Category: Real Estate Investment

India Witnesses Reduced Foreign Real Estate Investment

India recently lost a bigger amount of foreign real estate investment. UK – centered RICS reported that India real estate market in has become investor unfriendly.

Royal Institution of Chartered Surveyors RICS said that real estate investment in India is not preferable due to many reasons. The existing real estate market situation is totally against the investors.

Numbers of foreign investors are decreasing in India. They are highly cautious about having some real estate investment in India. Read More »

Blackstone Launches Asia Focused Real Estate Fund

Blackstone Group LP is about to launch its Asia Focused Real Estate Fund. Blackstone Group hopes to seize the Asian real estate market with this fund.

Blackstone Group is considered as the largest private real estate firm in the whole world. The firm has revealed its plans to launch another real estate fund in Asia. Read More »

Mumbai Real Estate Gives New Hope to the Investors

Mumbai Real Estate promises higher returns to the real estate investors. Three Mumbai suburbs are listed among the top ten advantageous Real Estate destinations of the country.

Mumbai City has 3 top Real Estate destinations of India. Prices in these areas are said to double in five years’ time.

Though the Real Estate sector undergoes a very sluggish momentum, investors all across the country still choose real estate investment. Higher returns are said to be the reasons behind this overwhelming popularity of real estate investments. Read More »

UAE NRIs Prefer Real Estate Investment: Say Reports

Falling Indian rupees invite more NRI investment in India. A majority of NRIs plan to invest on real estate properties. Sumansa Exhibitions’ survey disclosed that nearly 89% of the UAE NRIs do have investments in real estate.

The role of Non-Resident Indians (NRIs) in the investment strategy of India is prominent. Recent studies prove that most of the NRIs prefer real estate properties to Gold, bank deposits and other investment options. Read More »

Smarter Way of Buying a Home.

Profit is the keyword, when it comes to Investment and Investment in real estate rotates around purchase, ownership, management, rental and sale of property.  It involves a lot of planning, especially because of the rapid changes in the economic scenario.

Here’s a checklist of the things you need to keep in mind:

  • The Location: While buying a home, location is the most important factor. It is essential to take several factors into account. If you are to reside in a house, it becomes important to see the other factors such as propinquity to the work place, school, family and friends. No one would mind spending a few lakhs of rupees if the house were close to ones child’s school or ones office.
  • Th Condition of the Home: If you are buying an old house, scrutinize it carefully. No one don’t want to waste a lot of money in repairs later on.
  • Nearness to leisure time areas: You may want to live in a neighborhood with parks, libraries and walking trails, local markets, shopping malls, etc. as these are the points where you can relax or have fun on daily basis and also fulfils your basic needs of life.
  • Future Prospects: You can have an idea about the property by the area is going to develop by looking at the current local real estate trends. Upcoming malls and hotels are a key of the kind of development that the region is expected to undertake. The more developed an area, the more valuable your property becomes. High property values are especially useful when you want to go in for rent out or selling, so that it gives you good profit.
  • Your Neighbors: Try to meet the people living in the neighborhood of the choice of your area. If they are unfriendly to the idea of having you as their neighbor, it’s likely to show in their behavior.
  • Finance: You need to work out the financial implications of buying a home. You will have to decide whether which home loan, which bank at pertaining interest percentage you want to opt for to finance your property. If you already have the money, you need to work out whether investing your money in a property will affect your other expenditures in any way as you may need some for unforeseen emergencies.

Go Goa

A home is one that offers you a premium lifestyle with all the possible comforts, is pocket friendly and one that takes you closer to your aspirations of owning a home. Several people are now recognizing the advantages of buying a second home in semi-rural areas. After all, a second home nestled in the lap of nature not only gives you a weekend retreat for yourself and your loved ones, but also offers the option of earning good investment returns in the near future.
Known as the land of sun, sand and sea, Goa has the perfect milieu that one could choose for a second home, mainly purchased for the purpose of retiring in peace and tranquility, the state has a number of places to offer for the purpose. The decision to buy a second home is foremost driven mainly for family leisure. The villages in Goa suit perfectly for such a purpose, and what makes purchasing weekend homes attractive is the fact that new locations have opened up, which offer a package deal with the best of facilities, sound connectivity and developing infrastructure.

The weekend home trend has picked up to a great extent. People are now looking onto second homes as a new investment option as the property is bound to appreciate in future and that serves the dual purpose of investment as well as leisure. Money invested in real estate never goes down, there has always been an upward movement in this sector and the same will be in the future. The demand for second homes has been increasing steadily. With improving incomes, people have begun spending towards second. There are a number of people who prefer investing in real estate as an option for creating diversification of their overall investment portfolio. Therefore, surplus income is invested into second or multiple residencies. In order to attract buyers, the developers also agree to customize the properties as per the buyer and take responsibility for its maintenance.
The state is free from negative elements such as communal violence and the alike, making this place a comfortable and stress free place to retire in, shares an investor. Coupled up with the best of reselling, renting as well as leisure options, weekend homes are worth investing in. The scenic atmosphere and tranquility of a weekend home can be your best getaway from the chaos around.

Booking Moolah

There is a practice of some large- and mid-sized developers accepting cheques for booking amount, without disclosing the rates per square feet  and creating urgency amongst customers. In a recent case of a launch of a project by a big realty player, the initial rate at the time of launch was Rs 6,000 per sq ft and is  believed to touch Rs 6750 per sq ft and may cross Rs 7,000 per sq ft  in less than a month. So, the investor would have gathered in his moolah in less than a month, leaving end users to go through a fair share of costs like appreciated values, brokerage fees, etc.
Generally, real estate bookings are made at the pre-launch stage by investors. It is typical of brokers to feed their investor groups with information on where they should invest. These investors are only interested in trading, where property value escalation allows them to make fast money. This goes down well with the builders who get ready takers for their projects. Only the genuine buyer, is the person who gets sidelined and has to fend for himself by going through middlemen.
So, the cue for the end users is to be aware of projects to be launched in the areas of choice. Another one is to keep in touch with brokers, and be informed of the exact time and date of project launches. But, the best deal in the market is to be the investor yourself. If one books the property at soft launch stage, it is possible to leverage on many discounts which are given out during this period.

The end user should look for a reliable name, location and book a unit in a project while it is being launched. This way one manages to save money while there is clarity in the property documentation process.

Real estate is the new sinkhole for a large portion of unaccounted money,being put into the market. And this is one reason why there will be no recession here, India can rest easy!

Where Are The Affordable Houses?

Land is one of the major factors affecting affordable housing — be it land availability, land-accessibility or cost of land, the question always comes into the picture when plans for a housing-project are drawn up.

Land factor plays such a vital role when affordable housing projects are concerned, it only underlines the importance of planning and provision of substantial portions of land on which such housing projects may be developed. With land prices within Chennai ever on the rise, the Chennai Metropolitan Development Authority (CMDA) had to make a few adjustments to help establish affordable housing in the city.

“While preparing the 2nd Master Plan, we have taken into consideration the high land value and construction cost. The review of space standards were made and the plot size for residential construction has been brought down from 90 square metres to 80 square metres. For EWS (Economically Weaker Sections) it is retained as 20 square metres in Chennai city and 40 square metres in the rest of the Chennai Metropolitan Area (CMA) “, says Susan Mathew, vice chairman of CMDA.

Cross-subsidization is another strategy adopted by the CMDA to combat land prices and rising costs, which stipulates a minimum of 20-25% of developed lands in housing projects for Economically Weaker Sections and Lower Income Groups. This strategy has takers, as cross-subsidization is being looked upon as an effective method of making land and building material affordable to those belonging to LIG.

While measures like reduction of plot size and cross-subsidization may be encouraging, there are those who believe that land availability is not the only decisive factor of affordable housing, it is infrastructure, at the end of the day that plays the biggest role in affordable housing. Facilities onsite, transport connectivity, sewage and basic amenities can determine whether the land in question is viable enough for the establishment of a housing project.  Investment in infrastructure is a basic and non-negotiable requirement for affordable housing, new sources of power generation, recycling waste water, investing in roads, public transport and social infrastructure like colleges, schools, hospitals and markets facilitates affordable housing.
Chennai is the 4th largest metropolitan city in India and the total population of Chennai Metropolitan Area (CMA) as per 2001 census is 70.41 lakhs and the total number of households as per 2001 census in CMA is 16.19 lakhs and the total number of housing units in CMA is 15.83 lakhs.

The National Urban Housing and Habitat Policy, 2007 stipulates 10-20% of land in every housing project or 20-25% of FAR reserved for EWS/LIG housing. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) launched by the government of India stipulates a minimum 20-25% of developed lands in housing projects for EWS/LIG housing with a system of cross-subsidization.
It is mandatory on the part of the developers to reserve at least 10% of the site area and provide houses for Lower Income Group with dwelling units not exceeding 45 sq m in cases of large-scale developments exceeding 1 hectare. This rule was brought in the SMP to encourage EWS and LIG housing developments.

Axed Home loans

Recently, the home loans market is witnessed shift as the Reserve Bank of India (RBI) made efforts to tame inflation. After withdrawing their teaser loan schemes earlier, the leading banks have hiked prime lending rates and their floating rates, particularly for their existing customers.

However, since the principal burden is higher during the initial years the overall cost of borrowing was lower to that extent. With the interest rates moving up on the back of periodic RBI moves to increase repo rates and reverse repo rates, the mortgage rates have already moved up by an average of 150 bps over the last 12 months caused the axing of the teaser home loans.  Also, recently the Loan-To-Value in home mortgages being capped at 80% by RBI, home buyers will have to fork out 20% of the capital cost. Hence, the total cash burden in the initial years would substantially go up for the buyers. Secondly, the axing will bring about greater transparency in the system of dispersing loans.

The developers, however, maintain that such moves, even though beneficial for home buyers, will not have any significant impact on the realty market. Manoj John, Vice-President, Corporate Planning and Strategy, RNA Corp, says, “The move will have somewhat negative impact in the form of higher EMIs.

The teaser home loan scheme was very beneficial to a home buyer as it was introduced during a time when the economy was recovering.

Uday Dharmadhikari, CEO, , also quoted that “Teaser home loans initially are very enticing since they offer loans at low interest rates for the first two years of the tenure. Though there will be a little change in the consumer confidence, though the discontinuation of such loans will seldom affect home buyers. When the rates rise in the third year, the home owner will have to restructure finances since a rise in interest rates will mean increase in the EMIs.”

These schemes were good for those with mid-size budgets or lower income bands providing some relief on their cash flows for the first few years, allowing customer to buy their dream home.

According to realty experts, doing away with the teaser rates is a prudent move for the current situation, keeping in mind the overall asset price inflation and increasing interest rate. “Though the discontinuation of teaser loans may lower home buyer confidence but will bring in more clarity and there could be possibility that floating rates may benefit buyers in the long run”, says Shailesh Sanghvi – Director, Sanghvi Group.

If developers and realty experts are to be believed then the home loans market in India will continue to grow “selectively” though it may witness some dip. Also, the consumer in recent times has become more conscious of recent instance of malpractice in lending to a few real estate companies. The mortgage penetration in India is still far lower than most developed economies and the home loan markets remain robust.

Omaxe may raise prices

Real estate developer Omaxe Ltd may raise prices this financial year and plans to launch four new projects over the next two months on rising demand, its chairman said.
Mr. Rohtas Goel said, “Demand might be robust. I will increase prices very soon, in single digits within this year”.
The firm will invest fifteen billion rupees on the new projects, Goel said, adding he expects revenues of 23 billion rupees from the projects over 30 months.
India’s property market is recovering from a bottom hit earlier this year, and analysts say much of the demand will be from middle-income and affordable housing.

Real Estate Looking Forward

The reactions to real estate market are mixed. The looking up of this market in the US economy has raised some hopes in the Indian markets too. Various real estate companies have expressed that the market is looking up, and is likely to improve in the coming days, but some companies are skeptical and want to see actual results flowing in before commenting.
There has been some increased activity on the real estate market front in the recent weeks and this has raised some hopes. The media also reported that the prices of houses would not drop down further indicating that there is stability in the market.
The following weeks would be crucial and they could decide which way the market would go in the coming weeks.

Foreign investment in agriculture

Despite natural benefits, agriculture continues to languish for need of adequate investment and policy support. The case for reviving agriculture to meet the rising food needs of countries having huge population. The global food price crisis of last year highlighted the requirement to boost farm production and productivity through higher investment. The need to broden FDI flows in the agricultural sector has been gaining importance from last year. Recent Unctad World Investment Report has made out a cautious case for entry of transnational corporations with FDI. The report states that the stimulus is crucial for increasing productive capacity and farm output in the poorer countries. These investment inflows fall far short of their potential, the agency suggests developing a set of internationally agreed core principles for large-scale acquisition of agricultural land by foreign investors.
There is consensus among experts that one of the lingering effects of the price crisis on the world food system is the rapid and widespread acquisition of farmland in developing countries by other countries seeking to ensure their food supplies. While such acquisitions may insert required investment into rural areas in low-growth agrarian economies, they also raise concerns about the impact on the local resident, who risk losing access over land on which their livelihoods depend. It is difficult to ensure that these land deals are designed in a manner that will secure the living of local resident.

Commodity Mutual Funds lift the sensex

MFs that deals with commodity and energy stocks have beaten the Sensex returns as well as the 70% category average returns of diversified equity funds on a year-to-date basis ending 18 September of this year, credit goes to dual benefit of the rally witnessed in the equity markets and commodity rally as well.
5-8 funds that invest in mentioned theme outperformed the Sensex. Funds such as Mirae Asset Global Commodity Stocks Fund, DSP BR Natural Resources and New Energy Fund comfortably outpaced the Sensex by 6%to return about 80% during the mentioned period. The funds had a mix of overseas and domestic stocks in their portfolios.
Exposure to global mining, metal and oil refining stocks were the key drivers for the rally in these funds.
While the former held higher exposure to overseas stocks, the later managed an equally good performance, although overweight on Indian stocks.

ADB raises growth forecast for India

Owing to increased public spending and improved business confidence, the Asian Development Bank (ADB) has hiked its growth forecast for India from 5% to 6% this fiscal.
The update to ADB’s Asian Development Outlook (ADO) 2009 report released Tuesday said that India will grow at 7% in 2010, a revision from its earlier forecast of 6.5%.
“Normal rainfall in fiscal 2010, a pick-up in exports (as the recession ends in industrial economies), and strengthened investor confidence is now projected to lift GDP growth to 7% in fiscal 2010”.
“GDP growth in the second and third quarters is expected to fall below the 6.1% first-quarter expansion because of weak agriculture, but to recover sufficiently in the fourth to post a 6% annual expansion.”
According to ADB, “an increase in public spending, a quicker than expected return of capital inflows, stronger industrial production, and signs of improved business confidence will lift economic growth to 6 percent in India this year, up from an earlier estimate of 5%”.

Retail investors begin to return

Retail investors are regaining confidence in the primary market but they seem to be gradually making their presence felt in the secondary market.

Leading retail brokers say that they are seeing an increment in the number of clients returning to the market. The only difference is that investors are taking small bets, and quickly booking profits even if they are not large.

Growing retail investor interest can also be gauged from the fact that indices tracking the SME space have outperformed the key indices in the run-up to five thousand level touched by Nifty during intra-day trading.

Ansal to Invest 20 Billion Rupees on Townships

Real Estate in India
Ansal Properties and Infrastructure Ltd will invest twenty billion rupees in the this fiscal year as it seeks to capitalize on the demand for low-cost housing in India.
The investment will be the last installment of a total of sixty billion rupees earmarked last year by the company as the main investment to develop nineteen integrated townships over five to seven years. Ansal Properties spent forty billion rupees of the total in the last fiscal year.
Higher borrowing rates and property prices and fear of job losses in a slowing economy had hurt the demand for real estate in India last year. But, a series of stimulus packages and a reduction in loan rates by commercial banks are leading to a gradual recovery in demand this year.

FIIs fear higher tax outgo

Foreign institutional investors have approached the finance ministry looking for an extension of the ‘feedback window’ on the new direct tax code. People familiar with the issue said that the deadline for submitting feedback has lapsed. Terming the ‘window’ insufficient for a detailed response, FIIs have asked for an extension.

There is a perception that if implemented, the direct tax code could increase tax liabilities of foreign portfolio managers significantly. So far in 2009, FIIs have pumped in $8.6 billion into Indian equities.

Navi mumbai is good for commercial real estate

Navi Mumbai is the best place to invest in commercial real estate. Commercial options in Navi Mumbai span a huge price band. Growth of the residential segment in Navi Mumbai, before that of the commercial segment, actually works out in favour of the end-user.

Commercial real estate in Navi Mumbai comes at competitive prices along with other options in the Mumbai metropolitan region, with the benefits of being located in a well-planned city.

IT/ ITeS SEZs and businesses that have anything to do with rail/road transport and logistics or shipping, are proving to be the next big segment in Navi Mumbai’s commercial spectrum.

Realty prices unlikely to rise in recent future

Real estate prices are unlikely to go up in the next six-months and the industry may witness huge volumes of sales of residential properties.
According to Mr. Niranjan Hiranandani , MD of Hiranandani Group of Companies, “There is a huge improvement in real estate and prices will not increase, at least for the next six months.
Further he said that in the last two months, they have seen sales of almost eight thousand apartments in the Mumbai region alone, spread in all sectors of the real estate market, but especially focused on the lower segment. But they see across-the-board increase in demand.

Small cities are getting more interest

Real estate
Due to the major hike in property prices in metros most of the people are showing interest for small cities. The new name in this list is the Neharpar city in Faridabad. Buyers as well as developers are started looking at Neharpar as the emerging real estate investment destination. It is supposed to become the big realty junction of NCR in near future. The development work is going on its best in this city and the most attracting point is that prices are much affordable.

Real estate- the best investment destination

Real estate in India
The economic slump had a major impact on real estate. The price has come down over the last few months. People with a huge disposable income can explore investing in real estate for diversification of their assets. Reduced home loan interest rates and lower property prices makes it an opportunity hard to resist.
Some investments are considered safe in times of recession like precious metals and foreign currencies. In this list of investments that are popular during times of financial insecurity, real estate can be included.
Real estate is considered a hedge against forces of inflation. Inflation has led to the rupee value depreciating and property prices travelling upwards. Property investments are usually held over a long term.

DLF plan could hit barrier

Plans by the promoters of top real estate company DLF to buy out hedge fund DE Shaw’s investment in family-owned DLF Assets (DAL) could hit a roadblock because of a little known rule in the country’s foreign exchange laws.
Under a ‘put’ option signed between DE Shaw and three companies controlled by DLF-promoter KP Singh’s family in May 2007, the US-based fund, which invested $400 million in convertible preference shares of DAL, could exit its investment and get a fixed return of at least 27%.
As per the ‘put’ option with DLF Investments, Kohinoor Real Estates and Buland Consultants, DE Shaw is supposed to get back around Rs 2,500 crore after forex adjustments. But FEMA classifies all equity investments that carry a fixed return as debt, which could bring DE Shaw investment under the purview of external commercial borrowing (ECB) guidelines.
With ECBs not allowed in the real estate sector, investors holding convertible stock with fixed returns could find their exit option blocked.

Unitech raises fund from overseas PE

Money!Unitech raised 575 million dollars by placing shares with overseas private equity funds at Rs 81 a unit. This clearly indicates the rising interest of foreign investors in the Indian real estate market.

The company planned to raise only 200 million dollars, but as demand was huge, it decided to increase the issue size. The total demand in auction was for over 1 billion dollars. In the deal, the company will issue 342 million shares, which will expand its equity base by around 16.7%. This will bring down the promoter’s stake in the company to around 43%. However, following the conversion of warrants , subscribed by the promoter in May at Rs 50 per share for Rs 1,155 crore, this stake will increase to 49%. The money raised will be partly used to repay high cost debt of and partly to launch affordable houses in various regions of the country. The company had announced its plans to build 20,000 affordable houses at an investment of Rs 1,700 crore. It also aims to sell 15,000 flats in 2009-10. It is converting some of its premium projects into affordable housing.

Acacia Real Estate Acquires Stake In Mall Development

Acacia Real Estate has acquired a twenty-six percent stake in a retail development mall in India. The retail mall in Delhi was acquired through a joint venture with Anant Raj Group. Anant Raj group is a publicly listed company with a market capitalization of 1.2 billion dollars.
The project is expected to generate a return on equity for investors of eighty-three percent over 3.5 year holding period.
TAIB Bank has been appointed as the exclusive placement agent for the project.
The two hundred twenty million dollars’ retail mall development will consist of six lacs square feet of retail space upon completion.
The mall will be managed by Sandalwood, a JV company of Jones Lang LaSalle and Colonial First State Property Management, an Australian retail management firm.
The joint venture partners are in currently in advanced discussions with the potential anchor tenant of the mall.

Sistema Will Invest In Hospitality Sector In India

Kolkata, April 30:- Mr Alexander A. Chinyaev, the chief representative in India of Sistema said that after venturing into the Indian telecom business, Russian conglomerate Sistema is now planning to tap the real estate and hospitality industries in India. The London Stock Exchange-listed public sector company is looking at investing an estimated eight hundred crore rupees to construct office and commercial projects in the country by year end.
Talking on the sidelines of a conference organized by the Indo-CIS Chamber of Commerce here recently, Mr Chinyaev said, “We are looking to launch an ‘A class’ office and hotel projects in Delhi, Goa, Gurgaon, and in almost all the metros, including Kolkata. If we find proper partners, we will invest $100-200 million in a pilot project by the year-end.” Sistema, however, will not build residential projects in India, he clarified.
The company, which deals with thirty star hotels across the CIS countries, is also looking at building and managing hotels in India.
“We have plans to take part in the tourism business in India through exchange of tourists between the two countries. We can bring our tour agencies to India for this purpose. This will be supported by developing businesses like hotel and resort projects,” Mr Chinyaev said.