With a recovery in the residential portion of the real estate sector gaining ground, developers in Mumbai are banking heavily on the premium category. While relatively older apartments in South and central Mumbai continue to command a premium, new properties in these locations have not been left behind. Developers said that the big-ticket deals in the sector are in the range of Rs 5 crore to about Rs 35 crore. The price starts from twenty-five thousand to one lakh rupees per square feet. Among the properties that are bringing in high levels of interest are Mantri Ruby in Walkeshwar, Orbit Arya in Nepean Sea Road and Mittal Grandeur in Cuffe Parade. Adjoining areas like Worli Seaface and Mahalaxmi are also viewing concern from buyers. A deal for the sale of a new apartment in Cuffe Parade was hit at Rs 33 crore, with the transaction expected to be completed in about a month. One more property in Cuffe Parade, Mittal Grandeur, has an asking price of fifty crore rupees per apartment. This is for eight thousand square feet property having six bedrooms.
Monthly Archives: September 2009
PE invite into housing sector in the works
The government is preparing guidelines for the participation of PE funds in housing sector under the Rajiv Gandhi Awaas Yojana. The scheme aims to make a slum-free India in five years with construction of over 10 lakh houses. The government wants to connect with private funds to provide affordable housing to millions of households under the scheme. As per IDFC Projects Equity managing director Sachin Johri, a large number of PE’s are willing to take stake in such projects to an extent of 40-50%.
GMADA to start land pooling
The Greater Mohali Area Development Authority will implement a land pooling scheme for three major projects.
Farmers whose land will be acquired for the road linking S.A.S. Nagar international airport with Zirakpur and Patiala, Kharar-Desumajra airport road stretch and Mullanpur Urban Estate will be able to avail benefits like owning a plot. Under the scheme, a farmer will be made owner of 50% of land after GMADA develops it into a residential, commercial or an institutional plot. For 1 acre of land, a farmer will be given a residential plot of 980 square yard and commercial plot of 121 square yard in the developed area. The GMADA will also pay rent to farmers till they are allotted plots. The collector will fix the rent.
GMADA wants to popularise the land pooling scheme and have launched an awareness programme. However, it won’t be binding on the farmers to toe the GMADA line. In case any farmer does not want to opt for the scheme, GMADA will pay him cash fixed by the Land Price Fixation Committee.
The GMADA had decided to acquire 771 acres of land to build 200-metre wide road from the international airport to a site near Chhat village on the National Highway 64. On both sides of the road, some area will be allowed for mixed land use, implying that people can run commercial activities.
The GMADA will acquire 260 acres for KhararDesumajra-airport road stretch and 444 acres for Mullanpur Urban Estate.
Notifications for two projects have been issued while that for Urban Estate will be done soon.
Navi mumbai is good for commercial real estate
Navi Mumbai is the best place to invest in commercial real estate. Commercial options in Navi Mumbai span a huge price band. Growth of the residential segment in Navi Mumbai, before that of the commercial segment, actually works out in favour of the end-user.
Commercial real estate in Navi Mumbai comes at competitive prices along with other options in the Mumbai metropolitan region, with the benefits of being located in a well-planned city.
IT/ ITeS SEZs and businesses that have anything to do with rail/road transport and logistics or shipping, are proving to be the next big segment in Navi Mumbai’s commercial spectrum.
Realty prices unlikely to rise in recent future
Real estate prices are unlikely to go up in the next six-months and the industry may witness huge volumes of sales of residential properties.
According to Mr. Niranjan Hiranandani , MD of Hiranandani Group of Companies, “There is a huge improvement in real estate and prices will not increase, at least for the next six months.
Further he said that in the last two months, they have seen sales of almost eight thousand apartments in the Mumbai region alone, spread in all sectors of the real estate market, but especially focused on the lower segment. But they see across-the-board increase in demand.
Oberoi Constructions plans IPO early next year
Real estate firm Oberoi Constructions plans to launch its IPO early next year.
The IPO may happen in the first quarter of next financial year.
The Mumbai-based developer has “delivered” four million square feet of property and plans to add another four million square feet in the near future.
The share offering would be utilized to “fund growth” in the company. They already have a very decent land bank. They will use the cash for business and further land acquisition.
Mothercare-DLF JV
Mothercare, a UK retailer for kids and expectant mothers, is forming a JV with DLF. While the company would continue its existing franchisee agreement Shoppers Stop, it hopes that the new JV will give it greater control over its Indian operations and ability to expand quickly in one of the fastest growing economies.
Mothercare was committed to its ongoing expansion in the Indian market. The company has twenty-one stores in affiliation with Shoppers Stop. Mothercare had been in discussions with DLF and the Tata Group retailer trent for a possible equity partnership in India.
Tata Housing in talks for fund
Tata Housing is in initial talks with 2 PE funds, Sequoia Capital and Atlanta Equity, to raise funds for its multiple affordable housing projects, signaling that the PE players were willing to return to the real estate projects that offer good customer demand and less risk.
Sequoia and Atlanta have begun talks with the Mumbai-based realty firm to pick up minority stakes into its existing low-priced housing project in Boisar near Mumbai and three other affordable housing projects expected to be launched.
The two PE players want to pick up stake in Tata’s projects because they are low-risk projects with decent returns, the person close to the development said, adding that PE players could expect a return of 20-30% in these projects.
Sequoia Capital had marked around $1.8 billion out of its total ten billion dollars to India. If a deal with Tata Housing goes through, it could perhaps be its first in the real estate. Ditto for Atlanta Equity, an Atlanta-based $109-million fund founded in 2007.
RBI Revised Guidelines
The Reserve Bank of India has issued revised guidelines on banks’ exposure to commercial real estate. The strategies say about the property where repayment of loans solely depends on the property itself and not on its expected profits.
Where repayment mainly depends on other factors such as operating profit from business operations, quality of goods and services, tourist arrivals etc, the exposure would not be counted as Commercial Real Estate.
Banks may extend funds to public agencies for acquirement and development of land, provided it is a part of the complete project. Where land is obtained and developed by state housing boards and other public agencies, banks may extend credit to private builders on commercial terms by the way of loans linked to each specific project. Banks have no right to extend facilities to private builders for purchase of land even as part of a housing project.
Bank finance can also be approved to individuals for purchase of plot, in such case a declaration is needed from the borrower that he intends to construct a house on the said plot.
Plaza Centers to invest three thousand crore
Zuri Group Global is planning to invest about twelve hundred crore rupees for setting up five-star business hotels and luxury residential properties over the coming three years.
The investments would have a debt-equity ratio of 70:30. The company was open to raising funds through the private equity and IPO routes.
The Bangalore-headquartered company plans to open three to four hotels of 150-175 rooms each in Pune, Ahmedabad, Kolkata, Nagpur, Delhi (NCR) and Mysore entailing investment of Rs 800 crore over next three years.
Zuri was also planning to start constructing this year its luxury villas and apartments in Goa, which would entail an investment of Rs 400 crore including land cost. Zuri had acquired 300 acres for the project. The approvals for the project are in place and the villas are expected to be ready in 18 months from zero date.
Mumbai flat got record Rs 28 crore
Residential real estate prices are growing in Mumbai very fast. The highest price stands at Rs 97,842 per square feet for a flat at NCPA Apartments. The transaction took place about fifteen days ago in the Maker Tower B building located close to the World Trade Centre at Cuffe Parade.
In November 2007, the largest-ever residential transaction on record was completed when a four-bedroom flat at NCPA Apartments at the Nariman Point end of Marine Drive fetched a price of Rs 34 crore.
Andhra Pradesh Works on Resource Mobilization
Andhra Pradesh government is continuously working on the resource mobilization. They have planned to raise three thousand crore rupees from sale of lands. In the review meeting, it was felt that the economy was showing the signs of recovery. The Chief Minister asked the officials of Andhra Pradesh Industrial Infrastructure Corporation and Hyderabad Metropolitan Development Authority to prepare proposals in this regard.
Real estate recovery story being scripted by investors
The real estate recovery story is being driven by the residential segment, but contrary to the claims made by a number of developers that end-users are their main buyers, the current trend is being driven by investors.
Investors are back in good numbers and before the curve goes up, they want to buy. Some who have bought are already hoping to book profits during this Diwali. This could be a precursor to further improvement in investor sentiments, since investors would take this as a sign to look towards a sustainable run in the future.
Investors moved away from the residential real estate market when the market crashed last year and many have not been came back. The last few months though have seen a number of affordable launches at price points, which have stimulated the market. Most developers have launched mid-income housing in the Rs 20-40 lakh range, which has created a movement.
Reason behind New Delhi’s real estate hike
New Delhi has been considered the business of real estate in India. With the growing number of students, tourists and bureaucrats, the real state of Delhi has become an area offered in India. Apartments, houses, land, agricultural and industrial lands, industrial and residential plots, are the main segments in which the real estate industry in New Delhi is thriving. Real estate prices in the city depend on a number of factors, including the location, accessibility, etc. Tourists look out for accommodation that is close to historic monuments and, secondly, the employers look out for residential properties that are easily accessible from the airport, train station, etc. Real estate demand in Delhi has increased more than ever. It has become the preferred place for foreign direct investment and many multinationals have established their headquarters at the site and adjacent areas. The search for a real estate agent recognized as offering real estate in New Delhi, according to your budget and needs. Beyond this, there are some other important factors such as strong economic growth, the recovery of financial markets and investor friendly policies of the government will also increase the demand for real estate in the city.
No late delivery fine if date not assured
Real estate developers cannot be fined for late delivery of possession of a flat to an allottee if no specific date of its delivery is mentioned in the contract.
The National Consumer Commission further held that the acceptance of the belated delivery of the flat in 1993 without protest renders it impossible for the consumer forum to award compensation to the buyer in this case.
Realty Prices In Mumbai Rise
Though realty prices across India are still smooth, Mumbai’s realty market has surely started heading north. Realtors in Mumbai have hiked prices for their developments by 5-15%, depending upon the location. Modern India Ltd, a Mumbai-based realty company, has finalized the sale of 4 residential flats, sized 2,100 square feet each at its high-end Belvedere Court, Mahalaxmi, at a price of twenty-five thousand rupees per square feet. Recent research reports (Market Beat) show that comparable flats (Vivarea, Planet Godrej) in the vicinity fetched between Rs 19,400 and Rs 20,000 per square feet, which clearly indicates a price rise of 25% in that area. Though prices had declined only by 30-35% in Mumbai and its suburbs, they are again moving up and still demand is pouring in, which is beneficial for developers.
Temasek look at Prestige
HDFC Property Ventures and Temasek are in talks to invest about Rs 625 crore in the Bangalore-headquartered Prestige Group, as cash-hungry real estate companies continue to tap private equity funds to meet critical funding needs.
HDFC’s real estate fund along with Singapore’s Temasek is in discussions with Prestige, which is seeking a valuation of $1 billion for its business. But the deal could take some time to fructify as both sides need to iron out a number of issues, including pricing.
Prestige Estates is seeking a valuation of about $1 billion. It is not clear if Temasek and HDFC are willing to do a deal at that price. They may look at something between $800 million and just under $1 billion.
The two funds may jointly pick up a little over 15% stake in Prestige Estates Projects, valuing the holding entity of the southern real estate major anywhere between $800 million and $1 billion.
NHB Residex to cover cities with over 1 million population
National Housing Bank (NHB) aims to cover all cities with population of over one million under its NHB Residex, which is the country’s first official residential property price index.
Currently, the NHB Residex gives relative movement of residential property prices in different localities in fifteen cities.
According to Mr S. Sridhar, Chairman of NHB, “By the end of next year, we want to cover sixty-three cities — all cities with over one million population”.
He also said that NHB Residex will be available on a half-yearly basis from now. The values for the index are derived from the market, and not from Government data.
Tax benefits for investors
UP Government has declared some tax benefits besides simplifying process for approval of building layouts to increase SEZ investments.
During the meeting, it was planned that units being set up in SEZs will get a rebate on entry tax from June 30. These units will get entry tax wavier like export oriented units. Arrangements have been made for fast approval of layout of buildings.
Unit Approval Committee headed by Noida and Greater Noida officials will approve layouts.
Officials were also ensured that VAT deposited by units set up in SEZ was refunded as these units are exempted from VAT w.e.f. january last year.
Rent depends upon various factors
If we talk about rental system, it completely depends upon the age of building. The building of old age is not supposed to be as costly as the new building is. As we know that real estate do not comes into the category of depreciable asset, but still, the building with age factor more than twenty loses its rental market value. The fact behind it is the use of old fittings and loss of elegance with time. Most of the people prefer well maintained modern house for rental purpose.
Future Plans of Amrapali Group
Amrapali Group has announced plans to invest Rs.15,000 crore in coming 5 years to develop various projects across the country.
It is also considering coming out with IPO within this financial year if the global market scenario improves.
Amrapali group announced the launch of a 400-unit housing project in Ghaziabad with an investment of Rs.125 crore.
Besides the National Capital Region, the group has presence in 27 cities.
Small cities are getting more interest
Due to the major hike in property prices in metros most of the people are showing interest for small cities. The new name in this list is the Neharpar city in Faridabad. Buyers as well as developers are started looking at Neharpar as the emerging real estate investment destination. It is supposed to become the big realty junction of NCR in near future. The development work is going on its best in this city and the most attracting point is that prices are much affordable.
Rush is back
We often read that recovery in realty market is visible now. Such news has reached to general people and they have started looking at property of their choice at affordable rates. Competition between builders results into rate cuts and attractive offers for buyers. It can be easily figured out by taking a look on the increment in property registration in major cities. With the improvement in macro-economic conditions and affordability of buyers, developers witnessed a stronger response to new launches across cities over the past quarter.
Real estate recovery is now visible
As we all know that property buyers are coming back to market, this time can be marked as market revival time. Once again the buyer has lots of choices and the seller has more profit from dealing. After observing the increase in demands in real estate industry, developers are all set to increase the prices of realty projects. If we talk about real estate companies, almost every company including DLF, are working on the same strategy.
With the wish to see real estate at its best in near future, I hope that the buyers will have more and more choices available to fulfill their needs.
Indian real estate trend
In coming years, India is expected to outperform the global markets with a growth rate in the range of 7 percent to 10 percent. This will benefit the real estate sector, which is closely linked to high growth in the economy.
A decrement in property prices, reduced interest rates and stability in the job market has helped the sector gain momentum once again. Developers now realized that affordability was the key to attract the prospective buyers; they tried out with smaller sized apartment. Projects that were launched in this segment received a good response, which indicated that home-buyers were waiting for a good opportunity.