Thursday, February 5, 2009
Haryana relief for builders
Haryana relief for builders
Times of India, February 05, 2009, page 3
NEW DELHI: Amid reports of private developers backing out of residential and commercial projects in the NCR, a worried Haryana government has announced flexible schemes for payment of licence fee for builders. It has also extended the licence validity period from two to four years.
The recession relief measures follow two months after private developers approached the state government for a bailout package in the light of both residential and commercial projects coming to a standstill in Gurgaon, Faridabad, Sonipat and Rohtak. Licence fee is one of the biggest revenue earners for the state exchequer.
According to officials of the town and country planning department (DTCP), which grants licences to projects, the government has not come out with any financial package despite demands from developers. The present package, besides extending validity of the licence period, has also doubled the licence renewal period from one to two years. This means developers will now get more time to start construction work and at the same time, the renewal fee will come down drastically.
Private developers as well as government agencies will now need to pay only 25% of the licence fee while applying for a licence. The rest will have to be deposited when the licence is granted. Earlier, the full amount had to be paid while applying.
The present licence fee for one acre of residential and commercial property in Gurgaon is Rs 2.5 crore and Rs 1 crore respectively.
In another move, the government has extended the repayment period of external development charges (EDC) of such projects. Now the payment can be made in five years, against the earlier limit of four years. The government had increased the EDC in Gurgaon from Rs 35 lakh to Rs 52 lakh per acre when the real estate sector was booming. But with the economic slowdown, the list of defaulters has increased significantly. Now the government has reduced the interest rate on repayment of EDC from 15% to 12%. Similarly, as a relief for defaulters, interest rate has been reduced to 15% from 18%.
A department official said the package also includes a moratorium on payment of revised enhancement fee for projects based on 2021 master plans in Gurgaon, Sonipat and Rohtak till July 10, 2009. "The department issued licences for projects in areas which were earlier not in the development plan. But in case of Gurgaon, Sonipat and Rohtak, many such areas have been included in master plans 2021 and hence charges have been enhanced,'' said the official.
Responding to plea of developers finding it difficult to pay the enhancement fee at one go, the government has relaxed the norm to four equal instalments at 9% interest.
Times of India, February 05, 2009, page 3
NEW DELHI: Amid reports of private developers backing out of residential and commercial projects in the NCR, a worried Haryana government has announced flexible schemes for payment of licence fee for builders. It has also extended the licence validity period from two to four years.
The recession relief measures follow two months after private developers approached the state government for a bailout package in the light of both residential and commercial projects coming to a standstill in Gurgaon, Faridabad, Sonipat and Rohtak. Licence fee is one of the biggest revenue earners for the state exchequer.
According to officials of the town and country planning department (DTCP), which grants licences to projects, the government has not come out with any financial package despite demands from developers. The present package, besides extending validity of the licence period, has also doubled the licence renewal period from one to two years. This means developers will now get more time to start construction work and at the same time, the renewal fee will come down drastically.
Private developers as well as government agencies will now need to pay only 25% of the licence fee while applying for a licence. The rest will have to be deposited when the licence is granted. Earlier, the full amount had to be paid while applying.
The present licence fee for one acre of residential and commercial property in Gurgaon is Rs 2.5 crore and Rs 1 crore respectively.
In another move, the government has extended the repayment period of external development charges (EDC) of such projects. Now the payment can be made in five years, against the earlier limit of four years. The government had increased the EDC in Gurgaon from Rs 35 lakh to Rs 52 lakh per acre when the real estate sector was booming. But with the economic slowdown, the list of defaulters has increased significantly. Now the government has reduced the interest rate on repayment of EDC from 15% to 12%. Similarly, as a relief for defaulters, interest rate has been reduced to 15% from 18%.
A department official said the package also includes a moratorium on payment of revised enhancement fee for projects based on 2021 master plans in Gurgaon, Sonipat and Rohtak till July 10, 2009. "The department issued licences for projects in areas which were earlier not in the development plan. But in case of Gurgaon, Sonipat and Rohtak, many such areas have been included in master plans 2021 and hence charges have been enhanced,'' said the official.
Responding to plea of developers finding it difficult to pay the enhancement fee at one go, the government has relaxed the norm to four equal instalments at 9% interest.
Realty slump sours BPTP mega land deal
Realty slump sours BPTP mega land deal
The Financial Express, February 05, 2009, Page 1
Corporate Bureau
New Delhi: India’s costliest-ever land deal has been badly burnt in the real estate meltdown. BPTP, which bagged a 95-acre plot of land in Noida on the outskirts of New Delhi last March at a cost of Rs 5,006 crore, has returned the land to the district authority. The closely-held BPTP had outbid bigger real estate players like DLF, Ansal API and Omaxe Ltd.
The termination of the deal is the latest in a series of bad news that has hit Indian real estate. The highly leveraged sector has seen cash flows disappear as demand for malls and residential plots have plummeted.
As a result, companies are redrawing their business plans. DLF has decided to reduce prices of future projects by 15%, develop 20 million sq ft of affordable housing, raise Rs 2,000 crore from selling non-strategic assets and clear short-term debts by raising long-term funding. Parsvnath has pledged 10% of the promoters’ share, put its retail and overseas projects on hold and has decided to go slow with its SEZ projects.
Unitech is also generating additional cash flows through asset sales and infusion of private equity at the project level. Brokerage firm Macquarie Research in a report on DLF’s fund raising plans issued on Tuesday expressed concern that key primary sources of capital have dried up for real estate companies in the country.
BPTP had already run into problems paying the instalments for the Noida land. It had defaulted on the very first instalment and sought an extension in the deadline. The company is exiting the project under a new policy framed recently by the UP government, which allows developers to get payments rescheduled, seek a payment moratorium, surrender the plot after forfeiting 10% of the amount, or take land against payments already made.
“BPTP has submitted an application to the Noida Authority to surrender (the) plot and is awaiting its decision,” BPTP director Sudhanshu Tripathi said in a statement. Sources said the Noida Authority is likely to meet on Friday to take a decision on the matter.
In BPTP’s case, the authority will not refund the money paid so far for the land, but after deducting 10% of the payment made, will offer the company land for the amount. According to a BPTP spokesperson, the company has so far paid Rs 1,300 crore towards the land. “We were unable to pay the rest and had applied last month to the authority to surrender around 75% of the 95-acre plot, deducting the 10% penalty under the guidelines,” the spokesperson said.
BPTP had earlier planned to invest over Rs 3,000 crore to build a ‘commercial city’ comprising offices, retail outlets, hotels and service apartments with a total saleable area of 10 million sq ft. It was required to pay 25% of the land cost after winning the bid. BPTP had bid Rs 1,30,207 per sq m, against the reserve price of Rs 77,000 per sq m. The 95-acre land deal eclipsed the country’s second-largest real estate player Unitech’s buy of 1,750 acre in Vizag for Rs 3,350 crore.
The Financial Express, February 05, 2009, Page 1
Corporate Bureau
New Delhi: India’s costliest-ever land deal has been badly burnt in the real estate meltdown. BPTP, which bagged a 95-acre plot of land in Noida on the outskirts of New Delhi last March at a cost of Rs 5,006 crore, has returned the land to the district authority. The closely-held BPTP had outbid bigger real estate players like DLF, Ansal API and Omaxe Ltd.
The termination of the deal is the latest in a series of bad news that has hit Indian real estate. The highly leveraged sector has seen cash flows disappear as demand for malls and residential plots have plummeted.
As a result, companies are redrawing their business plans. DLF has decided to reduce prices of future projects by 15%, develop 20 million sq ft of affordable housing, raise Rs 2,000 crore from selling non-strategic assets and clear short-term debts by raising long-term funding. Parsvnath has pledged 10% of the promoters’ share, put its retail and overseas projects on hold and has decided to go slow with its SEZ projects.
Unitech is also generating additional cash flows through asset sales and infusion of private equity at the project level. Brokerage firm Macquarie Research in a report on DLF’s fund raising plans issued on Tuesday expressed concern that key primary sources of capital have dried up for real estate companies in the country.
BPTP had already run into problems paying the instalments for the Noida land. It had defaulted on the very first instalment and sought an extension in the deadline. The company is exiting the project under a new policy framed recently by the UP government, which allows developers to get payments rescheduled, seek a payment moratorium, surrender the plot after forfeiting 10% of the amount, or take land against payments already made.
“BPTP has submitted an application to the Noida Authority to surrender (the) plot and is awaiting its decision,” BPTP director Sudhanshu Tripathi said in a statement. Sources said the Noida Authority is likely to meet on Friday to take a decision on the matter.
In BPTP’s case, the authority will not refund the money paid so far for the land, but after deducting 10% of the payment made, will offer the company land for the amount. According to a BPTP spokesperson, the company has so far paid Rs 1,300 crore towards the land. “We were unable to pay the rest and had applied last month to the authority to surrender around 75% of the 95-acre plot, deducting the 10% penalty under the guidelines,” the spokesperson said.
BPTP had earlier planned to invest over Rs 3,000 crore to build a ‘commercial city’ comprising offices, retail outlets, hotels and service apartments with a total saleable area of 10 million sq ft. It was required to pay 25% of the land cost after winning the bid. BPTP had bid Rs 1,30,207 per sq m, against the reserve price of Rs 77,000 per sq m. The 95-acre land deal eclipsed the country’s second-largest real estate player Unitech’s buy of 1,750 acre in Vizag for Rs 3,350 crore.
Realty deals crumble under cash crunch
Realty deals crumble under cash crunch
The Economic Times, February 05, 2009, page 1
Sanjeev Choudhary NEW DELHI
SOME of India’s biggest and priciest real estate deals are on the verge of collapse as property firms, hobbled by a severe cash crunch amid a deep downturn in the real estate sector, look to wriggle out or rework terms agreed during the boom years.
DLF, Unitech, BPTP, Emaar-MGF and Jet Airways—corporate majors behind some of the biggest land deals of the last two years—are now trying to restructure them to make the terms more financially viable.
New Delhi-based realty firm BPTP is seeking to dissolve a nearly Rs 5,000-crore deal for 95 acres of prime commercial land in Noida—India’s and Asia’s priciest land deal—which it won in an auction last March. The developer is now trying to make use of a new Uttar Pradesh government policy that allows land buyers in Noida, Ghaziabad and other parts of the state to extend payment tenures and deals shrunk in size, albeit upon payment of a penalty.
“Following the UP government policy announcement, BPTP has made an application to the Noida Authority for surrender of plot and are awaiting decision of NOIDA,” BPTP director Sudhanshu Tripathi said. BPTP has so far paid Rs 1,300 crore, funded mainly through private placement of equity and its four special economic zones. It will have to pay 10% fine on the sum already paid—Rs 130 crore more—to the government to settle the matter.
BPTP is not alone. Unitech too is using this window of opportunity extended by the UP government whereas its larger rival and India’s top property company DLF has asked the Delhi Development Authority to rework the deal for the country’s proposed largest convention centre in Delhi.
Meltdown hits India’s biggest land deal
Meltdown hits India’s biggest land deal
Business Standard, February 05, 2009, Page 6
BS REPORTER New Delhi, 4 February
Realty player Business Parks and Town Planners (BPTP) has applied for the surrender of a 95-acre commercial plot at Sector 94, Noida, that it had bought for Rs 5,006 crore, as it was unable to complete the payment. It was the biggest land deal the country ever witnessed.
In a statement, BPTP Director Sudhanshu Tripathi said, “BPTP has made an application to the New Okhla Industrial Development Authority (Noida) for surrender of (the) plot and are awaiting the authority’s decision.” The company said it made the application after the UP government, in its new policy, gave developers options to get their payment plan rescheduled and seek benefits of moratorium.
The policy had also allowed developers to surrender the plot after paying a penalty of 10 per cent of the amount that it had deposited to the authority. The company will, however, not get the balance amount and instead will be offered land after paying the penalty. The government has given time till June to developers to submit their proposal to surrender their land.
In 2008, BPTP had bagged the 95-acre plot beating rivals, including DLF, Omaxe and Ansal Properties, surprising industry observers.
A BPTP spokesperson said the company has already paid about Rs 1,300 crore (it had bid for the land at the rate of over Rs 1.30 lakh per sq m) and has applied for retaining about 25 per cent of the land that it has paid for. However, it is not known at what per sq metre rate the government will provide the land.
The company had to pay the total amount through six monthly instalments over eight years and had sought an extension for its second instalment that was due in September 2008.
According to a source in the Noida Authority, some more developers may follow BPTP as the market value of the land bought in the last two-three years has come down drastically. Sale and purchase of land and buildings have almost come to a standstill in Noida as well as Greater Noida. People are waiting for the prices to fall further before they make a move.
Business Standard, February 05, 2009, Page 6
BS REPORTER New Delhi, 4 February
Realty player Business Parks and Town Planners (BPTP) has applied for the surrender of a 95-acre commercial plot at Sector 94, Noida, that it had bought for Rs 5,006 crore, as it was unable to complete the payment. It was the biggest land deal the country ever witnessed.
In a statement, BPTP Director Sudhanshu Tripathi said, “BPTP has made an application to the New Okhla Industrial Development Authority (Noida) for surrender of (the) plot and are awaiting the authority’s decision.” The company said it made the application after the UP government, in its new policy, gave developers options to get their payment plan rescheduled and seek benefits of moratorium.
The policy had also allowed developers to surrender the plot after paying a penalty of 10 per cent of the amount that it had deposited to the authority. The company will, however, not get the balance amount and instead will be offered land after paying the penalty. The government has given time till June to developers to submit their proposal to surrender their land.
In 2008, BPTP had bagged the 95-acre plot beating rivals, including DLF, Omaxe and Ansal Properties, surprising industry observers.
A BPTP spokesperson said the company has already paid about Rs 1,300 crore (it had bid for the land at the rate of over Rs 1.30 lakh per sq m) and has applied for retaining about 25 per cent of the land that it has paid for. However, it is not known at what per sq metre rate the government will provide the land.
The company had to pay the total amount through six monthly instalments over eight years and had sought an extension for its second instalment that was due in September 2008.
According to a source in the Noida Authority, some more developers may follow BPTP as the market value of the land bought in the last two-three years has come down drastically. Sale and purchase of land and buildings have almost come to a standstill in Noida as well as Greater Noida. People are waiting for the prices to fall further before they make a move.
Time to ‘right-size the projects’
Time to ‘right-size the projects’
The Economic Times, February 05, 2009, Page 19
SIMILARLY, Emaar MGF, a joint venture between Dubai’s Emmar Properties and India’s MGF, is a seeking a DDA loan to complete building the Commonwealth Games Village in Delhi before the 2010 Games. The company had previously won the DDA bid to build the village. The problems being faced by builders are not limited to Delhi and its surrounding areas. DLF has requested the West Bengal government to reduce the size of a deal to develop a 5000-acre township at Dankuni. The company has so far paid only 10% of the total bid amount of Rs 2,713 crore, and had asked government to allot proportional land only. The government has been unable to acquire much land for the proposed Rs 33,000-crore project and DLF, faced with a liquidity crunch, too is not keen to pursue it.
Two months ago, the company, refusing to make the full payment for a 75-acre project in Kokapet, had asked Andhra Pradesh government to adjust the due amount from the payment it had made for another project in the state. Some of the most expensive land deals were struck in Mumbai’s Bandra-Kurla complex in the past two years. But the successful bidder—Jet Airways—which offered Rs 826 crore for the 1.5-acre BKC plot, and Sunteck that won the Rs 496-crore bid, are now finding it impossible to pay.
“It’s sensible for the governments to understand the current market situation and let developers right-size the projects,” says CBRE South Asia MD Anshuman Magazine, who says developers will be able to focus on construction only after the burden of huge land payments is off their backs. In a sign of the changing market, land is no more the priority of developers as is evident in recent land auctions by regional development authorities in Mumbai or the national cpital region (NCR). “Developers, who ordinarily buy land, have turned into sellers. And there are many big names looking to sell land parcels. But in the last six months, we haven’t done any land deal of reasonable size, precisely because no one wants to buy land today,” says Knight Frank India chairman Pranay Vakil.
The real estate sector is in a slump as demand has dramatically shrunk and credit is still unavailable to developers. Almost all real estate firms have reported a massive decline in profits and revenues. DLF reported a decline of 69% in profit while Unitech’s profit fell 74%. Smaller players such as Parsvnath and Omaxe fared even worse with a 95% decline in profit.
The Economic Times, February 05, 2009, Page 19
SIMILARLY, Emaar MGF, a joint venture between Dubai’s Emmar Properties and India’s MGF, is a seeking a DDA loan to complete building the Commonwealth Games Village in Delhi before the 2010 Games. The company had previously won the DDA bid to build the village. The problems being faced by builders are not limited to Delhi and its surrounding areas. DLF has requested the West Bengal government to reduce the size of a deal to develop a 5000-acre township at Dankuni. The company has so far paid only 10% of the total bid amount of Rs 2,713 crore, and had asked government to allot proportional land only. The government has been unable to acquire much land for the proposed Rs 33,000-crore project and DLF, faced with a liquidity crunch, too is not keen to pursue it.
Two months ago, the company, refusing to make the full payment for a 75-acre project in Kokapet, had asked Andhra Pradesh government to adjust the due amount from the payment it had made for another project in the state. Some of the most expensive land deals were struck in Mumbai’s Bandra-Kurla complex in the past two years. But the successful bidder—Jet Airways—which offered Rs 826 crore for the 1.5-acre BKC plot, and Sunteck that won the Rs 496-crore bid, are now finding it impossible to pay.
“It’s sensible for the governments to understand the current market situation and let developers right-size the projects,” says CBRE South Asia MD Anshuman Magazine, who says developers will be able to focus on construction only after the burden of huge land payments is off their backs. In a sign of the changing market, land is no more the priority of developers as is evident in recent land auctions by regional development authorities in Mumbai or the national cpital region (NCR). “Developers, who ordinarily buy land, have turned into sellers. And there are many big names looking to sell land parcels. But in the last six months, we haven’t done any land deal of reasonable size, precisely because no one wants to buy land today,” says Knight Frank India chairman Pranay Vakil.
The real estate sector is in a slump as demand has dramatically shrunk and credit is still unavailable to developers. Almost all real estate firms have reported a massive decline in profits and revenues. DLF reported a decline of 69% in profit while Unitech’s profit fell 74%. Smaller players such as Parsvnath and Omaxe fared even worse with a 95% decline in profit.
DLF to scale down Dankuni project
DLF to scale down Dankuni project
The Economic Times, February 05, 2009, page 5
Sutanuka Ghosal KOLKATA
CAUGHT between the pangs of an economic downturn in the realty space and the Buddhadeb Bhattacharjee government’s reluctance to pursue jumbo land acquisitions ahead of Lok Sabha elections, the DLF Group has decided to scale down its ambitious Rs 33,000-crore township-cum-industrial complex in Dankuni, some 15 km from Kolkata. In the immediate term, the property biggie will set up the township on merely 500 acres although its final land requirement is pegged at 4,840 acres. If subsequent land acquisition is smooth, DLF proposes to execute the project in phases
DLF’s decision follows feedback from the West Bengal government that some local people of Dankuni are keen to offer their land for the DLF venture.
Confirming this, West Bengal’s urban development minister, Ashok Bhattacharya, told ET: “Since the country’s realty sector is undergoing a rough patch amid the liquidity crisis, DLF is likely to initially set up the township on 500 acres. But let me set the record straight. DLF has no plans to pull out of West Bengal. On the contrary, we have informed DLF that we have received firm offers from local people who wish to offer their land for the upcoming project in Dankuni.”.
When contacted, DLF Group executive director Rajiv Talwar said: “We are supportive of the West Bengal government and will work on their advice. We know that land acquisition has posed a problem in the state but we are hopeful that the issue will be resolved by the Buddhadeb government. We have no plans to quit the Dankuni project in West Bengal.”
Despite the scaling down of the project in the immediate term, DLF’s decision to remain involved in the Dankuni venture is seen as a face-saver for the Buddhadeb government, especially since the state’s efforts to acquire land in the area have met with stiff resistance. An official in the state urban department, who did not wish to be named, said: “Land acquisition proceedings in Dankuni area have met with stiff resistance from the Trinamool Congress.”
The Economic Times, February 05, 2009, page 5
Sutanuka Ghosal KOLKATA
CAUGHT between the pangs of an economic downturn in the realty space and the Buddhadeb Bhattacharjee government’s reluctance to pursue jumbo land acquisitions ahead of Lok Sabha elections, the DLF Group has decided to scale down its ambitious Rs 33,000-crore township-cum-industrial complex in Dankuni, some 15 km from Kolkata. In the immediate term, the property biggie will set up the township on merely 500 acres although its final land requirement is pegged at 4,840 acres. If subsequent land acquisition is smooth, DLF proposes to execute the project in phases
DLF’s decision follows feedback from the West Bengal government that some local people of Dankuni are keen to offer their land for the DLF venture.
Confirming this, West Bengal’s urban development minister, Ashok Bhattacharya, told ET: “Since the country’s realty sector is undergoing a rough patch amid the liquidity crisis, DLF is likely to initially set up the township on 500 acres. But let me set the record straight. DLF has no plans to pull out of West Bengal. On the contrary, we have informed DLF that we have received firm offers from local people who wish to offer their land for the upcoming project in Dankuni.”.
When contacted, DLF Group executive director Rajiv Talwar said: “We are supportive of the West Bengal government and will work on their advice. We know that land acquisition has posed a problem in the state but we are hopeful that the issue will be resolved by the Buddhadeb government. We have no plans to quit the Dankuni project in West Bengal.”
Despite the scaling down of the project in the immediate term, DLF’s decision to remain involved in the Dankuni venture is seen as a face-saver for the Buddhadeb government, especially since the state’s efforts to acquire land in the area have met with stiff resistance. An official in the state urban department, who did not wish to be named, said: “Land acquisition proceedings in Dankuni area have met with stiff resistance from the Trinamool Congress.”
Realtors bet on contract work to stay afloat
Realtors bet on contract work to stay afloat
The Economic Times, February 05, 2009, Page 5
Ravi Teja Sharma & Sanjeev Choudhary
AS REAL estate downturn deepens, some realty companies are hoping to stay afloat with increased focus on contractual projects. Companies see the contribution of such contractual works to significantly rise in their overall revenue. However, analysts feel a downturn may slow the pace of contracts as well.
“We will aggressively seek contractual construction projects,” said Parsvnath Developers chairman Pradeep Jain. Last year, the company bagged a project in Patna to develop the old Bankipore Jail campus on Frazer Road as the Buddha Memorial Park that would also include a temple with resemblance to Delhi’s Akshardham Temple. The contract was worth Rs 125 crore. Contracting contributed 16% to the overall revenue of Parsvnath in the quarter ended September ‘08 and Mr Jain says the contribution is going to go up in the coming quarters.
Indian real estate sector is in a turmoil these days. Demand for homes, shops and offices have dried up shrinking all real estate firms’ revenues and profits. India’s largest real estate firm, DLF, reported a 69% drop in profit, while second largest Unitech posted a 74% drop in its bottomline. Similarly, Parsvnath and Omaxe too have reported a decline of over 95% in their profit.
Given the difficult times, some companies such as Parsvnath and Omaxe are seeking contracts from governments as well as corporates to shore up their revenue. Omaxe has got contracts worth Rs 600 crore, mostly from the government. The company has got a Rs 300 crore contract to build a hospital in Saharanpur from the UP government, and two Rs 100-crore projects from Punjab to build modern jails at Faridkot and Kapurthala.
Hindustan Zinc has given Omaxe the mandate to build a housing project at its plant in Udaipur for Rs 100 crore. Over the last 6-8 months, players like Parsvnath and Omaxe have got contracts from various state governments as well as corporates to setup hospitals, parks, housing complexes and in some cases even jails. “We have around Rs 600-crore projects in the pipeline,” says Omaxe CMD Rohtas Goel.
Rate cuts, low prices spur demand in realty market
Rate cuts, low prices spur demand in realty market
The Financial Express, C&M, February 05, 2009, Page VIII
Mona Mehta
MumbaiSeveral builders in the metros are witnessing a revival in demand since January 2009. Demand has been spurred by the 30-40% reduction in real estate prices, along with the recent cut in interest rates by banks. Builders, incidentally, had to resort to price cuts in the face of a slowdown in the real estate sector; the liquidity crunch had taken a heavy toll demand for houses in metros.
Hemant Shah, chairman, Akruti City, told FE, “Since January 2009, we have sold 250 flats at Akruti Greenwoods in Thane and Akruti Galleria in Mira Road. By March-end 2009, we hope to sell 1,000 flats.” He informed that 1 BHK and 2 BHK apartments at Akruti Greenwoods in Thane are available at Rs 20 lakh and Rs 25 lakh respectively, post the price cut.
The Lodha Group has also seen a rise in demand. 50% of the apartments at its CASA Royale project in Thane have already been booked; 1 BHK flats at the site are available Rs 19.98 lakh onwards, and 2 BHK apartments have been priced Rs 27.63 lakh onwards.
Abhisheck Lodha, director, Lodha Group, said, “We expected a successful launch of our project for the mid-segment and are glad Royale was accepted so well, with over 1,200 visits in a span of just 7 days.”
Competitor Ajmera Group of Companies has sold 10-15 apartments each in its Ajmera Infinity project in Bangalore, Hasti Park in Wadala, Mumbai and Yogidham in Kalyan.
Dhaval Ajmera, managing director, Ajmera Group of Companies, said, “By March-end, we hope to sell 50 apartments in each of the projects in the metros. is despite the fact that we have not cut prices of either 1 BHK or 2 BHK apartments.”
Mayfair Housing Private Ltd, on the other hand, has sold about 27 apartments in its affordable housing project in Virar; ot has also sold 9-10 premium apartments at its high-end residential projects in Andheri, Khar and Bandra, according to Nayan Shah, CEO, Mayfair Housing.
“We hope to sell another 50 affordable apartments in Virar, and 20 apartments in Andheri, Khar and Bandra, by March-end 2009,” said Shah. He added that the recent softening of home loan rates will boost demand further.
The State Bank of India (SBI) recently cut its home loan rates to 8%. LIC Housing Finance Ltd also announced a special rate of interest for customers opting for floating rate loans; the new floating rate of interest for loans up to Rs 30 lakh will be 8.75%.
Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj (JLLM), said, “There has been a marginal improvement of around 5-6% in demand for residential real estate, on the heels of the recent softening in home loan interest rates.” He said that there is “reason to believe that by March 2009, there will be a further 3-4% rise in demand.”
Ravi Ramu, director of Bangalore-based Puravankara Projects said, “January 2009 has not been a good month for us as we have witnessed no improvement in apartment sales compared to October, November and December 2008.”
The rise in demand, however, has not touched all builders. Ravi Ramu, director of Bangalore-based Puravankara Projects, said, “January has not been a good month for us. We have witnessed no improvement in apartment sales compared to October, November and December 2008.”
The Financial Express, C&M, February 05, 2009, Page VIII
Mona Mehta
MumbaiSeveral builders in the metros are witnessing a revival in demand since January 2009. Demand has been spurred by the 30-40% reduction in real estate prices, along with the recent cut in interest rates by banks. Builders, incidentally, had to resort to price cuts in the face of a slowdown in the real estate sector; the liquidity crunch had taken a heavy toll demand for houses in metros.
Hemant Shah, chairman, Akruti City, told FE, “Since January 2009, we have sold 250 flats at Akruti Greenwoods in Thane and Akruti Galleria in Mira Road. By March-end 2009, we hope to sell 1,000 flats.” He informed that 1 BHK and 2 BHK apartments at Akruti Greenwoods in Thane are available at Rs 20 lakh and Rs 25 lakh respectively, post the price cut.
The Lodha Group has also seen a rise in demand. 50% of the apartments at its CASA Royale project in Thane have already been booked; 1 BHK flats at the site are available Rs 19.98 lakh onwards, and 2 BHK apartments have been priced Rs 27.63 lakh onwards.
Abhisheck Lodha, director, Lodha Group, said, “We expected a successful launch of our project for the mid-segment and are glad Royale was accepted so well, with over 1,200 visits in a span of just 7 days.”
Competitor Ajmera Group of Companies has sold 10-15 apartments each in its Ajmera Infinity project in Bangalore, Hasti Park in Wadala, Mumbai and Yogidham in Kalyan.
Dhaval Ajmera, managing director, Ajmera Group of Companies, said, “By March-end, we hope to sell 50 apartments in each of the projects in the metros. is despite the fact that we have not cut prices of either 1 BHK or 2 BHK apartments.”
Mayfair Housing Private Ltd, on the other hand, has sold about 27 apartments in its affordable housing project in Virar; ot has also sold 9-10 premium apartments at its high-end residential projects in Andheri, Khar and Bandra, according to Nayan Shah, CEO, Mayfair Housing.
“We hope to sell another 50 affordable apartments in Virar, and 20 apartments in Andheri, Khar and Bandra, by March-end 2009,” said Shah. He added that the recent softening of home loan rates will boost demand further.
The State Bank of India (SBI) recently cut its home loan rates to 8%. LIC Housing Finance Ltd also announced a special rate of interest for customers opting for floating rate loans; the new floating rate of interest for loans up to Rs 30 lakh will be 8.75%.
Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj (JLLM), said, “There has been a marginal improvement of around 5-6% in demand for residential real estate, on the heels of the recent softening in home loan interest rates.” He said that there is “reason to believe that by March 2009, there will be a further 3-4% rise in demand.”
Ravi Ramu, director of Bangalore-based Puravankara Projects said, “January 2009 has not been a good month for us as we have witnessed no improvement in apartment sales compared to October, November and December 2008.”
The rise in demand, however, has not touched all builders. Ravi Ramu, director of Bangalore-based Puravankara Projects, said, “January has not been a good month for us. We have witnessed no improvement in apartment sales compared to October, November and December 2008.”
Realty index plunges to record low
Realty index plunges to record low
Business Standard, February 05, 2009, Section II, page 10
GAUTAM CHAKRAVORTHY Mumbai, 4 February
Analysts say revival unlikely in 2009-10
The Bombay Stock Exchange’s (BSE’s) realty index plunged to an alltime low today, belying optimism of a revival in the real estate sector.
During the day, the index plummeted to 1,354.01, the lowest level since it was launched on July 10, 2007. However, the benchmark ended the day at 1,398.79 — 16.30 points up from the previous close.The index had reached a high of 10,727.70 on February 5 last year.
The drop in the realty index comes a day after DLF, the nation’s biggest real estate company, tumbled to its lowest. The index suffered the fall despite the government’s efforts to revive key sectors, including the real estate, by providing fiscal and monetary incentives. India’s real estate sector represents an estimated 10 per cent of the gross domestic product (GDP) and is among the biggest employers.
The Reserve Bank of India (RBI) has announced several measures, including cutting cash reserve ratio (CRR), statutory liquidity ratio (SLR) and bench mark interest rates, to help infuse liquidity and boost lending. The central bank has infused more than Rs 380,000 crore into the system.
In a bid to encourage lenders, the risk weight on commercial real estate was reduced to 100 per cent from 150 per cent. Still, lenders continue to be reluctant in extending loans to the sector. Rating agencies and analysts believe that the fiscal and monetary measures are unlikely to be of much help.
“The real estate sector outlook for the next one year is negative both from operating and credit point of view,” said Rakesh Valecha, senior director, Fitch Ratings India. The agency has downgraded at least six real estate companies on concern of high debt and uncertain cash flows.Indian banks have as much as Rs 75,000 crore outstanding loans to realty companies, according to the RBI data. The total debt exposure could be higher if mutual fund investments, commercial papers and inter-corporate deposits are also included.
With the economic outlook remaining grim and job markets uncertain, analysts believe that it will be some time before the real estate sector sees arevival. “The revival is unlikely to happen in 2010,” said Aashiesh Agarwaal, an analyst with Edelweiss Capital.
Stocks of DLF and Unitech have dropped more than 80 per cent in the past 12 months compared with a 51 per cent drop in the Sensex. The DLF stock has dropped 84 per cent and Unitech 92 per cent during the period.Despite the packages, real estate companies have made little effort in reviving demand. Though a few developers have dropped rates by 15-20 per cent and others plan to offer similar cuts, the effort seems to be too little to entice customers. However, one positive sign is that inquiries are rising.
Analysts say the increase in inquiries is not translating into enough demand to boost transaction levels.“Real estate developers need to bring in right product in the right market, offer completed products to revive demand, Agarwaal said.
Business Standard, February 05, 2009, Section II, page 10
GAUTAM CHAKRAVORTHY Mumbai, 4 February
Analysts say revival unlikely in 2009-10
The Bombay Stock Exchange’s (BSE’s) realty index plunged to an alltime low today, belying optimism of a revival in the real estate sector.
During the day, the index plummeted to 1,354.01, the lowest level since it was launched on July 10, 2007. However, the benchmark ended the day at 1,398.79 — 16.30 points up from the previous close.The index had reached a high of 10,727.70 on February 5 last year.
The drop in the realty index comes a day after DLF, the nation’s biggest real estate company, tumbled to its lowest. The index suffered the fall despite the government’s efforts to revive key sectors, including the real estate, by providing fiscal and monetary incentives. India’s real estate sector represents an estimated 10 per cent of the gross domestic product (GDP) and is among the biggest employers.
The Reserve Bank of India (RBI) has announced several measures, including cutting cash reserve ratio (CRR), statutory liquidity ratio (SLR) and bench mark interest rates, to help infuse liquidity and boost lending. The central bank has infused more than Rs 380,000 crore into the system.
In a bid to encourage lenders, the risk weight on commercial real estate was reduced to 100 per cent from 150 per cent. Still, lenders continue to be reluctant in extending loans to the sector. Rating agencies and analysts believe that the fiscal and monetary measures are unlikely to be of much help.
“The real estate sector outlook for the next one year is negative both from operating and credit point of view,” said Rakesh Valecha, senior director, Fitch Ratings India. The agency has downgraded at least six real estate companies on concern of high debt and uncertain cash flows.Indian banks have as much as Rs 75,000 crore outstanding loans to realty companies, according to the RBI data. The total debt exposure could be higher if mutual fund investments, commercial papers and inter-corporate deposits are also included.
With the economic outlook remaining grim and job markets uncertain, analysts believe that it will be some time before the real estate sector sees arevival. “The revival is unlikely to happen in 2010,” said Aashiesh Agarwaal, an analyst with Edelweiss Capital.
Stocks of DLF and Unitech have dropped more than 80 per cent in the past 12 months compared with a 51 per cent drop in the Sensex. The DLF stock has dropped 84 per cent and Unitech 92 per cent during the period.Despite the packages, real estate companies have made little effort in reviving demand. Though a few developers have dropped rates by 15-20 per cent and others plan to offer similar cuts, the effort seems to be too little to entice customers. However, one positive sign is that inquiries are rising.
Analysts say the increase in inquiries is not translating into enough demand to boost transaction levels.“Real estate developers need to bring in right product in the right market, offer completed products to revive demand, Agarwaal said.
Real estate to stay low in ’09
Real estate to stay low in ’09
Hindustan Times – Business, February 05, 2009, page 23
The real estate misery is set to continue this year. Fitch Ratings on Wednesday said 2009 would be an even more challenging year for real estate developers than 2008, as demand would continue to be weak and dependence on debt likely to rise.
The fundamentals of the industry have deteriorated due to the volatile external environment, weak economic/consumer sentiments, high interest rates, poor consumer affordability and rising construction costs. “In addition, developers are reluctant to reduce prices, and customers are opting to postpone their purchases in anticipation of a fall in prices,” Fitch said in its outlook on the real estate sector in India.
Fitch expects the sector’s profit margins, credit metrics and cash flow to remain under pressure in the short term. Profit margins may be affected by lower selling prices and the overall change in developers’ business strategy, with an increasing focus on lower margin mid-to-affordable housing.
A measure of consolation is the falling commodity prices, which may bring down construction costs. And with the decline in the number of land deals, the agency expects land prices to come down from their historical highs.
'This is not the time to skate on the edge'
'This is not the time to skate on the edge'
The Financial Express, February 05, 2009, Page I
As businesses face the toughest test of our times, it’s time for leaders to anticipate what’s coming and take on the new challenges decisively. In his just-released book, Leadership in the Era of Economic Uncertainty, Ram Charan, 69, offers advice to CEOs on how to steer businesses through the minefield of contracting markets and emerge winners. “Succeeding in a volatile environment requires frequent adjustments at the operational level of the business as well as an occasional disruptive shift,” he writes.
The author of best selling titles like Execution and Boards that Deliver is celebrated for simplifying business problems down to their bare essentials. His new book offers and innovative ways of approaching and solving complex problems. In an exclusive email interview to fe’s Saikat Neogi, he identifies the essential priorities managers need to focus on during the current financial turmoil. Excerpts:
How much of risk-taking is advisable in these uncertain times?
In these times of tight credit conditions and almost total uncertainty about what will remedy the situation, leaders need to give the highest priority to managing cash, managing liquidity in the worst circumstances. This is not the time to skate on the edge. The penalty for slipping up on cash is a virtual vertical decline, and sometimes that decline is permanent. When we talk about risk, we are not talking about the risk of profit and loss. We are not talking about the risk of shrinking revenues. We are talking about the risk of not being able to keep the right liquidity. When it comes to liquidity, take no risks.
How can companies strike a balance between short-term risk management and long-term growth plans today?
Management needs to do mental tussling, mental wrestling and think in terms of alternatives. Each alternative has a different balance between short-term risk management and long-term growth. Evaluate each alternative with particular attention to having no risk on the liquidity front. Then look at sequential steps for your growth aspirations. Do not forget: growth does require cash. Build the strategic steps that require less cash. Master those and then let the environment change for the better.
Everybody says lean management, efficiency and right-sizing are key to survival and success for businesses today. But isn’t that what businesses need always to do? What more do we need in these challenging times?
Number one, it must be a constant practice of all managers to get ahead of the curve. They should be looking over the horizon and anticipating the effect on their revenue and cash. Right now, it’s a sliding economy globally. For most companies, growth rates will be curtailed or revenues will shrink. Management must do the right-sizing before the decline or shrinkage. Right-sizing must be done with cash in mind, not accounting numbers. Lean is always a good practice to strengthen a company. Right-sizing is an urgent necessity now. What better managers will do is when they cut, they will cut deep, create cash reserves, use them for innovation that will help the business grow after the storm.
Is this the time to lie low or innovate for the future?
Managements must continue to sharpen the organisational mental muscles. Innovation is a continuous thing. The amount of money needed to think creatively and experiment is not too much. It’s when a manager launches an innovation that the money is needed. Do not think about it as a question of either/or. Do both. And remember that innovation is not just about new products and services. It also applies to operations. This is a good time to pursue innovation around how work gets done.
Is downturn or upturn a better opportunity to relook at business strategies?
The better strategic players don’t wait for somebody’s planning cycle or for the storm clouds to clear. They have in their mind and heart all the key elements of their strategy. They constantly evaluate those, consciously and unconsciously, focus on detecting the external changes daily, and brainstorm with other people to see if there is a radical change coming that you can ride on to change the game of your industry. You will be ahead.
If we have losers and more losers today, there should be some winners, too. Who will be the likely winners?
When there is a rising ride, the losers are hidden. When the tide goes out, those who are naked get exposed. You see more losers that way. The winners are those who mange for liquidity now and continue to do innovation at the same time. They are realists, and they manage their key talent well.
The Financial Express, February 05, 2009, Page I
As businesses face the toughest test of our times, it’s time for leaders to anticipate what’s coming and take on the new challenges decisively. In his just-released book, Leadership in the Era of Economic Uncertainty, Ram Charan, 69, offers advice to CEOs on how to steer businesses through the minefield of contracting markets and emerge winners. “Succeeding in a volatile environment requires frequent adjustments at the operational level of the business as well as an occasional disruptive shift,” he writes.
The author of best selling titles like Execution and Boards that Deliver is celebrated for simplifying business problems down to their bare essentials. His new book offers and innovative ways of approaching and solving complex problems. In an exclusive email interview to fe’s Saikat Neogi, he identifies the essential priorities managers need to focus on during the current financial turmoil. Excerpts:
How much of risk-taking is advisable in these uncertain times?
In these times of tight credit conditions and almost total uncertainty about what will remedy the situation, leaders need to give the highest priority to managing cash, managing liquidity in the worst circumstances. This is not the time to skate on the edge. The penalty for slipping up on cash is a virtual vertical decline, and sometimes that decline is permanent. When we talk about risk, we are not talking about the risk of profit and loss. We are not talking about the risk of shrinking revenues. We are talking about the risk of not being able to keep the right liquidity. When it comes to liquidity, take no risks.
How can companies strike a balance between short-term risk management and long-term growth plans today?
Management needs to do mental tussling, mental wrestling and think in terms of alternatives. Each alternative has a different balance between short-term risk management and long-term growth. Evaluate each alternative with particular attention to having no risk on the liquidity front. Then look at sequential steps for your growth aspirations. Do not forget: growth does require cash. Build the strategic steps that require less cash. Master those and then let the environment change for the better.
Everybody says lean management, efficiency and right-sizing are key to survival and success for businesses today. But isn’t that what businesses need always to do? What more do we need in these challenging times?
Number one, it must be a constant practice of all managers to get ahead of the curve. They should be looking over the horizon and anticipating the effect on their revenue and cash. Right now, it’s a sliding economy globally. For most companies, growth rates will be curtailed or revenues will shrink. Management must do the right-sizing before the decline or shrinkage. Right-sizing must be done with cash in mind, not accounting numbers. Lean is always a good practice to strengthen a company. Right-sizing is an urgent necessity now. What better managers will do is when they cut, they will cut deep, create cash reserves, use them for innovation that will help the business grow after the storm.
Is this the time to lie low or innovate for the future?
Managements must continue to sharpen the organisational mental muscles. Innovation is a continuous thing. The amount of money needed to think creatively and experiment is not too much. It’s when a manager launches an innovation that the money is needed. Do not think about it as a question of either/or. Do both. And remember that innovation is not just about new products and services. It also applies to operations. This is a good time to pursue innovation around how work gets done.
Is downturn or upturn a better opportunity to relook at business strategies?
The better strategic players don’t wait for somebody’s planning cycle or for the storm clouds to clear. They have in their mind and heart all the key elements of their strategy. They constantly evaluate those, consciously and unconsciously, focus on detecting the external changes daily, and brainstorm with other people to see if there is a radical change coming that you can ride on to change the game of your industry. You will be ahead.
If we have losers and more losers today, there should be some winners, too. Who will be the likely winners?
When there is a rising ride, the losers are hidden. When the tide goes out, those who are naked get exposed. You see more losers that way. The winners are those who mange for liquidity now and continue to do innovation at the same time. They are realists, and they manage their key talent well.
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