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Acron Infra Projects Constructing Residential Complex at Pune

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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.

Godrej Properties Stands Tall, But Weak Demand is a Concern.

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Worried about economic and political factors influencing the real estate sector, investors have dumped real estate stocks in the past few months. The 15-member BSE realty index is down by 40 percent in past one year. The members of the index have had varying degrees of fall in their stock prices ranging between 8.5 percent and 81 percent during the same period. However, through all this, the Godrej Properties scrip has not only held its ground, but also registered 19 percent appreciation in price in the last one year.

One of the few business houses to be in real estate, Godrej Properties is a national real estate developer with presence across 11 cities in mid-income housing development. One of the biggest advantage enjoyed by the company is the equity of its brand “Godrej”. At a time when the sector is losing investor confidence due to some of its players’ supposed involvement in corruption, having a strong and reliable brand in the realty space could not have been more cherished by Godrej Properties.

Given the command of high interest rates, high influence is yet another issue for real estate companies. The low capital-intensive model is a good change over other capital-intensive companies. The fourth quarter ended March 2011 has been the best one for the company driven by sales from its projects in Ahmedabad and Gurgaon. The company is expected to launch 4.5-5.5 million square feet area in fiscal 2012.

Though, one of the concerns is its geographic concentration of the company’s landbank around half of which is located in Ahmedabad and another concern is the weak demand in Mumbai market where the company’s ambitious project ‘The Trees’ is being constructed at Vikhroli. The demand should recover by the next 02 years.

Realty Big Players Attracted Towards Small Cities for Expansion

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NEW DELHI: Growing demand for homes in smaller cities of the country is attracting real estate biggies. Cities like Bhopal, Bhubaneswar, Coimbatore, Indore, Jaipur, Lucknow , Nagpur, Surat , Vadodara and Visakhapatnam are estimated to add 354 million sq ft of residential development in the coming 03 years. According to a research, large builders like DLF , Unitech , Parsvnath , Omaxe , Ansals and Emaar MGF have already diversified into these cities. These cities today show huge potential for growth. These cities are attracting the big developers because of their considerable price stability and growth prospects. With economic activity picking up in these cities, there is a growing migration from smaller areas, which has created a shift towards an apartment culture. This shift will foster volumes for larger developers in the future.

Looking at this new demand, banks and financial institutions are also looking towards these cities to bridge the financial saturation gap.The growth prospects in the smaller cities are fascinating huge developers with multi-city existance.

2BHKs at the Top of Sale Chart in Housing

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The smaller apartments are selling big! Presently, the maximum demand is for 2BHK residential apartments and the supply is fullfiling this demand. No wonder, some developers claim 55-60 percent of their current inventories are 2BHK units, the GM – Marketing of Ashiana Housing Ltd., Atma Sharan, says the same, “About 55-60 per cent of our inventory comprises 2BHKs. It is definitely the fastest growing segment, particularly since for the first-home buyers as they are at the beginning of their careers and married life.”

The maximum demand for the 2-bedroom units is from the middle-income group nuclear families typically a middle-class salaried employee hailing across sectors, like government employees, school teachers, or employed in the BPO, IT, banking and service sectors. Also the middle level self-employed professionals. This is likely for nuclear families with small kids where a third bedroom is not a necessity and not worth the additional cost. A lot of developers, who were primarily focusing on luxurious housing earlier, have changed their focus to the smaller units as it is said that “the pot of gold lies at the bottom of the pyramid, and that is where everyone wants to get.” The 2BHKs are doing particularly well as they tend to attract the first time buyer who is young, has just married and taken the first few steps of his or her professional life.

Real Estate to Feel Rate Hike Tweak

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The RBI’s decision to rise its policy rates, leading to hike in lending rates by banks, will adversely affect the sectors like real estate and automobile. These increases in the policy rates will raise the cost of properties as it increases cost of funds. The RBI’s hiking of the repo rate by 25 basis points is far from good news for the real estate sector, especially in terms of housing.

“Purchasing activity had already dropped, chances of minimising the property prices by developers to counter the negative effects of this hike depend on the financial ability of individual developers to hold on to their current pricing and risk losing sales till the situation improves.

Developers with enough capital as base are less likely to relent on their pricing than smaller developers with an urgent need to sell their inventories. The industry is already revolving under the high input costs and coupled with high sanction costs, it has to pass on the same to end user. However, hope is that the development will not discourage buyers of their buying decisions.

ICICI Bank , Country’s largest private sector bank, Managing director & CEO, Chanda Kochhar said that the RBI’s decision to increase the repo rate by another 25 bps and the existing systemic liquidity conditions could lead to an increase in funding costs for banks, and in lending rates.

RBI continues with its tight monetary policy to contain inflation. However, many analysts doubtes its efficiency to contain inflation. But, the measure will certainly affect the economic growth of the country.  The increase in the interest rates will not only make the loan costly but will also reduce the entitlement of credit of a debtor. According to banking norms, while approving loan to a borrower, bank see to it that the EMI on the loan should not exceed the 40% of the total monthly income of the family. As increase in interest rates will lead to rise in EMI and will bring down the claim of loan amount of a debtor on the same income.

Home Loan Rates Increases Tends to Increase Home Prices

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NEW DELHI/MUMBAI: A 25 basis point rise in key interest rates by the Reserve Bank of India on Thursday is likely to further lower home sales across the country, some builders and bankers said in the midst of increase in bank rates. Customers will now have to reconsider the size and locations of houses they wish to purchase and many buyers are expected to put off their purchases altogether till home prices come down and rates stabilise. This is certainly bad news for existing home loan consumers as banks will certainly increase home loan rates.

Purchasing capacity had already gone down visibly during the last tranche of interest rate hikes, and we will see a further reduction in buyer interest. Owing to the last 10 rate hikes by RBI, EMIs for housing loans have risen 25 percent to INR980 per INR 1 lakh of borrowing, and consequently loan eligibility for homebuyers has declined by 20percent. Anil Kothuri, head of retail lending business at Edelweiss Group says, “Housing finance companies have no wriggle room available.” For new home loan seekers, this will be big warning, not just because of the rate hike but also because of the frequency of the rate hike by RBI. “The person who is looking to purchase a home has the option, of buying or not buying. Existing home loan customers are stuck. However, of the opinion of Renu Sud Karnad, Managing Director of HDFC, is that this quarter percentage hike will not impact housing demand and loan off-take.

Maharashtra Govt. Launches E-Portal for Building Plans

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THANE : In a step that could lift the curtain of secrecy surrounding the process of construction projects, chief minister Prithviraj Chavan on Monday inaugurated a web-based portal for issuing clearances for new building plans.

The software of the portal is designed to issue timebound clearances.The commencement certificates has been the preferred project of Thane municipal commissioner R A Rajeev , who faced criticism from members of the standing committee at the time he was introducing the domain to the CM. The domain, “tmc.tp”, will improve clarity by permitting proposals for building projects to be sanctioned online in a specified time-frame.

A member of Shiv Sena opposed the manner in which the civic chief chose to “ignore” the elected council. Designed by software professional Prashant Ugemuge, Nagpur based, the portal will give the commissioner daily updates on the status of each proposal and can question any delay by the subordinate officials . In the beginning, proposals would now be examined by a surveyor or an assistant director online who will then put his seal of approval.

Brokers Hunt for Jobs as Slump Hits Realty Sales

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NEW DELHI | BANGALORE: Broker in Bangalore bylane has just opened a stationery shop. He has named it ‘Smart Shop’, borrowing the name from the realty brokerage firm that he ran from the same premises until about two months ago. He switched to retail after his property business hit a rough patch following a slump in home sales. About 03-quarters of his revenues came from sale of apartments, the remaining from renting.

“With home sales dropping, it doesn’t make business sense anymore,” he says. It’s the same story in other big cities. In Mumbai, a mid-size broker has set up a small fast food joint to make ends meet. In Nagpur, a real estater has quit the real estate business and set up an ice-cream parlour. Their worries are not unfounded. While the large and established players in the property business have managed to stay, even during the slump, thousands of smaller players like brokers and agents are being forced to look for other jobs.

It also hit lakhs of people employed with such small outfits – each of which hires 5-15 people.With many brokers closing shops or reducing size, these people are out in the market, looking for jobs in sectors such as retail, banking, insurance and call centres. The real estate industry employs about 10 lakh people across the country, the majority in the unorganised sector.

In the first quarter of 2011, home sales dropped 17 per cent in Mumbai, 14 percent in Bangalore and 15 percent in Hyderabad. According to consultant Jones Lang La-Salle, unsold residential units in projects that are complete or are nearing completion in 6-12 months in Mumbai and Delhi-NCR are as high as 25 percent and 16 percent, respectively. In other big cities, including Bangalore, Chennai and Kolkata, the numbers range between 12 percent and 19 percent. Sales in tier-II and tier-III cities are steady, though there is some panic due to the increase in interest rates, which have climbed to about 11 percent from 8.25 percent a year ago.

“For smaller brokers, the impact of the current market factors is a lot more compared to the larger brokers,” says the president of the National Association of Realtors India . “Even for our members – who are fairly well-off – business is down 40 percent compared to 2009-10. But the smaller guys are in trouble and are setting up businesses that move on a daily basis. Many I know have asked their employees to look out” Ravindra Bramhe, chairman of the Maharashtra Property Brokers’ Association, says.

For whatever business is left in the market, there are hundreds of agents in queue. For instance, there are pockets on the Noida Expressway, near large projects, where real estate brokers can be seen sitting inside small tents, under the sweltering sun, waiting for business. Those who can’t afford to set up these tents can be seen on the roadside, running after every car that passes by, with brochures and flyers of projects in hand. Industry refers to them as the broker mandi. “All my friends and colleagues are now looking outside real estate before things get worse,” says Chaudhary. Many have returned to the insurance industry and others have found jobs with small call centres. A few have found employment with retail stores.

Realty Prices Peaking, Time to Sell Your House and a Correction in the Rancid

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As property prices exceeds the 2008 peak levels, realty experts believe that a correction is possible in the next couple of quarters, especially in cities like Delhi and Mumbai where prices have grown up fast. This offers an opportunity to real estate investors to gain profits.

A Navi Mumbai-based marketing executive, Parvinder Singh Sidhu, agrees. Five years ago, he had bought a second home of 750-sq-ft flat at Belapur in Navi Mumbai for about Inr13 lakh. At present, the price of the flat is Inr35-40 lakh. However, with the talk of correction in the Mumbai property market, Sidhu is planning to sell this house and earn profits now. “I have a house to stay, so I can think of selling this one. If property rates come down in the future, I could buy a similar property at a lower price,” he says.

Is it really a good time to cash in on your real estate investment? Yashwant Dalal , president of the (EAAI) Estate Agents Association of India, says that property prices in many markets have begun to show signs of correction. ” Where the rates have peaked, we expect the prices to go down by 25-40% in metro cities. If you had bought a house previously just as an investment, I would suggest that you sell as soon as you can and buy a similar property at cheaper price later,” says Dalal. According to him, property bought even 03 years ago may have appreciated nearly 100-150 percent in some areas, so it may be a good time to book profits.

BAI Advices Maharashtra Government to Take Over SRA Redevelopment

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MUMBAI: In view of the tremendous response received by state-run housing corporation MHADA for its offer of 4,034 houses under different categories, Builders Association of India has adviced the Maharashtra government to take control of the redevelopment of SRA schemes and nominate MHADA, MMRDA and CIDCO as the official agencies for redevelopment of slum. BAI Treasurer, Anand Gupta said, “MHADA, MMRDA and CIDCO like agencies could offer free rehabilitation houses to eligible slum residents by constructing multi – storied buildings as provided in the SRA Scheme. They can sell the balance area to all those applicants of MHADA flats who did not get allotment”. BAI has sent a written proposal to state government in this regard.

“Over 2 lakh people had applied for the 4,034 MHADA flats in May this year, and nearly 7 lakh home-seekers are expecting that they will get flats at very reasonable rates. Funding such projects will not be an issue since customers are ready to buy the houses at rates and terms of payment as announced by MHADA”. MHADA has a unique advantage, it has over a period of time collected a huge data base of home-seekers in Mumbai, which promises ready customers for affordable and mass housing segments.

All these Government bodies have made the mandatory consent by 70 percent slum residents will not be required. As per SRA record, 1,046 plots are available with state Government for redevelopment. That can house 3,70,000 flats of 430 square feet as per carpet area, and provide housing to six lac slum residents.

Real estate prices fly in Delhi, NCR

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NEW DELHI: Real estate prices in some areas of the NCR glided high by 20 to 27%  in the first quarter of the current financial year as compared to the subsequent period of 2010-1. “Property prices for Delhi have seen boom if we compare per square feet prices of Q1-11 over Q1-10. Certain key areas like Sarita Vihar and Rohini have seen 27% and 20% growth respectivly in prices compared to prices over Q1-10”.

According to a report, the upward price sentiment would continue as the prices on average are hiking up by 15%. The South Delhi locality Sarita Vihar’s PSF prices rise by 27.60% at INR 8,110 as compared to Inr6,356 in the period of 2010-11, while north Delhi-based Rohini’s PSF prices increased by 25%. This is followed by Patparganj at a PSF price appreciation of 21.68%. Other localities like southwest Delhi-based Dwarka sub city’s PSF price also increased by 28 % in sector-11 and sector-2.

Realty prices in suburban NCR like Noida and Gurgaon also increased because of metro rail services came into operation. Prices per square feet in sector 110 and sector 93 of Noida also moved up by 16 %  and 11 % respectively,  as compared to prices in the corresponding period of last financial year. “Gurgaon witnessed an upgoing trend in property prices. Properties located on the Sohna Road and DLF City phase IV have seen the highest growth in prices by 46 % and 42 %, respectively, in Q1-11 over Q1-10”.

 

TPG purchases 15% in Shriram Properties

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Texas Pacific Group Capital, a US-based private equity firm has taken up a 15% shareholding in Shriram Properties, the realty arm of diversified financial services group, forINR 450 crore. The transaction values the Bangalore-based developer at more than INR2,700 crore. TPG currently holds 49 percent shareholding in Shriram Retail Private Holdings and another 28 percent in Shriram Citi Union Finance. In March, the private equity firm had possessed the assets of Vishal Retail for INR 70 crore through Shriram Retail.

Shriram Properties said it would use the proceeds of the shares sale to venture into retail, hospitality and information technology parks, besides growing its base in the residential projects. “The money raised from private equity fund will also be used to purchase distraught assets in the market,” said M Murali. The company has postponed its proposed plans to increase money from the stock market this year. “We are in talks with builders for buying five projects in commercial and residential space,” Murali managing director of Shriram Properties said. Shriram’s move to diversify its asset portfolio comes at a time when developers are starting to push commercial assets such as retail, hotels and IT parks, riding on the back of economic recovery, to generate steady returns in the next couple of years.

Wealthy and Powerful Buyers of CWG Flats Paying Heavy Interest.

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NEW DELHI: The group of wealthy and powerful people consisting of politicians, film stars, lawyers, bureaucrats, businessmen and top executives of multinational companies is fighting to gain custody of apartments in the heart of Delhi for some months now and there is no sign that a outcome is near. “We literally financed this project for the CWG, and now we are stuck, I put in all my hard earned money to buy a house here.”  said Dhiraj Mathur , one of the 280 people who purchased apartments in the Commonwealth Games village complex and an executive director at Pricewaterhouse Coopers.  These high-end apartments which were built to house the athletes of 2010 games, were sold for between INR2 crore and INR6 crore. But buyers were denied occupancy after charge of bribes in the Games surfaced.

“I used my life’s earnings to buy two apartments in the village as I did not have any property in Delhi”, who paid close to INR6 crore, said former cricketer and parliamentarian Navjot Singh Sidhu “. Had I invested this money elsewhere, I could have got a good return by now,” he added. About 280 buyers – including people like YC Deveshwar of ITC , danseuse Shovana Narayan, lawyer Rajiv Luthra, former finance secretary Ashok Jha and Attorney General Goolam E Vahanvati – paid close to INR 1,500 crore for these flats.

Many of the buyers had taken bank loans for the property and have been paying heavy interest for the past 03 years. Now, with the central bank having revised interest rates nine times in the past one year, their costs are mountaining. “I have been paying an average EMI (equated monthly installment) of about Rs 2 lakh for the past three years since I bought the flat. Right now, most of the EMI amount is going towards interest payment,” said an employee of IFC, New Delhi. He had bought a four-bedroom flat for about INR3 crore and had taken a loan of INR 2.25 crore from Citibank. In the last few months, his interest rate has gone up from the original 9.1 percent to 12.5 percent, increasing the interest factor in his EMIs by at least 30 percent. The apartments lie vacant, with no one to look after, with broken doors and windows that let in dogs and birds. They are in a state of disorder since the end of the games in October last year

GMR Declared Net Loss of Rs1,006.7 crore for 4th Quarter

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GMR Infrastructure on Tuesday declared a consolidated net loss of Rs 1,006.7 crore for the fourth quarter ended March 31, on account of a one-time loss from its dissociate of power company InterGen NV and losses from its Delhi airport.

Losses from the Delhi airport stood at INR 214 crore for the quarter on higher capacity costs, including interest charges and depreciation, with Terminal-3 becoming operational during the financial year. GMR’s net revenue during the quarter increased 74% to INR1,962 crore over INR1,125 crore in the corresponding period last year. The growth was assisted by revenue from its Male airport, the increase in traffic at Hyderabad and Delhi airports and better operations in its Chennai and Kakinada power plants, the company said.

The losses from the InterGen dissociate and Delhi airport operations also diminished the full year performance of the company which posted a loss of INR 929 crore for 2010-2011 as against net profit of INR158 crore in the past year. Full year revenue, however, increased 26% to INR 5,773.8 crore with airports contributing 41%, energy business 38% and highways 7%. The chairman of the GMR group said,“Though the dissociate of InterGen has resulted in a one-time and non-recurring loss, it has released equity capital of INR 958 crore and would enable us to reinforce our focus and resources on more profitable Indian assets.” The company also expects to recover part of the loss through Island Power, which is Singapore-based electric utility.

Multi National Brands Walmart, Carrefour and Tesco May Soon Open Stores in India

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NEW DELHI: Multinational retailers namely Walmart , Carrefour and Tesco may soon be allowed to open stores in India subject to inflexible investment norms, sourcing conditions, and cap on number of outlets in large cities. The Department of Industrial Policy and Promotion, or Dipp, is likely to move a proposal seeking cabinet’s consent for 51 percent FDI in multi-brand retail subject to an investment of at least USD 100 mn.

A draft structure has been prepared keeping sufficient safeguards to protect small shopkeepers, and to ensure that FDI actually helps in development of back-end infrastructure. The department has circulated a draft structure to a committee of secretaries, which will fine-tune it before a final cabinet note is moved. Multinational retailers will have to file a statement of account with the RBI and Foreign Investment Promotion Board showing the investment in back-end functions.

Proposals address states’ concerns “The government is very clear that FDI in multi-brand retail should create an employment on big scale and bring quality investment into the country resulting to development of back-end infrastructure,” the official said. For easier monitoring, the government will also allow back-end infrastructure to be executed through a dedicated unit. Multi-brand retail stores would be required to source at least 30 percent of their products, including food items, from small and medium enterprises, according to the draft structure.

Babus Turn Out to be Ingenious Investors.

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NEW DELHI: Out of the 4,587 members of the IAS, about 660 has not filed their statements even on the last day for declaring immovable property.The statements posted on the department of personnel and training website shows how babus are clever investors since most of them own several properties, Greater Noida is the most preferred investment place, followed by other parts of the extensive and fast growing NCR.

Any senior bureaucrat on Central deputation owns a plot or flat or house in Greater Noida. It is also a favourite destination for babus of AGMUT cadre, who are usually posted in Delhi at some point of their careers.

Several officers, irrespective of their ranks, own several properties. However, there are certain exceptions among senior officials, whose returns show that neither they nor their spouses own any property. Many officers have not filled in the column on current market value on the plea that they have not determined it. There are some statements, which show suspect at first glance.

Former NDMC chairman Parimal Rai, who was one of the officers indicated in the Shunglu Commission report, has declared 08 properties, including 02 flats in posh area of Green Park. He has valued the flats at Rs 10 lakh each, which is out of sync with the prevailing property prices in the city. His other propertues include a four-bedroom deluxe flat in Lucknow, and a plot in Ghaziabad. A K Mehta, a J K cadre 1978 batch Joint Secretary in UUD ministry, owns 10 immovable properties, which are three plots – two of which are in Golf City (Noida sector 75) worth Rs 37 lakh each – and a property in a Dwarka mall worth Rs 16 lakh.

India’s Biggest Real Estate Firm to Get Crores

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The Biggest real estate firm intends to trade in a few IT parks and its hotel business, hoping to wrap up 7,000 crore in the next two years and reduce its growing gross debts.

Its tax dues are on the peek, in the financial year 2011. It has received an additional tax demand of 546.85 crore from the IT-department in the last quarter of 2010-11. Net profit in the consequent quarter of last year was 426.38 crore.

Over the last 1½ years, the real estate major had already sold some non-core assets such as hotel sites in Delhi and Hyderabad as well as non-contiguous land parcels to receive around 3,000 crore. The company said it could sell non-core assets such as IT Parks that generate low return but not the buildings and other developed buildings. The company aspire to become debt-free by the mid term.

DLF’s initial plan was to obtain 4,500 crore from sale of non-core assets, but now plans to procure 10,000 crore in the next 2-3 years. With 3,000 crore already in its stake from sales of non-core assets in the last 18 months, it is now identifying properties to procure the balance 7,000 crore.

JP Morgan has Capitalized into Parsvnath Developer’s Residential Project

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JP Morgan financed $30 million in Parsvnath Developer’s residential project La Tropicana launching in Civil Lines area of New Delhi. The deal contains of an additional funding for the real estate group through JP Morgan’s local NBFC in India. The part of the funds raised has been used by Parsvnath to provide an exit to Red Fort Capital, which had put in Rs 115 crore in the project in 2009. Red Fort has made a 30 percent return on its investment in the project. Ernst and JP Morgan did not comment on the deal.

Parsvnath sold 18 percent stake in its 16.8-acre high-end residential La Tropicana project to private equity firm Red Fort Capital for 90 crore in 2009 and later in the same year sold another 4percent to the fund for Rupees 25 crore. The 400 apartment project, which was launched in 2008, has been much delayed and is now estimated to be completed by 2013. The developer is still selling apartments in this project at 14,000 per sq ft. The project was launched at Rs 8,000 per sq ft. Last year, Parsvnath had sold 24.5% stake for 120 crore to Red Fort Capital in an office project that it is building on land it received from the Delhi Metro Rail Corporation. The project is being made on a build-operate-transfer basis. January this year, Sun-Apollo India Real Estate Fund invested Rs 100 crore for a 49.9 percent stake in a residential project, Parsvnath Exotica, in Ghaziabad near Delhi.

Decline in Office and Commercial Space Demand in Mumbai

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India’s business capital, Mumbai, is witnessing a decline in demand for office and commercial space with dealings down by more than half since last year. Classy office space in the center of Mumbai, but it looks there are few buyers. According to a report, need for commercial real estate is lingering. Dealings of 0.88 million square feet were recorded in the fourth quarter i.e. January to March of Fiscal 11, against the 2.81 million square feet transacted in quarter 4th of Fiscal 10, that’s a 68 percent decrease in demand.

Though sale connections showed marginal progress from 13 to 23, the number of properties leased dropped from 54 to just 28 at the same time. A Consulting agency Cushman and Wakefield points to the high level of vacancy rate of 20 percent. Usually it is the BFSI and the IT and ITeS sectors that habitually drive demand in the commercial real estate space. Also since starting of this year the market has been polluted by several scams and that has unfavorably obstructed plans of several corporates.

Still, industry experts says in 2011 demand for commercial real estate across the country is expected to be around 42 million square feet. So, 2011 will be a pretty interesting year in terms of demand. The challenge on pricing will continue to stay. As the demand & supply disparity continues, most developers have so far desisted from hikking rental values. But still, market sentiment continues to be gentle with players expecting large developers to minimise prices further.

Greater Noida’s Land Rates Inflated at 12.5% by UP Govt.

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Post farmers protests for hightened land reimbursements, authorities of Noida, Greater Noida and Yamuna Expressway on Monday decided to inflate land rates by 12.5%. To counterweigh the loss, authorities have also inflated land allotment rates by the similar percentage. This was revealed by Chairman Mohinder Singh at a press conference.

Moreover, authorities have permitted for 04 new metro rail projects including City Centre to NH-24 via Sector 71 overpassing, Sector 71 intersecting to Bodaki railway station in Greater Noida via Sector 121 and Noida Extension and Kalindi Kunj to Botanical Garden. The fourth link from Sector 94 to 142 via 124 and 44 will tie the Noida-Greater Noida Line to Kalindi Kunj providing a direct connection to the Sarita Vihar line.

A raised road along the Shahdara drain is proposed from Sector 14-14A to Kalindi Kunj via Noida Sector 95. The line would be 5.8 kilometer long and cost would be Rupees 525 crore. Also, the board has agreed a laser park at Sector 91, a project for municipal solid waste management and other village development projects.

DLF’s Net Profit Dropped by 4.8%

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India’s biggest real estate company, DLF Ltd, accounted a bordering drop of 4.8% in its net profit for the year ending 31 March 2011. Company’s combined net profit stood at Rupees1,640 crore in comparison to Rs1,720 crore in fiscal 2010. The earnings per share for the year stood at Rupees9.66 versus Rupees10.13 in fiscal 2010.

However, for the quarter ending 31 March, organisation’s net profit stood at Rupees 344.54 crore, a drop of 19% in comparison to Rupees 426.38 crore in the subsequent period in the previous financial year. It reported combined revenue of Rupees10,145 crore for the year ending 31 March 2011 and an increase of 29 per cent from Rupees7,851 crore in the subsequent period in the previous fiscal.

EBIDTA stood at Rupees 4,337 crore, after adjusting for a one-time cost reset due to input price high of Rupees 475 crore.

Summers Affecting Realty Sales

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Summer indicates a calmness for the real estate sector as transaction volumes take a downward leap. The trend is clear seeing that estate project launches have been the least during the second quarter from 01st April 2011  to 30th June 2011. As many as 46,093 high rise apartments were launched between January 2005 till December 2010. Of these, the highest launches were during the third quarter (July to September) when over 41% highrise homes were announced in the city. In contrast, the lowest launches came in the second quarter when the launch of only 5,448 apartments that is 11.82 % were launched.

When asked why home buyers postpone purchases, real estate analysts blames it on the roasting heat and summer vacations. “It is true that transaction volumes are lesser during the summer months. This is a time when the weather is not inspiring for buyers. Moreover, since summer vacations are the longest, many families go out of town for holidays. People wait for the Navratras and Diwali as they consider this time to be auspicious which falling in the third and fourth quarters respectively.Also, as the weather is acute, many people feel this is not an appropriate time to shift into a new home. Also, since children are already into their new academic year, parents do not want to make a change.

According to the launch figures, the next highest number of launches of 13,814 apartments comes in the first quarter. Also, over 16 per cent announces were seen in the last quarter from October to December. The phase from January to March is the time for financial closures and, hence, it boosts transaction volumes. On the other hand, the winter months see a large inflow of non-resident Indians arriving back in India to visit relatives. The transaction volumes at this time are mainly due to NRI purchases.

New Parking Lot Policy

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MUMBAI: An amended BMC parking lots policy submitted for state government approval, could earn it several hundred crores a year from builders. The developers , who build parking lots free in return for incentive construction rights, will now have to share 40% of their profits with the BMC. “Each new parking lot could get us Rs 50 crore to Rs 60 crore. Municipal commissioner Subodh Kumar overtake the original policy a few weeks ago because it was delayed in accusation of favoritism and corruption.

In March, CM ordered the BMC to review it after criticism that the scheme only helped builders enjoy unusually high profits under the appearence of executing a public scheme. Developers used this scheme which is very well known Parking FSI to build 50-60 storey-high luxury skyscrapers, mainly in central Mumbai.

Critics said developers spend hardly Rs 1,500 a sq ft to build parking lots, but the incentive as additional FSI from the government was worth Rs 20,000 –  Rs 25,000 per sq ft.

The amended policy will constrain the height of the parking lots to ground plus 04 storeys and two basements. The original scheme sanctioned parking towers of 10-15 storeys high. The BMC committee wants the traffic police department to evaluate peak level actual parking on all roads over 60 feet wide and 250 m in length as well as on station and public assembly areas.

The BMC issued starting certificates to 11 public parking towers, eight in the Parel-Dadar belt and three in Goregaon for 15,845 vehicles. Only these projects are given go ahead.

Why Real Estate Investments are Getting Riskier

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The first quarter of this fiscal would be a difficult one for the real estate sector. Many of the big players in metropolitan cities have had to borrow funds to pay their installments on loans due to banks by the end of March 2011. In smaller cities and towns, the situation is not any better. Realtors who had overerated actual end user demand for housing, and had received advances from pioneers and investors are coming under pressure to deliver promised projects to enable them to cash in on their investments.

Projects are not moving ahead because of lack of cash, and banks are not falling over themselves to lend money to the sector any longer – especially as the RBI has restricted such flows and had asked banks to be cautious of offering out too much money to real estate companies. What does all this mean and how are these indications going to affect the person who wants to invest in real estate? Firstly, potential investors should be very, very careful of where they invest in. In the absence of a real estate regulatory body in place the old statement of requirement , or buyers beware is more relevant today than ever before. Developers are facing a double setback this year.

Even if their projects come up, the support of foundations and substructures promised by government agencies such as power, water , sewage, and above all, road and transport connectivity – is just not happening on time, so projects may be finished, painted and polished, but may not be livable . The high cost of borrowing money is also hitting developers and with banks becoming cautious of extending credit to the sector, many developers are now looking towards private equity and similar sources of finance, many of which are much more expensive than bank funds. Apart from expenses, many financiers are also more wary about the money they lend.

TATA Housing Project

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Company declared in the coming three years will build a luxury housing project in Gurgaon and also declared its plans to venture into the international market this financial year. The sale price of a house starts from Rupees 1.5 crore. As the company’s expansion plan company is coming up with apprx 10 new projects this year. Also, they are looking at two new lines of business related to land development. It will be smaller in size than the realty business.” The company is planning to expand operations into international markets.

The plan to get into the international market is in advance stages, while the proposal for expanding into two new lines of business is still at an intial stage. He did not reveal further details on these new initiatives.  This is the company’s second project in the city and the company is in advanced stages of launching two more projects in the Delhi-NCR this financial year.