Real Estate Intelligence Service, Monday, December 07, 2009

Deepak Parekh to step down as HDFC chief this month

Deepak Parekh to step down as HDFC chief this month
The Economic Times, December 05, 2009, Page 4

Our Bureau MUMBAI

DEEPAK Parekh, whose name has been synonymous with India’s largest mortgage company, HDFC, will cease to be the chief executive of the corporation from December-end. The company on Friday formally announced the succession of Keki Mistry, vicechairman and MD, as chief executive and joint MD Renu Sud Karnad as managing director for a five-year period from January 1, 2010.

Although Mr Parekh would continue to be chairman, he has indicated that he would be spending lesser time in office in the day-to-day running of the company. “Mr Deepak Parekh, chairman & CEO of HDFC, after 31 years of which 16 years were as chairman, has decided to step down from his executive position. He will continue as the non-executive chairman of HDFC, which is the holding company for its group ventures,” a statement issued by the corporation said. The group ventures include HDFC Bank, HDFC Standard Life, HDFC Ergo General Insurance and HDFC Mutual Fund.

The corporation’s board has also approved the elevation of V Srinivasa Rangan, senior GM & chief treasurer, to the rank of the executive director of the corporation for five years.

Mr Mistry joined the corporation in 1981, has served on the company’s board for 16 years. He has worked in various positions and now would be responsible for the overall functioning of the corporation. Ms Karnad had joined the corporation in 1978, and has been on the board for nine years. She will continue to be responsible for the operations, human resources and communications functions of the corporation.

Mr Parekh’s stepping down will be an inflection point for HDFC as he is credited with building the institution which today enjoys a market capitalisation of Rs 77,000 crore. Besides heading the home finance company, Mr Parekh spearheaded the group’s ventures which have gained from his personal equations with industry, policymakers and investors. One reason for HDFC’s impeccable asset quality, despite the stress in real estate, according to insiders, is Mr Parekh’s deep understanding of the construction industry. It is also because of Mr Parekh’s stature in the international market that big names globally have been willing to pay top dollar to partner with HDFC for a variety of businesses, say insiders. Indeed with close to threefourths of its shares held by foreigners, the comfort level of the international investors is significant for HDFC.

Mistry is new HDFC CEO

Mistry is new HDFC CEO
The Financial Express, December 5, 2009, Page 1

fe Bureaus, Mumbai

HDFC vice-chairman and managing director Keki Mistry would be the new CEO of the corporation after Deepak Parekh steps down on January 1, 2010, after serving the country’s largest mortgage lender for 31 years.

Parekh, who has been heading HDFC for last 16 years of his 31 years of service with the corporation, would continue to be the chairman of the organisation, albeit in a non-executive capacity.

Mistry would be re-designated as the vice-chairman and chief executive officer with effect from January 1, 2010. Renu Sud Karnad, currently the joint managing director has been appointed as the managing director of the corporation for a period of 5 years.

Parekh has been appointed as an additional director of the corporation and shall hold the office as such up to the date of the next annual general meeting of the corporation.

Speaking to FE Mistry said, “I do not foresee a further correction in the real estate prices in the metro cities. Even if the interest rates rise, I do not anticipate a fall in demand for affordable homes as long as Indian economy continues to do well.'' Promoting affordable housing would top the agenda Mistry said. V Srinivasa Rangan, senior general manager and chief treasurer, has been appointed as the executive director of the corporation for a period of five years.

India to return to 8-9% growth in 1-2 years: Zoellick

India to return to 8-9% growth in 1-2 years: Zoellick
The Economic Times, December 05, 2009, Page 7

Our Bureau NEW DELHI

INDIA could return to a higher growth trajectory of 8-9 % in two years, but it needs to invest more in infrastructure for sustaining such growth, World Bank president Robert Zoellick said on Friday.

Winding up his four-day visit here that included meetings with prime minister Manmohan Singh, finance minister Pranab Mukherjee and other key government functionaries, he said: “India has emerged from the economic crisis with a clear vision of what it will take to accelerate back to earlier growth rates and beyond”.

The country’s 11th five year plan ending in 2012 has set a growth target of 9%. However, GDP growth slipped to 6.7% in 2008-09, after three years of over 9% growth, in the aftermath of the global crisis.

The strong fiscal and monetary policies of India had helped counter a decline in exports and withstand some of the external shocks from the food, fuel and financial crisis, he said. He added the World Bank would look at giving assistance to large consolidated projects rather than individual ones.

“What we are now trying to do is see if we can have some billion-dollar- plus interventions to try to support the reforms not only financially but at developing institutional capacity and figure out how we can connect other sources of funding, including some private sector funding from India and abroad,” he said.

Mr Zoellick announced a support of $ 1 billion for helping clean the Ganges. Earlier, the finance ministry said the World Bank is likely to triple its lending to the country to $US 7 billion this year. The World Bank has expressed interest in the development of the Eastern corridor on the lines of the Western corridor for which the governments of India and Japan are working together. “I saw increased discussion about longer-term investments in railway production including in the Eastern corridor and so I wanted to suggest that we might be able to partner with India on these issues and there has been a receptivity there,” Zoellick said.

On giving more voice to developing countries, he said the Bank would like to achieve a closer parity of towards 50:50 in terms of developed and developing countries.

Dubai will not hurt India, says Zoellick

Dubai will not hurt India, says Zoellick
The Financial Express, December 6, 2009, Page 1

World Bank Group president Robert Zoellick on Saturday said the Dubai debt crisis is manageable and it would not affect India.

"I personally think that the Dubai financial problem would be contained and is manageable. I don't think it to have an effect on Indian markets," he said. Zoellick was talking to reporters after a meeting with policy makers, including Reserve Bank governor D Subbarao and Planning Commission deputy chairman Montek Singh Ahluwalia. Though India would not be hurt, he said events in Dubai, due to the nervousness in financial markets, might prompt a second or a third look at investments in emerging markets.

World Bank Group President Robert Zoellick on Saturday said the Dubai debt crisis is manageableanditwouldnot affectIndia.
"I personally think that the Dubai financial problem would be contained and is manageable. I don't think it to have an effect on Indian markets,"Zoellicksaid.

Zoellick was talking to reporters here after a meeting with policy makers, including RBI governor D Subbarao and Planning Commission deputy chairman Montek Singh Ahluwalia.

Though India would not be hurt, he said events in Dubai, due to the nervousness in financial markets, may prompt a second or a third look at investments in emerging markets. About the meeting, to understand how India is coming out of theglobalfinancialcrisis,he said the policy makers feel the stimulus has helped the economy . "I got a general sense that they feel that the fiscal expansion has played an important role," Zoellick said on the final day of his four-dayvisittoIndia.

"And, overtime as they (India) return to growth they are also going to try to get some fiscal consolidation,"headded.Speakingon the priorities of Indian policy makers, he said they are more interested in longer term investments like foreign direct investment rather than portfolio investment. Foreign Direct Investments can help India connect to the international economy , Zoellick said, addingheisimpressedatthe riseinFDIinthecountry .

"One of the interesting observations that was made at the meeting was that the FDI numbers have gone up and that's a good sign," he said. Zoellick said the critical things discussed at the meeting included looking ahead and seeing what kind of urban strategy, infrastructure or water strategy could be pursued.Finally, the World Bank chief said he is emboldened by the Indian recovery and the growing stature of the country helping global stability . "I have beenencouragedhowIndia has come back quickly in this crisis ... I think that it can play an important role not only for the people of India but in the international economy,"hesaid.

No Impact of Dubai crisis on India: Zoellick

No Impact of Dubai crisis on India: Zoellick
Business Standard, December 6, 2009, Page 2

BS Reporter / New Delhi

The World Bank chief meets top policy makers.

The financial crisis in Dubai will not affect India but may prompt investors to take a relook at emerging markets, according to World Bank President Robert Zoellick.

“I do not think it will have an effect on Indian markets,” Zoellick told reporters after a meeting with a select group of policy makers on the final day of his four-day visit to India.

He said though the financial problems in Dubai were manageable, they might prompt a second or a third look at investments in emerging markets due to the nervousness in the financial system.

Zoellick, who met Reserve Bank of India Governor D Subbarao, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Department of Industrial Policy and Promotion Secretary Ajay Shankar, among others, said the meetings helped him understand how India was coming out of the global financial crisis.

“I got a general sense that they feel the fiscal expansion has played an important role… As they return to growth, they are also going to try to get some fiscal consolidation,” Zoellick said.

He said Indian policy makers preferred longer term investments like foreign direct investment to portfolio investments as the former could help the country connect to the international economy. “One of the interesting observations made at the meeting was that FDI has gone up and that is a good sign.”

This was Zoellick’s second visit to India in the last two years as the head of World Bank. During the visit, he met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee. He also made a day-long trip to Tonk district in Rajasthan where met Chief Minister Ashok Gehlot

Dubai financial problems manageable, says Zoellick

Dubai financial problems manageable, says Zoellick
The Hindu Business Line, December 6, 2009, Page 3

Stresses on importance of trade, need to resist protectionism.

Our Bureau, New Delhi

India need not entertain any worry about the recent debt crisis of Dubai World adversely impacting its market, the World Bank President, Mr Robert B Zoellick, said here today.

“I personally think that the Dubai financial problems will be contained and manageable. I don't think it will have an effect on the Indian market,” Mr Zoellick told reporters after a meeting with key Indian policy makers including the RBI Governor, Dr D. Subbarao, and the Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia.

Late last month, Dubai World, the State-owned conglomerate that spearheaded Dubai's growth, had asked creditors of its flagship property firms — Nakheel and Limitless — for a six month repayment freeze on some of its debt. This had shaken global markets and raised apprehensions here that the debt crisis may spillover to India.

“I think because of the nervousness in financial markets, the events in Dubai caused everybody to take a second or third look at fragilities,” Mr Zoellick noted.

On his meeting with top Indian policy makers this morning, Mr Zoellick said that they discussed critical issues of infrastructure, budgetary issues, and the changes in business models that one sees coming out of the Indian economy.

The World Bank Group President said that he was encouraged by India's rebound in the current global economic downturn. Mr Zoellick said that he stressed the importance of trade and the need to resist protectionism.

“We also talked about the challenges of low-income States, about the G-20 process and how India can play a role with some of the global economic challenges of the day,” he said.

Asked whether he got a sense of the timing of exit (on stimulus measures) from Indian policy makers, Mr Zoellick said, “I got a general sense that they feel fiscal expansion has played an important role and over time as they return to growth they are going to get fiscal consolidation.”

The meeting observed that Foreign Direct Investment into India had gone up this year, which Mr Zoellick pointed out was a “good sign”.

“I get that the principal interest of policymakers (in India) is to get longer term investments not portfolio investments so much as foreign direct investments that can help them connect to international economy”, he said.

He said that the main purpose of his visiting India was to listen and learn about how the country was coming out of the global financial crisis and also its growth strategies for future.

Allow smooth passage of FII funds: Bhave

Allow smooth passage of FII funds: Bhave
The Economic Times, December 07, 2009, Page 1

Shaji Vikraman & Santosh Nair MUMBAI

NET foreign fund inflows into Indian equities is nearing a record high, but concerns of restrictions on portfolio flows may have been exaggerated. Securities and Exchange Board of India (Sebi) chairman CB Bhave is of the view that unless foreign portfolio investors are allowed entry and exit without being hobbled, it would be difficult to attract foreign investments into equities. In an interview to The Economic Times, Mr Bhave said the massive inflows this year have to be viewed in the context of net outflows in 2008 and as such, net dollar inflows were within a manageable limit.

“We can only ensure that the necessary KYC (know your client) norms have been adhered to. But we can’t say only that capital is allowed which will not go out in two months,” said Mr Bhave.

With more portfolio investors coming through the front door, or in other words, opting to register directly, he also doesn’t see the need, at least in the near term, to tweak the participatory note, or PN, regime. PNs are derivative instruments which derive their value from the underlying shares of Indian firms and are issued by foreign portfolio investors to overseas investors or entities who may not wish to invest directly. Mr Bhave, however, said those FIIs that issue PNs without following proper KYC norms would be penalised.

Topping the list of priorities for the capital markets regulator is reducing the time taken to list after the issue closure to seven days from the current 20. The regulator is also trying to extend the application supported by blocked amount (Asba) facility to institutional investors and high net worth individuals. This would then speed up the process to make it mandatory for institutions to pay 100% margin while applying for IPOs. “Extension of the Asba facility and cutting the time taken for listing are key since institutional amounts are huge and if you keep them blocked for a considerable time, there will be issues,” said Mr Bhave.

The regulator, he said, was also considering tightening the norms for mutual funds to lower concentration of risks owing to a few investors holding a large chunk of investments, and to ensure that no single investor holds more than 25% in a single scheme. Since October 2008, Sebi has put stringent rules in place, including abolishing the entry fee, or the load for investors in mutual funds, and other measures aimed at preventing a systemic crisis.

On the contentious issue of extension of trading hours, the regulator is content to play the role of a facilitator rather than taking a view. “Let the industry decide, we are not getting into it,” the Sebi chief said.

Eight-yr cycle: Mkt may hit 21k jackpot in ’11

Eight-yr cycle: Mkt may hit 21k jackpot in ’11
The Economic Times, December 06, 2009, Page 1

Analysts see stock market in consolidation phase; anticipate some correction over next 12 months

Aman Dhall NEW DELHI

IF YOU are a retail investor looking to make money on Dalal Street, you may have a little over 12 months left to get your portfolio right. The Indian stock market is in the midst of a consolidation phase that will set the tone for the next bull run which, according to chartists, is set to begin in the first half of 2011.

The technical analysis, based on a classical eight-year time cycle that the market has followed since 1984, projects the Bombay Stock Exchange (BSE) benchmark Sensex to break the 21,000 barrier by early 2011 and embark on a bigger bull run. “The current rally is an upward leg of the larger consolidation pattern,” said Anup Bagchi of ICICI Securities. “In 2010, the Sensex will fluctuate in the range of 12,500 and 21,000. The next major peak is expected in 2016.”

The analysis shows that the equity market tends to be range bound after doubling from the bottom. For instance, after the 13-month bear phase witnessed during 1992-93, the Sensex jumped more than 100% from 1,980 to 4,643 before going into a consolidation phase for almost four years. The larger bull run, which started in 1998, then took the Sensex beyond the 6,000-mark in Feb 2000 before markets were spooked by the bursting of the tech bubble.

The next cycle from 2000 to 2008 also witnessed a similar trend. After a threeyear bear run between 2000 and 2003, the Sensex went up by more than 100% from the 2,900 mark to 6,250, which was followed by a correction of almost 33%. This next bull phase started in 2005.

Going by this theory, analysts expect the markets to see some correction over 12 months. “It could correct up to 11,000 at some time. There are, in fact, likely to be large swings in both directions,” says Rohit Srivastva, fund manager at Sharekhan.

A SundayET article dated January 4 had, citing technical analysis, predicted the market stabilising from April after bottoming out in February/March following the completion of a 13-14 month downtrend.

Ashu Madan, president of equity broking at Religare Securities, believes the Indian stock market is already under a different kind of bull run. “We may be in a consolidation phase but the euphoria has begun to build. For retail investors, this period leading to the bull run will be a litmus test. They should not let their learnings of last market crash act as a baggage now,” he says.

Low readings on India Volatility Index (VIX) too show that the overall perception among investors about market risk has reduced. The VIX is currently trading in the mid 20s, which is in sharp contrast to the same period last year when it was trading in the 50s.

Over a longer period of time, analysts anticipate the markets to touch 25,000 levels by 2012. “Going by the cycle, the Sensex should touch 32,000 levels by mid 2014,” says Sandeep Wagle, chief technical analyst at Angel Broking.

Eight-yr cycle: Mkt may hit 21k jackpot in ’11

Eight-yr cycle: Mkt may hit 21k jackpot in ’11
The Economic Times, December 06, 2009, Page 1

Analysts see stock market in consolidation phase; anticipate some correction over next 12 months

Aman Dhall NEW DELHI

IF YOU are a retail investor looking to make money on Dalal Street, you may have a little over 12 months left to get your portfolio right. The Indian stock market is in the midst of a consolidation phase that will set the tone for the next bull run which, according to chartists, is set to begin in the first half of 2011.

The technical analysis, based on a classical eight-year time cycle that the market has followed since 1984, projects the Bombay Stock Exchange (BSE) benchmark Sensex to break the 21,000 barrier by early 2011 and embark on a bigger bull run. “The current rally is an upward leg of the larger consolidation pattern,” said Anup Bagchi of ICICI Securities. “In 2010, the Sensex will fluctuate in the range of 12,500 and 21,000. The next major peak is expected in 2016.”

The analysis shows that the equity market tends to be range bound after doubling from the bottom. For instance, after the 13-month bear phase witnessed during 1992-93, the Sensex jumped more than 100% from 1,980 to 4,643 before going into a consolidation phase for almost four years. The larger bull run, which started in 1998, then took the Sensex beyond the 6,000-mark in Feb 2000 before markets were spooked by the bursting of the tech bubble.

The next cycle from 2000 to 2008 also witnessed a similar trend. After a threeyear bear run between 2000 and 2003, the Sensex went up by more than 100% from the 2,900 mark to 6,250, which was followed by a correction of almost 33%. This next bull phase started in 2005.

Going by this theory, analysts expect the markets to see some correction over 12 months. “It could correct up to 11,000 at some time. There are, in fact, likely to be large swings in both directions,” says Rohit Srivastva, fund manager at Sharekhan.

A SundayET article dated January 4 had, citing technical analysis, predicted the market stabilising from April after bottoming out in February/March following the completion of a 13-14 month downtrend.

Ashu Madan, president of equity broking at Religare Securities, believes the Indian stock market is already under a different kind of bull run. “We may be in a consolidation phase but the euphoria has begun to build. For retail investors, this period leading to the bull run will be a litmus test. They should not let their learnings of last market crash act as a baggage now,” he says.

Low readings on India Volatility Index (VIX) too show that the overall perception among investors about market risk has reduced. The VIX is currently trading in the mid 20s, which is in sharp contrast to the same period last year when it was trading in the 50s.

Over a longer period of time, analysts anticipate the markets to touch 25,000 levels by 2012. “Going by the cycle, the Sensex should touch 32,000 levels by mid 2014,” says Sandeep Wagle, chief technical analyst at Angel Broking.

6 more US banks seized, year’s total at 130

6 more US banks seized, year’s total at 130
Business Standard, December 6, 2009, Page 5

WASHINGTON (Reuters)

Regulators seized six more U.S. banks on Friday, bringing the tally of failures to 130 this year as the bank industry continues to suffer under the weight of deteriorating loans.

Small banks are expected to continue to fail at an elevated pace through next year. The Federal Deposit Insurance Corp, which protects bank accounts, has said the banking industry's recovery will lag behind the general economy.

The economy showed some signs of brightening on Friday as a report showed U.S. employers cut far fewer jobs than expected last month in the best showing for the labor market since the recession began.

The FDIC said regulators on Friday closed three banks in Georgia, bringing the number of bank failures in that state this year to 24, and one each in Virginia, Illinois and Ohio.

The biggest bank to close on Friday was AmTrust Bank of Cleveland, Ohio, which had assets of $12 billion and deposits of $8 billion. The New York Community Bank of Westbury, New York, assumed its deposits.

The other five banks had assets of less than $1 billion. They are Benchmark Bank of Illinois, Greater Atlantic Bank of Virginia and the three banks in Georgia -- Tattnall Bank, Buckhead Community Bank, and First Security National Bank.

The six failures are expected to cost the FDIC's insurance fund a total of more than $2.3 billion.

Banks are collapsing at the highest annual level since 1992. Last year 25 banks failed, compared to just three in 2007.

At the beginning of the crisis, institutions were being brought down by soured mortgage-backed securities and bad home loans. Increasingly, small banks' woes are tied to commercial real estate loans that have taken longer to unravel.

Small institutions have a disproportionately large exposure to commercial real estate because it was an area in which they could effectively compete with larger banks during the credit boom.

The FDIC has said it expects bank failures to cost its insurance fund about $100 billion from 2009 through 2013.

The agency has ordered banks to prepay three years of industry assessments, or about $45 billion, to give the FDIC cash to handle the failures.

WB to back Indian firms in emerging economies

WB to back Indian firms in emerging economies
The Financial Express, December 5, 2009, Page 1

fe Bureaus, New Delhi

World Bank Group president Robert Zoellick on Friday said it is willing to help Indian companies operating in developing countries. He projected the South-South trade to rise, while forecasting India would return to 8-9% growth rate in two years. “There may be an opportunity for us to help Indian companies operating in other developing countries,” he said. “We are going to see much of the South-South business and trade.”

Zoellick said he was committed to get additional resources for India. “I had the opportunity this morning to speak to the Prime Minister how fully committed I am in trying to get India more financial resources from the World Bank Group,” he said, concluding his four-day trip to India.

The World Bank is currently working on projects of more than $22 billion in the country, including a $3.6-billion loan from its arm International Finance Corporation, which funds private projects.

FDI violations by Emaar

FDI violations by Emaar
The Financial Express, December 5, 2009, Page 4

The Enforcement Directorate(ED) on Friday claimed to have found evidence of "large-scale" violations of Foreign Direct Investment(FDI) guidelines by real-estate major Emaar MGF in purchase of land.
During its searches carried out at 13 premises of the group on Thursday, ED also claimed to have recovered about Rs nine crore in cash, two kg of gold and foreign currency worth Rs 5 lakh.

Stating that Emaar MGF has availed more than Rs 6,000 crore of FDI in the last four years, the ED said in a press statement that the seized documents indicated "large-scale violations of FDI guidelines."

"The company has about 12,800 acres of land bank out of which 8,700 acres of land is agriculture land. Most of this agriculture land have been acquired out of FDI which is a violation," the statement said. The ED claimed that the MD of the group "admitted that the FDI funds were used for purchasing agricultural land."

About the search operation, the group said it was

"routine." An EMAAR MGF statement on Thursday said, "There was a routine search operation... we have fully cooperated with the investigation."

The ED statement said the real estate group, a joint venture between Dubai-based EMAAR Properties and India's MGF Development, had floated more than 350 companies including a large number of them in Cyprus, Caymon Islands, Mauritius and Singapore.

Huge amount of money was found to have been routed and re-routed through these companies, it said.

Emaar MGF violated FDI norms: ED

Emaar MGF violated FDI norms: ED
The Hindu Business Line, December 5, 2009, Page 15

New Delhi

A day after it conducted search operations at 13 offices of Emaar MGF, the Enforcement Directorate today said that the documents seized indicate “large scale violation of FDI guidelines”. “The company has about 12,800 acres of land bank of which 8,700 acres is agricultural land. Most of the agricultural land has been acquired out of FDI, which is a violation of FDI”, the ED said in a statement here. The ED also claimed to have found Rs 9 crore of Indian currency, two kilos of gold during the search and seizure operations on Thursday. “A number of incriminating documents showing large scale FEMA violations by the Group was found and seized. The Group has floated more than 350 companies including a large number of companies registered in Cyprus, Cayman Islands, Mauritius and Singapore”, the statement said. The search operations on Thursday came at a time when the company is gearing up for a Rs 3,850-crore initial public Offering. — Our Bureau

Sustained strong growth could see withdrawal of stimulus next year

Sustained strong growth could see withdrawal of stimulus next year
The Hindu Business Line, December 5, 2009, Page 15

Our Bureau, New Delhi

Stimulus packages may be withdrawn as early as the next fiscal if the current GDP growth trends continue.

The impressive second quarter GDP growth rate of 7.9 per cent has given the Government enough confidence to consider withdrawing the stimulus packages next year.

Speaking on the sidelines of the International Chamber of Commerce's Regional CEO Forum, Dr C. Rangarajan, Chairman of the Prime Minister's Economic Advisory Council, said: “We have had a strong growth in Q2 and if this trend continues and we have a strong growth of around 7 per cent for 2009-10, then the Government can consider withdrawing the stimulus packages.” Dr Rangarajan said: “Some steps need to be taken to bring down the fiscal deficit. Some of the expenditures could be withdrawn and there may not be any need for some of the expenditures incurred in the current year.

“Revisions in excise duties and taxes are also not ruled out. But these are all issues that need to be discussed at the time of the formulation of the Budget. Right now it is necessary to put the process of fiscal consolidation in place.”

Regarding the role of monetary policy in curbing the food inflation, Dr Rangarajan said, “In a period of scarcity, if the money supply growth is very strong, it will fuel inflation. The Reserve Bank of India could take action on reducing liquidity after observing the prices in December.”

Earlier, in his address at the event, the Economic Advisory Council's Chairman said that India's GDP growth this year is expected to be around 7 per cent and should be between 7 and 8 per cent for the 2011-12 fiscal. “If the world economy and world trade recovers, then India can be back at the 9 per cent growth rate in another two years,” said Dr Rangarajan.

Infrastructure holds potential for banks

Infrastructure holds potential for banks
The Hindu Business Line, December 7, 2009, Page 10

Anjana Chandramouly, Bangalore

Many large-sized banks have grown their exposure to infrastructure lending in the past few months, and if the recent push for infrastructure by the Government is any indication, the pie could only get bigger for them.

“The infrastructure sector holds a lot of potential for banks, with lending opportunities of $130-140 billion,” Mr H.S. Upendra Kamath, Executive Director, Canara Bank, told Business Line.

Several factors can work in favour of banks in this regard. Commercial banks are being allowed to take exposure in infrastructure projects where India Infrastructure Finance Company Ltd (IIFCL) or Infrastructure Development Finance Company (IDFC) are leading financers. The Reserve Bank of India has also taken a liberal view on the risk weightage of those projects where take-out financing has been organised.

The Government's decision to open up development of toll roads, airports, ports etc. to the private sector, “is driving up investment,” said Mr Albert Tauro, Chairman and Managing Director, Vijaya Bank.

Canara Bank recorded a 59-per cent year-on-year growth in infrastructure lending during the second quarter of this fiscal, while Vijaya Bank saw about 21 per cent year-on-year growth in infrastructure credit during the second quarter this year. “There will be a 15-20 per cent growth on a sustained basis in this space going forward,” said Mr Tauro.

The increased focus on infrastructure will continue for the next six months to a year, said Mr Ashvin Parekh, Partner and National Leader – Global Financial Services, Ernst & Young.

“While larger banks such as State Bank of India, Punjab National Bank, Bank of India and Canara Bank have grown their exposure in infrastructure lending, smaller banks are still keeping away,” he added. Larger banks are willing to participate in projects where the regulatory risks are lower, said Mr Parekh.

However, banks may face some difficulties, especially in long-tenored funding in the infrastructure space. For instance, projects such as roads are not preferred because their tenor is long, while funding for ports is preferred as the turnaround time is much less, he added.

Refinance rates

There is an absolute need to create an alternative source of funding by the government, said Mr Kamath of Canara Bank, adding that for commercial banks to play a bigger role, “there is a need to have a refinance window for infrastructural lending and an efficient mechanism of take-out financing.” Refinance at affordable rates should be made available to banks, he said.

“With more and more take-out finance partners coming in, the ability on the part of the banking companies to invest in infrastructure projects is extended. Banks have indicated that they can hold out an investment for a period of about five years in projects where take-out finance has been organised,” said Mr Parekh.

Value buying in realty is back

Value buying in realty is back
The Economic Times, December 06, 2009, Page 1

2BHK preferred format, sub Rs 40 lakh segment attracting home buyers

Anand Rawani and Neha Dewan NEW DELHI

VALUE buying is back in business. Realty buyers are primarily looking at the sub-40 lakh category to fulfill their dream home aspirations and it is the 2BHK which has emerged as the preferred format for buyers in these times.

SundayET spoke to a cross section of real estate developers, brokers and bankers to assess the ground situation on the kind of housing format and home loan size that is now gaining maximum flavour.

Most developers agree that the current hotselling flavour of the market is apartments ranging between Rs 25 to 40 lakh. According to Rajeev Talwar, group executive director, DLF, it is primarily the 2 and 3 BHKs which are finding buyers. “As far as prices are concerned, the sub-40 lakh is selling well in Bangalore. We have sold 1,200 units in Bangalore since the beginning of February this year. Similarly in Delhi we have sold 2,500 units since the beginning of the Financial Year. We will be coming up with more affordable housing projects across locations over the next three years.”

Unitech official pegs it a little lower. As per a Unitech spokesperson, the sub-30 lakh category is faring well in these times. “We have sold flats in Noida, Gurgaon, Chennai, Mohali, Kolkata and Hyderabad in this range. It’s mainly the 2 and 3 BHK with sizes between 800-1,000 sq ft respectively. In fact, in the first six months of this year, we have sold over 8 million sq ft of apartments, out of which 40% is in the price range of sub-30 lakh,” he said.

Others feel that a combination offered with a study space is working out as an appealing factor. Says Rita Dixit, executive director, Jaypee Greens, “Options in the range of Rs 25-Rs 40 lakh are gathering momentum. Apartments which offer 2 and 3BHK with study space work out well. These typically range between 1,050-1,400 sq ft. Our projects offering such options, such as Classic and Kosmos, are bringing good business.”

Not merely the property developers but even realty brokers echoed similar sentiments. Pankaj Jain, executive director of Realistic Realtors, a Delhi-based real estate brokerage firm said, “The 35 to 50 lakh segment is seeing bulk demand across locations. Demand for 2BHK with size ranging from 1,200 to 1,500 sq ft is high as it is an ideal size for a nuclear family.”

The home loan enquiries coming to banks bear testimony to the market trend. According to Renu Sud Karnad, Jt MD, HDFC, “The segment where we are seeing a huge demand is in the price range of Rs 30-50 lakh in metros and bigger towns and around Rs 20-25 lakh in smaller towns.”

Similarly, in the case of Bank of Rajasthan, where a predominant number of customers are from rural, semi-urban and urban centres, the average ticket size is below Rs 20 lakh. As per the loan portfolio of home loan of Bank of Rajasthan, the sub-Rs 20 lakh loans category constitute almost 95% of the total home loan portfolio.

BULK DEMAND

The current hotselling flavour of the market is apartments ranging between Rs 25 to 40 lakh
Demand for 2BHK with sizes ranging from 1,200 to 1,500 sq ft is high
Banks seeing home loan disbursement in the range of Rs 30-50 lakh in metros and around Rs 20-25 lakh in smaller towns.

Ansal API sells 600 units in hi-tech city

Ansal API sells 600 units in hi-tech city
The Hindu Business Line, December 7, 2009, Page 13

New Delhi, Dec 6 (PTI)

Realty firm Ansal Properties and Infrastructure (Ansal API) has sold 600 flats worth around Rs 250 crore in its first-group housing project at hi-tech city near Greater Noida. The 2,500-acre hi-tech city ''Megapolis'', located at Dadri adjoining Greater Noida, will be developed in various phases with the first phase spread over 500 acres.

"We had launched the first group housing project in the hi-tech city in July this year. Since then, we have sold 600 apartments with a sales value of about Rs 250 crore," Ansal Hi-Tech Township Chief Operating Operation Rakesh Kaul said.

"Demand has been very robust and so we have increased the number of units to 1,100 from the initial 700 flats," he said.

Property demand, which slumped last year due to global economic slowdown, has started to pick up, especially for housing units falling in a range of Rs 10-30 lakh.

The company will invest Rs 120-130 crore on construction, Kaul said, adding that the total realisation from 1,100 flats will be about Rs 400 crore. The flats would be offered at Rs 11-42 lakh depending upon the sizes that vary between 750 sq ft and 2,200 sq ft. Ansal Hi-Tech Township is a special purpose vehicle (SPV) formed to build the hi-tech city. The company had bagged the hi-tech city project from the UP government last year. "The project will have a sale value of Rs 26,000 crore and the total investment will be Rs 13,000 crore," Ansal API Chairman Sushil Ansal had said in July last year.

Residential sector back on track

Residential sector back on track
The Hindu Business Line, December 6, 2009, Page 15

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We expect demand for commercial and retail space to pick up in six months.
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MR PRANAV ANSAL, VICE-CHAIRMAN AND MD, ANSAL PROPERTIES.

Moumita Bakshi

Fresh out of a fund-raising exercise in September when it garnered over Rs 200 crore, Ansal Properties and Infrastructure Ltd has used the funds to speed up its projects and retire debt. The company is on the verge of unveiling a new township in Gurgaon, which is being billed as the first green township of Asia. It is also gearing up to launch an industrial SEZ in Murthal (Sonepat district) for which it is in the process of getting the required approvals.

Mr Pranav Ansal, Vice-Chairman and Managing Director of Ansal Properties and Infrastructure Ltd, speaks to Business Line on buyer sentiments, the company's plans and the response to the affordable housing projects announced earlier this year.

Excerpts from the interview:

In January, the company set itself a target of selling 10,000 dwelling units in the affordable housing segment during 2009. What is the position in terms of actual sales of those units?

We have already sold 8,500 units and we should be able to reach the full target by January 2010. In fact, we are handing over possession of some of the projects in December, including the Jodhpur project.

Is buyer interest back in the residential market?

The residential demand is back to normal and people have started buying property as earlier. The investor is out of the market and so the buyers are actual users who opt for bank financing. In that sense, it is a better situation for developers now.

Although the residential sector is totally back on track, the commercial and the retail realty side are still under pressure. Now that business operations have started to stabilise, in the next six months or so, I expect commercial office and retail real-estate sector also to pick up.

In my view, given another three to four months, companies will start looking at growth.

That is when they will also look for office and commercial space. Also, remember that over the last 12-18 months new development on the commercial side has been limited, so there will be a demand spill-over effect.

On the residential side, of course, the demand is largely in affordable housing. From a company's point of view, a large portion of our business is in that category. But even for high-end development in Delhi NCR, at least the ready projects are finding takers.

Since you say the market is stabilising, are you lining up new projects?

We are going to announce a new township in Gurgaon very soon. It is spread over 120 acres and once we get licence and approvals sometime in January, we will launch it. It will be unique in the sense that it is the first residential green township of Asia.
As things stand today, there is a concept of green buildings. But we are looking at a horizontal township. This will be certified by LEED. We are working towards a gold certification, where all the materials used will be environment-friendly, and the township will utilise solar power. We have already invested Rs 350 crore for the land, and are now waiting for clearances.

The company had put on hold its plans for hotels. Will you revisit those plans now?

We have not yet applied our mind to the issue. In fact, we have a meeting in December (on this) and so we will probably take a call.

And the SEZ projects?

The industrial SEZ is a big project for us and it is coming up in Murthal (in Sonepat district). We are in the process of getting approvals now.

I think we will launch it in December. We are convinced about the viability, given the huge demand. See Karnal, Panipat and Ludhiana are huge industrial belts, but pollution norms have become very stringent. So a lot of factories running in those locations are closing down. However, the IT SEZs are still on hold because there is still not much of demand.

After the recent fund raising, which saw IPRO, a Mauritius-registered fund, picking up nearly 10 per cent stake, are there any more plans to raise money from the market?

We raised close to Rs 200 crore in September this year. That money has already come in; it has been used for projects, expansion and retiring debt. We are not looking at any other fund-raising plan at this time.

The company retired some debt from the funds that were raised. Our debt position earlier was about Rs 1,100 crore and we would have retired roughly Rs 50-100 crore. Most of our debt is long-term and our projects are comfortably paying for it. So there is no problem.

Bangalore commercial realty perks up

Bangalore commercial realty perks up
The Hindu Business Line, December 6, 2009, Page 15

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Demand grows for space as companies restart expansion plans put on hold due to the slowdown.
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Anjana Chandramouly

The office space realty is looking up in Bangalore with the growing numbers of enquiries , say realty experts.

Corporates are re-evaluating their expansion plans that were put on hold. The early signs of this revival are being felt in the real-estate marketespecially in the Bangalore market, primarily driven by the IT and ITeS sectors with much of this demand comes from large corporates and multinationals.

According to Mr Anshuman Magazine, Chairman and Managing Director, CB Richard Ellis (CBRE), real-estate services firm, says, “Corporates have now started to seriously evaluate growth/expansion opportunities and are actively seeking out good deals in the market.”

Though some significant transactions have happened in the last few quarters; in general, “closure seems to be slow, with corporate clients choosing to deliberate and sometimes wait till they can negotiate the best possible commercial and non-commercial terms,” he adds.

During 2009, the Bangalore commercial office market adopted a cautious approach with relatively limited infusion of new space, says Mr Sumit Rakshit, Executive Director, Occupier Services at Cushman & Wakefield India. The supply forecast for the year was approximately 8 million sq.ft but only about 60 per cent – 4.8 million sq.ft was delivered up to September. The last quarter is expected to see new supply of approximately 2 million sq.ft.

Late start

The first two-and-a-half quarters of this year were bad for the commercial real-estate market. However, enquiries indicate there is demand for more than 2 million sq.ft in the Bangalore market, which is a very positive sign for the industry, says Mr Goutam Chakraborty, Regional Director, Office Leasing, Colliers International, global commercial real-estate consultants.

The year is expected to close at approximately 5 million sq.ft, thereby recording a 52 per cent drop from the absorption witnessed in 2008. “Further, most of the absorption was observed in the older vacant stock and second-generation buildings indicating sufficient available supply in the market,” says Mr Rakshit. The Bangalore commercial real-estate market also noticed various other sectorssuch as telecom and BFSIcontributing to the demand this year.

Mr M. Murali, MD, Shriram Properties says his company has been able to deliver one million sq.ft space out of the 4 million sq.ft planned in its Chennai project. Buoyed by the Chennai experience, the company now plans to “duplicate the Chennai commercial project in Bangalore, Hyderabad and Kolkata,” he says. In fact, “we plan to start work on the Kolkata project soon, and we are looking for land in Bangalore and Hyderabad,” says Mr Murali. Shriram Propertiesplans to develop about five million sq.ft of office space in Kolkata. The company might need Rs 800-900 crore for these two ventures, even if “we develop two million sq.ft in each location,” says Mr Murali.

Lease, rental values

Lease/rental values have softened by about 10-20 per cent. Most of the markets in Bangalore peaked in the second half of 2008 with the exception of the International Tech Park Bangalore in Whitefield that peaked in 2005.

According to Mr Chakraborty of Colliers International, though lease/rental rates took a beating during the peak recession time, “things have started getting better for the developers now” since there is a revival of demand for office space. “There is a stabilisation of rental values with an indication that it could head north in the near future,” he adds.

For instance, in good times, the market has seen monthly rental values of about Rs 200 per sq.ft for a few premium buildings in the central business district (CBD) and around Rs 50 per sq.ft for the peripheral business district.

In fact, there has been a stabilisation of rental values towards the latter half of 2009, says Mr Magazine “However, rentals still remain under pressure in specific micro markets of Electronic City and Whitefield due to excess supply and inadequate demand.”

More small and medium-sized transactions are expected, particularly in the CBD/Off CBD locations. Pre-commitments are likely to be less on account of significant ready supply, says Mr Rakshit, adding that Bangalore might see relatively increased activity from other sectors in the times to come. He feels the first two quarters of 2010 are likely to see reduced infusion of new supply. According to him, demand is expected to gain momentum by the third quarter of 2010, while existing projects are also likely to see accelerated pace of construction activities hereon.

Green code must for buildings in 8 States

Green code must for buildings in 8 States
Business Standard, December 5, 2009, Page 16

BS Reporters / New Delhi/mumbai

The green building code, termed energy conservation building code (ECBC), is likely to be mandatory for commercial buildings coming up in eight fast growing states in the next two years.

“In the eight major states where commercial buildings are being built — Delhi, Haryana, Maharashtra, Andhra Pradesh, Tamil Nadu, West Bengal, Gujarat and Uttar Pradesh — our goal is to have the law on their books within two years,” said Ajay Mathur, Director General of Bureau of Energy Efficiency (BEE).

BEE finalised the code two years ago and is currently voluntary. Each state will have to amend the legislation to make ECBC mandatory. “We are providing assistance and tools to the states for this,” Mathur added.

Though ECBC-compliant buildings would add 10-15 per cent to the overall cost of construction, it would be more than neutralised by the savings from lesser consumption of energy.

“We already have one green building. We are implementing six such projects without any legal compulsion. Though cost is high... it will result in value addition to the users,” said Vimal Shah, Managing Director of Ackruti City.

Making the code mandatory would require a lot of preparatory work in terms of monitoring and auditing mechanisms.

Delhi was the first to make mandatory for all new government buildings to be ECBC-compliant. “Haryana and Uttarakhand are close to doing it,” said Mathur.