Realtors upset with the policies of Bhubaneswar Development Authority.

The real estate developers on Thursday reacted sharply to the Bhubaneswar Development Authority’s (BDA) move to change the definition of “apartment” and “group housing.”

Talking to reporters here, Confederation of Real Estate Developers Association of India (CREDAI) state president D S Tripathy said the new definitions are vague and will result in the harassment of people while constructing houses.

The draft BDA (planning and building standards) amendment regulations-2012 proposes to amend the definition of apartment as building constructed in one block having more than four dwelling units where land is owned jointly and construction is undertaken by one agency. Under the existing BDA regulations 2008, an apartment is defined as a building having six or more dwelling units.

Tripathy said under the new definition houses of joint families may become apartments. As a result, such families would have to meet the required road width of minimum nine metres, he said. Tripathy said certain apartments can never form societies for which at least seven members are required. Similarly, the new definition of ‘group housing,’ building with more than one dwelling unit, where land is owned jointly and the construction is undertaken jointly by one agency, is vague and don’t convey clarity.

CREDAI, which suggested its comment on the draft regulations, open for public suggestions, is of the view that creation of the new “settlement fund” and earmarking of 10% of all housing projects for economically weaker sections is not going to help the poor. “It seems impractical that BDA will construct EWS houses using shelter fund,” the CREDAI chief said.

The CREDAI, Odisha, suggested that the state government should formulate an affordable housing policy on the lines of Rajasthan, which looks more realistic, gives incentives to builders and subsidy to weaker sections.

Real Estate Sector still waiting for the long pending Industry Status.

The announcement with respect to external commercial borrowing now being permitted opens up a huge opportunity for developers want to cater to the bottom of the pyramid with housing units targetted at the lower income classes even though the overall expectations haven’t been met.

This move will ensure better capital availability for developers of low-cost housing which will result in timely project execution, which will boost volumes and since low margins are typical of this sector, only higher volume growth will make it attractive to developers.

The Union Budget 2012-13 throws up a mixed bag for the real estate sector. The government’s initiative to make affordable housing available to a larger section of the society has only been met partially. Initiatives such as external commercial borrowing (ECBs) for the affordable and low-cost housing segment will help the sector to tap long-term funds and help ease the liquidity in the sector.

Extension of the 1 per cent  interest subvention scheme for affordable housing will help the buyers to avail a loan limit of Rs 25 lakh. Also the measures to increase funding for highways and other infrastructure will help put more territories on the real estate map.

The Union budget has no real measure for the real estate sector as most of the industry expectations have not been met. The most important demand across all real estate companies is that of an industry status being assigned to the sector has been still pending.

Even though all the expectations have not been delivered. The most important demand of increase in the limit on tax deduction available on home loans interest from current Rs 1.5 lakhs remains unanswered.

 

Real Estate Sops can’t impress Firms.

The finance minister relaxed borrowing norms for real estate firms and extended the loan subsidy for low-cost affordable houses. The concessions have, however, failed to impress the industry leaders who termed it as a too-little-too late move that would have a limited impact on the sector.

“I propose to allow ECB (external commercial borrowing) for low-cost affordable housing projects,“ the Budget said.

The move has a dual aim of expanding the window of funds for real estate developers such that affordable housing projects do not face cash crunch and are completed within the time frame.

Global consultancy Deloitte said RBI had earlier allowed ECB for developers in integrated township projects of 100 acres or more till December 31, 2010.

The FM also extended, by a year, the 1% interest subsidy on loans up to R15 lakh where the cost of house does not exceed R25 lakh.

Realty Sector in Disappointment

The Union Budget 2012-13 on Friday proposed allowing external commercial borrowing for low cost affordable housing projects.

Presenting the Budget in the Lok Sabha, the Finance Minister, Mr Pranabh Mukherjee, also proposed setting up of a Credit Guarantee Trust Fund to ensure better flow of institutional credit for housing loans.

The Minister also proposed to enhance provisions under Rural Housing Fund from Rs 3,000 crore to Rs 4,000 crore besides extending the scheme of interest subvention of 1 per cent on housing loan up to Rs 15 lakh where the cost of the house does not exceed Rs 25 lakh, for another year.

Meanwhile, real estate players were disappointed with the Budget saying it failed to highlight the role of the housing sector in the economy.

“The proposal of bringing in an umbrella tax structure to the cement industry will increase the cost of housing and will negate the development process. Also providing ECB to affordable housing is a minor respite to the sector. There is an inherent risk of liquidity drying up wherein the exemption of capital gains tax to invest in small and medium enterprises may result in cash out from real estate,” Mr Lalit Jain, President, CREDAI, the industry body of real estate players, said.

The sector also said that the increase in service tax will increase the cost of construction by Rs 50-100 per sq feet.

According to Mr Anurag Mathur, Managing Director, Cushman & Wakefield India, “The increase in allocation in infrastructure implies a clear intent on enhancing the urbanisation process as well as providing a support to the slowing industrial sector. At the same time the increase in the service tax from 10 per cent to 12 per cent would lead to additional burden on the tenants as the service tax on rentals has remained unchanged.”

Builders say that Pranab Mukherjee has ignored ground realty in the Union Budget 2012-13.

With predicting an escalation in property prices, top players in the realty sector said they had been ignored by the finance minister.

Chief of the Confederation of Real Estate Developers’ Association of India (CREDAI), Lalit Kumar Jain, said the announcement on external commercial borrowings (ECB) for affordable housing was a minor respite but still meaningless. Jain, who is also chairman and managing director of Kumar Urban Development Ltd, added, “We contribute 6.5% to the GDP and expected a big boost from the budget for affordable housing through special schemes, an interest subvention of 5-7 % for LIG (low income group) and EWS (economically weaker section) housing and promotion of rental housing through tax exemption.”

Jain also pointed out that the interest subsidy on home loans was too low. The Budget has extended the scheme of interest subvention of 1% on housing loan up to Rs 15 lakh where the cost of the house does not exceed Rs 25 lakh for another year.

In addition, Gaurav Gupta, director, Omkar Realtors & Developers, lamented that the realty sector had got nothing to boost market and customer sentiments. “There are no indications of this sector being granted the status of an industry, which it much deserves. On the contrary, the increase in service tax will push up realty prices as the additional cost will be passed on to the buyers.”

Tata Housing MD and CEO Brotin Banerjee added, “Initiatives to make affordable housing available to a larger section of the society have only been met partially.”

There were some who welcomed the proposals. Sachin Sandhir, MD, RICS South Asia felt it “exceeded expectations” given the pressures on the fiscal situation.

Realty Sector has no resurgence.

The latest Economic Survey reveals that the share of the housing sector to the overall GDP is likely to rise by one per cent to 6 per cent on increased investment. Currently, about 5 per cent of India’s GDP is contributed by the housing sector. With institutional credit for housing investment growing at a compounded annual growth rate of about 18-20 per cent per annum in the next three-five years, the housing sector’s contribution to GDP is likely to increase to 6 per cent.

As every rupee that is invested in housing and construction, Rs 0.78 gets added to the GDP. Investment in housing and real estate activities can be considered a barometer of growth of the entire economy. Unfortunately, the 2012-13 Budget does not recognise this. Although the finance minister’s speech concludes by reiterating the fact that there is a need to create an “enabling atmosphere” and that India is on the brink of “resurgence”, he has done precious little to make that happen.

India’s GDP has not been growing as it was sometime earlier was the topic of the finance minister before presenting the Budget. His five-point objective does not really lay any emphasis on the housing and real estate industry. While he has tried to restrict central subsidies to fewer than 2 per cent of GDP to improve the quality of public spending, he has failed to provide for measures which will give impetus to the industry at large, housing and real estate in particular.

The finance minister has permitted external commercial borrowings (ECBs) for low cost affordable housing projects. One wonders if this would do any good, since players in this industry are not used to taking the ECB route for affordable housing projects. This provision therefore does not make sense.

Extending the scheme of interest subvention of 1 per cent on housing loans up to Rs 15 lakh (on houses costing up to Rs 25 lakh) for another year also does not make sense, unless and until the limit of Rs 25 lakh is increased.

Realty players demand Industry status and affordable housing as a priority from the Budget 2012-13.

The Union Budget 2012 to be presented by the Finance Minister Pranab Mukherjee is being looked at to provide relief in terms of policy reforms with the real estate sector of the economy coming under repeated credit pressures owing to high interest rates for borrowing.

Experts say that the real estate sector needs government support as well as further stimulus to get out of the current slump. With the first step, experts have sought industry status for real estate, since the sector is a major driver for economic growth and generates countless jobs across its various verticals and associated industries. Experts this feel will also help the sector raise debt from FIs at a much lower rate.

Common demand across all real estate companies is that of an industry status being assigned to the sector in the Budget 2012-13 with ways to make affordable housing available to a larger section of the society.

Samir Jasuja, founder and chief executive officer at Prop Equity said, “In this budget, we expect the central government to grant the real estate sector the industry status as that would help the reeling sector raise debt from financial institutions at a much lower rate, which may partly improve the liquidity crunch crisis.”

Realtors ask for Better home loans and tax cuts.

Realtors from Chennai are expecting the Union government to enhance the income tax exemption for up to Rs 3 lakh paid as interest on housing loans in a year from the existing Rs 1.5 lakh which will help to boost the real estate market.

Siva Krishnan, head of residential services (Chennai), Jones Lang LaSalle India, said that  “The market, which was struggling last financial year, has picked up and we expect the government to enhance the income tax exemption limit.”

The Confederation of Real Estate Developers’ Associations of India have expressed that the realty sector and housing policy should be modified in order to address a huge demand of 26 million homes. “Inordinate delay in the sanction of approvals have hit hard. Provision of single-window clearance for real estate development projects is the need of the hour,” said CREDAI president T Chitty Babu.

In addition he also said that “Some of the measures like creation of Special Residential Zones can help. Affordable housing sector should continue to grow based on the incentive given for borrowings from banks for homes.”

Also the 36-month holding period should be reduced to 12 months.

Budget 2012: A ray of Hope for the Real estate sector.

The real estate industry is very optimistic about the coming budget 2012 as the budget may bring a sheer relief  for the affordable housing buyers.

Real estate industry generates countless jobs across its various verticals and also the sector is a major driver for economic growth so it is  hoping to get an industry status.

To improve the significance of the housing sector sufficient steps were not taken in the Budget 2011-12 which in return gave very less to the developers and customers.

Shailesh Sanghvi, Director, Sanghvi Group of Companies said that,”We expect revision in tax for affordable housing projects in order to address the acute housing shortage in the country.”

The priority must be given to the banks who  in return offer concessional costs to the common man and also affordable housing should be considered important .

The interest subvention of 1% on home loans could be raised from Rs 20 lakh to 30 lakh.

In addition Ajmera also said that “The budget should look forward to extending the existing benefit of Section 80 IB(10) of the IT Act for developing affordable housing as the country is still in a huge shortage of tenement.”

Government must take steps which in return would be beneficial to both developers and also buyers. Real Estate sector is hoping the best from the Budget 2012.

As per the developers, Pranab Mukherjee, must present such a Budget that should bring happiness,joy and comfort to every sector.

 

 

Affordable Housing Policy to be implemented by the State Government from 15th April.

From April 15, the state government’s affordable housing policy is set to be implemented. With a preliminary notification already out, the policy will be implemented after the final notification in a month’s time.

This decision took place at a recent meeting between Additional Chief Secretary (Urban Development Department) TC Benjamin and representatives of Confederation of Real Estate Developers’ Associations of India (CREDAI) from Pune, Nagpur, Kolhapur, Nashik and Aurangabad.

The government in the notification has made it mandatory for all projects on more than 2,000 sq m land to reserve 20 per cent of the land or constructed space for small-sized housing.

Benjamin said that, “The state has a dearth of such housing and this initiative will help bring about more such houses in residential projects. It will have to be implemented by the builders after April.”

Builders expressed reservations about whether the 20 per cent of the land should be reserved in the same area. However, it was decided that they could have a little farther but in the same zone. To this Benjamin added that, “They have to provide the housing with almost the same kind of infrastructure.”

However, most of the builders had reservations about having the economical housing on the same campus but agreed to have it a little farther away from their projects.

Pune CREDAI representative Satish Magar, who attended the meeting, said, “We are open to the policy but had some issues, which we discussed.”

Acron Infra Projects Constructing Residential Complex at Pune

Acron Infra Project, Mumbai-based developing company is building a large residential multiplex at Karvenagar which is in the heart of Pune, a 3-hrs drive from the metropolis of Mumbai. They are building a big, affordable residential complex with a total of 2,800 apts spread over a 24-acres green campus. The Director of Acron Group said the fund for the INR 800-cr project will be raised through internal accruals of the company and bookings.

This residential multplex will be developed in six phases.During the first phase, a total of four 25-storey buildings will be built within 18 months which includes 800 apartments. The two-bedroom apartments with an area of 900 sq ft at the rate of Rs 6,000-7,000 per sq ft will cost about INR 40 lac- Rs 50 lac. The registration and stamp duty will be an additional cost to the buyer. This project will develop eco-friendly apartments targeted at upper middle class home buyers looking for comfortable and affordable housing in the heart of the city and the housing complex will offer all the modern conveniences and amenities such as a clubhouse, swimming pool, jogging park, children’s park and a green surrounding environment.

With two decades of experience in construction, Acron Group brings to the table a wealth of experience, modern techniques, state of the art building materials and institutional knowledge, engineering, management, talent and skill, especially in the area of green building development. Acron group with branches in Bangalore and Goa is an EPC company engaged in real estate development, infrastructure and hotels.

The project has already begun and the apartments will be ready for possession on schedule. “We want our clients to appreciate that housing development happens at Acron Infra in tandem with nature,” Meghnani said.

After Affordable housing, it’s Luxurious housing’s turn

Luxurious house in Port Douglas
Photo by Saga A’xeron
After the success of ‘Affordable homes’, realtors are now moving towards the launch of luxurious housing. The demand for luxurious houses indicates that there is big scope for realtors there.

With this increase in demand, many developers including Ansal API, Unitech, DLF, Emaar MGF etc are jumping into this business and plan to launch huge number of housing projects within next six months, where the cost of each single unit will be over Rs. 2 cr.

According to the executive vice-chairman and managing director at Emaar MGF, Shravan Gupta, since the recession period is over and job market is looking up, there are chances of realty boom too.

Within six months, cities like Punjab, Gurgaon, Bangalore, Hyderabad and Kerala will be overloaded with such projects.

Best Features of Noida Extension

CORNER LOT FOR SALE:  SAGAMI-OTSUKA
After the locations called Raj Nagar Extension, Mayur Vihar Extension, now its Noida’s turn to stretch itself and the name given to this stretch is Noida Extension.

There are large numbers of upcoming projects here located adjacent to Noida’s Sector 121. These face the Noida-Greater Noida Link Road. It is expected that within next three months, this stretch will become operational.

Some of the major features of Noida Extension are:

Prime Location: Noida Extension actually belongs to Greater Noida sector 1. It is a part of NCR and is close to Noida sec. 121 and sec. 119.

Connectivity: One of the best features of Noida Extension is its connectivity across the complete NCR. And the upcoming metro line is acting as cherry on the cake.

Infrastructure: The Noida-Greater Noida Link Road which is 130m wide passes through the area. Also, NH 24 is just 60m away.

Long Term Investment: The area will pick its pace in around a year or two. But once it is full fledged, it won’t lack returns. Thus, it’s a long term investment opportunity.

Options for all: The developers are coming up with all kind of residential projects, office spaces and commercial projects. Thus, Noida Extension will have goodies for everyone.

Affordable Housing: The projects brought up by the developers provide a large range of residential opportunities whose prices will fall in the range of Rs. 9 lakh to Rs. 40 lakhs.

Real Estate Trends And Consequences

An interactive discussion on Real Estate titled ‘Real Estate: Trends, Issues & Consequences’ was organized by Money life Foundation on May 5. The session was jointly conducted by industry experts like Pranay Vakil, Chairman of Knight Frank (India) Pvt Ltd and Pankaj Kapoor, MD, Liases Foras.

AAR's Staying Competitve Seminar
Photo by Phil Sexton
Mr. Pranay Vakil said on the occasion, “One of the major reasons why the prices are high today is infrastructure. Nobody wants to travel long distances for work. Title insurance is another major issue in this industry.”

He added on being quizzed about the short recession, “Liquidity is vital. Developers realized this when sales volumes declined drastically due to the liquidity crunch. The slowdown gave customers ample choice as affordable housing came into the industry in a big way. Investors are ‘fair-weather friends’, Sell ‘ready’ products during a slowdown; contracts can be broken; healthy growth can be sustained by a gradual increase in prices; high-value transactions hyped by the media are not the ‘real’ market and the need is to innovate sales strategy.”

Mr. Kapoor said, “Are we heading towards another asset bubble? Are the prices affordable? What is wrong with the valuation and where is affordable housing? The government is responsible for hiking prices. We need a regulator for this industry to grow and curb wrong practices.”

The workshop witnessed enthusiastic participation from several investors, research analysts and industry experts in form of healthy exchange of ideas between them.

Ms Kavita Hurry, CEO, ING Vysya Mutual Fund asked the speakers to highlight three major issues in the sector.

On which Mr. Vakil said “Three most important things we need in real-estate as a priority are—rental housing, all over the world there is organized rental housing. Here you are left at the mercy of the broker who does not know anything. Secondly, infrastructure— the government cannot be a provider, it can be a facilitator. Thirdly, all these need funds, so get foreign parties excited about India.”

Mr. Kapoor said, “We need to address the congestion issue in the island city. If we move five buildings from the island city to Bandra, there will be a whole shift in the crowd. If we can shift Mantralaya, BSE or the Income-Tax office, there will be a difference. There are three-four magnets which draw the crowd there. Everyone knows about it but there is no intension to do that because they are sitting in luxurious places. We need to add more connectivity. We need a complete master plan for Mumbai to reduce the congestion. We need a regulator, and urban planning.”

Other industry experts also voiced their opinion.

The audience reached to a consensus which was that there is an immediate need for a citizen action forum to make higher authorities listen.

quences

Truth behind ‘Affordable Homes’

More affordable homes
Affordable home
April 21, 2010

A really interesting question rising up these days is that is affordable housing taken seriously by our policy planners and key stakeholders? Now-a-days, talking and discussing affordable homes has become a fashion, including those who were not as such associated with realty sector.

But when enters the term ‘affordable homes’, one must put up a question that affordable for whom?  Around 44% of our population comprises of people earning Rs 8,500 to Rs 40,000 as their monthly income and fall both in the formal and the informal sectors.  Are these flats for these 44% people?  Also, the banks are now backing out from providing home loans. Arun Mohan, a senior advocate and writer answered all these questions in his latest offering “Affordable Housing: How Law and Policy can make it possible” .

According to Arun Mohan, there are three areas that need urgent attention to provide affordable homes: One, availability of flats which are affordable; two, availability of bank finance; and, three, availability of land for housing. Also, crisis of confidence is one of the major problem due to which prices are so high and the market is restricted. He gave answers to these questions too.  After a keen analysis, he came to the conclusion that “certifying-cum-performance guaranteeing company” [or a regulator] is required, which would control the builders and issues a “wideguarantee certificate” to the flat buyer in order to ensure him that he will be delivered the flat he pays for. This guarantee will prove beneficial since both the flat buyer will be willing to part with his money and bank will also be willing to finance it.

Comeback Of Realty

Halifax's Version Of 'Repent Sinner' and 'Riot 2010'
March 26, 2010

Towards the end of 2009, remarkable appreciation in values has been observed by the residential markets across big cities of India. Report by Wakefield and Cushman informed that in the two key residential markets in India, Mumbai and NCR, this trend is most prominent. In these areas, as compared to the same period of last year, values in Oct-Dec 2009 were appreciated.

Since Mumbai and NCR are one of the high demanded markets, both from the investors and consumers, it witnessed a faster recovery than other cities. As a result of economic slowdown, these investors were backing out their requisites which had brought a kind of uncertainty in the job markets. But on the other hand, this slowdown brought affordable housing to the consumers which in turn led to sharp upward correction in the capital values and strong recovery in the economy.

Since in NCR, a large number of projects were sold out as soon as they were launched, it can be concluded that the demand for the housing which seems to be affordable, i.e., ranging from 20 to 40 lakhs was quite high. Recently, 500 flats offered by Supertech in Noida at a cost of 9.75 lakhs are sold out just after its launch. Due to the new trend, volume of transactions has been aggrandized.

However, this trend can continue only if the government takes back the extra burden of the 10.3 percent service tax which was announced in the budget 2010 on the sale of flats before there completion. This may make the projects under construction more attractive.

Jaypee Greens Announces Lake District in Sports City, Greater Noida

Jaypee Greens Sports City - Lake District,  Greater Noida Jaypee Group (JPSK Sports Private limited) announces yet another new residential project “Lake District” under its new sports themed township Sports City along Yamuna Expressway in Greater Noida (Gautam Budh Nagar). The project is so names as it will feature an artificial lake in line with international standards. The project will offer luxury living at affordable rates. The lake district project will have 2BHK (2 bedroom), 3BHK (3 bedroom) with optional worker rooms (servant quarters), and 4BHK (4 bedroom) with worker rooms (servant quarters) residential apartments.

For further information such as floor plans, pricing, booking details, etc. please visit: http://jaypeelakedistrict.propertywala.com/

Omaxe may raise prices

Real estate developer Omaxe Ltd may raise prices this financial year and plans to launch four new projects over the next two months on rising demand, its chairman said.
Mr. Rohtas Goel said, “Demand might be robust. I will increase prices very soon, in single digits within this year”.
The firm will invest fifteen billion rupees on the new projects, Goel said, adding he expects revenues of 23 billion rupees from the projects over 30 months.
India’s property market is recovering from a bottom hit earlier this year, and analysts say much of the demand will be from middle-income and affordable housing.

Tata extends affordable housing scheme to 2BHK segment

Tatas expanded their affordability drive to the housing sector by launching flats for Rs 12.73 lakh for a two bedroom unit.

Tata Housing Development Company launched its ‘New Haven’, offering 1,300 apartments, including 2 BHK (bedroom, hall and kitchen) and 3 BHK homes, starting at Rs 12.73 lakh with a minimum size of 670 square feet.
The Tatas began their affordability drive in the housing sector earlier in May by offering one bedroom flat at prices starting from Rs 3.9 lakh at Boisar in Mumbai.
Conceptualized as a national brand, New Haven will meet the home-buyers’ full spectrum of lifestyle needs at an affordable cost, the company said in a statement.
According to the statement, after the launch of New Haven at Boisar in Mumbai, it will be expanded across the country mainly in the Tier I and II cities. Consumers can book an apartment with an initial payment of 10% of the total sale price as booking amount.
New Haven, spread across 35-acres, will offer self- contained homes and provide consumers with facilities such as club house and community center.

Century joins affordable housing bandwagon

Century Real Estate is the latest to join the affordable housing bandwagon. It has come up with ‘Century Indus’ project that offers apartments in the Rs 20-30 lakh category.
Mr P. Ravindra Pai, MD, Century Group said, Acquiring land at historical rates has helped the company make the project affordable.
The company has a land bank of over 3,000 acres, most of them acquired in historical rates, worth about 2 billion dollar. There are plans to make use of some of the land parcels to develop few more affordable projects in the city.
“We propose to develop 6,500 apartments targeted at the affordable segment, approximately seven million sq ft development, with a budgeted outlay of Rs 1,050 crore in the next three years,” said Dr P. Dayanand Pai, Founder and Chairman, Century Group. The projects would be located in North and West Bangalore.
Mr Pai said that the group has now formed ‘Century Real Estate Holdings.’ About 300 acres, valued at Rs 1,200 crore, from the land-bank have been transferred to this company, and about 12 projects would be developed on this land.
The company is looking at raising funds at entity and project levels. At the entity level, it plans to raise Rs 200 crore as bank debt for pre-development of these 12 projects. “We have almost tied up the debt,” said Mr Pai.

Realty regulator is needed

HDFC chairman Mr. Deepak Parekh said that there is need of real estate regulator at state level to deal with issues concerning the housing sector. He pointed out that the Government should layout an institutional framework for a real estate regulator. Regulators’ role would be to regulate the affordable housing agenda, promote real estate reforms and ensure transparency especially by mandating that flats be sold only on carpet area and act as a platform to protect buyers from real estate deceit. Mr. Parekh suggested that affordable housing has to be enable to cut all income segments and has to make economic sense in terms of distance from work place.

Realty regulator is needed

Government should layout an institutional framework for a real estate regulator. Regulators’ role would be to regulate the affordable housing agenda, promote real estate reforms and ensure transparency especially by mandating that flats be sold only on carpet area and act as a platform to protect buyers from real estate deceit. Mr. Parekh suggested that affordable housing has to be enable to cut all income segments and has to make economic sense in terms of distance from work place.

Affordable housing is not more affordable for builders

The  sector appears to have found its feet with focus on affordable housing and this may reflect in the June quarter results of the companies. The move has led to higher sales for many companies, but on the other hand, it has also impacted the margins negatively. The reason being that the mid-segment housing is a high volume with low margin business.

It may also be understood that only the residential market has seen a recovery, while the commercial and retail segments are still under stress.

Among all the listed companies, Orbit and Indiabulls Real Estate (IBREL) are expected to show a marginal improvement in sales. With a huge fall in property prices in the luxury segment, Orbit has shown 5% increase in sales. With a 70% YoY decline in revenue, Parsvnath is expected to see the highest fall. DLF and Unitech may follow with 60% and 54% decline, respectively. As a move to generate cash for business activities, both these companies have exited from unviable projects and also sold noncore assets. This would help in completing under-construction projects. Even some large SEZ projects have been shelved.

Many companies have launched new residential projects in affordable housing segment. Though construction costs would be low, EBIDTA margins would decline by 5-10 % average due to sharper decrease in prices. However, companies like Unitech, DLF, HDIL, and Sobha that have raised funds have improved their balance sheet positions and thus lowered their overall finance cost. Average EBIDTA margin for June’ 09 would be 39% as against 43% for March’ 09. Peninsula Land is expected to show positive margin, as the number of projects was very limited, hence leverage was also low.

Despite all the gloom, realty sector is seen to show some improvement in margins. The overall PAT margins for the June quarter will be at 26%. Though real estate sector is one of the major contributors to the over all profit growth for India Inc, yet it is low as compared to the past PAT margins of 35-40 %. However as alternate sources of funds have become available, builders have managed to improve their cash position. Loans have been restructured and thus interest liability has been reduced. Developers like Mahindra Lifespaces, IBREL and Peninsula Land are expected to report PAT margins upward of 30%.

Mumbai is the next target for DLF and Unitech

Mumbai seems to be the next destination for realty giants DLF and Unitech. Both companies are trying to restart some of their projects in Mumbai which were on hold.
Unitech, said, “We have a number of slum redevelopment projects in Mumbai. We also have a focus on affordable housing and some projects will be announced by the end of 2009.” A company official said that the focus would now be on residential projects and prices would be lower than the current market rates.