Monthly Archives: December 2008

Realtors look at ‘affordable’ flats for cash flows

December 5, 2008 – 1:57 am

After launching mid-income houses, real estate companies are now targeting low-priced homes in the sub-Rs 10 lakh category to improve cash flows and beat the slump in the property market that has been driven by high borrowing rates.

Unitech, the Delhi-based property major, has applied to the Haryana government to develop houses in the Rs 7 lakh to Rs 15 lakh range in Gurgaon. These are high-density, four-storied buildings in the 450 to 800 square feet range.

“Affordable housing is the new mantra for developers now because it is much easier to get loans below Rs 20 lakh,” said Raminder Grover, managing director, Homebay Residential, a subsidiary of Jones Lang LaSalle

India’s central bank counts loans of Rs 30 lakh and below given by lenders to home borrowers as priority sector lending. The classification means that banks can also access refinancing at concessional rates and fulfill norms of directed lending.

The Union government is also expected to promote low-cost housing in its stimulus package for the economy to be announced Saturday. It is expected to give some relief in interest rates for low-cost housing for loans not exceeding Rs 10 lakh.

“The slump in demand in the real estate can be reversed if we provide affordable housing in the range of Rs 20 lakh to Rs 30 lakh. Unitech’s new projects will factor in this and we intend to reduce the ticket size to make the houses more affordable,” said Ramesh Chandra, chairman, Unitech.

The country’s largest listed realtor DLF, on the other hand, is focusing mainly on mid-income, rather than low-income, housing in the Rs 2,700 to Rs 3,000 per square feet bracket, a company official said. The company has sold over 2,600 apartments in this segment in the last six months.

Smaller property companies are not far behind. For instance, Delhi-based property developer Falcon Realty Services has launched apartments priced at Rs 5.5 lakh at its Gulmohar Woods in Global Eco-City near Delhi.

Mumbai-based Matheran Realty launched houses priced between Rs 3 lakh and Rs 7 lakh category in Karjat, nearly 100 km from Mumbai, and is looking to launch similar projects in the central and western suburbs outside Mumbai.

Another Mumbai-based realtor, Sunil Mantri Realty, is launching a housing project in the bracket of Rs 5 lakh to Rs 15 lakh in Gwalior, Madhya Pradesh, in February next year. The developer is also launching projects in the Rs 10 lakh to Rs 15 lakh segment in Sholapur in Maharashtra, Mumbai and the outskirts of Bangalore next year.

Other property majors such as Omaxe and Puravankara have set up separate companies to launch the affordable housing projects. Omaxe has set up National Affordable Housing & Infrastructure Limited (NAFHIL), in which it recently divested a majority stake, and Puravankara has set up Provident Housing.

Matheran Realty saw nearly 66,000 aspiring home-buyers applying for 3,000 apartments to be handed over in mid-2009 in Tanaji Malusare City. The realtor sells houses here at Rs 1,000 to Rs 1,400 per square foot even as it spends Rs 1,200 to Rs 1,300 per square foot on land and construction.

The developer is looking to sell shops and other commercial properties at Rs 5,000 to Rs 6,000 a square foot by way of cross-subsidies on the housing project.

Pravin Banavalikar, chief executive officer, Tanaji Malusare City, Matheran Realty’s Karjat project, said: “There is no dearth of demand for houses below Rs 10 lakh whether it is boom or recession because there is a huge demand-supply mismatch.”

Planning Commission estimates suggest that India has a shortage of 24.7 million homes and economically weaker sections and low income group (LIG) segments account for 99% of that gap. The shortage is expected to touch 26.5 million houses by 2012.

The investment required to bridge the gap at the beginning of the eleventh five year plan was pegged at Rs 1,47,200 crore and is expected to rise to Rs 2,14,100 crore by 2012.

Though margins in low-priced apartments are lower than in mid- and premium housing, companies are eyeing higher volumes to drive the business. Low-cost houses have a margin of 10 to 15%against margins above 25% for higher-priced housing.

By | Posted in Real Estate News | Tagged , , , , , , , , , , | Comments Off on Realtors look at ‘affordable’ flats for cash flows

Dubai retreats on just-announced $95B development

December 4, 2008 – 12:40 am

The newly created Dubai developer that unveiled a 95 billion dollar real estate project just 2 months ago says it is reviewing its plans in light of the economic downturn.

Meraas Development says “it has seen that investor demands have changed” and that it must quickly respond to meet these market needs.

The developer says it is reassessing its business strategy and the rollout of its flagship Jumeira Gardens project slated for a central part of Dubai. The company, which was launched in late September, announced the building project at a property expo in October.

Meraas says it expects to have more details on the project by the beginning of next year.

By | Posted in Real Estate News | Tagged , , , , , , , | Comments (1)

How fluctuations in rupee affect the investment

December 3, 2008 – 9:27 am

How fluctuation in rupee affects your investment.

  • If the rupee falls in value, the rupee returns on commodities such as gold increase.
  • If the rupee appreciates in value, the rupee returns on gold decline.
  • An investment in overseas assets will fall in value if the underlying currency depreciates, and investors will tend to lose out
  • But a strengthening currency will result in gains for investors in foreign assets such as property and bonds.
    • By | Posted in Real Estate News | Tagged , , , , , , , , , | Comments Off on How fluctuations in rupee affect the investment

    Market expects speedier, steeper rate cuts

    December 1, 2008 – 6:03 am

    RBI may be forced to cut interest rates earlier than planned and more aggressively than previously hoped, as it comes under pressure to navigate an already faltering economy away from the turbulent economic aftershocks of the Mumbai terror attacks.

    Last week’s attacks, which killed around 200 people, targeted key symbols of enterprise in a city that is widely viewed as the country’s economic powerhouse and a key barometer of business confidence. The attacks and the choice of targets appear at least partly aimed at puncturing investor confidence at a time when the country’s economy is already reeling under slowdown.

    Much like the 9/11 attacks in the US in 2001, hastened the easing of the monetary policy stance — which had been started by the Federal Reserve in response to the bursting of the technology bubble, many in the market are expecting RBI to adopt a similar response to what many are calling India’s version of 9/11. The Fed progressively brought down its key federal funds rate to 1% in the months, following the 9/11 attacks, although no one in India is expecting that aggressive a move.

    “With signs of economic slowdown already staring at us, the terrorist attacks are likely to affect investor confidence. To counter the possibility of still slower capital inflows, the market is hopeful about a sooner rate cut from RBI,” said B Prasanna, MD & CEO, ICICI Securities, a primary dealer in government securities.

    Terror attacks in Mumbai are hardly new, but it’s the first time that it targeted five-star hotels frequented by top business figures and foreigners visiting the city. Analysts say the likely fall out of the attacks could be foreign investors getting worried about the safety of their employees and establishments, which in turn could impact already shrinking capital flows into the country.

    Economic growth this year is expected by most forecasters at less than 7%, down from the 9%-plus of the previous three years, and some analysts expect it to fall further next year. Anticipating this, and helped by a falling inflation rate, the central bank has already switched gears in favour of an easier monetary policy, but analysts say the Mumbai attacks may force it to become more aggressive.

    “Declining inflation and increased downside risk to growth hint that another round of easing by the central bank is imminent. However, the Mumbai attacks could prompt RBI to announce a bigger cut than the 50-basis point we had expected prior to the attacks,” said Rajeev Malik, chief economist with Macquarie Securities in a research report.
    The market is already betting on this. Overnight interest rate swaps, a derivative product commonly used by traders to express a view on interest rates, are trading at a 5-year low, suggesting rate cuts are imminent.

    Amid all this, RBI has been predictably silent on further rate cuts. However, that it remains biased in favour of softer rates is clear by some of its recent actions — it cut a key short-term rate and slashed banks’ reserve requirements in early November and recently extended the time period for its various liquidity enhancing measures to June next year.

    T reported on Saturday that a group of bankers had in a meeting with RBI asked it to cut its reverse repo rates rather than bring down the cash reserve ratio. This, they feel, will give an indication to the market that interest rates are headed south.

    By | Posted in Real Estate News | Tagged , , , , , , , , , , , , , | Comments Off on Market expects speedier, steeper rate cuts

    LAVA Electronics in talks with realty

    December 1, 2008 – 4:45 am

    Sweden-based electronic products maker LAVA Electronics is in talks with real estate firms Ansal API, Omaxe and Parsvnath for a possible India entry through a franchisee arrangement.

    The LCD television maker, which gets 60% of its revenues from the B2B segment, is planning to sell its products to large hotel chains. The company clocked a turnover of e60 million last year. LAVA executives met officials of real estate companies during the weekend.

    LAVA Electronics’ managing director Christian Svantesson said: “We are looking for a suitable franchise partner and aim to enter India by the third quarter of 2009.”

    He said his company will have exclusive outlets to cater to consumers directly but five-star hotels would continue to remain its focus area. “We want to position the company as a high-end brand in India,” he added.

    The firm has an assembling unit in Southern Sweden. While television cabinets, panels and other hardware are imported from Germany, software programming and product designing is done by the company at its Swedish unit.

    The firm intends to replicate similar business models in India. Mr Svantesson said that initially the company would import and sell in India. It will start assembling products in the country after creating a presence among consumers and business houses.

    LAVA sold 50,000 LCD televisions world-wide last year and targets to sell 70,000 sets this year. Currently, the firm has operations in countries such as Hong Kong, Australia, Spain, UK, Italy, France and the US.

    By | Posted in Real Estate News | Tagged , , , , , , , , , , , , , , , , , , | Comments Off on LAVA Electronics in talks with realty