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REAL ESTATE 2009 : BOOMTIME AGAIN!

Pradeep Jain, Chairman, Parsvnath Developers & president - CREDAI NCR

NEW DELHI, JAN 02 :
BEFORE we dwell on 2009, it is pertinent to note that real estate sector has witnessed phenomenal accelerated growth from 2005 to first quarter of FY 09, both in residential and commercial segments. The rationale for this spurt in demand was the incentives offered to Real Estate in the Union Budget.

In 2005-2006, the surge was because of income tax exemption upto to Rs 1.50 lakh on interest paid on housing loans, tax exemptions to developers who produced residential units upto a certain size, provision for repeal of Urban Land Ceiling Act, etc, were some of the important incentives.

Extremely attractive interest rates and easy availability of funds for acquisition of residential units provided additional impetus for an exponential growth. As the demand for real estate continues unabated, with a view to cool off the market, the Union Government/ RBI, intervened through certain monetary and fiscal measures such as withdrawal of the tax exemptions granted earlier, raising of interest rates, etc. This resulted in a peculiar situation.

While, on one hand, there existed a demand due to unprecedented number of jobs generated by continued growth of knowledge industries and, on the other hand, the demand could not be translated into deals, mainly due to enhanced interest rates on housing loans.

The real estate sector, therefore, entered a phase of sluggishness. Deals concluded were not commensurate with the actual latent demand. Large section of the prospective purchasers preferred to wait and the situation continued till September 2008.

Since October 2008, the world witnessed the collapse of American financial system, preceded by the sub-prime crisis. The latent or the built-up demand found another reason not to surface sufficiently while the investors demand remained low in Real Estate; almost every segment of the Indian economy entered a slow down mode.

At this point of time, the Government did intervened with encouraging measures to boost real estate demand, since it is considered to be the backbone of Indian Economy and is the growth engine supporting around 240 industries. It is the largest employment generator for below the poverty line.

Starting November 2008, the Government has been taking a slew of proactive measures to boost demand for real estate with the RBI's monetary easing is beginning to take effect with banks dropping lending rates by 50 - 150 basis points for various segments.

It also includes concessional interest rates for loans upto Rs 20 lakh, pumping in Rs 3,00,000 crore to the Banking system over a few weeks, to ease liquidity, reduction in risk weightage for housing loans, refinance by National Housing Bank at low interest rates and many more such measures. Banks also announced softer interest rates for loans not only below Rs 20 lakh, but for loans above Rs 20 lakh also.

This will not only prompt the developers to consider more construction of mid segment and affordable houses. Apart from this, tier II and tier III cities are also promising good potential options for accelerated growth of real estate in these fast emerging cities. The proactive intervention by government is a major differentiator this time and this is bound to play a crucial role in the revival of the economy.

The interest rate cut should prompt those, who were delaying decisions for sometime, now to wrap up deals for their dream
homes during the first few weeks of the New Year. More importantly, reasonable prices for residential apartments in tier II and tier III cities as compared to metros, is also a key factor as the bulk of demand will be seen in these emerging cities. The other good news is that the IT majors have not altered their hiring numbers much.

Besides, hiring numbers for banks, insurance and some other sectors are likely to go up drastically. Job creation due to these factors should generate fresh demand for housing. I also presume that the American turmoil has the potential to bring more business to Indian IT companies due to mergers and acquisitions back in the USA, and also due to an urgent requirement for American companies to cut costs in times like this. Experts also predict that the revival of Indian economy will happen faster and sooner than anticipated, primarily due to Government interventions, unlike in the past, and that, when the revival happens, it can create jobs much faster than in the past.

It would not be much if I would say that by mid of calendar year 2009 we may witness spurt in real estate sector again. All these should bring buoyancy to real estate and to the Indian economy, post 2008.

While at the time when we are looking forward to 2009 as the year of resurgence for Indian real estate sector, we would also seek the support of government in providing Industry status to Real Estate Sector as it is the largest employment generator after agriculture in the country and a single component within the industry - housing - contributes roughly 5 per cent of India's
GDP.

The sector is therefore strategic to India's economic progress. Consequently, the sector requires further impetus for continued growth.

As for the Individual perspective, the cap on the rebate is relatively low and needs to be commensurate with the level of existing expenditure to acquire real estate. On the cost side, stamp duty, which presently ranges between 6-16 per cent (depending on the state in which the property is located), needs some attention. In this respect, there appears to be a need for a credit mechanism since there is a cascading effect of stamp duty right from purchase of land by the developer to sale of the property to the final buyer.

A possible solution could be an input credit system (similar to service tax) for stamp duty paid on land against the output stamp duty on sale of property. These measures will not only have the dual benefit of increasing the supply of housing for the mass segment (thereby making it more affordable) but also will provide a fillip to the real estate sector on the demand side as well.

Secondly, I look forward for Providing Infrastructure Status for Housing as mass housing involves integrated infrastructure development. Bigger township projects have long gestation period needing investment for a longer period of time like infrastructure.

We are engaged in undertaking large scale urban development projects including purchasing raw land and developing it for the purpose of construction of houses, multi-storied buildings, creation of infrastructure and social facilities such as laying of roads, systems for water supply, water treatment, sanitation and sewerage, solid waste treatment and also to create educational, medical and recreational facilities as an integral part of development of satellite townships, in accordance with the elaborate rules and regulations and with the specific approval from the State Governments. Integrated township development is almost akin to development of SEZs with complete set of infrastructure facilities.

"An integrated township and group housing development on area more then 10 acres involving provision of residential, educational, medical, community, commercial or institutional buildings and creation of required facilities including roads, water supply, water treatment, sanitation and sewerage systems and solid waste treatment and management systems". Real estate developers need to be given incentives for creating such an infrastructure in the country. Hence, integrated township development should be accorded infrastructure status.

I am confident that with Reviving Concession u/s 80IB (10) to trigger affordable or low cost housing whereby income tax deduction u/s 80IB (10) was available to developers for making houses affordable to weaker sections of the population. This facility was discontinued from 01st April 2008.

This concession was highly successful in triggering affordable housing but since State laws were not permitting higher densities, the benefit of it could not be realised to fullest possible extent. Now, almost all State Govts. have relaxed their density norms. Therefore, if concession u/s 80IB(10) is revived now, it will give boost to affordable housing and help in reducing
the prices. (editor@thesynergyonline.com)

NEW HOME LOANS PACKAGE HIGHLY INADEQUATE : ASSOCHAM

NEW DELHI, DEC 16 :
TERMING home loans package of PSU banks as highly inadequate, ASSOCHAM President, Mr. Sajjan Jindal demanded that government should make housing loans upto Rs.30 lakh at 6% and above this amount, ideal interest rates be 8.5 per cent..

This move, according to ASSOCHAM will create required growth momentum in real estate, construction, cement, steel, electrical and heavy engineering which is the need of hour.

Mr. Jindal further pointed out that making available home loans upto Rs.5 lakhs at 8.5 per cent and between Rs.5 lakh-Rs.20 lakh, charging interests at 9.25 per cent would not make any sense as properties are hardly available at this cost not even in Tier II and tier III cities, why to talk of metros and large townships.

Therefore, the government should make housing loans at suggested 6 per cent as well as 8.5 per cent interest rates, if it is really serious to create demand in real estate, construction, cement, steel etc., said Mr. Jindal. (editor@thesynergyonline.com)

FISCAL STIMULUS PACKAGE TO BOOST AFFORDABLE HOUSING

Thesynergyonline Real Estate Bureau

NEW DELHI, DEC 16 :
PUBLIC policies promoting affordable housing in the country represent a win-win proposition at the moment. For the real estate development business, this implies an overall expansion of the market size by extending their focus to the middle and lower-income-group (LIG) of the population.

On the other hand, ‘housing for all’ remain a key priority in India’s development agenda. Low-cost housing offers a ‘world of opportunities’ to the real estate development business that could bring in much needed resilience to this sector,according to Asáni Consulting .

The much anticipated ‘fiscal stimulus package’ was announced by the government on December 7, 2008; a day after the Reserve Bank of India (RBI) cut repo rate by 100 basis points. The package worth Rs 37,000 crore came as a huge relief to the industry and provides much needed resource to firefight the recession in the economy.

In addition to this, government hopes to expedite infrastructure projects worth Rs 100,000 crore through faster clearances of public private partnership (PPP) projects, and ensure their easier financing through tax breaks on fund raising by the India Infrastructure Finance Company (IIFC).

PSU banks will shortly announce a package for borrowers for home loans in two categories; for loans of up to Rs 5 lakhs and Rs 5-20 lakhs, implying cheaper credit for buyers from low and middle-class segments. Restructuring of loans from the PSU banks were allowed, which was earlier restricted. CENVAT duty reduced by 4 per cent across the board (i.e. for all categories: 14, 12 and 8 per cent). This would cost the government in terms of forgone revenue of Rs 8700 crore. This also would benefit the ancillary and input industries for the real estate sector. In a nutshell, many restrictions imposed on this sector that led to escalation of costs were eased.

That affordable or low-cost housing in the Indian context could stimulate the flagging demand in the Indian real estate sector has been a topic of discussion among industry and government circles for quite some time now. Interestingly, a de facto working definition of affordable housing was spelt out in the package. This definition, hitherto missing, would pave the way towards a constructive debate on affordable housing in the country.

Consequently, a consensus to adopt a time-bound, effective action-plan to housing for the mass would be easier to reach at. ‘Shelter’ is a pre-requisite for a strong social infrastructure, and even the colossal sum of US$ 500 billion planned investments over the Eleventh Plan on India’s hard infrastructure cannot complement deficiencies in the corresponding soft infrastructure sector.

Recently, the Maharashtra Housing and Area Development Authority (MHADA) had declared 600 low-priced apartments for sale in Mumbai. These apartments were priced at around $50 a sq. ft., roughly four times that of the prevailing market rates. MHADA received around 200,000 applications for these 600 hundred apartments that were to be allotted on the basis of lottery. In Delhi too, the Delhi Development Authority (DDA) has received 850,000 applications for 5,010 low-cost apartments. Clearly, the demand for low-cost housing is very strong in India.

Potential demand for low-cost housing in India is estimated to be over 24 million dwelling units at present. According to a Planning Commission Report, urban housing shortage in the country is expected to increase to 26.5 million by 2012.

Consequently, this segment is likely to throw up a huge investment opportunity. An estimated US$ 25 billion investment would be required over the next five years in urban housing according to a Merrill Lynch report, suggesting a substantial scope of demand for housing. Appropriate policies can translate this latent demand to an actual one thereby setting in a multiplier effect in the economy.

Close to 80 per cent of the real estate development in India takes place in the residential segment. This reflects that demand for housing is a compelling one in the Indian market. In spite of declining average age of borrowers, which has come down to 35 years from 40 years, a vast untapped potential still remain in the home loan market.

Housing finance companies attribute the surge in demand for home loans to tax breaks, which brought down effective cost of loans to a moderate 6%. However, it took 30 years for mortgage penetration to expand from 2.5 per cent to 6 per cent of GDP. In comparison to this, US mortgage loans comprise 66% of their GDP, indicating a plenty of room for growth of demand for loans in India. An innovative financial system addressing the issue of latent demand could actually spur actual demand for housing.

Affordable housing was not a major part of the Indian real estate sector boom. However, affordable housing has recently attracted attention from developers and PE investors. The raison d'être for channelling investment in this asset class is mainly due to an early mover advantage, volume-driven profitability, priority-sector status accorded by government and subsidized land costs, among other drivers.

Already many real estate development companies have moved into affordable housing construction. Puravankara has set up a wholly-owned subsidiary- ‘Provident Housing and Infrastructure’ which will build 64,500 houses in southern part of the country over the next five years.

Omaxe has 100 per cent owned ‘National Affordable Housing and Infrastructure’, which plans to invest $20 billion over the next five years in building one million such homes. Many other developers are queuing up to foray into the low-cost housing construction business. The rush is partly explained by the response to government-led housing programs.

In the final analysis, ‘housing for all’ objective can only be realised through collective action by industry, government and the society. A convergence of social and business objectives would guarantee this. While, government support might help in the short run, considering the billion-plus population of India, an integrated strategy is indispensible to ensure ‘housing for all’. It is precisely for this reason that private investments are necessary for the growth of this sector.

Various proposals aiming to lift the purchasing power of homebuyers have been forwarded. ‘Interest subsidy scheme’ and ‘mortgage guarantee scheme’ are discussed as ways that can reduce risks for banks and provide credit to low-cost homebuyers. ‘Refinance scheme’ for banks to finance builders and real estate developers have also been suggested.

This would support developers undertaking housing projects having dwelling units with carpet area of about 400 sq. ft — primarily a one-bedroom house of about 525-550 sq. ft. Refinancing schemes could also be extended to slum development projects.

Besides rigid land laws raising avoidable transaction costs, developers face increasing costs as land prices on an average shot up by almost four-fold over last three year. Incentives like reduced land price, relaxation of restrictions on the height of construction would immensely promote low-cost housing projects. Taller buildings raise the measure of building density known as Floor Space Index (FSI).

Some states are pursuing a policy of mandatory allocation of land by the developers for economically weaker sections and low-income group. The public-private-partnership (PPP) model that has so far been able to work well for many infrastructure development projects could be tried out in the real estate sector also for affordable housing projects. (editor@thesynergyonline.com)

NAREDCO HAILS ECONOMY STIMULUS PACKAGE

Thesynergyonline Real Estate Bureau

NEW DELHI, DEC 08 :
NATIONAL Real Estate Development Council (NAREDCO), the nodal agency for housing & real estate sector in India, has welcomed the economic stimulus package announced by the government . It has however expressed disappointment that no immediate and direct relief to the housing sector has been announced.

"Although the government has not announced any immediate relief to the housing sector, we however welcome the steps taken to provide the right push to the economy as a whole. The move to make funds available for various infrastructure projects is a step in the right direction since it will stimulate demand in the core sectors. This clubbed will the cut in Repo and Reverse Repo rate announced yesterday will help the economy by providing the right impetus by making funds available easier and relatively lower cost",*Mr Rohtas Goel, President, NAREDCO said in a statement .

The steps taken by the government over the last two days will go a long way in stimulating demand in the economy giving it the much required impetus. The move is aimed at creating favorable ground for both buyers and sellers who have been shying away from the market in the last few months. We look forward to the banks to take a favorable view of this and announce a favorable scheme for the housing sector soon, " he added.

NAREDCO had recently advised its members to review the prices of their residential projects. Concerned over the decline in bookings in the realty sector, NAREDCO had proposed this move which was aimed to boost sales of the projects and bring some relief for the buyers who were shying away from investing in real estate.

The apex industry body has been the voice of real estate sector in the recent past for many issues affecting the sector. (editor@thesynergyonline.com)

DWELLING UNITS DEMAND FELL BY 35% IN TIER II, III CITIES BETWEEN APRIL-OCT. `08

Thesynergyonline Real Estate Bureau

NEW DELHI, DECEMBER 01:
NEARLY 35 per cent fall in demand of purchase of properties in most of Tier II and Tier III cities has been noticed in the first half of current fiscal due to high cost of borrowings, according to an assessment of The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

The assessment has been arrived at the Chamber in its latest exercise about as to what has been happening in purchase of properties in Tier II and Tier III cities in first 7 months of current fiscal in which the properties purchases had registered a growth of over 25% between April-October in the last year.

The Chamber's assessment reveals that over 2 crore people in about 25 Tier II and Tier III cities are the claimant for buying of dwelling units who are unable to make purchases as higher borrowing cost have compelled most of real estate developers to defer their projects.
The buyers of dwelling units have also not been able to make payments as higher interest rates as also still higher inflation have come on their ways to partly dampen their enthusiasm and eroded their budget.

The analysis of the Chamber is based from the feedback that it received from its well known affiliates real estate members that are developing real estate projects in number of tier II and tier III cities which include Meerut, Bulandsahahr, Muradabad, Bhiwadi, Dehradun, Rudarpur, Chandigarh, Sonepat, Panipat, Manesar, Pune, Nasik, Bhopal, Indore and many other such cities and towns in Southern and other parts of the country. The developers who gave the feedback to ASSOCHAM include Parsavnath, Omaxe, DLF, Unitech, BPTP etc.

The assessment further reveals that not only the cost factor has compelled, the promoters of properties makers to indefinitely defer their real estate projects but non-availability of inputs such as briks, cement, steel and availability of quality power and delays in obtaining water connections etc. have caused inordinate delays for developers to stick to their schedules as promised in their pre-launch campaigns.

The Chamber, therefore has mooted a proposal to the government to introduce Real Estate Investment Trusts (REITs) to bring the much needed class of institutional investors to strongly support transparency and reign the discipline of domestic commercial real estate market, The Chamber holds that REITs can also help develop Commercial Mortgage Backed Securities (CMBS) market and create a source of cheaper debt for commercial real estate.

It further holds that since purchase and sale of real estate assets would form part of the activity of REITs, the presence of a large number of REITs can enhance liquidity in the secondary market for commercial real estate. The increase in liquidity would make the sale of assets - if necessitated in CMBS structure easier, thereby improving the attractiveness of CMBS.

The Chamber has further pointed out that principal repayments to CMBS investors are made through refinance or sale of property; hence the enhanced liquidity in commercial real estate will make CMBS more viable, in terms of availability of refinance and quicker sale of property. However, in the case of CMBS originated by a REIT, the REIT would own the property.

As a financial investor, the REIT would be more inclined to let the CMBS trust enforce the mortgage and sell the property. The REIT's franchise with its unit holdrs would improve if cuts its losses from a property that did not provide adequate returns. CRISIL expects the legal risks associated with taking possession of and selling mortgaged properties to reduce considerably in the case of properties owned by REITs.

REITs typically own a variety of real estate properties, often even across geographies. They thus offer a pool of well-diversified properties of CMBS. This, results in a better spread of risks as compared to a regional developer who offers mortgages on a few similar properties often located in the same market space. Diversification will rescue the investors' overall market. This will therefore improve the investment characteristics of CMBS and provide REITs with easier access to lower-cost debt funds. (editor@thesynergyonline.com)

RETAIL RENTS GROW IN GLOBAL STRATEGIC DESTINATIONS

Thesynergyonline Real Estate Bureau

NEW DELHI, NOV 22 :
RETAILERS are focusing on some of the major global fashion capitals, pushing rents in the world’s most expensive retail locations even higher, according to CB Richard Ellis’ (CBRE) latest Global Retail Rents Survey. Some smaller and secondary retail cities continue to see strong levels of growth, however global fashion capitals such as Hong Kong, London and Los Angeles now sit alongside these markets in the company’s top 25 fastest growing retail rents index, whilst simultaneously claiming some of the most expensive retail rents in the world.

Despite deteriorating economic conditions, the retail sector has to date continued to perform relatively well. Half of the markets surveyed saw retail rental growth in the past year (ending Q3 2008), with 65 per cent of those seeing increases over the last six months. New York’s 5th Avenue remains the world’s most expensive retail destination, with rental values reaching €16,817/sqm/annum, more than 75 per cent higher than Hong Kong, the second most expensive location. Also making the top five most expensive retail destinations globally are Moscow, London and Tokyo.

Speaking about the retail sector in India, Anshuman Magazine, Chairman & Managing Director, CB Richard Ellis said; “The Indian retail sector has seen a slight correction in rentals in key cities, primarily due to prevailing market conditions. From being the 27th most expensive retail destination we have dropped to the 31st spot.

The growth of the sector too, has seen a slowdown keeping in sync with the global economic conditions. However India continues to be a preferred location for international brands and will continue to attract retailers.”

The demand is coming from retailers that are performing well in the current market – such as luxury brands – but also from retailers who are reining in wider expansion plans in response to weakening consumer spending and focusing on longer-term strategic locations as opposed to new destinations.

Although rents have risen in many key cities, the slowdown in consumer demand has inevitably struck some retail markets around the world resulting in falling rents. In cities such as Tokyo and CBRE’s research ranks 88 global retail markets across EMEA (Europe, Middle East and Africa), Asia Pacific and the Americas in terms of rental values for stores in prime retail destinations, identifying the most expensive and fastest growing markets.

Madrid, where rents fell by 5 per cent in the past six months, retailers are now beginning to take advantage of their covenant strength and landlords are becoming more open to rental negotiations. Despite growing downward pressure, retail rents in these cities remain some of the highest in the world (Tokyo #5, Madrid #21).

Ray Torto, Chief Global Economist, CBRE, said: “It is easy to assume that falling consumer confidence and financial market turmoil across the globe are striking all retail stores, but the CBRE survey together with sale figures from retailers is showing that we have a barbell market.

The analysis indicates that the upper end is holding up well and the same is true for lower-end,non-discretionary retailers. ”
EMEA continues to dominate the most expensive retail hot spots, containing 33 of the top 50 premier destinations. Cities in the EMEA region also dominate the fastest-growing retail rents.

Fifteen of the top 25 fastest-growing retail destinations sit in EMEA, with Tel Aviv, Oporto, Abu Dhabi, Valencia and Lyon topping the global list. Peter Gold, Head of Cross-Border Retail in the EMEA region for CBRE, said: “Although growth rates are slowing in response to deteriorating economic conditions, demand for retail space at the prime end of the market, particularly in fashion hot spots like New York and London, continues to propel rental growth in many cities. Many retailers are opting for ‘prime pitch’ space
in major retail cities in an attempt to secure the best long-term prospects for their business in an uncertain market.

“Changing economic conditions are also impacting the types of retailers driving demand. Many private retailers still have cash to fuel their expansion plans; luxury and value-led brands have announced positive sales growth and are maintaining strategic expansion; and many retailers are jumping on opportunities to fill new gaps in the shifting marketplace.

It will therefore be those retailers who have a particular point of differentiation within their market – either based on product or price – which are likely to succeed despite the tougher conditions. And it is these who will consequently grow market share and ultimately help to sustain rents in key cities.”

North American cities continue to dominate the most expensive rents in the Americas region. Los Angeles at tenth position in the global ranking follows New York as the next most expensive destination, with San Francisco, Toronto and Vancouver being the other cities to make the top 50. Miami, Montreal, Philadelphia and Washington join Los Angeles and New York in the fastest growing index, although demand continues to be restricted to prime pitches.

Asia Pacific’s presence in the top rankings continues to be prominent, holding seven of the top 20 most expensive destinations. The scarcity of prime units continued to push rental increases in many markets, with Guangzhou, Shanghai, Hong Kong and Singapore all registering growth over the past six months. Guangzhou continues to be the most expensive Chinese city, having jumped significantly in the ranking from 22nd in Q1 2008 to 13th in the current ranking. About CB Richard Ellis CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2007 revenue).

With over 29,000 employees, the Company serves real estate owners, investors and occupiers through more than 300 offices worldwide (excluding affiliate offices). CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. CB Richard Ellis is the only commercial real estate services company named one of the 50 “best in class” companies by BusinessWeek, and was also named one of the 100 fastest growing companies by Fortune. (editor@thesynergyonline.com)

NAREDCO CALLS FOR PACKAGE TO BOOST REAL ESTATE SECTOR

Thesynergyonline Real Estate Bureau

NEW DELHI, NOV 22:
NAREDCO, , the apex Government, public,private sector body has hailed the Finance Minister's initiative to give a boost to housing and construction industry to avert recession in economy. The body with state chapters and operation in districts and cities, assures the government of total support in providing affordable housing to the country by reviewing prices for such housing projects while asking the government to roll back the tax, monetary and credit regulation policies for lower rate of home loans, bank credit to developers and a package to give a fillip to the industry.

The National Real Estate Development Council (NAREDCO) is engaged in promoting nascent real estate industry and safe guarding interest of all stake holders including buyers. It works under the patronage of Ministry of Housing and Urban Poverty Alleviation, Govt. of India and its members include NHB, HUDCO, PNB HFL, LIC HFL, HDFC in addition to leading developers, HFIs and other stake holders from private sector across the country. Few leading developers who are members of NAREDCO are DLF, Unitech, Ansals, Parsvnath, Omaxe, Assotech, Som Datt Builders, Sobha Developers, Eldeco, Raheja Developers, ATS Infrastructure, TDI, Mahindra lifespaces Developers, Vigneshwara Developers, Jaypee, BPTP, Sahara, Shipra, Suncity Projects, Amrapali, Ambience Infrastructure, Purvanchal, Era Landmark, Ashiana etc.

The real estate sector had recorded a growth rate of 25 – 30 percent year on year basis and has been meeting one of the essential requirement of housing which is terribly in short supply. Contribution of Construction Sector to GDP has been around 8.53 percent and it has been one of the main employer for unskilled and semi skilled labour who are approximately 32 millions. The sector supports more than 250 ancillary units like cement, steel, paint, tiles, furnitures etc.

Presently, the strict monetary policies of RBI for real estate projects and high rate of home loan finance by Indian banks, closure of ECBs and rise in interest rates together with stock market crash due to selling pressure of FIIs, have lead to a situation where credit is dried down and buyers are hesitant to purchase.

NAREDCO, at a meeting decided to request all its members to "review their prices" of the properties by reducing their cost, cut down on their margin, cutting down advertisement and brokerage cost by becoming more professionally organized and by outsourcing some of the activities and to pass all the benefits to our customers. NAREDCO hope that this step will boost demand to some extent on one side and will benefit our customers who will get a life time opportunity to purchase property of their choice.

NAREDCO feels that though the Govt. of India is taking measures to increase liquidity in the system and bring down home loan rates but it is just not sufficient to rejuvenate demand. Interest rate on home loan should be drastically cut by at least 3 -4 percent so that cost of borrowings can be reduced for a common man.

NAREDCO also feels that the Govt. of India should take few pro active measures to boost the demand in the sector for more employment creation and to increase the growth rate of our country.

Some of our suggestions are as follows:

(a) Rescheduling of bank debt to the real estate developers, with a moratorium of one to two years.

(b) Banks have become more risk averse presently, hence Govt. should advise RBI and banks to aggressively finance real estate projects, without calling it NPA.

(c) Where land is purchased from Govt./Semi Govt. undertakings, then the banks should consider financing the land cost also in addition to the construction cost of the project.

(d) FDI norms related to area and lock-in period should be further eased to encourage foreign investment.

(e) ECB should be allowed for real estate projects.

(f) Housing should be given status of infrastructure.

(g) At present there is a mandatory requirement on banking institutions to provide loans for the priority sector of the economy within a prescribed percentage. With a view to encourage banks to provide finance to the Housing Sector, it is suggested that quantum of loans given to the first home buyer upto Rs. 30 lakhs may be allowed to be included within mandatory quota of the priority sector funding by the bank. This single step will encourage banks to provide more funding to the Housing Sector.

NAREDCO has appreciated the steps taken by Govt. of India to boost liquidity in the system and therefore request to take above pro active steps to meet down the challenges posed by economic meltdown.

The credit demand of the housing sector should be met at reasonable interest rate by further improving liquidity by RBI. Availability of liberal, easy and short term credit and meeting working capital requirements is the need of the hour, for completing ongoing projects, as also to retain the confidence of the market and to sustain growth.

The real estate sector has the capacity to boost economic growth and create maximum job opportunities. It is, therefore, requested that real estate industry be provided all support and encouragement from the Govt. Urgent action is, therefore, requested from RBI's side to advise the banking institutions accordingly. (editor@thesynergyonline.com)

MCHI TO SHOWCASE PROPERTIRES AT INDIA REALTY EXPO 2008 IN DUBAI

Thesynergyonline Real Estate Bureau

MUMBAI, NOV 21 :
MAHARASHTRA Chamber of Housing Industry (MCHI), in its bid to attract investments from Middle East, would be showcasing properties of renowned builders from across India , at India Realty Expo 2008, to be held in Dubai from November 27 to 29.

India Realty Expo 2008, to be held under the aegis of MCHI, a member of Confederation of Real Estate Developers’ Association of India (CREDAI), will provide an opportunity to NRI investors to explore abundant opportunities offered by the real estate sector in India in housing as well as commercial and retail options.

As many as twenty five leading developers, members of the MCHI, would be participating in the exhibition, 11th INDIA REALTY EXPO 2008 scheduled to be held at Renaissance hotel, Deira, in Dubai . The exhibition will remain open on 27th November, 2008 during 5 pm to 9 pm and on 28th and 29th November, 2008 during 11 am to 1 pm and 4 pm to 9 pm .

The objective of the expo will provide a platform to Indian developers to showcase their projects and at the same time offer an opportunity to the NRI investors to explore the vast opportunities and wide range of housing and commercial options available in the Indian Real Estate Industry from Mumbai, Thane, Navi Mumbai, Panvel, Pune, Bangalore, Goa, Nagpur and other Indian cities.

The expo will provide a one stop solution to all needs of a Non-Resident Indians intending to purchase a property in India . The exhibition will have representatives from major real estate developers such as Tata Housing, Hiranandani, Bramha Builders, Kalpa-Taru Builders, Sunil Mantri Realty, Kanakia Spaces, Rustomjee, Nahar Builders, Neelkanth Mansions , Prajapati Const., Godrej Properties, Nirmal Lifestyle, Akar Creations, G.Corp Properties, Pathy Housing and more, along with leading housing finance companies such as H.D.F.C. & D.H.F.I.

Mr. J. S. Augustine , MCHI’s Co-Chairman, International Exhibitions, said,” Investment in India is a greater opportunity for NRIs in UAE. The real estate prices in India currently are very attractive. The recent depreciation of Indian Rupee against the US dollar has turned beneficial to the NRI investors in UAE since this will give the NRI investor around 20% more property value for every dollar. NRIs can hedge their $ funds to get more returns especially when they are getting good deals from Developers. Considering these facts, The expo is expected to be a successful event this year like in the previous occasions. We are also doing a concurrent online exhibition for the benefit of NRIs to interact with the exhibitors. Dubai NRIs can even talk to the Developers on our Radio talk show during these days”.

Mr. Zubin Mehta, CEO, MCHI said, “We are glad to announce The INDIA REALTY EXPO 2008, which is entering into 8th year. The exhibitions organized by the MCHI have always proved successful occasions from the NRI buyers perspective in the past may it be in India or U A E. The forthcoming exhibition in DUBAI is being attended by prominent developers, who had their projects in almost all the categories such as IT, ITES, Retail, Entertainment, Banking, Financial, Hospitality, education and of course residential properties to suit all budgets ranging from 4 lacs to 2 crores and more. The event is expected to see substantial investments from the Indian and overseas companies.

He further added that,”during trying times always rely on exhibitions organized by reputed and official trade bodies such as MCHI to invest your hard earned money for safety and security since almost all participants are reputed and members of our body.”
( editor@thesynergyonline.com)

REAL ESTATE FIRMS CALL FOR HOME LOAN AT 7%

Thesynergyonline Real Estate Bureau

NEW DELHI, NOV 20 :
AGAINST the backdrop of suggestion by the Finance Minister P Chidambaram real estate major are reluctant enough to cut prices of apartments and houses .

According to DLF chairman KP Singh , prices have already been reduced in the last one year as the industry was facing a slowdown. At present, the company has decided to defer implementation of projects in residential and commercial sectors, instead of lowering prices to increase revenues.

"In hotels, residential and commercial everywhere, the projects deferred because of lower demand and liquidity crisis," DLF chairman said. He said that high interest rates have affected the demand, adding that present pricing is competitive and linked to supply and demand.

Mr Singh said government should ensure that home loan is available at 7 per cent to prop up demand in the sector as many projects have been closed down by developers.

Mr Parsvnath CMD Pradeep Jain, who is also the president of Council for Real Estate Developers' Association of India (Credai, Northern Zone) said that prices of on going projects have already fallen to an extent that the profit margins have reduced to single digit due to high inflation, which has increased the cost of construction by 25 to 30% in the last one year.

However, going forward, he said there could be some correction in prices if that of steel and cement go down. At the same time, the developers are constructing smaller size apartments with comparatively low-grade specification. Such steps will lower the per unit cost of apartments.

Mr Jain said unless price of land comes down, the real estate price will not decline. If the developers would not be able to sell them at profit, they will shelve projects, which is happening all over the country now. He added that reduction in interest rates will help generate demand as it will help common customers. He said government should bring down the home loan rate to 7 per cent.

Mr Jain also demanded that banks should be asked to lend directly to realty companies with a moratorium on repayment for 18 months. At the same time, the realty sector should be given the industry status, which will enable banks to lend to the sector easily. Jain said as the real estate sector creates demand for almost 200 industries, the government should give it due importance and accord it proper status. (editor@thesynergyonline.com)

DMAC PROPERTIES' FIRST PROJECT IN DUBAILAND UNDER WAY

Thesynergyonline Property Bureau

NEW DELHI, NOV 18 :
LUXURY lifestyle provider DAMAC Properties Dubai has announced that work has commenced at its Lincoln Park site at Arjan in Dubailand. Lincoln Park is a low-rise development of seven buildings which will comprise residential and commercial units. The project is one of a number that DAMAC Properties Dubai is developing near the huge Dubailand development but is the first to have commenced construction work. Enabling contractor IFG moved to site this week and has commenced foundation work as part of the AED6.7million enabling contract. In addition fencing is being installed to secure the site with hoardings also being put in place.

Based on a Chicago architectural style, the buildings at Lincoln Park will have ornamental entrance ways, flat rooves with parapet walls and sun terraces on top of the buildings. The ground floors will feature a range of shops and restaurants enabling those people living and working at Lincoln Park to make the most of their leisure time.

CEO of DAMAC Properties Dubai Peter Riddoch welcomed the initial work on site at Arjan and said that the company was excited to see its first development at Dubailand get underway.'Dubailand will be one of the most exciting developments in the whole of Dubai's history. It is bringing worldwide attention to Dubai and will potentially open up the region to a whole new audience,' he said.'We have a number of projects in the pipeline in that locality but it is pleasing to see our first one get underway at Lincoln Park. We are very excited to be a part of this innovative and exciting new phase in Dubai's continued development.'

Lincoln Park is due for completion in 2010 and is one of several developments that DAMAC Properties Dubai will eventually have in both the Arjan and Majan areas near Dubailand. Once completed Dubailand will be one of the world's largest tourism destinations - spanning more than three billion square feet and twice the size of DisneyWorld in Florida.

Mr. Riddoch added: 'The creations of Dubailand offers yet another opportunity for companies like DAMAC to continue to be a part of the UAE success story and we are grateful for that.''We believe that the mix of residential and retails units we are constructing in this area will prove very popular with a whole range of customers from end users to investors.'

2008 has been the 'Year of Construction' at DAMAC Properties, during which its businesses have aggressively focused on construction and contract delivery to trusted and quality contractors. An impressive AED2.5billion worth of contracts have been awarded in the first nine months of 2008. From initial consultants through to enabling and main contractors, the company has awarded more than 60 contracts in the first nine months of the year - showing that it means business when it comes to delivery.

So far approximately AED2.1billion worth of contracts have been awarded by DAMAC Properties in Dubai, AED45million at projects in Abu Dhabi and a total of AED320million by DAMAC International in Qatar and Jordan. In line with this, the company is making good progress at its major developments and has recently handed over 571 units at Lake Terrace in Jumeirah Lake Towers in Dubai and with the promise of delivery of 192 units at the Executive Heights project at TECOM in Dubai, 198 units in its Tera Del Sol developments in Discovery Gardens in Dubai, 536 units at LakeView in Jumeirah Lake Towers in Dubai and 847 units at The Crescent, located at IMPZ in Dubai, all before the end of 2008. Approximately a further 7,100 units are planned for handover in 2009/10 across the region. (editor@thesynergyonline.com)

YEAR 2009 HOUSING YEAR ; MAHARASHTRA CM

Thesynergyonline Real Estate Bureau

MUMBAI, NOV 12 :
DECLARING 2009 as year of “Housing for common man” Maharashtra Chief Minister Mr. Vilasrao Deshmukh has announced a slew of measures that would boost the real estate sector.

Among various announcements made for the real estate sector, the chief minister cleared the decks for Public Private Partnership (PPP) on various government housing projects.

Mr. Deshmukh said in view of an encouraging response from the government’s scheme of providing 0.33 FSI in lieu of TDR in Mumbai, the government was considering extending the scheme to the rest of Maharashtra. He also said the government was keen to extend 80 per cent IT/ITES across the state.

Addressing the “Advantage Maharashtra--Housing for all” convention held under the aegis of Maharashtra Chamber of Housing Industry, CREDAI Maharashtra and supported by the State government, held at the NCPA hall here , Mr Deshmukh said “PPP model has been a great success in Maharashtra and we will try to extend this possibility in the entire state on various government projects. We have observed that we have got the quality, timely possession whenever we have done Build-Operate-Transfer (BOT)/PPP projects”.

Mr Deshmukh further said, “Various departments in government, MHADA, Housing Board, MMRDA could follow the PPP/BOT method with a view to increase housing stock/commercial office stock”. The Chief Minister announced uniform slum rehabilitation scheme across the state.

He said municipal bodies would give sanction on the carpet area. The redevelopment of old building with 2.5 FSI would be extended to entire Maharashtra.

The Chief Minister further pointed out that “as per the 10th five year plan there is a deficit of 27 billion houses across the country and it would be a great task to fulfill the need of a shelter to the common man”.

Mr Sunil Mantri, Convenor, Advantage Maharashtra in his introductory speech urged the state government to extend helping hand to the real estate which has been currently boring the burnt of global meltdown. “It is a crucial time for the government to push the real estate sector and consider various issues with a series of proactive steps“

In order to provide boost to the sector, the chief minister said that the government was considering automatic deemed NA permission upon plan sanctions, amendments in MOFA for layout townships and the concept of 25 acre township from existing 100 acre.

Maharashtra Minister of state for Urban Development, Mr. Rajesh Tope complemented the MCHI and the CREDAI, Maharashtra for their efforts in organizing a convention based on the theme of housing for all. He further said that the state government is keen on offering lower tax on the green building and renewable energy initiatives.

MCHI president Mr. Pravin Doshi in his opening remarks appreciated the key role played by the state government and great support from the Maharashtra Chief Minister Mr. Vilasrao Deshmukh towards the real estate and infrastructure development in the state.

Speaking on the occasion, Maharashtra Minister of state for housing Mr. Pritamkumar Shegaonkar, said, “I am happy to see the initiatives by the real estate developers towards realizing the dream of affordable housing in the state. The developers need to consciously take efforts in order to instill confidence and create trust among the common man, who always feel that the developers construct housing for the rich and higher middle class people of the society.

Mr Anant Rajegaonkar, Co-convenor, Advantage Maharashra said, “The support of the state government would go a long way in improving the real estate scenario in the state. It will also help the government realize its dream of housing for all.

Prominent among those who attended the event included CREDAI Chairman Kumar Gera, and Mr Rajni Ajmerae.

The day long convention which is held here today was addressed by the eminent speakers such as CREDAI Chairman Kumar Gera, Senior political leaders such as Manohar Joshi, several senior government officials also attended and addressed the seminar. (editor@thesynergonline.com)

ASIAN OFFICE MARKET FACES INCREASING SLOWDOWN

Thesynergyonline Economic Bureau

NEW DELHI, India, NOV 07 :
THE Asian office market has slowed further as the fallout from the global economic crisis hits the region, according to CB Richard Ellis' Asia Pacific Office Market Review for the third quarter of 2008. The quarter saw the further easing of momentum in office leasing and the remainder of 2008 is likely to see the end of the upward cycle as potential occupiers grow cautious about committing to premium space.

Prime office rentals in the third quarter were static in major CBDs including those in Beijing, Hong Kong, Seoul, Ho Chi Minh City and Singapore. Tokyo recorded its third consecutive quarterly drop in rentals, confirming the early phase of a downward cycle. Average prime office rents began to consolidate in New Delhi, Shanghai, Philippines, Manila and Bangkok.

Vacancies across the region started to increase with a rise in the office vacancy rate observed in 12 out of the 17 markets tracked by CBRE. However current vacancy levels still remain generally lower than those recorded in the third quarter of 1997 during the Asian financial crisis, and many markets have suffered from a supply shortage over the past 12 months. At the end of the third quarter 10 markets recorded a vacancy level below 5%.

According to Anshuman Magazine, Chairman & Managing Director, CB Richard Ellis, South Asia, "Leasing activity in India has slowed down during the third quarter. This was because businesses began to feel the impact of financial turmoil overseas."

The low volume of leasing led to a marginal correction in quoted rentals for the New Delhi CBD. Rentals across premium buildings in Mumbai also underwent a correction while rentals in Bangalore stayed static.

In Tokyo a number of Grade A buildings found it tough to fill vacancies as tenants became increasingly reluctant to commit to space at high rents. In the prime district of Marunouchi/Otemachi/Yurakucho, over 40,000 sq.ft. of Grade A office space was reportedly vacated during the third quarter and has remained empty.

Although sentiment in the Seoul office market cooled, rental rates climbed marginally as the strong market up to the second quarter of 2008 created a ripple effect.

Many occupiers in Singapore are chasing lower costs and are relocating to decentralized locations, built-to-suit facilities and business park space. However, Marina Bay Financial Centre managed to boost pre-commitment to 65.6% as three foreign companies pre-leased some 241,000 sq.ft. of space.

In Hong Kong, demand from the financial sector - the dominant driving force for rental growth over the past five years - fell as investment banks postponed or cancelled expansionary plans. However, the Central CBD managed to enjoy a further 2% q-o-q growth in rentals to HK$134.7 psf per month (US$17.4 per sq.ft. per month).

Turning to China, the positive effects of hosting the Beijing Olympics and Paralympics could not prevent the office rental growth from slowing as leasing activity took a backseat to the games. In Shanghai, office rentals in Pudong recorded their first downward movement since 2005 as the large quantity of new supply launched over the past nine months began to impact the market. Meanwhile, the Guangzhou market shifted in favour of tenants with landlords adopting a softer approach at the negotiation table than before.

These trends in the Asian office market reflect the deterioration of overall business sentiment across the region. Confidence has taken a hit despite the fact that corporate bankruptcies and job cuts in Asia have been less severe than those in the United States and Europe. The impact of this change in business confidence is therefore reflected in the commencement of a period of consolidation in the region's prime office markets. (editor@thesynergonline.com)

'INTRODUCE REITs TO REIGN TRANSPARENCY IN REAL ESTATE'

Thesynergyonline Economic Bureau

NEW DELHI, NOV 07 :
THE Associated Chambers of Commerce and Industry of India (ASSOCHAM) has advocated introduction of Real Estate Investment Trusts (REITs) to bring in institutional investors to reign and discipline domestic real estate market.

A note to this effect has been forwarded to Securities and Exchange Board of India (SEBI) by the ASSOCHAM, stating that REITs can also help develop Commercial Mortgage Backed Securities (CMBS) market and create a source of cheaper debt for commercial real estate.

The ASSOCHAM has pointed out that since purchase and sale of real estate assets would form part of the activity of REITs, the presence of a large number of REITs can enhance liquidity in the secondary market for commercial real estate. The increase in liquidity would make the sale of assets – if necessitated in CMBS structure easier, thereby improving the attractiveness of CMBS.

The Chamber has further pointed out that principal repayments to CMBS investors are made through refinance or sale of property; hence the enhanced liquidity in commercial real estate will make CMBS more viable, in terms of availability of refinance and quicker sale of property.

However, in the case of CMBS originated by a REIT, the REIT would own the property. As a financial investor, the REIT would be more inclined to let the CMBS trust enforce the mortgage and sell the property. The REIT’s franchise with its unit holdrs would improve if cuts its losses from a property that did not provide adequate returns.

REITs typically own a variety of real estate properties, often even across geographies. They thus offer a pool of well-diversified
properties of CMBS. This, results in a better spread of risks as compared to a regional developer who offers mortgages on a few similar properties often located in the same market space. Diversification will rescue the investors’ overall market. This will therefore improve the investment characteristics of CMBS and provide REITs with easier access to lower-cost debt funds.

Globally, the REIT industry has grown dramatically in size and importance. Tax benefits, and the ability that REITs give to small
investors to access the real estate market, have been instrumental in REITs becoming increasingly popular in the USA. An important feature of US REITs is that they do not have an upper limit on leverage. To provide leveraged returns to unit holders, REITs borrow both in the form of unsecured debt and CMBS.

There are 191 companies in US whose Sector Market Capitalisation are 221.06; Australia, 65 and 53.37; UK 26 and 31.75; France 26 and 31.75; Japan 42 and 24.40; Canada 35 and 13.59; Singapore 15 and 8.47; Hong Kong 5 and 3.95; Belgium 15 and 3.54; New Zealand 9 and 1.51; South Africa 5 and 1.35; Taiwan 7 and 0.94; Turkey 11 and 0.80, South Korea 12 and 0.67; Malaysia 14 and 0.65; Greece 2 and 0.38; Thailand 7 and 0.29 and Bulgaria 11 and 0.13.

REITs can play an important role in the development of CMBS. One of the main risk factors in CMBS is the legal process involved in enforcing mortgages on defaults by developers. The repossession and sale of property involves a legal process, which, in Indian conditions, may delay repayments to CMBS investors. This risk becomes even more pronounced when developers also own the property mortgaged. Developers may be influenced by franchise-related issues, and may not want to alienate the property even when unable to repay debt; they may then resort to legal means to stall the sale process.

The US still accounts for over half of the global REIT market (53.2per cent) although this percentage has been declining as a result of conversion of public REITs to private REITs in the US and REIT IPOs elsewhere. The growth and increased profile of REIT markets has led to an increased level of specialist Global REIT funds being launched. (editor@thesynergonline.com)

MAHINDRA LIFESPACE H1 PAT UP 20 % AT RS 21 CRORE

Thesynergyonline Real Estate Bureau

MUMBAI, OCTOBER 26 :
MAHINDRA Lifespace Developers , the real estate and infrastructure development arm of the Mahindra Group, registered a 14 petr cent rise in its operating income at Rs 78.53 crores in H1 FY09 as against Rs 69.13 crores in H1 FY08.

The profit after tax for H1 FY 09 is Rs. 20.95 crore. The profit after tax for H1 FY 08 was Rs.32.07 crore including Rs. 14.53 crore, consisting of Rs. 4.87 crore on account of one time income on sale of investments and Rs. 9.75 crore on account of arrears of preference dividend.

The profit for H1 FY 09, on a comparable basis, is higher than the profit for H1 FY08 by 20 per cent. The profit after tax for Q2 FY 09 is Rs. 11.20 crore. The Profit after tax for Q2 FY 08 was Rs. 19.87 crore including Rs. 9.75 crore on account of one time income of Arrears of Preference Dividend. After excluding this one time income, the profit for Q2 FY 09, on a comparable basis, is higher than the profit for Q2 FY08 by 11 per cent. The standalone results have been subject to a limited review by the auditors of the company.

The consolidated total income has increased by 54 per c ent to Rs. 167.97 crores in H1 FY09 from Rs. 109.00 crore in H1 FY08. The unaudited consolidated profit after tax has increased by 23 per cent to Rs 32.57 crore in H1 FY09 from Rs. 26.57 crore in H1 FY08. The consolidated results have not been subject to a Limited review by the auditors of the company.

‘Mahindra Splendour’, a residential project at Mumbai has bagged the IGBC Green Homes Pre-Certified Platinum certification in September 2008 from the Indian Green Building Council (IGBC). The Company has pioneered the cause of sustainability in the residential real estate space with the Green Construction philosophy.

Development work is underway at the company’s residential project, ‘Mahindra Chloris’, near Delhi Public School at Faridabad .

The company’s subsidiaries, Mahindra World City Developers (MWCDL, Chennai) and Mahindra World City (Jaipur) (MWCJL) have been rapidly growing their customer base and development activity.

At MWCDL, Chennai, total employment by the companies operating in the Business City crossed the 10,000 mark during the quarter and the Company received a Developer of the Year Award from the Export Promotion Council for EOUs & SEZs (EPCES) and the Madras Export Processing Zone (MEPZ) for its contribution to the growth of exports from SEZs.

Mahindra World City , Chennai added 5 global customers during H1FY09 including Renault Nissan, Armstrong, JC Valves, and Mekaplast in its expanded project area.

The company’s 2nd Integrated Business City , MWCJL became operational within 2 years of the signing of the Shareholders Agreement with the State of Rajasthan with Deutsche Bank and Infosys inaugurating their campuses at the IT SEZ at Mahindra World City , Jaipur. A total of 24 customers have signed MOUs / Lease Deeds for establishing their facilities at Mahindra World City, Jaipur, the most recent being ICICI Bank which will be establishing an IT Hub in Mahindra World City, Jaipur. (editor@thesynergonline.com)

CHANGING PARADIGM IN INDIAN REAL ESTATE SECTOR

Pradeep Jain, president, CREDAI NCR and Chairman, Parsvnath Developers

THE global economic slowdown and the lack of liquidity in the market are the two aspects that are affecting the entire economy. The real estate sector that was growing at a fast rate and was scaling new heights has felt the pain and has been hit hard especially more with the perception of various communities. I feel this CII stage offers me an opportunity to share my feeling on behalf of the sector about this temporary phase which is going on. However I am confident that this will be corrected eventually.

The real estate sector have been of immense interest to people across the globe. This was evident from the fact of huge investments made in the sector. However, the sub prime mortgage crisis had a cascading impact on the Indian financial system. This resulted in a conservative lending approach followed by banks that inevitably increased the home loans following the impact of CRR and repo rate hike by RBI.

The move dried up the existing liquidity in the markets which is evident from the current share market fall. The move has given critics a further boost to question the liquidity positions of the developers and to argue that the growth in the real estate was mere a bubble which has now burst.

They are, now without being aware of the ground realities, boasting about developers being trapped in a cash tight situation. This inturn has influenced the spending capacities of publics and has to some extent restricted the growth of the Indian Real Estate Sector. To add to the misery, higher risk weightage attached to the real estate lending has been dampened the image of the sector’s growth.

We should recall that this is the sector that provides assistance to 245 ancillary industries, is the highest employer to the below poverty line; second largest employment generator in the economy where the top five real estate players employ more than 2.00.000 employees at different locations.

The sector been instrumental in changing the face of India from being an underdeveloped country towards accelerating its way to a developed country. It is evident from the state of art infrastructure developments, buildings, townships, shopping malls which are not only restricted to the urban cities but are also spread in the Tier II & Tier III cities and make them stand at par with the modern towns.

These concerns have increased the negative sentiments of persons who have over the period maintained a negative perception about the Real estate sector even when the sector witnessed growth rates to the tune of 30 per cent and is contributing 8.53 per cent of the total GDP .

The sector has emerged as the fifth largest destination of foreign investment. However, the negative vibes created have hit back and have been hampering the growth of the Indian economy and has brought it to a stand still. Envisaging the impact, the RBI in order to stabilize the Indian financial system has reduced CRR to 6.5% that would infuse additional liquidity of Rs 1,00,000 crore in the cash starved market.

Subsequently RBI for the first time since 2004 has reduced the Bank repo rate by 100 basis points to 8 percent. This would reinforce banks’ confidence in lending by infusing more liquidity. The steps taken are barely sufficient to keep our economy safe in the current scenario and not grow from the prevailing levels.

In order to steer through these tough times the RBI needs to further cut the repo rates probably by another 100 basis points and reduce CRR as well. The higher risk weight on the real estate loans should also go. Going forward, we do not see any decline in the demand from the end users as there is a shortage of 27 million units.

As the population keeps on increasing, the demand is further expected to escalate from current scenario. Even, as of today the demand is much higher than the government authorities without the presence of private real estate developers can fulfill. It appears obvious from the 8.50 lakh applications received for mere 5010 flats on sale by DDA.

The recent reports by real estate consultancy firms validate the view point. The report by Cushman &Wakefield has hit hard on the face of pessimists who questioned the future of the real estate Sector. As the industry report states that the demand for real estate across office, retail, residential and hospitality sectors in the country is expected to cross the 1,000-million sq ft bench mark by 2012.

The residential segment would contribute 63 per cent of the total real estate construction during the term under consideration and would continue to drive real estate demand with 687 million sq ft. The commercial office space is projected to be 243 million sq ft and the retail and hospitality segments are expected to constitute 95 million sq ft (9 per cent) and 73 million sq ft (6 per cent) of this total demand, respectively.

Considering the burgeoning demand we have been offering commercial and residential properties both in the affordable and the premium luxury segment. However, we cannot meet the needs and keep up to the demands of the customers without the support of the government.

Thus for the prosperity of the sector at general and customers at large the government should facilitate the efforts of real estate developers by providing Minimum infrastructure guarantee under habitation policy, Relaxing guidelines on foreign investing in Indian Realty, Reducing risk weightage and by giving the sector “industry status” coupled with reduction and uniformity in stamp duty.

And of course by doing away with the restrictions on real estate loans. We only hope the second most important sector recievs due attention and support from all-government, banks, bureaucrats and media – to maintain the growth. To communicate the need we need the fourth estate to come in the aid of real estate. (npsinha@thesynergonline.com)

ARC LIGHTS TO HOLD TWO-DAY 'REALTY REVIEW 2008' IN LONDON FROM NOV 29

Thesynergyonline Real Estate Bureau

NEW DELHI, OCTOBER 25 :
WITH the aim of promoting the real estate potential of India and the UAE, ARC Lights, an international events firm with offices across India, UAE and UK, is organising the first ever Realty Review 08 in London from November 29 to 30 , 2008 at The Park Plaza Riverbank.

In partnership with London-based property investment and development company Highworth Properties and sponsored by Silver Heights, an upcoming realty company based in Dubai, Realty Review 08 promises to be an ideal platform to showcase the opportunities in the real estate markets in India and UAE.

The exhibition aims at attracting foreign investments from High Networth Individuals, Non-resident Indians and other investors for the booming real estate industry.

Speaking about the event, Mr Prem Kumar, Managing Director, ARC Lights said, "With the present financial gloom around the world markets, we feel there is an untapped opportunity for providing the right investment platform for the NRI Indian in UK. UAE as a market has the reassurance of the visionary rulers, and the recently concluded Realty show in Dubai, further reinforced the fact that UAE market is to an extend unaffected by the current financial crisis, thus making the UAE a good investment zone."

"India is a golden opportunity, especially when the prices are low and keeping the strong fundamentals of the land. Further more its time to touch upon the emotional side of the NRIs in UK to invest back in their homeland , " he added.

Commenting on the need for Indian developers to participate in Realty Review 08, Mr Alex Varkey, Director, ARC Lights said, "India has a lot of potential when it comes to real estate. Through Realty Review 08 Indian developers will have the best opportunity to showcase their strengths to a global audience. Realty Review will ensure atleast 2000 high networth attendance thus making the event a must participate option for builders wanting to sell high stake inventory."

"There are a few first at the event as well. We have looked at a power broking opportunity where builders can also interact with potential agents to sell their stock. These innovations have been set primarily factoring the needs of the Indian Realty companies and their past experiences , " he added.

Year 1 will target 67 builders across 20 promising cities in India and the UAE. The Realty Review model envisages to travel globally with Singapore and USA being next in line. (npsinha@thesynergonline.com)

GLOBAL REAL ESTATE INVESTS IN VELANKANI TECH PARK, CHENNAI

Thesynergyonline Real Estate Bureau

NEW DELHI, OCTOBER 21 :
AN affiliate of AIG Global Real Estate has invested in Velankani Tech Park, a part of the Bangalore-based Velankani Group. Velankani is developing a notified Special Economic Zone (SEZ) in Sriperumbudur, located approximately 50km from Chennai. The proposed development of 8.5 million sq. ft. is aimed to provide plug-and-play space for electronics hardware and telecom component manufacturers and IT/ITES companies.

Velankani Tech Park is expected to house around 20-30 global component suppliers and will meet ready-to-move-in space requirements of vendors to telecom original equipment manufacturers & Electronic Manufacturing Services (EMS) giants looking to set-up operations in Sriperumbudur.

Kiron Shah, Director and Founding Member of Velankani Group, commented that the development is uniquely positioned and has a first mover advantage in the region. “The Velankani Tech Park is the only SEZ which will offer a plug and play facility in Sriperumbudur for companies and a seamless experience in commencing operations. Substantial effort has already gone into the conceptualization of the project over the last two years leading to commencement of development at the project site. All basic infrastructure will be provided by Velankani to meet tenant requirements including future expansion.”

He further added “AIG Global Real Estate brings tremendous experience in development of industrial parks worldwide and we are excited to partner with them. We will benefit from their global client relationships and hands on design and development expertise. This partnership is a starting point and we believe it will flourish and grow in the future.”

Rajesh Agarwal, Managing Director, AIG Global Real Estate India, stated, “We are excited to partner with the Velankani Group and invest in a project that caters to an unfulfilled demand in the region. We look forward to strengthening and expanding this relationship with Velankani. This investment is a statement of AIG Global Real Estate’s continued commitment to India and our investors, and we are looking forward to expanding its presence in India and building strong relationships with local partners and investing in attractive opportunities in the region.”Avista Advisory Group were advisors to the Velankani Group on this transaction. (npsinha@thesynergonline.com)

DEMAND FOR PRIME OFFICE SPACE IN KEY CITIES WITNESSES SLOWDOWN

Thesynergyonline Real Estate Bureau

NEW DELHI, INDIA , OCTOBER 21 :
THE global economic conditions have impacted the office space absorption in India during the last quarter ending September 30, 2008. The 7 cities covered in the quarterly India Office Market View report showed a marked slowdown in demand and office space leasing that had moderated in the first two quarters of the year.

Many corporate occupiers, especially in the IT/ ITeS sectors have postponed or curtailed their expansion plans. Together with this, the fund availability for the sector which was already constrained due to the inflation control measures of Reserve Bank of India, will be further curtailed by the recent financial crisis in the US and its ripple effect on rest of the world.

Commenting on the findings of the report, Mr. Anshuman Magazine, Chairman and Managing Director, South Asia for CB Richard Ellis said; "The global economic slowdown has started to show early signs of impact on the offices market. The third quarter of 2008 has seen some decline in the office space take up across the country. Going forward this is expected to keep office rentals under check."

During the 2nd quarter review, a slack in demand combined with the inventory build up had starting dampening the office space values across all the 7 cities, albeit in varying degrees. It was also reported that while the Central Business Districts did not see much demand due to limited space, the peripheral markets saw increased demand due to quality space being made available at affordable prices.

Another trend that came to the forefront was the increased flexibility on the part of the developers and landlords to negotiate on the quoted commercial terms - a reflection of the pressure being felt in the market.

Rentals in the National Capital Region are likely to remain stagnant for the next few quarters. On the other hand the demand for corporate office space is not likely to be affected in the next few quarters, especially in the micro-market of New Delhi where maximum space take up is in this category rather than IT/ITeS.

In light of the global conditions and the fact that Mumbai is the financial capital of the city, rentals and capital values across most micro-markets will see a further correction. This can turn out to be more severe by mid 2009, if there is no improvement in the overall economic climate and the supply hits the market as per the timelines indicated by the developers.

The total space take up till Q3-08 has 5.3 million sq.ft. As compared to this, the total absorption till Q3 last year was approximately 9 million sq.ft. The space absorption in Bangalore has dropped quarter on quarter this year and clearly the economic slowdown in the global markets has left a mark on the Bangalore office sector.

With the STPI benefits coming to an end soon, the next wave of developments in Bangalore are expected to be in SEZ spaces. Clearly the major developers in Bangalore are betting big on SEZs to lead the space take ups in the coming years.

In Chennai the absorption till date for 2008 is about 3 million sq.ft.; substantially lower than the space that was leased in the same time period last year. The long awaited Second Master Plan, , was eventually notified by the Government during Q3 2008 and is expected to open up avenues for re-development in the CBD and also the Peripheral and Suburban micro-markets.

In Hyderabad rentals have stabilized across various micro-markets. Considering the current demand scenario and with developers postponing and further phasing out the supply, rentals are not expected to move upwards for the next few quarters. The supply of Grade-A space in CBD is still nonexistent and the situation is not expected to be alleviated. In response to the sluggish market conditions, planned and under-construction supply is being delayed.

The office space sector in Pune is exhibiting some degree of slowdown in terms of take up and rental growth. Going forward, rentals are expected to either remain stable or perhaps undergo a correction in certain pockets.

In line with the subdued economic outlook, office leasing in Kolkata is also experiencing a temporary stagnation. Though the city has emerged as a viable destination for corporate set-up, backed by proactive government and adequate infrastructural development; certain adverse political developments have impacted the city's image. However, positive measures are being taken to rectify the harm done.

Overall the office market space in the key cities in India has witnessed a slowdown which is expected to continue over the next few quarters. This is reflective of the global economic conditions affecting commercial real estate in India. However we are still confident that the Indian growth story is secure and would continue. (npsinha@thesynergonline.com)

DON'T OWN A HOME ONLY , OWN A PIECE OF GREEN ENVIRONMENT

Thesynergyonline Real Estate Bureau

NEW DELHI, OCTOBER 10 :
THE increased effect of global warming is having a toll on all of us, most potently on the dwellers of big cities. And to top it, the hectic lifestyle makes it worse as quality of life goes down considerably.

Getting up early in the morning, negotiating traffic snarls, and dealing with pollution, dealing with the high stress of office or business - Life in metro has indeed become very taxing. After a tense and hectic day what one longs for is the comfort of home. But if the residence itself is a quagmire of sound and air pollution then indeed there is no escape.

There is virtually no space in Delhi and even the NCR region is seeing a mad rush where high rise buildings are taking precedence over relaxed and calm environment.

The quest for green environment has led a few builders in the NCR to concentrate more on the "Green Quotient".

One such project that is creating huge interest is the GreenIsle, a project by Saviour builders in Crossings Republik. GreenIsle means a small green island. It very well does justification to its name by having lush greenery.

Marching towards the new age GreenIsle offers not only homes but a lifestyle that is contemporary, elegant and tranquil. Crafted with aesthetic sense and great architecture, it represents itself as the most modern abode that rests amidst sprawling greens. Saviour Builders are building new age apartments Greenisle heart of the city Crossings Republik. GreenIsle will be the new definition of luxury homes for everyone in real estate.

Saviour Builder's new GreenIsle apartments will be available at Ghaziabad's posh area Crossings Republik. Greenisle will be luxurious and magnificent in its interiors and exteriors too. Greenisle's multistoried apartment is building in the large area of 23,000 square meters with a huge sum of amount. The Apartments are built in the huge area of 6 acres and more than 12 lakh Sqft is the construction area. There are approx 1000 housing units. The mode of fund raising for the project Greenisle is banks and other financial institutions.

The Chairman of Saviour group Mr. Iqbal Singh Sodhi says "We realized that a noisy city life makes the residents tired with its cut throat competition, maddening crowd, and severe traffic congestion and pollution attack. With these difficulties people seek a home amidst serene environs - A home, where you feel the view of open sky, twinkling stars, that soothes you and where Mother Nature caresses you by keeping your heart, mind and soul, calm and composed. Taking all these essentialities as prime priority, a green habitat, GreenIsle was born, that rests in India's First Global City, Crossings Republik".

Don't wait to buy real estate, buy real estate and wait

The Green quotient in the GreenIsle is sufficiently handled, but it is also true that with the sub-prime crisis in the US, the real estate sector in India has also hit a plateau. But if you are planning to buy your first home, waiting for interest rates to cool down serves on purpose as the costs even out in the long term. Even for investors, GreenIsle provides a bountiful of attractive features at affordable price.

As T Harv Eker once remarked: "Don't wait to buy real estate, buy real estate and wait."

Mr. Iqbal Singh Sodhi says "Everyone wants a piece of land. It's the only sure investment. It can never depreciate like a car or a washing machine. Land will double its value in fraction of time. Land is going up every day."

Commenting upon the recent slowdown and correction in the real estate market, Mr.Yashpal Dhama, Director and CEO, Saviour group stated, "In the buoyant market, all developers do well. It is in the downturn that the natural selection and discernment process starts and it is then that a professional developer with industry-best standards and practices benefits and gains more recognition and trust from buyers. Now is the time that we expect to reap the fruits of our sustained diligence and ingrained professionalism."

"Sustainability is directly linked to resources and resourcefulness demanding holistic approach. The basic principles of sustainable development such as building configuration, energy use, water conservation, air quality, maintenance, recycling and material specification would be the key parameters we are implementing in this project ," he stated.

What makes GreenIsle commercially attractive is its location. Proposed 6 lane express way is just near to it. Its proximity to proposed metro station makes it more special in every manner. With such attractive features, appreciation in rates cannot be ruled out.

Besides, it provides with all the day to day necessities & luxuries simultaneously. It provides the customers with a swimming pool, health club, golf course, fountain parks, jogging track, spa etc. It consists of a modular kitchen, each kitchen with the facility of RO supply and the most important thing is that GreenIsle is situated right next to the golf course and the lake.

The apartments are not only stunning but are available in the most reasonable prices. The 2 bedroom flats are in the total area of 1250 sq. ft. The 3 bedroom flats are in the area of 1600 sq. ft. and the 3 bedroom flats are in the area of 1800 sq. ft. It possesses a study room as well for the working professionals & students. Keeping in mind the affordability the prices are not much and it's an excellent opportunity for the buyers.

Mr. Sanjay Rastogi Director Saviour Group said, "I liked the project very much and feel confident that it will find many buyers. The development with its unique setting will be especially attractive to people moving to GreenIsle. Being Close to the university and town and still having a country setting will be an important feature."

Till now the real estate sector has never seen the use of Technology in such a better way as it has been in Greenisle. It is equipped with all the comforts and luxuries which any human heart will desire. This edifice stands tall with its sky scraping towers offering you the option of luxurious 2/3/4 bedroom apartments that give desired space to your life. Here you find the rare combination of fascinating features and state-of-the-art amenities that you have always desired for your dream home.

The Director Yashpal Dhama says "Greenisle is the place for comfort & luxury and will your soothe your complex life giving you the mental & physical relief. GreenIsle has become a synonym to style, class and innovation. It has all the modern standards that one can think of."

According to the Director Mr. Lakhbir Singh Gill says "The luxuries and the lifestyle provided at Saviour Group have taken a different turn altogether by bringing together best of all the worlds standards. Being one of the promoters at Crossings Republik surely make us feel a part of the global boom which has already struck the Indian Market."

Saviour group has executed more than 10 commercial and residential projects. Some of its completed Projects are SPS Residency, SPS Heights, Euro Apartments, SPS commercial etc. After completing these prestigious projects in Indirapuram now the upcoming project Greenisle in Crossings Republik helps one realise ones dream of living in style.

The Director further adds "We are proud of a spectacular track record and today, can be credited with changing the very face of the Delhi, National Capital Region."

Indeed green projects like the GreenIsle intends to cover all the areas of modern standards that can quench the thirst of each and every customer who dreams of living in a Global city with the global standards.(npsinha@thesynergonline.com)