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Wednesday, October 27, 2010
Wednesday, October 20, 2010
Realtors offer freebies to brokers to sell stocks
The property market , which is once again on fire, is being driven mainly by investors, raising fears within the industry that a meltdown may be just round the corner. The market is booming, but many are now asking how long will it be able to sustain the rates which have shot up by 60% to 100% since 2009.
As builders launch a slew of high-end residential projects with some offering enticing payment schemes to buyers, experts warned that it is more a sign of weakness to mop up demand, tie down purchasers and make it difficult for them to exit in case prices fall.
Despite the euphoria, builders are edgy and are suddenly offering not only brokerage but mega prizes to brokers to sell their stock.
A prominent south Mumbai developer has offered brokers 2% commission plus a Skoda-Fabia car if they get business worth Rs 5 crore, a Skoda-Octavia if they sell flats worth Rs 10 crore, a Mercedes C class if they get business worth Rs 20 crore, a Mercedes E class if they fetch Rs 30 crore, a top of the line Mercedes S class if the figure touches Rs 50 crore and a Rolls Royce if they manage Rs 100 crore business in some of his projects. This is a sign of desperation and a realization that the good times won't last forever,'' said an industry insider.
A recent innovative scheme that allows the buyers to pay just 10% upfront and the remaining 90% only on possession has received tremendous response'', said builders.
The trend started by Indiabulls Real Estate for two of its luxury skyscrapers in Lower Parel recently has now been adopted by several builders across the city. However, not many are aware of the fine print. Sources said there is a heavy exit load in case the buyer wants to get out.
Read more >>
As builders launch a slew of high-end residential projects with some offering enticing payment schemes to buyers, experts warned that it is more a sign of weakness to mop up demand, tie down purchasers and make it difficult for them to exit in case prices fall.
Despite the euphoria, builders are edgy and are suddenly offering not only brokerage but mega prizes to brokers to sell their stock.
A prominent south Mumbai developer has offered brokers 2% commission plus a Skoda-Fabia car if they get business worth Rs 5 crore, a Skoda-Octavia if they sell flats worth Rs 10 crore, a Mercedes C class if they get business worth Rs 20 crore, a Mercedes E class if they fetch Rs 30 crore, a top of the line Mercedes S class if the figure touches Rs 50 crore and a Rolls Royce if they manage Rs 100 crore business in some of his projects. This is a sign of desperation and a realization that the good times won't last forever,'' said an industry insider.
A recent innovative scheme that allows the buyers to pay just 10% upfront and the remaining 90% only on possession has received tremendous response'', said builders.
The trend started by Indiabulls Real Estate for two of its luxury skyscrapers in Lower Parel recently has now been adopted by several builders across the city. However, not many are aware of the fine print. Sources said there is a heavy exit load in case the buyer wants to get out.
Tuesday, October 19, 2010
NHB Set to Tighten Rules Governing Affordable Housing
The housing regulator plans to tighten the rules governing affordable housing as it looks to ensure that projects built on subsidised priority loans are actually delivered. The National Housing Bank is working on a proposal that seeks to make it mandatory for such projects to get rated by credit rating agencies such as Crisil and CARE . “We are yet to work out the details,” said RV Verma, chairman and managing director of National Housing Bank, a housing finance institution owned by the Reserve Bank, which also functions as the sector regulator.
“We will hold discussions with the real estate industry, financial institutions, government bodies and other stakeholders before finalising the guidelines,” he said. There are over 25 developers across seven states in urban India, which offer good-quality low-cost housing in the range of Rs 3-7 lakh.
The move to get ratings is aimed at bringing in transparency and discipline into the market and enhancing allround confidence. “Better and credible information will be available in the market, which will benefit all stakeholders,” Mr Verma said. If the proposal sails through, the financing institutions will be in a better position to provide lending to real estate projects, both directly and indirectly.
“Ratings will provide us with the comfort that loan to such groups or buyers in that project will not turn into non-performing assets,” said a senior official with the country’s largest lender, State Bank of India . The ratings will also be a useful indicator of the quality of the project and the developer. It will also provide information on the current standing of the project. The move has also found favour with other government arms. According to an official with the ministry of housing and urban poverty alleviation, credit rating will encourage builders as they’ll also be sure of credit being made available to them.
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“We will hold discussions with the real estate industry, financial institutions, government bodies and other stakeholders before finalising the guidelines,” he said. There are over 25 developers across seven states in urban India, which offer good-quality low-cost housing in the range of Rs 3-7 lakh.
The move to get ratings is aimed at bringing in transparency and discipline into the market and enhancing allround confidence. “Better and credible information will be available in the market, which will benefit all stakeholders,” Mr Verma said. If the proposal sails through, the financing institutions will be in a better position to provide lending to real estate projects, both directly and indirectly.
“Ratings will provide us with the comfort that loan to such groups or buyers in that project will not turn into non-performing assets,” said a senior official with the country’s largest lender, State Bank of India . The ratings will also be a useful indicator of the quality of the project and the developer. It will also provide information on the current standing of the project. The move has also found favour with other government arms. According to an official with the ministry of housing and urban poverty alleviation, credit rating will encourage builders as they’ll also be sure of credit being made available to them.
Monday, October 4, 2010
Sunteck Realty to focus on premium luxury residential segment
MUMBAI: Riding on the high demand for premium residential space, realty major, Sunteck Realty , on Friday said as a part of its growth plans, it would focus on the premium luxury space in Mumbai.
The company is developing a range of landmark residential projects with apartments ranging from Rs 1 crore to Rs 40 crore, which offers exemplary designs and superior quality by adapting to highest standards of international living.
The company has 27 projects in pipeline out of which it has already successfully launched nine projects, it said in a statement here.
Of the nine, six are premium residential and three commercial projects with the remaining projects proposed for launches in the current fiscal, it said.
"Sunteck Realty is focused on catering to the aspirational business professionals by providing them their dream house," Sunteck Realty's Chairman and Managing Director, Kamal Khetan, said.
The company has already launched its high-end residential landmark projects--Signature Island at BKC with duplex apartments with an area of around 7,000 square feet to 11,000 square feet. Owing to the huge potential at BKC, the company plans to launch another two luxury residential projects--Signia Isles and Signia Pearl--in the near future, it said.
Sunteck has tapped key areas of Mumbai such as Andheri, Borivali, Vile Parle, Goregaon, Airoli, Mulund and Thane for further development.
Read more >>
The company is developing a range of landmark residential projects with apartments ranging from Rs 1 crore to Rs 40 crore, which offers exemplary designs and superior quality by adapting to highest standards of international living.
The company has 27 projects in pipeline out of which it has already successfully launched nine projects, it said in a statement here.
Of the nine, six are premium residential and three commercial projects with the remaining projects proposed for launches in the current fiscal, it said.
"Sunteck Realty is focused on catering to the aspirational business professionals by providing them their dream house," Sunteck Realty's Chairman and Managing Director, Kamal Khetan, said.
The company has already launched its high-end residential landmark projects--Signature Island at BKC with duplex apartments with an area of around 7,000 square feet to 11,000 square feet. Owing to the huge potential at BKC, the company plans to launch another two luxury residential projects--Signia Isles and Signia Pearl--in the near future, it said.
Sunteck has tapped key areas of Mumbai such as Andheri, Borivali, Vile Parle, Goregaon, Airoli, Mulund and Thane for further development.
Time for NRIs to buy a house
After a rollercoaster ride, the residential property market has stabilised now and a number of developers are gearing up to launch new housing projects. Developers are gaining confidence and pricing the products in a realistic manner. Realty funds are coming back to identify strategic partners for investments in residential projects.
With the corporates gearing up to expand operations, commercial space movement is also reviving with smaller spaces getting absorbed at frequent intervals unlike earlier. For homebuyers, the time is just right to strike bargain deals.
For NRIs who have been waiting in the wings, the situation is just appropriate to enter the market. Home loan rates are competitive and linked to the base rates after the initial period of three years. There are banks who have waived processing and documentation charges
Read more >>
With the corporates gearing up to expand operations, commercial space movement is also reviving with smaller spaces getting absorbed at frequent intervals unlike earlier. For homebuyers, the time is just right to strike bargain deals.
For NRIs who have been waiting in the wings, the situation is just appropriate to enter the market. Home loan rates are competitive and linked to the base rates after the initial period of three years. There are banks who have waived processing and documentation charges
Monday, September 27, 2010
Foreign Funds Shying Away from Indian Real Estate
Having burnt their fingers during the economic slowdown of 2008-09, foreign private equity (PE) funds continue to stay away from Indian real estate, even as domestic funds have taken the lead in property investments. While domestic funds have put in $864 million (Rs 3,950 crore) in 22 realty deals since January this year, foreign funds have invested a mere $126 million (Rs 575 crore) in only three deals, according to data collated by Venture Intelligence, which tracks PE and merger and acquisitions in India. During the property boom of 2004-2008, foreign funds put in millions of dollars in realty projects, expecting huge returns. Their investments peaked in 2007, when they put in around $5.73 billion (Rs 26,100 crore) as against $ 4.05 billion (Rs 18,500 crore) put in by their domestic counterparts. But the global economic slowdown of 2008-09, which led to lower home sales and redemption pressures on PEs, spoilt the party. Indicating poor risk appetite, foreign funds invested $183 million (Rs 835 crore) in Indian real estate in 2009, while domestic funds put in $665 million (Rs 3.030 crore).
“Most foreign funds are sitting on pre-crash investments which are terribly under water. Limited partners (investors in funds) have lost badly in the downturn and their current focus is more on salvaging investments than taking fresh exposure. Moreover, they still believe that India is overpriced,” says Jacob Matthew of Mape Advisory. Says Ashish Joshi, managing partner, real estate, IL&FS Milestone Fund: “Foreign investors are playing safe and are sceptical. Since one of the biggest reasons for the economic crisis was real estate, there is a rub-off impact and overseas PE funds are staying away.”
But why are domestic funds continuing their investments? For instance, during the first half of this year, the deal flow of domestic funds and amount invested have gone up by 36 per cent and 240 per cent, respectively, compared to last year. “Domestic funds can gauge the pulse of Indian real estate. Moreover, they can invest in any project of any size, unlike foreign funds whose investments are governed by FDI norms,” says a managing director of a domestic PE fund.
A number of Indian fund managers such as Indiareit, Aditya Birla Financial Services and ICICI Venture are raising or are in the process of raising around Rs 6,000 crore from domestic institutions and high net worth individuals. But non-property investments by PEs are still booming. In the first half of calendar year 2010, total PE investments touched $4.571 billion (Rs 21,380 crore) across 138 deals. This was a three-fold jump over the $1,508 million (Rs 7,000 crore) invested in 111 deals during the same period last year, according to Venture Intelligence data. “The Indian market is not cheap. They have the option of investing in other geographies where the market is cheaper,” said Vikram Hosangady, executive director-advisory transaction services, KPMG.
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“Most foreign funds are sitting on pre-crash investments which are terribly under water. Limited partners (investors in funds) have lost badly in the downturn and their current focus is more on salvaging investments than taking fresh exposure. Moreover, they still believe that India is overpriced,” says Jacob Matthew of Mape Advisory. Says Ashish Joshi, managing partner, real estate, IL&FS Milestone Fund: “Foreign investors are playing safe and are sceptical. Since one of the biggest reasons for the economic crisis was real estate, there is a rub-off impact and overseas PE funds are staying away.”
But why are domestic funds continuing their investments? For instance, during the first half of this year, the deal flow of domestic funds and amount invested have gone up by 36 per cent and 240 per cent, respectively, compared to last year. “Domestic funds can gauge the pulse of Indian real estate. Moreover, they can invest in any project of any size, unlike foreign funds whose investments are governed by FDI norms,” says a managing director of a domestic PE fund.
A number of Indian fund managers such as Indiareit, Aditya Birla Financial Services and ICICI Venture are raising or are in the process of raising around Rs 6,000 crore from domestic institutions and high net worth individuals. But non-property investments by PEs are still booming. In the first half of calendar year 2010, total PE investments touched $4.571 billion (Rs 21,380 crore) across 138 deals. This was a three-fold jump over the $1,508 million (Rs 7,000 crore) invested in 111 deals during the same period last year, according to Venture Intelligence data. “The Indian market is not cheap. They have the option of investing in other geographies where the market is cheaper,” said Vikram Hosangady, executive director-advisory transaction services, KPMG.
Retail Sector Facing Wholesale Problems
Incessant rains, political instability in markets such as Srinagar, and the upcoming Commonwealth Games, are giving retailers and manufacturers nightmares. Companies are reworking strategies to ensure that there is adequate inventory during the forthcoming festival season. An analyst note said: “Traditionally in India, sales peak during festival time. Almost 40 per cent of sales are achieved during the period starting from October-December. Incidentally this year, the festival period will coincide with the CWG. Restricted traffic movement and flood situations are creating a barrier to free goods movement ahead of the season start.”
A slew of retailers Business Line spoke to confirmed that brainstorming sessions were on to overcome tight situations, including shipping products directly from factories to the dealers, and even setting up smaller temporary warehouses in the cities to expedite good transportation.
“We are talking to dealers to take stock even at night. On our part, we are ensuring that the warehouses are supplying goods to stockists at a common meeting point and even sub-warehouses to overcome logistical issues,” said Mr K. K. Kaul, Head (Logistics and Supply Chain) for LG Electronics India.
Read more >>
A slew of retailers Business Line spoke to confirmed that brainstorming sessions were on to overcome tight situations, including shipping products directly from factories to the dealers, and even setting up smaller temporary warehouses in the cities to expedite good transportation.
“We are talking to dealers to take stock even at night. On our part, we are ensuring that the warehouses are supplying goods to stockists at a common meeting point and even sub-warehouses to overcome logistical issues,” said Mr K. K. Kaul, Head (Logistics and Supply Chain) for LG Electronics India.
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