and Managing Director, said that the company is also shifting machinery from its leased facility in Gumidipoondi to Appur. It also has plant in Hosur. Across these plants, the company has an installed capacity is 21,600 tones a year.
Shriram Properties and Career Launcher have tied up to open a chain of 25 Indus World Schools in townships developed by Shriram Properties.
According to Career Launcher, a leading education service provider present in 200 locations in India, West Asia and the US, initially, Indus World Schools would come up by 2010 in Shriram Properties townships being developed in Bangalore, Chennai, Kolkata and Visakhapatnam.
Over the next three years, 25 such schools will come up in the southern and eastern parts of the country.
As per the agreement signed by the two partners, Shriram Properties will provide the infrastructure and Career Launcher will bring in its education expertise.
Indus World Schools are operating in Hyderabad, Indore, Mandi, Bhiwani, Raipur, Ahmednagar, Amritsar, Gurgaon and Noida.
City Corporation has started apartment exchange scheme. This exchange scheme meant for its future customers who would exchange their present house with an apartment in the firm’s Amanora Park Town project in Pune. City Corporation would buy old apartments from customers, renovate them and sell-off through an established network of real estate agents.
City Corporation is developing a 400-acre township named Amanora Park Town in Pune, which would have 12,000 apartments in different categories. As per this scheme, a flat owner, who wishes to buy an apartment at Amanora Park Town, would hand-over power of attorney to City Corporation at a mutually agreed price. This amount would then be considered as down payment for the new apartment booked in Amanora Park Town and the flat owner would continue to stay in the old flat till the new flat gets ready.
The revival of riches in the real estate sector has encouraged textile companies with huge land banks to enter into property development.
Among such companies are textiles major Bombay Dyeing and Century Textiles.
Golden Tobacco, manufacturer of the Panama and Chancellor cigarette brands, is also considering to have its real estate arm to utilize its land assets across the country.
Earlier, groups like Tata, Mahindra and Godrej also entered the realty space. The Tata group has Tata Housing and Tata Realty while Mahindra’s venture is called Mahindra Lifespace Developers. Godrej’s venture goes by the name of Godrej Properties.
Ansal Properties and Infrastructure Ltd will invest twenty billion rupees in the this fiscal year as it seeks to capitalize on the demand for low-cost housing in India.
The investment will be the last installment of a total of sixty billion rupees earmarked last year by the company as the main investment to develop nineteen integrated townships over five to seven years. Ansal Properties spent forty billion rupees of the total in the last fiscal year.
Higher borrowing rates and property prices and fear of job losses in a slowing economy had hurt the demand for real estate in India last year. But, a series of stimulus packages and a reduction in loan rates by commercial banks are leading to a gradual recovery in demand this year.
Unitech Developers are now concentrating on Kolkata. They present new stylish affordable residential apartment Unihomes at Kona Expressway Kolkata with lots of modern amenities. Unihomes offers one and two bedroom apartments that are suitable for contemporary urban living. A desirable and contemporary place within the reach of your pocket. Apartments Price is starting at eighteen lakh rupees and above.
Photo by truedudiMafatlal Industries has put an eighty five thousand sq ft property in central Mumbai on the block hoping to generate between Rs 100 cr and Rs 150 cr. The proceeds will be used to revive the operations of the loss-making company.
A senior company official confirmed the decision to sell the property and said the bidding process could start within a couple of days.
Located at Lower Parel, the building called Mafatlal Chambers B, is one of the many properties in the city owned by the group.
Cushman & Wakefield (C&W), the international property consultant, is advising Mafatlal Industries on the deal. Industry trackers said the prevailing rate for commercial property in central Mumbai is in the range of Rs 15,000-20,000 per square feet. The minimum bid price for this property has been set at Rs 11,000 per square feet.
Omaxe Ltd. is going to develop a Hi-tech township spread over about 2700 acres in Lucknow the city of nawabs. Garv Buildtech Private Ltd, a subsidiary of Omaxe, has entered into a MoU to develop the said Hi-tech Township in Lucknow.
The Hi-Tech Township which is expected to yield estimated revenue of over Rs 2800 crores will be executed over a period of 5-7years and is slated to cater to the growing demand of quality living space in the city. The township is strategically located on the proposed Lucknow Ring Road in close proximity to Lucknow Airport and only half an hour drive from Hazratganj, center of Lucknow city.
Speaking on the announcement, Mr. Rohtas Goel, CMD, Omaxe Ltd said, “The hitech township is an attempt to recreate an entirely new living experience in the city of Nawabs. There is already substantial pressure on the existing infrastructure and this township will attempt to ease the demand by providing state of the art facilities in close quarters. This hi-tech township will indeed reinforce the commitment to develop and deliver a world class product to the new aspiring class of local residents and the migrants from other cities.”
Housing Development and Infrastructure Ltd stated that it had agreed to offer about three hundred fifty crore rupees as income to be booked in the remaining quarters of this financial year to the Income Tax Department. This follows an Income tax raid on HDIL office premises and promoters’ residences. HDIL said that the income calculated by Income Tax Department was based on initial entries in its books of accounts mostly relating to current fiscal year, which the company would have irrespectively booked during the current financial year on completion of transaction and taxes paid. HDIL said that there was no hidden income, tax evasion, levy of penalty for previous or current year.
The Government-appointed Director and the promoters of Maytas Properties are near to brokering a deal that will help the unlisted entity address the main problem of liquidity to complete projects.
This infusion of liquidity could be through bringing in another developer into the company as an investor by leveraging the large land bank created over the years.
The Government-appointed Director, Mr Ved Jain, said, “We are at an advanced stage of negotiations with various lending institutions and real estate players and could potentially manage to bring in a developer as a strategic partner.”
Fifteen real estate companies are waiting in the wings to tap the capital market to raise upto 6 billion dollars with the housing sector showing signs of recovery. This list includes Lodha Developers, Oberoi Constructions, Emmar MGF and Godrej Properties and many more. These firms wanted to come out with the IPO earlier, but held them back due to bearish market. The success of a real estate IPO would depend upon corporate governance, background of the companies and the right pricing among others. Start-ups and relatively unknown firms would face difficulty to raise funds from the market. Almost USD six billion private equity fund was also likely to come in the six to eight months time to the domestic real estate bazaar.