Friday, May 29, 2009
Realtors plan lock-in clauses to weed out speculators
Realtors plan lock-in clauses to weed out speculators
Business Standard, May 29, 2009, Page 1
Neeraj Thakur & Raghavendra Kamath / New Delhi/mumbai
Stung by recent experiences, many real estate companies such as Tata Housing, Omaxe, DLF and others are planning to impose lock-in periods of up to one year for their mass housing projects.
A lock-in clause means buyers cannot sell their properties within a certain period after booking the property or have to pay a penalty if they do so.
Realtors are doing these because investors or speculators often leveraged volume discounts on property purchases to re-sell them at prices lower than those available to individual buyers. This created problems for realtors when demand slowed, since it put pressure on them to take a hit on margins and lower prices still further.
In the boom years of 2006 and 2007, 30 to 50 per cent of such projects were sold on bulk discounts, especially in the national capital region.
Now, companies such as Tata Housing will not issue no-objection certificates to property buyers for the first six months after allotment and DLF, India's largest listed realtor, said it would not transfer the title of the property in the name of the buyer for a year after a property is booked.
Several other companies have imposed a steep transfer charge — Rs 100 to Rs 1,000 a square foot — if the first-time buyer sells the property within a specified period.
The lock-ins are expected to be introduced mostly for mid-income projects, that offer prices 20 to 30 per cent below the market and, therefore, attract more undercutting from bulk discount buyers.
''We are going to introduce such clauses in all our future affordable housing projects. We do not want short-term investors to compete with us later in the market, as the margins in affordable housing are very low," confirmed Rohtas Goel, chairman and managing director of Delhi-based developer Omaxe, which is launching 10 mid-income projects this year.
Margins on such housing projects are typically 20 to 25 per cent compared with 50 to 70 per cent for premium housing.
DLF Ltd, the country's largest developer, claims it is the first developer to introduce the clause for both premium and mid-income projects.
"Earlier, the same buyer used to buy five to six flats in our projects and sell it within a month in the market. We, as the largest developer, decided to discourage such speculation", said Rajeev Talwar, executive director, DLF.
The clause, however, has attracted criticism from analysts. "Developers want the best of both worlds. They want to delay registration and charge a transfer fee because once a property is registered it is binding on both developers and buyers," said Pranay Vakil, chairman, Knight Frank India, an international property consultant.
The legal fraternity is, however, divided on whether the move was legally tenable.
"It is a contractual obligation and not a statutory one. The statute does not say that a property cannot be sold in a certain period of time. Developers are merely putting pressure on buyers,'' said Vinod Sampat, a Mumbai-based advocate.
He added some Mumbai developers even charged Rs 1,000 a square foot as transfer charges though the state housing department has said the developer cannot charge a single paisa as transfer charges.
PH Parekh, a senior Supreme Court lawyer, said, however, that all legal documents signed by a person were binding, unless he decided to challenge it in court. "If a buyer decides to challenge the lock-in period, the decision of the court can go either way," Parekh said.
Business Standard, May 29, 2009, Page 1
Neeraj Thakur & Raghavendra Kamath / New Delhi/mumbai
Stung by recent experiences, many real estate companies such as Tata Housing, Omaxe, DLF and others are planning to impose lock-in periods of up to one year for their mass housing projects.
A lock-in clause means buyers cannot sell their properties within a certain period after booking the property or have to pay a penalty if they do so.
Realtors are doing these because investors or speculators often leveraged volume discounts on property purchases to re-sell them at prices lower than those available to individual buyers. This created problems for realtors when demand slowed, since it put pressure on them to take a hit on margins and lower prices still further.
In the boom years of 2006 and 2007, 30 to 50 per cent of such projects were sold on bulk discounts, especially in the national capital region.
Now, companies such as Tata Housing will not issue no-objection certificates to property buyers for the first six months after allotment and DLF, India's largest listed realtor, said it would not transfer the title of the property in the name of the buyer for a year after a property is booked.
Several other companies have imposed a steep transfer charge — Rs 100 to Rs 1,000 a square foot — if the first-time buyer sells the property within a specified period.
The lock-ins are expected to be introduced mostly for mid-income projects, that offer prices 20 to 30 per cent below the market and, therefore, attract more undercutting from bulk discount buyers.
''We are going to introduce such clauses in all our future affordable housing projects. We do not want short-term investors to compete with us later in the market, as the margins in affordable housing are very low," confirmed Rohtas Goel, chairman and managing director of Delhi-based developer Omaxe, which is launching 10 mid-income projects this year.
Margins on such housing projects are typically 20 to 25 per cent compared with 50 to 70 per cent for premium housing.
DLF Ltd, the country's largest developer, claims it is the first developer to introduce the clause for both premium and mid-income projects.
"Earlier, the same buyer used to buy five to six flats in our projects and sell it within a month in the market. We, as the largest developer, decided to discourage such speculation", said Rajeev Talwar, executive director, DLF.
The clause, however, has attracted criticism from analysts. "Developers want the best of both worlds. They want to delay registration and charge a transfer fee because once a property is registered it is binding on both developers and buyers," said Pranay Vakil, chairman, Knight Frank India, an international property consultant.
The legal fraternity is, however, divided on whether the move was legally tenable.
"It is a contractual obligation and not a statutory one. The statute does not say that a property cannot be sold in a certain period of time. Developers are merely putting pressure on buyers,'' said Vinod Sampat, a Mumbai-based advocate.
He added some Mumbai developers even charged Rs 1,000 a square foot as transfer charges though the state housing department has said the developer cannot charge a single paisa as transfer charges.
PH Parekh, a senior Supreme Court lawyer, said, however, that all legal documents signed by a person were binding, unless he decided to challenge it in court. "If a buyer decides to challenge the lock-in period, the decision of the court can go either way," Parekh said.
New SEZ rule allows builders to use non-functional areas
New SEZ rule allows builders to use non-functional areas
Business Standard, May 29, 2009, Page 2
Business Standard, May 29, 2009, Page 2
DLF promoters plan to sell another 5.5% stake
DLF promoters plan to sell another 5.5% stake
The Financial Express, May 29, 2009, Page 3
Kakoly Chatterjee, New Delhi
The KP Singh family, promoters of the country’s biggest real estate firm, DLF are planning to sell another 5.5% of their stake to raise around Rs 2,000 crore.
Earlier on May 13, the Singh family sold 9.9% stake to raise Rs 3,860 crore. If the second round of stake sale happens, the promoters stake will come down to around 73.1% from the current 78.6%. Its stake sale was 88.5% before the May sale.
“Institutions have started looking into the company (DLF Ltd) again,” a merchant banking source said. “The Singh family will go for a secondary qualified institutional placement (QIP) since the money will come to the promoters,” he said. Since they are majority owners of DLF Assets Limited (DAL), they can use these funds to offload the debt on its books.
However, when contacted, Rajiv Talwar, group executive director, DLF denied about the possibility of any further promoter stake sell.
Last month when the promoters of DLF sold 9.9% stake in open market transaction to raise Rs 3,860, it was primarily for paying off hedge fund, D E Shaw which wanted to exit DAL, another K P Singh promoted company. D E Shaw was to be paid Rs 2,000 crore and the rest was infused into DAL to pay off DLF. Currently DAL owes Rs 4,900 crore to DLF. The original plan to list DAL in the Singapore stock exchange had to be scrapped because of the market crash. DAL buys commercial property from DLF and collects lease rentals from it.
Sources said the funds raised from the second round of sale would be used to partly pay off the balance Rs 3,100 crore DAL owes to DLF. The transaction of 9.9% took place at just above Rs 230 per share, which is much lower than DLF’s IPO price of Rs 525 a share. The current transaction is expected to be around the same price. On the previous occasion HSBC, Fidelity, Euro Pacific Growth Fund and Copthall Mauritius Investment Ltd were the other major buyers who made bulk deals on the stock exchange.
Out of a net debt of Rs 13,958 crore that DLF has on its books, it plans to clear off Rs 3,591 crore in the current financial year (FY10). Exit from Delhi Convention centre has fetched them Rs 850 crore, exit from the Bidadi and Dankuni projects has brought to them Rs 336 crore.
The Financial Express, May 29, 2009, Page 3
Kakoly Chatterjee, New Delhi
The KP Singh family, promoters of the country’s biggest real estate firm, DLF are planning to sell another 5.5% of their stake to raise around Rs 2,000 crore.
Earlier on May 13, the Singh family sold 9.9% stake to raise Rs 3,860 crore. If the second round of stake sale happens, the promoters stake will come down to around 73.1% from the current 78.6%. Its stake sale was 88.5% before the May sale.
“Institutions have started looking into the company (DLF Ltd) again,” a merchant banking source said. “The Singh family will go for a secondary qualified institutional placement (QIP) since the money will come to the promoters,” he said. Since they are majority owners of DLF Assets Limited (DAL), they can use these funds to offload the debt on its books.
However, when contacted, Rajiv Talwar, group executive director, DLF denied about the possibility of any further promoter stake sell.
Last month when the promoters of DLF sold 9.9% stake in open market transaction to raise Rs 3,860, it was primarily for paying off hedge fund, D E Shaw which wanted to exit DAL, another K P Singh promoted company. D E Shaw was to be paid Rs 2,000 crore and the rest was infused into DAL to pay off DLF. Currently DAL owes Rs 4,900 crore to DLF. The original plan to list DAL in the Singapore stock exchange had to be scrapped because of the market crash. DAL buys commercial property from DLF and collects lease rentals from it.
Sources said the funds raised from the second round of sale would be used to partly pay off the balance Rs 3,100 crore DAL owes to DLF. The transaction of 9.9% took place at just above Rs 230 per share, which is much lower than DLF’s IPO price of Rs 525 a share. The current transaction is expected to be around the same price. On the previous occasion HSBC, Fidelity, Euro Pacific Growth Fund and Copthall Mauritius Investment Ltd were the other major buyers who made bulk deals on the stock exchange.
Out of a net debt of Rs 13,958 crore that DLF has on its books, it plans to clear off Rs 3,591 crore in the current financial year (FY10). Exit from Delhi Convention centre has fetched them Rs 850 crore, exit from the Bidadi and Dankuni projects has brought to them Rs 336 crore.
Real estate getting real
Real estate getting real
The Financial Express, May 29, 2009, Page 6
Anandita Singh Mankotia
The real estate sector made a killing during the boom period—some leading entrepreneurs even made it into the Fortune billionaires list. Now the big companies in the sector, troubled by the slowdown, are beginning to regret extending beyond their core competence. In the not so distant past, real estate companies in India were so confident about their own ability to make quick money that many began diversifying away from real estate to other sectors. For example, DLF felt that it was well poised to move into the retail business by partnering retailers—they called it a forward integration. DLF even bought into the wind energy business (going green being the new way forward to fuel our energy needs). They went into the hotels business, as they believed that it was only an extension of their realty business. After all, if they were competent enough to construct a hotel, they felt managing it wouldn’t be that difficult.
Funds were never really a problem during the boom. However, a year later, the realty players are in for a reality check. Almost all developers who unanimously clamoured for an infrastructure status to shore up their bottomlines seem to be now realising that their own plans and estimates were probably overly optimistic. DLF has said a strict no-no to any more retail tie-ups, its SEZ dream has gone sour, and the company posted the most dismal results ever in its history. Unitech believed, that having conquered the real estate business, it needed to look for greener pastures. Presumably inspired by big telecom deals like Hutchison-Vodafone, it felt it was well positioned to handle a foray into telecom. A year later, not only has it sold a majority stake in Unitech Wireless but has had to abandon its most hyped ‘luxury township’ project in favour of a more modest ‘affordable housing project’. It is even selling the corporate office that was supposed to act as its headquarters and house its staff. So, the big players are in a serious mess. The smaller ones are even worse off, actually facing an existential threat. Many bigger firms are resorting to sale of promoter stake in a last ditch attempt to salvage their floundering businesses.
The Financial Express, May 29, 2009, Page 6
Anandita Singh Mankotia
The real estate sector made a killing during the boom period—some leading entrepreneurs even made it into the Fortune billionaires list. Now the big companies in the sector, troubled by the slowdown, are beginning to regret extending beyond their core competence. In the not so distant past, real estate companies in India were so confident about their own ability to make quick money that many began diversifying away from real estate to other sectors. For example, DLF felt that it was well poised to move into the retail business by partnering retailers—they called it a forward integration. DLF even bought into the wind energy business (going green being the new way forward to fuel our energy needs). They went into the hotels business, as they believed that it was only an extension of their realty business. After all, if they were competent enough to construct a hotel, they felt managing it wouldn’t be that difficult.
Funds were never really a problem during the boom. However, a year later, the realty players are in for a reality check. Almost all developers who unanimously clamoured for an infrastructure status to shore up their bottomlines seem to be now realising that their own plans and estimates were probably overly optimistic. DLF has said a strict no-no to any more retail tie-ups, its SEZ dream has gone sour, and the company posted the most dismal results ever in its history. Unitech believed, that having conquered the real estate business, it needed to look for greener pastures. Presumably inspired by big telecom deals like Hutchison-Vodafone, it felt it was well positioned to handle a foray into telecom. A year later, not only has it sold a majority stake in Unitech Wireless but has had to abandon its most hyped ‘luxury township’ project in favour of a more modest ‘affordable housing project’. It is even selling the corporate office that was supposed to act as its headquarters and house its staff. So, the big players are in a serious mess. The smaller ones are even worse off, actually facing an existential threat. Many bigger firms are resorting to sale of promoter stake in a last ditch attempt to salvage their floundering businesses.
Moody’s caution on Indian economy
Moody’s caution on Indian economy
The Hindu Business Line, May 29, 2009, Page 10
Our Bureau, New Delhi
Moody’s Investor Service cautions India against various challenges in the macroeconomic management and a backlog of structural reforms, even as its ratings outlook for the Indian government’s foreign currency rating and local rating is stable.
In a new report released today, Moody’s Vice-President and Senior Analyst, Aninda Mitra, said India’s ratings are based on Moody’s assessment of the country’s moderate levels of economic and institutional strength that in turn are bolstered by a large, rapidly growing and well-diversified economic structure.
The key arguments advanced in the report deal with the constraint exerted on India’s economic potential by domestic imbalances and financial fragilities; the risk posed to economic performance by the confluence of potentially weak external liquidity and the persistence of government deficits. These shortcomings coupled with sectoral imbalances, low rural income and still-pervasive infrastructural bottlenecks constrain more rapid improvements, it said.
While economic liberalisation and de-licensing have facilitated a strong productivity response and led to greater competition, capacity building and growth in several industry sectors, fiscal policy predictability and credibility have worsened, the report said. “The stable outlook on the ratings has recently faced growing pressure, mainly due to substantial deterioration in the fiscal position amidst a rise in India’s dependence on foreign capital flows to drive its investment cycle”, it added.
Stating that a time of a sharp deceleration in private investment and falling capacity utilisation, the much higher level of fiscal deficit is not expected to result in price pressures or credit crowding, the report contends that with private sector resuming growth from latter part of 2009, the availability of domestic financing could be crowded out if the large fiscal easing is not unwound quickly.
It further said if the new government is able to re-commit itself to fiscal restraint in a credible manner or alter the financing mix of the deficit (to include greater reliance on disinvestment), such developments could better support “our views about the institutional framework underpinning macroeconomic management”.
Pointing out that large government borrowing needs have slowed the development of private bond markets for domestic corporations, the report said this has driven greater reliance on equity issue and foreign borrowings. “Consequently, disruptions in global or local capital markets affects private corporations’ fund raising capabilities much more than at comparable emerging market countries with more fiscal space”, it said.
While appreciating statutory and regulatory bodies for being effective and less heavy- handed than in earlier decades, the report highlights slow and cumbersome bureaucracy. It said the overall quality of governance in the context of policy implementation is poor and in particular, the provision of public goods and services has suffered.
The Hindu Business Line, May 29, 2009, Page 10
Our Bureau, New Delhi
Moody’s Investor Service cautions India against various challenges in the macroeconomic management and a backlog of structural reforms, even as its ratings outlook for the Indian government’s foreign currency rating and local rating is stable.
In a new report released today, Moody’s Vice-President and Senior Analyst, Aninda Mitra, said India’s ratings are based on Moody’s assessment of the country’s moderate levels of economic and institutional strength that in turn are bolstered by a large, rapidly growing and well-diversified economic structure.
The key arguments advanced in the report deal with the constraint exerted on India’s economic potential by domestic imbalances and financial fragilities; the risk posed to economic performance by the confluence of potentially weak external liquidity and the persistence of government deficits. These shortcomings coupled with sectoral imbalances, low rural income and still-pervasive infrastructural bottlenecks constrain more rapid improvements, it said.
While economic liberalisation and de-licensing have facilitated a strong productivity response and led to greater competition, capacity building and growth in several industry sectors, fiscal policy predictability and credibility have worsened, the report said. “The stable outlook on the ratings has recently faced growing pressure, mainly due to substantial deterioration in the fiscal position amidst a rise in India’s dependence on foreign capital flows to drive its investment cycle”, it added.
Stating that a time of a sharp deceleration in private investment and falling capacity utilisation, the much higher level of fiscal deficit is not expected to result in price pressures or credit crowding, the report contends that with private sector resuming growth from latter part of 2009, the availability of domestic financing could be crowded out if the large fiscal easing is not unwound quickly.
It further said if the new government is able to re-commit itself to fiscal restraint in a credible manner or alter the financing mix of the deficit (to include greater reliance on disinvestment), such developments could better support “our views about the institutional framework underpinning macroeconomic management”.
Pointing out that large government borrowing needs have slowed the development of private bond markets for domestic corporations, the report said this has driven greater reliance on equity issue and foreign borrowings. “Consequently, disruptions in global or local capital markets affects private corporations’ fund raising capabilities much more than at comparable emerging market countries with more fiscal space”, it said.
While appreciating statutory and regulatory bodies for being effective and less heavy- handed than in earlier decades, the report highlights slow and cumbersome bureaucracy. It said the overall quality of governance in the context of policy implementation is poor and in particular, the provision of public goods and services has suffered.
LIC Housing Fin hits year high on easing liquidity
LIC Housing Fin hits year high on easing liquidity
The Hindu Business Line, May 29, 2009, Page 12
‘Outlook on mortgage growth as asset quality has improved’.
Our Bureau, Kolkata
LIC Housing Finance on Thursday touched its 52-week high at Rs 520.70. It, however, closed at Rs 509.70, marking a 6.5 per cent gain. In the past week, the stock has gained over 17 per cent and its gain last month is around 55.5 per cent.
According to analysts, LIC Housing Finance was attracting investors’ attention in the past few weeks on easing of liquidity for small ticket borrowers and lowering of rates too.
According to Mr Amitbh Chakraborty, President (Equity) of Religare, expectations that the Government would continue to accord priority to 10 lakh or below housing finance to borrower for macro social and economic needs, have come true. “So a recovery of small housing finance stocks such as LIC Housing Finance and GIC Housing Finance were on the cards for some time.”
Incidentally, GIC Housing Finance also hit its 52-week high on Thursday at Rs 76.40. It finished at Rs 75.85, up over 19 per cent.
According to Edelweiss, LIC Housing Finance is delivering strong operating performance quarter after quarter on all key parameters such as loan growth (20 per cent plus), reduction of NPAs and margins.
“Moreover, the outlook on mortgage growth as asset quality has improved since January with change in macro environment and increased availability of capital.” Also, margins are expected to sustain due to sharp decline in wholesale funding cost, which will help LICHF sustain this strong performance.
Disbursements
LICHF is estimated to have improved its market share to 9 per cent plus in FY09 from around 6 per cent in FY08. Disbursements have also gone up 24 per cent. After muted disbursements over FY05-07, it has been gaining market share owing to internal restructuring.
As a result of better performance and relatively lower valuations, brokerages have recently upgraded rating for the stock. Emkay expects LICHF to report a 20 per cent CAGR in net operating revenues and earnings over FY09-11E.
Investors warm up to realty, once again
Investors warm up to realty, once again
The Economic Times, May 29, 2009, Page 17
FIs, MFs, HNIs Seen Flocking To Real Estate Funds
Shailesh Menon MUMBAI
AFTER a near 16-month hiatus, strategic investors are once again warming up to the real estate sector. A few foreign funds and local asset management companies have hit the road for raising money to be invested in real estate companies. Interestingly, even high net worth investors are flocking to these funds, say industry watchers.
Mutual funds raising funds towards realty investments include ASK Investment Holdings, Milestone Capital Advisors, Birla Sun Life Asset Management Company and the Singapore-based Morgan Stanley Investments. While ASK Investment Holdings has launched a Rs 500-crore PMS fund (that will invest into live realty projects through an investment vehicle) Milestone Capital and Birla Sunlife AMC are planning to raise Rs 600 crore and Rs 2,500 crore, respectively, for focused real estate investments. Almost all these funds are promising annualised returns in the range of 20-25%.
Both Morgan Stanley and Birla Sunlife are floating offshore real estate funds. According to market sources, Birla Sunlife will raise the money from West Asian and Latin American investors. Officials at Birla Sunlife refused to comment on the development. “Affluent investors who could not make much of the recent equity market rally are now trying to invest in real estate instruments. Even big-ticket funds are now raising money from investors. An HNI portfolio now will typically have 5% investments in real estate funds; overall real estate exposure would be in the range of 15-20%,” said Right Horizons Wealth Management CEO Anil Rego.
ASK Investment Holdings has launched a realtyfocused portfolio management scheme, with minimum investment pegged at Rs 25 lakh. The fund will make equity investments into live city-centric residential projects in seven cities. “The fund (with a fiveyear gestation period) has already received commitment for Rs 100 crore. We’re looking to invest the pool in cash-strapped projects; being an equity investment, we’ll have 26-49% equity participation in the invested projects,” said ASK Investment Holdings executive director Sunil Rohokale.
“We’ll invest only into properties which are completed and rented out, therefore eliminating development risk. The idea is to generate 20% annualised return over a period of four years,” said Milestone Capital CIO Ashish Joshi.
Sensex up 186 points
Shares extended their winning streak on Thursday with key indices finishing at eight-and-ahalf month highs, reports Our Bureau from Mumbai. Provisional data showed foreign funds to be aggressive buyers, net buying shares worth over Rs 1,800 crore. In a volatile session, the Sensex closed at 14296.01, up 186.37 points, over the previous close. The Nifty gained 61.05 points to close 4337.10. Metal, banking and capital goods shares were the star performers of the day while IT and pharmaceutical shares were under pressure.
The Economic Times, May 29, 2009, Page 17
FIs, MFs, HNIs Seen Flocking To Real Estate Funds
Shailesh Menon MUMBAI
AFTER a near 16-month hiatus, strategic investors are once again warming up to the real estate sector. A few foreign funds and local asset management companies have hit the road for raising money to be invested in real estate companies. Interestingly, even high net worth investors are flocking to these funds, say industry watchers.
Mutual funds raising funds towards realty investments include ASK Investment Holdings, Milestone Capital Advisors, Birla Sun Life Asset Management Company and the Singapore-based Morgan Stanley Investments. While ASK Investment Holdings has launched a Rs 500-crore PMS fund (that will invest into live realty projects through an investment vehicle) Milestone Capital and Birla Sunlife AMC are planning to raise Rs 600 crore and Rs 2,500 crore, respectively, for focused real estate investments. Almost all these funds are promising annualised returns in the range of 20-25%.
Both Morgan Stanley and Birla Sunlife are floating offshore real estate funds. According to market sources, Birla Sunlife will raise the money from West Asian and Latin American investors. Officials at Birla Sunlife refused to comment on the development. “Affluent investors who could not make much of the recent equity market rally are now trying to invest in real estate instruments. Even big-ticket funds are now raising money from investors. An HNI portfolio now will typically have 5% investments in real estate funds; overall real estate exposure would be in the range of 15-20%,” said Right Horizons Wealth Management CEO Anil Rego.
ASK Investment Holdings has launched a realtyfocused portfolio management scheme, with minimum investment pegged at Rs 25 lakh. The fund will make equity investments into live city-centric residential projects in seven cities. “The fund (with a fiveyear gestation period) has already received commitment for Rs 100 crore. We’re looking to invest the pool in cash-strapped projects; being an equity investment, we’ll have 26-49% equity participation in the invested projects,” said ASK Investment Holdings executive director Sunil Rohokale.
“We’ll invest only into properties which are completed and rented out, therefore eliminating development risk. The idea is to generate 20% annualised return over a period of four years,” said Milestone Capital CIO Ashish Joshi.
Sensex up 186 points
Shares extended their winning streak on Thursday with key indices finishing at eight-and-ahalf month highs, reports Our Bureau from Mumbai. Provisional data showed foreign funds to be aggressive buyers, net buying shares worth over Rs 1,800 crore. In a volatile session, the Sensex closed at 14296.01, up 186.37 points, over the previous close. The Nifty gained 61.05 points to close 4337.10. Metal, banking and capital goods shares were the star performers of the day while IT and pharmaceutical shares were under pressure.
Hope on the horizon
Hope on the horizon
ET Realty, May 29, 2009, Page 1
With the new government being formed, there is a ray of hope that the real estate sector just might be up and running this year end
Tanvi Rustagi
Hope is in the air and everyone wants a whiff of it, including the real estate sector. The Indian real estate sector has been through one of its worst blows in recent times. With UPA sweeping the majority in elections and the Indian citizen taking the front seat, it seems like this time hope will turn into reality.
But what does revival mean to the realty sector? Vijay Jindal, CMD, SVP Group explains, "Recovery will mean a stable market where buyers regain the confidence in the real estate sector. It would also mean that the developers get support from the government in completing their projects. Developers are waiting for the right environment to prevail for the sector and this can only happen if the government steps in and takes some positive initiatives."
Rohtas Goel, CMD, Omaxe states, "We expect the government to promote affordable housing and provide a helping hand to the rising need of the affordability factor for housing needs. We expect the government to hold special funds for building such corridors with easy clearance for the projects."
Due to a sweeping majority, there is much ado about what the UPA government will deliver. Bhim Yadav, CEO of Falcon Realty Services Pvt Ltd avers, "With the philosophy of the UPA government being of interest to the common man, everyone is hopeful that they will introduce suitable measures for the affordability of homes."
In the present scenario, the main challenge lies in providing housing solutions for all segments. Builders should focus in minimising their profits and building homes. The ratio between profit and development should be balanced because it is the buyers market now and speculative prices have no place. Navin M Raheja, chairman, Raheja Developers, Pvt. Ltd. says, "One of the most important issues for the government to address right now is financing. The reason is that banks have virtually stopped financing any real estate projects. Lending to the builders has also become extremely difficult as they are asking for additional security/guarantee for home loans. In fact, many of the banks are forcing their own payment schedule based only on the cost of construction, without factoring land cost, administration cost, marketing cost, approval cost, etc., thereby resulting into a deficient cash flow for the developers. The government should take steps to liberalise finance for the sector or allow external commercial borrowings for real estate and relax financing norms." But that's not all. Other hopes from the government include issues such as recognising integrated townships as infrastructural projects, single window clearance and rationalisation of property taxes, stamp duty and registration expenses across states with external development charges, rationalising license fees and other government levies.
However, before any kind of expectations, there are some who are caught in the middle of incomplete projects due to the deficient cash flow that the developers were facing. The completion of any project depends on the builder's capability. Past losses need to be borne by the developers as well as the investors, in order to complete the ongoing projects within time. Raminder Grover, CEO, Homebay Residential (subsidiary of Jones Lang LaSalle Meghraj) informs, "With market improvement and transaction numbers increasing in the market, more cash flow is available with the developers and hence, they should be able to complete their projects by the end of this year." With hope on the horizon for the real estate sector, everyone seems to be of the opinion that the sector just might be able to rise from the ashes by the end of this year. Brotin Banerjee, managing director and CEO, TATA Housing tells, "With the world's financial markets suffering extraordinary volatility and stress in the last three months, the financial crisis is now feeding through to many areas as people are avoiding high value purchases. Nevertheless, we are now witnessing the government, the Reserve Bank of India and commercial banks of both public and private genres, coming out with a series of fiscal and monetary measures to boost the sector, especially housing.
ET Realty, May 29, 2009, Page 1
With the new government being formed, there is a ray of hope that the real estate sector just might be up and running this year end
Tanvi Rustagi
Hope is in the air and everyone wants a whiff of it, including the real estate sector. The Indian real estate sector has been through one of its worst blows in recent times. With UPA sweeping the majority in elections and the Indian citizen taking the front seat, it seems like this time hope will turn into reality.
But what does revival mean to the realty sector? Vijay Jindal, CMD, SVP Group explains, "Recovery will mean a stable market where buyers regain the confidence in the real estate sector. It would also mean that the developers get support from the government in completing their projects. Developers are waiting for the right environment to prevail for the sector and this can only happen if the government steps in and takes some positive initiatives."
Rohtas Goel, CMD, Omaxe states, "We expect the government to promote affordable housing and provide a helping hand to the rising need of the affordability factor for housing needs. We expect the government to hold special funds for building such corridors with easy clearance for the projects."
Due to a sweeping majority, there is much ado about what the UPA government will deliver. Bhim Yadav, CEO of Falcon Realty Services Pvt Ltd avers, "With the philosophy of the UPA government being of interest to the common man, everyone is hopeful that they will introduce suitable measures for the affordability of homes."
In the present scenario, the main challenge lies in providing housing solutions for all segments. Builders should focus in minimising their profits and building homes. The ratio between profit and development should be balanced because it is the buyers market now and speculative prices have no place. Navin M Raheja, chairman, Raheja Developers, Pvt. Ltd. says, "One of the most important issues for the government to address right now is financing. The reason is that banks have virtually stopped financing any real estate projects. Lending to the builders has also become extremely difficult as they are asking for additional security/guarantee for home loans. In fact, many of the banks are forcing their own payment schedule based only on the cost of construction, without factoring land cost, administration cost, marketing cost, approval cost, etc., thereby resulting into a deficient cash flow for the developers. The government should take steps to liberalise finance for the sector or allow external commercial borrowings for real estate and relax financing norms." But that's not all. Other hopes from the government include issues such as recognising integrated townships as infrastructural projects, single window clearance and rationalisation of property taxes, stamp duty and registration expenses across states with external development charges, rationalising license fees and other government levies.
However, before any kind of expectations, there are some who are caught in the middle of incomplete projects due to the deficient cash flow that the developers were facing. The completion of any project depends on the builder's capability. Past losses need to be borne by the developers as well as the investors, in order to complete the ongoing projects within time. Raminder Grover, CEO, Homebay Residential (subsidiary of Jones Lang LaSalle Meghraj) informs, "With market improvement and transaction numbers increasing in the market, more cash flow is available with the developers and hence, they should be able to complete their projects by the end of this year." With hope on the horizon for the real estate sector, everyone seems to be of the opinion that the sector just might be able to rise from the ashes by the end of this year. Brotin Banerjee, managing director and CEO, TATA Housing tells, "With the world's financial markets suffering extraordinary volatility and stress in the last three months, the financial crisis is now feeding through to many areas as people are avoiding high value purchases. Nevertheless, we are now witnessing the government, the Reserve Bank of India and commercial banks of both public and private genres, coming out with a series of fiscal and monetary measures to boost the sector, especially housing.
Hope on the horizon
Hope on the horizon
ET Realty, May 29, 2009, Page 1
With the new government being formed, there is a ray of hope that the real estate sector just might be up and running this year end
Tanvi Rustagi
Hope is in the air and everyone wants a whiff of it, including the real estate sector. The Indian real estate sector has been through one of its worst blows in recent times. With UPA sweeping the majority in elections and the Indian citizen taking the front seat, it seems like this time hope will turn into reality.
But what does revival mean to the realty sector? Vijay Jindal, CMD, SVP Group explains, "Recovery will mean a stable market where buyers regain the confidence in the real estate sector. It would also mean that the developers get support from the government in completing their projects. Developers are waiting for the right environment to prevail for the sector and this can only happen if the government steps in and takes some positive initiatives."
Rohtas Goel, CMD, Omaxe states, "We expect the government to promote affordable housing and provide a helping hand to the rising need of the affordability factor for housing needs. We expect the government to hold special funds for building such corridors with easy clearance for the projects."
Due to a sweeping majority, there is much ado about what the UPA government will deliver. Bhim Yadav, CEO of Falcon Realty Services Pvt Ltd avers, "With the philosophy of the UPA government being of interest to the common man, everyone is hopeful that they will introduce suitable measures for the affordability of homes."
In the present scenario, the main challenge lies in providing housing solutions for all segments. Builders should focus in minimising their profits and building homes. The ratio between profit and development should be balanced because it is the buyers market now and speculative prices have no place. Navin M Raheja, chairman, Raheja Developers, Pvt. Ltd. says, "One of the most important issues for the government to address right now is financing. The reason is that banks have virtually stopped financing any real estate projects. Lending to the builders has also become extremely difficult as they are asking for additional security/guarantee for home loans. In fact, many of the banks are forcing their own payment schedule based only on the cost of construction, without factoring land cost, administration cost, marketing cost, approval cost, etc., thereby resulting into a deficient cash flow for the developers. The government should take steps to liberalise finance for the sector or allow external commercial borrowings for real estate and relax financing norms." But that's not all. Other hopes from the government include issues such as recognising integrated townships as infrastructural projects, single window clearance and rationalisation of property taxes, stamp duty and registration expenses across states with external development charges, rationalising license fees and other government levies.
However, before any kind of expectations, there are some who are caught in the middle of incomplete projects due to the deficient cash flow that the developers were facing. The completion of any project depends on the builder's capability. Past losses need to be borne by the developers as well as the investors, in order to complete the ongoing projects within time. Raminder Grover, CEO, Homebay Residential (subsidiary of Jones Lang LaSalle Meghraj) informs, "With market improvement and transaction numbers increasing in the market, more cash flow is available with the developers and hence, they should be able to complete their projects by the end of this year." With hope on the horizon for the real estate sector, everyone seems to be of the opinion that the sector just might be able to rise from the ashes by the end of this year. Brotin Banerjee, managing director and CEO, TATA Housing tells, "With the world's financial markets suffering extraordinary volatility and stress in the last three months, the financial crisis is now feeding through to many areas as people are avoiding high value purchases. Nevertheless, we are now witnessing the government, the Reserve Bank of India and commercial banks of both public and private genres, coming out with a series of fiscal and monetary measures to boost the sector, especially housing.
ET Realty, May 29, 2009, Page 1
With the new government being formed, there is a ray of hope that the real estate sector just might be up and running this year end
Tanvi Rustagi
Hope is in the air and everyone wants a whiff of it, including the real estate sector. The Indian real estate sector has been through one of its worst blows in recent times. With UPA sweeping the majority in elections and the Indian citizen taking the front seat, it seems like this time hope will turn into reality.
But what does revival mean to the realty sector? Vijay Jindal, CMD, SVP Group explains, "Recovery will mean a stable market where buyers regain the confidence in the real estate sector. It would also mean that the developers get support from the government in completing their projects. Developers are waiting for the right environment to prevail for the sector and this can only happen if the government steps in and takes some positive initiatives."
Rohtas Goel, CMD, Omaxe states, "We expect the government to promote affordable housing and provide a helping hand to the rising need of the affordability factor for housing needs. We expect the government to hold special funds for building such corridors with easy clearance for the projects."
Due to a sweeping majority, there is much ado about what the UPA government will deliver. Bhim Yadav, CEO of Falcon Realty Services Pvt Ltd avers, "With the philosophy of the UPA government being of interest to the common man, everyone is hopeful that they will introduce suitable measures for the affordability of homes."
In the present scenario, the main challenge lies in providing housing solutions for all segments. Builders should focus in minimising their profits and building homes. The ratio between profit and development should be balanced because it is the buyers market now and speculative prices have no place. Navin M Raheja, chairman, Raheja Developers, Pvt. Ltd. says, "One of the most important issues for the government to address right now is financing. The reason is that banks have virtually stopped financing any real estate projects. Lending to the builders has also become extremely difficult as they are asking for additional security/guarantee for home loans. In fact, many of the banks are forcing their own payment schedule based only on the cost of construction, without factoring land cost, administration cost, marketing cost, approval cost, etc., thereby resulting into a deficient cash flow for the developers. The government should take steps to liberalise finance for the sector or allow external commercial borrowings for real estate and relax financing norms." But that's not all. Other hopes from the government include issues such as recognising integrated townships as infrastructural projects, single window clearance and rationalisation of property taxes, stamp duty and registration expenses across states with external development charges, rationalising license fees and other government levies.
However, before any kind of expectations, there are some who are caught in the middle of incomplete projects due to the deficient cash flow that the developers were facing. The completion of any project depends on the builder's capability. Past losses need to be borne by the developers as well as the investors, in order to complete the ongoing projects within time. Raminder Grover, CEO, Homebay Residential (subsidiary of Jones Lang LaSalle Meghraj) informs, "With market improvement and transaction numbers increasing in the market, more cash flow is available with the developers and hence, they should be able to complete their projects by the end of this year." With hope on the horizon for the real estate sector, everyone seems to be of the opinion that the sector just might be able to rise from the ashes by the end of this year. Brotin Banerjee, managing director and CEO, TATA Housing tells, "With the world's financial markets suffering extraordinary volatility and stress in the last three months, the financial crisis is now feeding through to many areas as people are avoiding high value purchases. Nevertheless, we are now witnessing the government, the Reserve Bank of India and commercial banks of both public and private genres, coming out with a series of fiscal and monetary measures to boost the sector, especially housing.
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