However, a section of the state administration feels that conditions in the realty market may upset the government’s dreams of generating several thousand crores of rupees by selling these properties.

The Maharashtra government is sitting on vast tracts of land in one of the most expensive real estate markets in the country. These properties, in many cases, have become a liability for the state, since it earns paltry revenue from them. Most of these properties are locked in lease agreements.

“We earn around Rs 20 crore from 955 land leases in Cuffe Parade and Churchgate and Rs 25 crore from Backbay Reclamation and Nariman Point. Most of these lease agreements are over. Instead of renewing them, we would want the government to consider outright sale of these properties,” Mumbai district collector IA Kundan said.

Of the 955 land lease agreements in Cuffe Parade, Churchgate and Marine Drive, 458 agreements ended long ago. In the Backbay area, where the business district of Nariman Point is located, more than half of the 316 lease agreements have expired. Some of these agreements were signed for 99 years. “The rent the state government receives from these properties is ridiculously low,” Ms Kundan said.

The Maharashtra government had, in 1999, proposed to free itself from these lease agreements, but its plan to sell the properties landed in court. Now the issue has been settled, and the revenue ministry has asked the city collector to put up a formal proposal to sell the leased properties. “Accordingly, we have submitted our plan. This will now be discussed by the state cabinet,” she said.

“In the next six months, we will be launching two residential townships in Indore and Meerut spread over 150 acres each. Once all regulatory issues are solved, we will start construction,” TDI Infrastructure Managing Director Kamal Taneja said.
“The company would invest Rs150 crore in each toward construction of the townships,” he added.
On the source of funding for the projects, he said that it would be a mix of debt and equity.
When asked if the company would approach private equity players in view of liquidity crunch in the banking system, Taneja said: “We are not completely closed to PE funding, but in today’s scenario, they are expensive and their expectations are going very high.”
“PE players have become ‘very structured’ these days and TDI would not like to get into such systems,” he added.
“There is obviously funding problem and it is available in a limited way to those developers, who are delivering quality products. It has created little delay in disbursement of loans,” Taneja said.
“To deal with the current situation, the company would not embark upon any expansion, mainly on land bank,” he added.
The company launched a new scheme of construction solutions for the plots in its township in Kundli, TDI City.
Under the scheme ‘build and earn’ the company would offer one-stop-solution for overall constructions of the plots and would offer a rebate of up to 25% to the owners.
“We want to create a new Gurgaon in Kundli. For this we will offer standardized constructions to the plot owners, through which they will be getting a good rebate also,“ Taneja said.
‘TDI City´ is a 1,500 acre integrated township comprising plots, villas, group housing, commercial complex, school and hospitals. It is being developed at an investment of about Rs10,000 crore and is expected to be completed by 2013.
“We will develop about 15,000 apartments and offer 12,000 plots. After developing the plots under the scheme, we may retain some and lease them in future,” Taneja said.
The company has a land bank of about 2,600 acres and it plans to develop the same in the next 6-7 years. Currently, it is developing five township projects in about 2,000 acres of land.

Sahara Prime City, the real estate arm of Sahara India Pariwar, is building the project in Coimbatore as part of what it says will be a vast chain of townships in 217 Indian locations.
Covering 1113 acres, Coimbatore will soon be home to 3,846 new residential units and will feature high-rise and mid-rise apartments, houses and independent bungalows.
Sushanto Roy, head of Sahara’s real estate operations, said, “The township has been planned to set a new standard of luxury and style. The brand Sahara City Homes is intended to provide quality lifestyle with its range of amenities and facilities.”
The township will be fully air conditioned and is also designed at one level higher than the applicable seismic zone as an extra safety measure to guard against earthquakes.
Other Sahra townships have already started taking shape with development and construction underway in the cities of Lucknow, Nagpur, Indore, Ahmedabad and Gwalior. Work is going on also at sites in Jaipur, Aurangabad, Solapur and Jodhpur.

The realty index opened at 2,720.59 points and touched an intra-day low of 2,701 points in the first few minutes of trade. It was later quoting at 2,716.17 points, down 3.16%. Led by Indiabulls Real Estate, which plunged by over 11%, sto cks of all major realty firms fell in the range of 3% to 11% in the morning trade on the BSE.

Indiabulls Real Estate touched an intra-day low of Rs 108.70, down 11.63%. Marketmen said that weak sentiments have gripped the market as a whole, which is pulling down all the sectors and realty is no exception to that.

Shares of the country’s largest realty major DLF, whose share buyback would commence from October 17, on Wednesday dipped 3.09% to touch an intra-day low of Rs 301. It was later trading at Rs 306.20, down 1.42%. Over 1.38 lakh shares got traded in the market.

Mr. Pradeep Jain, Chairman- Parsvanth Developers, Mr. Rohtas Goel, Chairman and MD- Omaxe and Mr. Punit Beriwala, MD-Vipul’s Ltd, are all in approval of this step taken by the RBI and feel that it will revive and stabilize the market and are also hopeful that this may impact a reduction in the interest loan.
However, Mr.Parry Singh, MD-Red Fort Capital, says that for the success of this step, the RBI needs to strike a balance between the provision of liquidity and control of inflation, through CRR or SLR reductions.

According to some analysts, the total cost on this count could go up to $2 trillion since the financial turmoil is not likely to end anytime soon. Most of these banks had created debts to the tune of 30-40 times their equity against the prudential norm of not exceeding ten times.
In India, the Reserve Bank of India has been pumping in liquidity into the system and local banks have been borrowing at least Rs 70,000 crore on an average over the past three weeks under its liquidity adjustment facility. Even so, liquidity has been drying up.
Recently, the Asian Development Bank down-scaled the growth expectations of many Asian economies, including India’s, in its half yearly report: Asian Development Outlook 2008.
The ADB attributes this to the worsening conditions in major industrial economies that will weaken demand for goods and services. “The myth of uncoupling has been exploded”, the report says.
India’s GDP growth estimate for the current financial year has been downgraded from 8% to 7.4% and, for the next financial year, from 8.5% to 7%.
ADB bluntly states that “very large fiscal imbalance created by the current level of subsidization of oil, fertilizer and food, as well as other off-budget items, sets a daunting task for economic management.”
With the financial turmoil in the US and Europe showing signs of worsening since the publication of Asian Development Bank’s half-yearly report, one need not be surprised if GDP growth in India turns out to be even lower than that projected by Asian Development Bank — just around 7% or so for the current fiscal. In line with the falling capital markets across the world, which have already wiped out investor wealth of over ten trillion dollars this year so far, the Indian stock market has witnessed an unprecedented fall over the past few weeks. Not surprisingly, FIIs have been pulling out from the stock market in a big way, corporate borrowings from the global markets are becoming increasingly difficult, raising money for new investments through public issues is on hold, and liquidity in the economy is fast drying up.

Indian cities enjoyed a real estate boom for nearly four years, ending 2007. After being stagnant for the first part of the year, property prices slid about 15% during the last two months in key metro areas like New Delhi or Mumbai and fast-growing cities like Bangalore and Pune.

Apart from prime locations in such cities, price corrections of up to 15% could continue in the residential, office and retail space.

Realty consultants said the property market will be affected for at least a year.

In its ongoing biennial meeting, the CAG office will also examine the nature of reforms and re-engineering of audit processes, methodologies and approaches to support its intended role. The statutory body feels that in today’s liberalized and globalize environment, the increasing varieties of organizational forms have raised serious challenges for the audit process and methodology. According to a CAG report, Rs. 1,50,000 crore has been allocated to various central government-funded schemes.

Under the current procedure, the statutory body is not able to capture the amount in transit or the actual sum utilized. At any point of time there is an estimated float of Rs 10,000 crore. “This has been the issue with many national schemes such as National Rural Employment Guarantee Scheme (NREGA) and National Rural Health Management (NRHM).

We found loopholes within these two schemes and informed the government. We’re currently working on a system which can sort out government accounts where multi-layered agencies like non-governmental organizations (NGOs) are working,” said deputy CAG, Bharti Prasad, on the eve of the 24th Accountants General conference. Plans are on to enhance the role of state CAGs and further integration process between them and the CAG.

The project encompasses a judicious mix of executive homes, weekend homes and premium villas. The company is pumping in an investment of three hundred crore rupees towards the project.
Mr. Bhim Yadav, CEO, FRSPL says “Our in-depth understanding of a consumer’s requirements and what should be offered to him has helped us in visualizing the largest Secured, Gated and Master Planned Community Development on Expressway, NH-08, in Delhi-NCR which will provide Self Sustainable, Energy Efficient Green Developments, Luxurious and Affordable Housing, Dynamic Location and a great investment growth plan.”
Global Eco-City will showcase the living trends that will come in to vogue. The roof top of the houses will be designed by fitting solar heating systems into homes which is an efficient way to combat increasing energy costs.
All Walls of the houses will be formed to create insulation to keep the home cool in summers and warm in winters. Global Eco- City shall maintain low density housing as well. Each plot has been also designed to have open space in all directions. All residents of Global Eco-city will also have the benefit of getting farm fresh organic fruits and vegetables.
Mr. Yadav said, “Global awareness is the need of the hour. It has been identified that buildings alone are responsible for 25-40% of energy consumption, 30% to 40% waste production and 30% to 40% green house gas emissions globally. There are innumerable benefits of going green that one can talk about. Though in a nascent stage, the concept is very dynamic and fast catching up. The benefit of green concept is reduced environmental impact through energy efficiency and a reduced carbon footprint, without making a commercial compromise”.

The economic slowdown which has mainly affected suburban and non-metro locations has led to some developers coming up with innovative schemes like “Book Now and Pay Later on Possession” as well as home loan installment payment for the initial two years, a report by Cushman and Wakefield said.

A few high-end residential projects in Chennai have also marketed their property with unique concept of an unlimited and unconditional complete structural guarantee against leaks and cracks and a lifetime warranty for standard fixtures.

However, established developers with substantial cash reserves have up till now remained insulated from this trend.

The current short-term stagnation in commercial and residential activity in India has led to an overall reduction in the number of land transactions with developers deferring their decisions to occupy additional land reserves.

However, the economic slowdown is not expected to affect reputed developers as much as small time operators, even leading to consolidation of the industry by bigger players.

Private Equity (PE) funds have adopted a cautious approach towards the kind of projects they pick up and there is an increased emphasis on the reputation of developers, making it difficult for lesser known players to raise funds. This has led to availability of suitable investment terms for funds.

This year investments have diversified across asset classes, with the highest share going to the residential (41%) and township (21%) sectors with the quantum of investment in the range of Rs 128,600 million.

With the market conditions changing over the first half of 2008, investors have become cautions and have chosen to remain in tier one cities where market trends are more definite. PE investments in tier three cities were estimated to be about 40% of the total quarter four of 2007. However as of mid August the tier three cities recorded nil PE investments.

As a result there is marked reduction in investors interest in projects across tier two and tier three cities.

Bangalore and Hyderabad have been able to attract maximum “SPV” deals followed by Mumbai and Delhi NCR.

Region wide distibution of PE deals shows that western (37%) and southern (32%) accounted for almost 70% of the investment followed by northern region at 26%. South Zone has seen the maxiumum number of deals (24) and the avreage size of deals being 2,800 million.

The report also states that commercial supply superceded demand. During the first six months of 2008, the seven major cities in India witnesed commercial office space supply over and above the space uptake, validating a temporary slump in the economy and in the realty sector at large.

However there were also instances like Chennai and Bangalore where the first half of 2008 saw an increase in demand over the same period last year.

In order to ride over the economic slowdown, several corporates have deferred their expansion plans. Some small time and medium players in select cities have been selling their projects to big developers to tide over.

At the recently held Green Building Congress 2008, speakers from various industries tried urgently to tap into the zeitgeist of environmental concern, arguing that green construction is the only way to build without polluting. All manner of purportedly energy-efficient devices from power-saving bulbs to eco-friendly carpets were advertised. However while green construction appeals to builders and many architects, critics think it’s little more than a fashion statement.
The ICGB has been actively promoting the concept of green architecture for three years and offers builders Leadership in Energy and Environmental Design (LEED) certificates. Developed by the US Green Building Council, LEED is a rating system that lays down a set of standards for sustainable architecture. The ICGB holds its own office in Hyderabad as an exemplar of green construction. It has courtyards that allow cross-ventilation thereby reducing the building’s dependence on air-conditioning and skylights that let in enough natural light, precluding the need for artificial light. S Raghupathy, a senior director at ICGB says the building uses about 30% less energy than an ordinary building of similar proportions. Completed in 2003, it is India’s first LEED-certified building. Five years later, 320 buildings that have been registered for LEED awards. Raghupathy predicts that by 2010, there will 1000 LEED-certified buildings in the country.

According to industry sources FIRE Capital is currently in the due diligence stage with the affordable housing investment. “The deal should get concluded within 2-3 weeks,” said the source in the know of the deal.
While, the name of the real estate developer is being guarded by the realty fund, DNA Money has learnt that it is a firm operating out of the eastern region of India. “In most likelihood, the affordable housing project is being developed in West Bengal,” added the source.
The ticket size of the project will be between Rs 8 lakh and Rs 15 lakh across various permutations and combinations of apartment sizes.
Gautam Vashisht, executive director (investments), FIRE Capital Fund, said, “The intent is certainly there in the affordable housing segment in India, particularly in Tier II and Tier III cities.” However, he denied making any comment on the possible investment in affordable housing project in east India.
Fire Capital launched its first fund in 2006 with a corpus of $250 million and has already committed over $150 million across seven investments. Focusing on residential and mixed-use developments centred on residential use, its first investment was in the Indore-based M Jhaveri Group’s 137-acre township. Other investments are also in township projects in Jaipur, Bangalore, Nagpur, Chennai, Ahmedabad and Dehradun.
The venture fund typically makes investments ranging from $5 million to $30 million.
Now with close to 80% of the corpus being deployed, the venture capital fund is planning to raise another fund next year. The amount to be raised is rumoured to be in the region of $500 million. While the primary investors will be from the US and European markets the fund will also look at raising some part of it from the Middle East.
The second fund will also target real estate projects in residential and mixed-use developments (including hotels), and the focus will be on Tier II cities in the country.

The Delhi International Airport Pvt Ltd (DIAL) had planned to raise Rs 2,750 crore from this district in 2008 when the plan was first floated and then got entangled in a controversy with the government.

But by the time this plan got finally cleared and DIAL goes ahead for inviting bidders now, both the real estate and financial markets are in a crunch. These factors, combined with a deposit from successful bidders for three years and not six as earlier proposed, DIAL now expects to raise about half of the Rs 2,750 crore as security amount. The amount raised from the hospitality district will go towards financing the Rs 9,000 crore Delhi airport phase-I that has to be ready by 2010.

DIAL’s plan for the 45-acre hospitality district include having hotels of all ranges — from budget to ultra luxury. As a result, plot sizes range 1.6 acres (for budget) to a 7.7-acre plot for a huge conference hotel. “A security deposit of three times the average annual lease rental will be charged from successful bidders.

The entire infrastructure will be provided by DIAL,” a senior DIAL official said.
Though a common feature abroad, Delhi’s hospitality district will be first of its kind project in India.

The outcome: The bitter realization that the Indian developer has limited options before him to attract buyers. The builders unanimously agreed to allow customers to have a greater say in price negotiations — in other words, they decided to cut home prices.

The developers agreed to give a 10-12% reduction for all consumers, albeit couched in schemes such as ‘bearing’ 2-3% of the interest cost, flexible rates for parking and floor rise pricing. “Don’t be rigid on rates; allow the customer to have his say,” was how one participant who is involved in large housing projects in suburban Mumbai, described the conclusion of the meeting.

The developers’ move also assumes significance as a sharp correction in Mumbai home prices would have a ripple effect across the country. Though residential prices are down 20-25% across India, developers in Mumbai have been unwilling to cut prices, citing a huge demand-supply mismatch.

“This quarter was crucial for us,” said a developer who was present at the meeting. “Demand is still robust as far as residential markets are concerned. What we want is to convert the demand into actual deals. If pricing is hampering sales, we are willing to compromise on that,” he added.

Till now, developers were not ready to accept that demand at high prices would weaken. In fact, most developers were currently holding out and did not offer discounts. They could afford to do so, since they were sitting on huge profits accumulated over the past two years of bull run in realty market.

“But the same developers have realized that demand is unlikely now at the prices seen two years back,” said an analyst with Kotak Securities. “We believe demand can only come back if prices correct.”

Some of the developers who were learnt to have attended the Grand Hyatt meeting were Akruti City, Nirmal Lifestyles, Kanakia Builders, Evershine Builders, Rahejas and RNA.

In Delhi, several developers in the National Capital Region have started offering deeper cash discounts and have increased their marketing efforts. Developers are banking on more ‘genuinely-priced’ products, a good cash discount and more advertising to lure buyers. “We didn’t offer any discount during the festive season last year,” said Raheja Developers chairman Navin Raheja. “But this time, everyone is giving it, since market conditions have changed.”

Raheja Developers is offering an outright discount of Rs 200 per square feet or around 6-7% at its soon-to-be-launched high-end project in sector 109 in Gurgaon. Aiming to lure government employees — beneficiaries of the Sixth Pay Commission recommendations — the developer is offering them an additional discount of Rs 100/sq ft, which is over and above the Rs 200 discount offered to all.

This quarter, developers are caught in a pincer-grip of falling sales, dropping rentals and tight liquidity conditions. Developers said they have also asked industry associations and their officials to help bring back investors and buyers’ confidence in the real estate sector. The overall quantum of sales dropped over 60% in the past quarter due to rising interest rates and additional pressure on household budgets.

Developers across the country have now pegged hopes on the upcoming festive season, offering to pay stamp duty and gifts like a car or free home furnishing.

For instance, Mumbai-based Sunil Mantri Realty has waived stamp duty (5% of property value) for buyers at its Mantri Park project in Goregaon (East) in Mumbai and is also offering 5% discounts at its Bangalore and Gwalior projects.

The Citigroup-backed Golden Gate Properties has offered a car for every customer booking a flat at the Golden Palms project on Hennur-Banaswadi road, some 30 minutes from Bangalore’s new international airport. “We are offering a Skoda Fabia to every customer who books a flat at the Palms,” said Sanjay Raj, executive director at Golden Gate Properties. “For those who already own a car, we are providing a discount equivalent to the value of the car,” he added. Golden Palms comprises 450 apartments measuring 1,400-1,800 sq ft and is priced at Rs 2,600 per square feet.

The first half of this year also saw a marked shift in developers’ strategy towards mid-income houses, as the high-end segment witnessed increased resistance from buyers.

Project launches in the high-end category fell by two-third to just 5, while mid-income housing project launches rose by over 20% to 37.

As per a report by international property consultancy firm DTZ, the absorption of mid-income houses in July at 76% had overtaken that of high end houses (68%). This means that high end houses are selling at a slower pace than the mid income segment. The report says that the share of mid-income housing in the overall residential supply is expected to rise to 62% in three years, compared to 22% currently.

This translates into a CAGR of 131% for mid income housing units.

The order is for the development and construction of township for the new zinc smelter plant at Dariba, Udaipur of Hindustan Zinc.
The township which is spread over an area of 4,50,000 square feet in a 12.5 acre plot consists of G+2 and G+3 houses, hostels, club, shopping centre, guest house, Swimming Pool, surface transportation program (STP), wastewater treatment plant (WTP), Sub-station, Water Harvesting, Internal Services and External Services consisting of Roads, Drainage, Water Supply, Street Lighting, Lawns and Horticulture.

The project, spread over thirteen acres, is likely to be completed by 2011, the company said in a statement.

Earlier in the day, Parsvnath said it expects revenue of 400 million rupees from its just-launched housing project in Pune.