After closing its two earlier real estate funds, India Infoline Ltd (IIFL) plans to raise two new funds. These new funds will be invested for developing a residential and office space projects.
India Infoline Ltd (IIFL) has announced that it would close two old real estate funds soon and start raising two new funds. IIFL plans to raise the new funds from domestic investors. The funds will be probably be used for developing residential or commercial projects. Continue reading
Home prices in Mumbai rose in the last quarter. Meanwhile the period was noted for lower home sales as well.
MUMBAI: Home sales are down. The real estate market is sluggish. Yet the home prices are not affected by them. It seems that the home prices are not aware of the weak home sales. Continue reading
As the builders are not able to find sufficient number of buyers for their projects, now they are coming up with options of property investment.
Sluggishness has spread its shadow on residential market. Home sales are falling down as there are no property buyers. What could the developers do to boost the buyers’ sentiments? Here we see how they are promoting their projects under the banner ‘best option for property investment.’ Continue reading
Delayed projects have hit the NCR residential market. Due to the delay of projects the home sales have dipped in the NCR.
DELHI-NCR: The prospective buyers are nailed by delay in projects. As per a recent report by Knight Frank states that new launches in the Delhi-NCR has fallen by 31%. It has adversely affected the NCR residential market.
As per the report, NCR residential market has nearly 1,40,000 unsold inventories. Out of this, over 27% is under construction.
As per the Knight Frank India report the 33,500 units were launched in the second half of 2012-13. This shows a fall of 31%. Global property consultant firm warns that the launches will see slowdown in the coming months too, affecting the largest residential market.
Developers are finding it really hard to complete the projects. The escalating prices of raw materials make construction costlier. This prompts the developers to invest more. Difficulty in finding sufficient fund is thus another reason for delayed projects. Continue reading
Tier-2 cities of India have been witnessing a stabilized domestic demand for residential as well as commercial properties. In fact the domestic demand drives the growth of tier-2 cities.
Unlike the big cities which witness the demand of NRIs and other HNIs, the smaller cities or tier-2 cities are growing due to the domestic demand for residential and commercial properties. Property prices in these cities are more stable and not rocketing as in the other major cities.
When surveyed among the occupants of tier-2 cities, majority of them opined that the property prices will stand stable in these cities. However a few said that the property prices will be increasing by 70% by the next year. Continue reading
Aiming to provide affordable homes to all the people, the union government is seriously pondering over the matter to confer infrastructure status to the housing sector.
Economically poor and weaker sections of people are on the verge to own a home in near future. This will be possible for them if the union government confers the infrastructure status to the housing sector.
The decision is believed to be taken in the upcoming budget session of the parliament. However the matter is under the consideration of the Finance Ministry and Reserve Bank of India.
A senior official with Ministry of Housing and Urban Poverty Alleviation (MHUPA) said that it is likely that a favorable decision is taken on the matter. The official added that the ministry is planning to offer some income tax exemptions and service tax reductions to the housing sector.
Conferring infrastructure status is believed to boost the housing sector as it will provide easier access to funds. As a consequence, the availability of houses also will be increased simultaneously.
A recent study on the urban housing shortage revealed that in 2012 nearly 18.78 million housing units were short in India. A major share of the shortage was in the medium and low budget housing units.
The supply of housing units in the economically weaker section and lower income group fell sharply. The former witnessed a shortage of 10.55 million housing units while the number of the latter was 7.41 million.
The shortage cannot be mended by the government but only by the private developers who find it all the more difficult to construct cheaper homes due to the increased cost of construction. The land also has become so costly that added the cost of construction. Increase in the interest rates also affected the property prices.
The developers have been demanding for infrastructure status for the housing sector for a long while. MHUPA also raised the demand for the same. Conferring the infrastructure status to the housing sector will boost housing sector and the builders will be benefitting from this as it will enable them to own some tax exemptions and other tax benefits.
Home buyers look with lure to attain a better one among the many unsold properties in Pune. The home buyers are expected to bargain for the unsold properties in Pune.
Vast numbers of properties in Pune remain unsold. Recently residential market in the city has experienced stable property prices for a few couples of weeks. Home buyers consider this as a boost for them as they will have plenty of options to choose from. They are also hopeful of attaining properties in Pune at lower rates through bargaining with the builders.
Global property consultant Cushman & Wakefield’s October-December (2012) quarter residential research report stated that the home launches fell sharply in the last quarter of 2012. Though there was a substantial increase in home launches here in the first three quarters of the year, the final quarter faced around 60% fall in new launches. Continue reading
Real estate experts said that the residential market across India has revived after RBI cut its major rates. After the RBI rate cut; the home loans have become cheaper and this has improved the sentiments of home buyers.
RBI rate- cut have highly affected the sentiments of home buyers. With the RBI rate cut, the home loans have become cheaper. This has increased the housing demand that helped residential market to revive.
Praising the RBI rate cut, real estate developers and consultants have said that the act will improve the housing demand. As a result the residential market will see a growth. According to them, the rate cut will boost foreign investment as well.
Last week; in a much awaited decision enabling the subsidiary banks to offer loans at lower interest rates, RBI had cut short its key interest rates. The Central Bank lowered the repo rate by 0.25% and cash reserve ratio by 4%. Continue reading
Theme-based housing has become the latest trend in the Indian residential market. According to the industry experts, the theme-based housing projects hold better potentials for growth in India.
Recent trend in the Indian residential market is that it has become theme-based. Indian realty market witnesses a steady increase in the demand for theme-based housing projects. Viewing this increased demand for theme-based homes; Tata Housing Development Co. Limited is up with many theme-oriented projects.
Speaking to media persons Mr. Rajeeb Dash, marketing head at Tata Housing Development Co. Limited; said that theme based projects are becoming more popular in India. In his opinion theme based projects have a very bright future in the residential market in the upcoming days.
The growing trend is seen as resulting from the people’s contact with the outer world. At present the people of India travel a lot; and they get acquainted with the housing trends in the world-cities like Paris, New York, Dubai and the-like. These cities influence them and moreover they become aware of the western culture and the residential markets there. Continue reading
Pointing to the falling property prices, global property consultancy firm CBRE reports that the residential market is on the verge of a price-correction. The property consultancy firm added that the builders are pressured to cut down the prices by the weak home-sales.
Mr. Anshuman Magazine, CBRE’s chairman & MD for South Asia, pointing the fallen property prices in Mumbai and other major cities of India, said that the housing segment will soon experience a price-correction. He said that if the lower sentiment remains the same in the residential market, it can be sure that there is a bigger flow of black money.
Compared to the second – quarter prices, prices for the newly launched homes in the third quarter are down by 2 to 5% in Mumbai, reported CBRE. Substantiating their report, another property consultancy reported that the property prices in Mumbai have fallen. According to the report of Liases Foras, the prices in Mumbai have fallen by 1%. Continue reading
Cushman & Wakefield reported that the new home launches in top Indian cities fall by 16%. The global property consultant had tracked top 8 cities of India.
According to the Cushman & Wakefield report, nearly 1.62 lakh housing units were launched in India’s top 8 cities in 2012. The number shows that the new home launches are down by 16% compared to 2011.
Cushman & Wakefield had studied the number of home launches in NCR, Mumbai, Bangalore, Chennai, Kolkata Pune, Hyderabad and Ahmedabad. Based on their study the global property consultant reported that the residential market across India has dropped. Continue reading
Photo by dno1967Bangaluru has over the years gained immense popularity as the hub for IT industries in India. With great opportunities like world class education, working environment, living standards it is not wrong to mention it as the “The Silicon Valley of India”.
Many non-Bangaloreans now call the city their home. It is interesting to note that over 10,000 dollar millionaires and about 60,000 super rich people are currently living in the city with huge investments to make. All these have made Bangalore a hot spot for Real Estate Market, both Residential and Commercial.
Residential market has seen some significant action with many developers like Prestige and Sunil Mantri, Sobha, rolling out new projects in micro market segment. Some of the key areas in Bangalore, where the residential demand has picked up, are Sarjapur Road and Whitefield, Doddakanenahalli and, Jayanagar.
The supply is growing in line with the revived commercial real estate demand. Latest report from Cushman & Wakefield implores that the total projected supply for the current year is 12.42 million square feet of office space, more than twice the supply delivered in the year 2009.
Indian Market Research Bureau (IMRB) conducted a survey among 5 cities, amongst individuals aged between 25-39 yrs, stated that Mumbai and Bangalore are the most preferred places to live as the cities provide the best quality of life as well as the most courteous people. Bangalore is also identified as a city which is in the process of development on multiple counters – numerous projects have been initiated in areas of Infrastructure, Power, Water, and Sanitation.
All this indicates that this will be a good investment destination, hence attracting FDIs and NRIs fund flows as time goes.
There are various factors that must be discussed before purchasing property. One needs to consider factors such as economic growth outlook, interest rates, job security, demand, credit supply etc, understand the overall dynamics of the real estate sector.
Rough estimates show that out of the total 100 percent real estate market the residential segment weightage is approximately 75 percent whereas 20 percent is commercial office spaces and balance 5% comprises retail, hospitality.
The mid market residential segment (residential properties between Rs 15 – 50 lakh) represents nearly 85% of total mortgage disbursements in India. Therefore, the mid market residential segment represents nearly 64% of the market. Almost 55% of mortgage finance disbursement for residential properties happens within the top seven cities and the balance 45% is shared by the whole country.
There was a dearth of two to three bedroom properties within this range of Rs 15 – 50 lakh within the greater metropolitan areas of major cities. Easy supply of money from equity capital sources created an artificial demand of land for the development of large township projects and SEZs. Everybody started announcing huge and multiple projects but ignored the calculation, execution and delivery capability perspective involved.
Most developers started projects 10 – 20 times the total square footage of what they had delivered in the last 20 – 30 years. The various sources of institutional capital lapped up the story. However critical considerations like the nature and kind of organisation structure, management bandwidth, labour, capital equipment, machinery, project time were ignored.
The pricing of residential projects went up by 400 – 500 percent in most cities between 2006 – 2008. Interest rates also went up from an all time low of 7.00 percent, 20-year fixed mortgage to as high as 13.75 percent floating rate in 2008. This put a lot of strain on affordability.
The stock market crash and job insecurity that followed the Lehman Brothers fiasco, drove away investors and actual buyers. The credit tightening from domestic banks and marked to market losses started reflecting on credit supply to the sector and the market went dead.
Developers came stress with no cash flows from the sale of projects and rentals of commercial office spaces and retail spaces also dipped by as much as 50% and everybody started playing the waiting game and bottom fishing to get back into the market.
The most credible development companies, in the absence of retail buyers, could not find capital to complete under-construction projects. This led to delays and temporary abandoning of projects. Developers were forced to rethink strategies to get back cash flows and improve sales. This led to developers having a “Eureka” moment about affordable housing.
Luckily for the markets better sense has now prevailed and several developers are re-pricing projects downwards and repositioning them as affordable housing. The banks have also selectively started lending to developers, albeit in small amounts and with strict performance criteria. The banks have also brought down interest rates and also restructured debts. This has slowly brought buyers to the market.
The worst seems to be over for the mid-market residential real estate asset class, although the same is not yet true for commercial office spaces and retail malls. This segment essentially drives cash flows as well as the major chunk of demand. This segment is also one which gets maximum bookings from actual user market rather than the investor bookings in percentage terms. Therefore, it is the lead segment in driving real estate markets. Unfortunately, it was the most neglected segment during the bull run of 2006 – 2008.
Now that most developers have realised that this segment is bringing back buyers who were left out to due to affordability issues during the bull run, cash flows are likely to improve. There have been a few launches of affordably priced projects, which have seen a positive response from actual users.
This has led to other developers following suit and taking advantage of the positive sentiment that has emerged towards affordable/mid market residential segment. The market will see a slew of such launches in the next three months to one year, giving ample choice to actual buyers. Prices will stabilize for a while.