Delhi malls cut rental in demand slump
HT Business, 27th January 2009, page 19
Major mall developers in the National Capital Region have cut rentals by at least 15 per cent to prevent retailers from exiting malls, industry executives say. Unitech has cut the rentals of its one million square feet mall 'The Great India Place' (TGIP), which is the largest mall in India.
Sachin Sachdeva, head of retail operations at TGIP said the current rentals are Rs. 350 (per square foot per month) for ground floor, Rs.
250 for first floor and Rs. 125 second floor, down 15 to 20 per cent from their peaks.
"Of the total 280 stores, nearly 20 are empty," he said. A large property brokerage firm owner said that the vacancy level could be higher, at nearly 20 percent.
Executives at DLF, Parsvnath and Omaxe admit to a decline in both rentals and occupancy levels. "The retail rentals have come down by 20 to 25 percent.
However, there is further scope for correction of prices by at least 15 to 25 percent," said Arvind Singhal, chairman of retail consulting firm KSA Technopak. The situation for Ambience Mall on the Gurgaon highway is worse.
A senior mall executive in the premises said nearly 160 out of total 360 stores are empty. "Revenues expected by developers and retailers did not match expectations and hence there is a re-alignment in rentals," said Rajneesh Mahajan, retail head at consultancy firm Cushman and amp; Wakefield.
Tuesday, January 27, 2009
Delhi malls cut rental in demand slump
Realtors look to barter deals
Realtors look to barter deals
HT Business, 27th January 2009, page 19
With credit turning tight and buyers disappearing, real estate firms are experimenting with barter — a transaction where goods or services are directly exchanged for other goods and/or services — without the use of money.
The New Delhi-based AEZ Group has invited proposals from manufacturers and suppliers of materials and equipment like steel, aluminium, elevators, escalators and generator sets for barter against ownership of property.
“We need material for construction and suppliers need to dispose off their surplus stock that they may have ordered on commitment of the developer,” said Shrey S Aaren, director, AEZ Group. “This made us go in for barter proposals. We have received more than 100 queries so far.”
It could be a win-win situation for both, the developer and the supplier, said Hemant Shah, chairman, Akruti Nirman. “The developer can help the supplier dispose off his surplus stock and the supplier the developer’s real estate. It offers a way out of the (current) logjam. We are open to such schemes.”
Such deals could also help improve profitability in a sluggish market. “It is one of the innovative ways of improving your profit margins,” said Anshuman Magazine, managing director, CB Richard Ellis, a real estate consultancy. “I think the trend is bound to increase. It is important that the location of the project is good and the property has been valued right.”
On the other side, Abhishek Somany, joint managing director, Somany Ceramics, is open to such deals. “If we were to go into something like this, the category of the builder and the location of the property will be important,” he said. “Besides, we would prefer a commercial space barter to a residential space as that would enable us to use the office or godown space.”
For barter system to work, it is necessary that suppliers have the cash flow and are willing to find value in such deals, said Sanjeev Srivastava, managing director, Assotech. It is likely to be more successful in case of manufacturers of elevators and escalators where the suppliers have a long-term involvement with the developer, he said.
Crisis hits home, auto, personal loan portfolios of foreign banks in India
Financial Express, Jan 27, 2009, Page No. 2
New DelhiThe deepening financial crisis and ballooning losses at global banks have forced major foreign banks in India to either stop or significantly reduce the amount of various loans including home, personal and car loans given to retail customers. While HSBC has shut its home loan operations, Standard Chartered, Citibank and ABN Amro have drastically pruned fresh home loans to customers, banking industry sources said, which was confirmed by a visit to branches of the four banks by FE reporters.
Deteriorating credit conditions, rising bad debts and losses have led to a sort of a temporary halt in retail loan disbursements by these banks. While public sector banks increased lending this year, private and foreign banks have reduced credit. Credit growth of foreign banks operating in India has almost halved to 16.9% as on January 2, 2009 from 30.7% as on January 4, 2008, as per RBI data released in the third quarter review of macroeconomic and monetary policy on Monday. Public sector banks lending grew by 28.6% as on January 2, 2009, up from 19.8% last year, whereas, credit growth of private banks fell to 11.8% as on January 2, 2009 from 24.2% a year ago, the RBI data showed.
The US banks are unable to lend after suffering losses of nearly $700 billion since the start of crisis in the sub prime mortgage market 18 months ago. Indian banks too have reduced credit disbursals after facing intermittent liquidity shortages. After contracting by Rs 1,157 crore in December, the non- food credit slightly rose to Rs 11,961 crore for the fortnight ended January 2, according to RBI data. Gross non performing assets of banks in India could hit 4.7% of total loans by fiscal end 2.3% currently, a note by financial services firm Antique Finance Ltd said.
HSBC and Standard Chartered have stopped providing personal and car loans, while Citibank has stopped personal loans to new customers, executives at these banks’ branches in Delhi said. Standard Chartered has expanded its ‘negative list’ of cities wherein the bank is not granting any loans. Interestingly, Ghaziabad is part of this negative list and bank executives refused to finance any property in most of the NCR region, including the ‘laldora’ areas of Delhi that have now been regularised.
A home loan executive said this list has been there for the last 2-3 years, but it has now been expanded. “We are going slower because of the financial crisis,” he said. When FE visited an ABN Amro bank as loan seekers last Monday, two branch executives did not directly deny home loan but said they would arrange for a call in the evening. The bank had not called since then. One of these executives said on further questioning on Wednesday it would be extremely difficult to arrange for a home loan.
A Citibank branch executive, however, said on Thursday the bank was willing to provide home loan at 11.75% rate and up to 80% of the property value. The bank has stopped personal loans to new customers and car loans are available only for the Maruti brand, the executive said. Calls and e-mails to these banks did not elicit response. Standard Chartered spokesperson did not respond to a questionnaire despite repeated attempts over the past two weeks. “We will be unable to respond to the queries, as we are currently in close season (till announcement of Group results in first week of March),” said a HSBC spokesperson. FE could not reach ABN Amro bank.
A Citibank spokesperson said the queries have become outdated in light of the restructuring at the bank. She did not respond on whether retail loans operations have been shut at Citibank. Citi, the US-based parent company, last Friday jettisoned its financial supermarket model to minimise losses that stood at $8.29 billion in the fourth quarter. It is splitting the company into two entities, Citicorp and Citi Holdings, to retain good assets including the global bank and to offload bad assets in future. Citi Financial, whose business in India includes home loans, personal loans and investment products, has posted a net loss of Rs 268.6 crore during the first three quarters of 2008.
While the new administration in the US is pushing to complete the bank rescue plan, the financial losses in the country may reach $3.6 trillion, New York University Professor Nouriel Roubini said at a conference in Dubai on Wednesday. The banks that have funds to lend are parking them in gilt securities for the fear of rising bad debts.
DLF raises funds and repays part of it to MF
DLF raises funds and repays part of it to MF
Times of India, Jan 26, 2009, page no. 28
At a time when a host of real estate companies are finding it difficult to raise money to pay off their debts, K P Singh controlled DLF recently raised about Rs 900 crore. But the story doesn’t end with the fund raising. The Gurgaon-based real estate conglomerate then used part of the proceeds to repay about Rs 300 crore to a large mutual fund house, that too even before the due date. In boom times, many real estate companies had issued paper to raise funds for their projects. And they had found ready investors in the mutual funds, which had readily bought into the story of ever-rising property prices. At a time when many of these real estate companies are trying hard to keep their head above water, several mutual fund houses are still on the edge, mainly because of their legacy investments in real estate papers. Therefore, the move by DLF must have come as a surprise bonanza for some fund managers. Hopefully, other realty companies are looking at the DLF example.
Flight to the suburbs
HT Estates, Jan 24, 2009, Page No. 1
Welcome to the wave of great great migration. Better infrastructure, proximity to the workplace, parking facilities, wide green expanses and the overall cost analysis - all of these are luring many Delhiites to the suburbs. It is, therefore, not surprising that the outskirts of the Capital are fast developing as new residential corridors.
If the recently released real estate price index by the National Housing Bank (NHB) is anything to go by, prices in South Extension, Vasant Vihar and other posh localities in Delhi, rose at a much lesser rate than places located in the Capital's outskirts. Several reasons may have fuelled this pattern. The primary one is that posh localities in Delhi have already witnessed optimum growth and are almost saturated when compared to new property stock in the outskirts of the city The second. reason is that the city too has expanded and created new infrastructure, connectivity and fresh employment opportunities, forcing people to move to the fringes. B g e h m , I sscs i g roe e ot According to Pankaj Renjhen, Managing Director of the North Indian operations, JLLM, "Suburban development is all about growth of the city, it's all about providing economic stimulus to that city which has grown outwardly Suburban housing is typically cheaper and bigger housing development since the availability of land is more. In the US the bigger houses are typically located in the suburbs." Therefore, it is the need for a larger home, more open space and peace, that is forcing people from posh localities in Delhi to shift base to the NCR. The other socioeconomic factors include proximity to the workplace, better security and infrastructure and the quality of real estate such as a golf course related development.
Often these homes in the outskirts start as an investment and gradually develop into first homes as the area develops and becomes habitable, points out Renjhen. Cagn huignes hnigosn ed Concurs Anshul Jain, CEO - India, DTZ International Property Advisors, earlier the demand pull towards parts of NCR came from people aspiring for upmarket premium residential spaces, amidst all modern amenities ¬provisioned within well-developed gated and self-sustainable communities. Heavy concentration of commercial activity in these regions has been another factor contributing to this migratory trend; driven by the housing needs of the young professionals wanting to stay closer to their work places.
One, therefore, has people moving to homes in either Gurgaon or Greater Noida overlooking golf courses -the perfect greens. Points out Rita Dixit, ED of Jaiprakash Associate Ltd (JAL), real estate division, "Several buyers from posh Delhi localities have bought properties in our Greater Noida golf property. Our loft and studio apartments are also immensely popular with the avid golfers’: group," she adds. vandana.ramnani@ hindustantimes.com
‘Model realty regulator Act soon for States’
‘Model realty regulator Act soon for States’
The Hindu Business Line, Jan 24, 2009, Page 17
The Centre will soon bring a model Act to facilitate states to create a real estate regulator, a move aimed at checking unscrupulous elements in the property sector and keeping prices at a reasonable level.
"Based on the recommendations of the various stakeholders, including the States, the government has decided to put a model real estate regulator Act in place," Minister of State for Housing and Urban Poverty Alleviation Kumari Selja said at a realty conference.
"This was a demand which was there not only from the consumers but also from the real estate sector," she added.
The objective of such a model act is that the regulator would not only see land acquisition and development process, but also ensure that prices do not go beyond a level and to check unscrupulous elements in the sector like fly-by-night operators and brokers, the minister said.
Stating that states have endorsed the creation of such a model act in a recent meeting of State Housing Ministers, Selja said her ministry would bring out the model act at the earliest for states to follow.
"States must enact their own law for state regulator. Thats why we will come up with model act," she said, assuring that the model act would be prepared after consulting all the stakeholders.
She also clarified that there is no contradiction with the similar proposal of Urban Development Ministry to bring regulatory body for realty sector. "What urban development ministry is proposing is for Delhi. What we are doing is a model act for the whole country to follow.".
Selja expressed confidence that States would follow the model act and bring a regulator for property sector.
Selja also asked the developers to build affordable houses as there is a huge untapped demand in that segment. She emphasised that the government has announced several measures to boost the housing sector, but asked the industry to respond by lowering the profit margins.
"Today there is a lot of gap between demand and supply. The demand is from the common man and the supply is only for the high-end. The sector needs to take a look and get into the sector where the demand is," Selja said.
For developing affordable houses, she said there is a need to reduce the cost of land and construction, besides cutting on the profit margins.
"It is desirable to evolve a new framework of partnership between government agencies and private sector to supply affordable housing into the market," she suggested.
Selja noted that it was becoming very difficult for anybody to afford a good house as prices were going through the roofs. The realty sector has been hit hard as it was building high-end projects, she pointed out.
The minister also highlighted that housing construction sector has found an important place in the two stimulus package as the sector has multiplier effect on the economy.
She said the government has recently announced interest subsidy scheme for housing the urban poor. The scheme is aimed at providing cheap loans to urban poor who have a plot but do not have funds to undertake construction. An interest subsidy of 5 per cent would be given for loans of Rs 1 lakh for EWS and LIG taken during 11th plan.
The National Housing Bank and Housing and Urban Development Corporation Ltd will be the nodal agencies for disbursement of the subsidy and monitoring the progress.
"Under this ambitious scheme, interest subsidy of Rs 1,100 crore is expected to leverage institutional finance of Rs 3,870 crores for beneficiaries over the next four years," she said.
India has no better friend, partner than US, says Obama
Financial Express, January 27, 2009, page 3
Washington Greeting India on the occasion of the country’s 60th Republic Day, US President Barack Obama said Indians have no better friend and partner than the people of the United States.
“As the Indian people celebrate Republic Day all across India, they should know that they have no better friend and partner than the people of the United States,” Obama said.
Obama, who calls India as a natural ally of the US and seeks inspiration from Mahatma Gandhi, in a message said: “It is our shared values that form the bedrock of a robust relationship across peoples and governments.
“Those values and ideals provide the strength that enables us to meet any challenge, particularly from those who use violence to try to undermine our free and open societies.”
As Indians and people of Indian origin in the US and around the world celebrate Republic Day on January 26, Obama said: “I send the warmest greetings of the American people to the people of India. Together, we celebrate our shared belief in democracy, liberty, pluralism and religious tolerance.”
Referring to the new bonhomie of relationships between India and the US in the last one decade, the US President said the two nations have built broad and vibrant partnerships in every field of human endeavor.
“Our rapidly growing and deepening friendship with India offers benefits to all the world’s citizens as our scientists solve environmental challenges together, our doctors discover new medicines, our engineers advance our societies, our entrepreneurs generate prosperity, our educators lay the foundation for our future generations, and our governments work together to advance peace, prosperity, and stability around the globe,” he said.
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