Monday, March 9, 2009
ICICI slashes home loan rates, Rs 20 lakh now at 9.75 per cent
ICICI slashes home loan rates, Rs 20 lakh now at 9.75 per cent
Hindustan Times Business, March 7, 2009, Page 25
ICICI Bank took on State Bank of India to intensify a home loan rate war on Friday by announcing a quarter-to-half percentage point cut in lending rates split into three slabs. Loans of up to Rs. 20 lakh will now come at 9.75 per cent, but only for new customers. The new rates for the home loans are- 9.75 per cent for loans up to Rs 20 lakh and 10 per cent for loans in the Rs. 10 to 20 lakh range. Larger loans of up to Rs. 30 lakh will come at 11.5 per cent. "This is not a special scheme but an ongoing continuous scheme. The three slabs have been made to make loans affordable according to the category of the customer," said a senior official from ICICI Bank. "Rates for existing customers are a factor of the cost of funds and hence a cut in those rates are a factor of the cost going down." The new rates came amid a market-shaking initiative by SBI, which priced its loans at 8 per cent, but only for the first year. LIC Housing Finance is offering a rate of 8.75 per cent for loans up to Rs 30 lakh and thus is the cheapest. HDFC is charging 9.75 per cent for loans up to Rs 30 lakh and 10.75 per cent for larger amounts. At 9.75, the offering by ICICI and HDFC is effectively cheaper than the SBI's offering (8 per cent for first year and 10.25 from the second year linked to the BPLR - benchmark prime lending rate -- that takes the effective rate to 9.94 per cent). The effective rate changes from the second year, because SBI's charge goes up in a manner that balances out the gains given to customers in the first year.
Hindustan Times Business, March 7, 2009, Page 25
ICICI Bank took on State Bank of India to intensify a home loan rate war on Friday by announcing a quarter-to-half percentage point cut in lending rates split into three slabs. Loans of up to Rs. 20 lakh will now come at 9.75 per cent, but only for new customers. The new rates for the home loans are- 9.75 per cent for loans up to Rs 20 lakh and 10 per cent for loans in the Rs. 10 to 20 lakh range. Larger loans of up to Rs. 30 lakh will come at 11.5 per cent. "This is not a special scheme but an ongoing continuous scheme. The three slabs have been made to make loans affordable according to the category of the customer," said a senior official from ICICI Bank. "Rates for existing customers are a factor of the cost of funds and hence a cut in those rates are a factor of the cost going down." The new rates came amid a market-shaking initiative by SBI, which priced its loans at 8 per cent, but only for the first year. LIC Housing Finance is offering a rate of 8.75 per cent for loans up to Rs 30 lakh and thus is the cheapest. HDFC is charging 9.75 per cent for loans up to Rs 30 lakh and 10.75 per cent for larger amounts. At 9.75, the offering by ICICI and HDFC is effectively cheaper than the SBI's offering (8 per cent for first year and 10.25 from the second year linked to the BPLR - benchmark prime lending rate -- that takes the effective rate to 9.94 per cent). The effective rate changes from the second year, because SBI's charge goes up in a manner that balances out the gains given to customers in the first year.
Core sector growth slows to 1.4% in Jan
Core sector growth slows to 1.4% in Jan
Business Standard, March 7, 2009, Page 2
BS Reporter / New Delhi
Continuing its declining trend, the index of six core industries grew at its slowest pace in January 2009, as crude and petroleum products output went into the negative territory. However, cement was the only industry to grow at a faster pace on annual basis.
The index expanded by 1.4 per cent in January 2009, against 3.6 per cent in the year-ago month. Economists expect the Index of Industrial Production (IIP) to remain weak in the month under consideration, as the core industries constitute nearly 27 per cent of IIP.
After expanding 4.7 per cent in September 2008, the pace of growth in the core sector index has been declining steadily.
“The core sectors are a large block of the basic goods segment of the IIP. The 1.4 per cent growth in January is one of the lowest,” said a report prepared by Saugata Bhattacharya, vice-president, Axis Bank, who expects the IIP to dip by 1 per cent in the month under consideration.
The IIP had dipped by 2 per cent in December 2008, the worst performance by the index in the backdrop of dropping demand in the domestic, as well as overseas markets.
The key reason for muted growth in the core sector index was due to a unprecedented fall in crude oil production, which dipped by 8 per cent in the month, compared with a contraction of 0.2 per cent in the same month of the previous year. Moreover, petroleum products production also contracted in the month under consideration, as Indian refineries produced less.
In the absence of significant discoveries, and waning output from oil fields like Bombay High, production of the crude oil has been slipping. In the 22 months period between April 2007 and January 2009, production of crude oil has contracted in 14 months.
However, four other components of the core sector — cement, coal, electricity and finished (carbon) steel — expanded in the month under consideration.
“This could be because of the measures announced by the government to boost the economy,” said Soumendra Dash, chief economist, CARE Ratings.
Business Standard, March 7, 2009, Page 2
BS Reporter / New Delhi
Continuing its declining trend, the index of six core industries grew at its slowest pace in January 2009, as crude and petroleum products output went into the negative territory. However, cement was the only industry to grow at a faster pace on annual basis.
The index expanded by 1.4 per cent in January 2009, against 3.6 per cent in the year-ago month. Economists expect the Index of Industrial Production (IIP) to remain weak in the month under consideration, as the core industries constitute nearly 27 per cent of IIP.
After expanding 4.7 per cent in September 2008, the pace of growth in the core sector index has been declining steadily.
“The core sectors are a large block of the basic goods segment of the IIP. The 1.4 per cent growth in January is one of the lowest,” said a report prepared by Saugata Bhattacharya, vice-president, Axis Bank, who expects the IIP to dip by 1 per cent in the month under consideration.
The IIP had dipped by 2 per cent in December 2008, the worst performance by the index in the backdrop of dropping demand in the domestic, as well as overseas markets.
The key reason for muted growth in the core sector index was due to a unprecedented fall in crude oil production, which dipped by 8 per cent in the month, compared with a contraction of 0.2 per cent in the same month of the previous year. Moreover, petroleum products production also contracted in the month under consideration, as Indian refineries produced less.
In the absence of significant discoveries, and waning output from oil fields like Bombay High, production of the crude oil has been slipping. In the 22 months period between April 2007 and January 2009, production of crude oil has contracted in 14 months.
However, four other components of the core sector — cement, coal, electricity and finished (carbon) steel — expanded in the month under consideration.
“This could be because of the measures announced by the government to boost the economy,” said Soumendra Dash, chief economist, CARE Ratings.
Core sector slides to four-year low
Core sector slides to four-year low
The Financial Express, March 7, 2009, Page 1
Economy Bureau, New Delhi
The prospect of a revival soon in factory output dwindled with the infrastructure sector turning in just 1.4% growth in January, far below the 3.6% recorded in the same month last year.
This is the worst monthly performance since December 2005, according to government figures released on Friday. The core sector six-cement, coal output, electricity, finished steel petroleum refinery products and crude oil-contribute 27% to overall industrial production.
Other ways of gauging industrial output are just as discouraging. Non-oil imports, accounting for around three-fourths of industrial inputs, contracted by 0.5% in January. Similarly, commercial vehicles registered 52% negative sales growth in January 2009, only marginally better than the 58% shrinkage that was seen in December.
Government officials have exuded optimism about industrial production inching back into positive territory in January. Department of Industrial Policy & Promotion secretary Ajay Shankar had predicted last month that thanks to automobile, steel and cement companies showing signs of strength, “there is positive (IIP) news in January numbers”.
The IIP had shrunk for the first time in 15 years in October 2008. In November, it showed signs of some recovery by registering a 1.7% growth, but then contracted by 2% in December, against a growth rate of 8% in the same month a year earlier.
The slump in infrastructure industries bears out India Inc’s argument that without a substantial lowering of interest rates by banks, there would be little rise in credit off-take. RBI data released on Wednesday showed that from mid-December to mid February, credit to industry from the banking sector grew by only Rs 8,000 crore, against Rs 87,000 crore in the same period last year.
Of the core sector six, cement at 8.3% growth registered the best performance in January, against 5.6% in the same month last year. The worst performance was registered by crude oil production, which shrunk 8.1% in January from -0.2%. For the April-January period, overall growth slipped to 3.2%, from 5.7% a year earlier.
“The weakness in core sector growth reflects the inability of the government to implement any capacity expansion programmes in infrastructure. It could have expedited programmes like highway construction, electricity generation and transmission. This is not a derived demand. Such effective implementation of these programmes could have become the growth engine, but we see governance weakness,” said Indian Council of Research in International Economic Relations director & CEO Rajiv Kumar.
Vinayak Chatterjee, chairman of infrastructure consultancy firm Feedback Ventures, said, “The infrastructure constraints are growing more worrisome by the day. Unless fresh capital investments are made, the situation is unlikely to improve further. “
Nomura economist Sonal Varma agrees. “Though coal and cement sectors have done well, crude oil production has remained weak. When seen together with the slowdown that we saw in auto production in January, we are expecting IIP growth to be 0.3%. But this will be better than the December 2008 figures.”
Chidambaram predicts upturn by year-end
Chidambaram predicts upturn by year-end
Business Standard, March 7, 2009, Page 2
BS Reporter / Mumbai
Home Minister P Chidambaram today said that the country’s economy was expected to show an upturn by third or fourth quarter of 2009-10 and registering a 9 per cent growth by 2011.
While the economy is projected to expand by 7.1 per cent this year, the third quarter gross domestic product growth is estimated at 5.3 per cent. This would mean that the economy has to grow by 7.6-7.7 per cent during January-March, Chidambaram said, adding that it was something that looked difficult.
The minister was speaking at a conference organised by the International Bar Association. “Even until about two-three months ago, we were pretty confident that we will navigate this difficult year and end with a growth of a little over 7 per cent. In the first half of the current fiscal year, growth was 7.8 per cent. We were hoping that in the second half we will do 6.5 per cent. But the results of our third quarter GDP growth have been quite depressing,” he said.
Blaming the Western economies for weak regulation and being the originators of global economic crisis, Chidambaram said that regulations must always remain a step ahead of innovation.
Business Standard, March 7, 2009, Page 2
BS Reporter / Mumbai
Home Minister P Chidambaram today said that the country’s economy was expected to show an upturn by third or fourth quarter of 2009-10 and registering a 9 per cent growth by 2011.
While the economy is projected to expand by 7.1 per cent this year, the third quarter gross domestic product growth is estimated at 5.3 per cent. This would mean that the economy has to grow by 7.6-7.7 per cent during January-March, Chidambaram said, adding that it was something that looked difficult.
The minister was speaking at a conference organised by the International Bar Association. “Even until about two-three months ago, we were pretty confident that we will navigate this difficult year and end with a growth of a little over 7 per cent. In the first half of the current fiscal year, growth was 7.8 per cent. We were hoping that in the second half we will do 6.5 per cent. But the results of our third quarter GDP growth have been quite depressing,” he said.
Blaming the Western economies for weak regulation and being the originators of global economic crisis, Chidambaram said that regulations must always remain a step ahead of innovation.
Interest subvention catching on
Interest subvention catching on
The Hindu Business Line, March 8, 2009, Page15
--------------------------------------------------------------------------------
Developers in Kolkata are waking up to the advantages of the interest subvention scheme, which is considered a win-win for buyers, banks and developers.
--------------------------------------------------------------------------------
Manish Basu
Having remained unreceptive to the idea of reducing home prices at a time of slackening demand, developers in Kolkata are now catching up with their counterparts in other cities in launching a new scheme — the pre-equated monthly instalment (pre-EMI) subvention scheme.
The steep decline in the number of units sold since October has made them look closely at strategies of boosting demand, the most recent being the interest subvention scheme. Those convinced about the scheme have already launched (three to four developers) it or are soon to launch it and those who are doubtful have at least started etching out substitute strategies, such as a direct discount. Either way, the consumer in Kolkata stands to gain.
Under the subvention scheme, the consumer planning to buy a house by going in for a home loan makes only an upfront payment of 15-25 per cent of the home price to the developer while the rest is disbursed to the developer periodically by the bank with which the developer has a prior tie-up. The consumer does not pay anything thereafter till the delivery of the flat or for the period (example-one, two or three year) for which the offer is valid — depending upon the nature of the scheme. The developer in turn pays the pre-EMI amount (which is only the simple interest component) to the bank in phases. After the delivery of the flat, the customer starts paying EMI, which constitutes both principal and interest, till the loan period ends.
Advantage all
According to Mr Abhijit Das, Regional Director of JLL Meghraj, the scheme puts all the three involved stakeholders — buyers, banks and developers — in a win-win situation. “For people staying in rented homes, it makes absolute sense because, on the one hand, they are not burdened by additional monthly payments till they shift to new flats; on the other hand, the extra interest payment due to delay in delivery time falls on the developer, prompting him to speed up construction,” he said.
Mr Sumit Dabriwal, Managing Director, Riverbank Holdings Pvt Ltd, cited a prime concern faced by the potential buyer during the current recession — whether to delay buying as interest rates were expected to come down and property prices were predicted to fall. “The new scheme addresses these issues perfectly,” he said, “on the one hand, the buyer can avail the upside of reduction in interest rates when he actually starts paying EMI and on the other he gets an indirect discount eqivalent to a price cut.”
The company launched a one-year interest subvention scheme in tie-up with HDFC Bank in January for its Rs 35 lakh and above flats in Maheshtala, on the fringes of Kolkata. The project has sold nearly 20 flats since the launch of the scheme compared to little business in the previous four months.
The new scheme may also prove beneficial for the bank as it reduces chances of default, an SBI official related to the development said. “We will, however, be extremely cautious in choosing the developers and only those with a good track record and credibility to meet completion commitment will be considered,” he said.
As for the developer, apart from a direct boost in customer confidence, this will also provide a flow of funds from the banks indirectly with the developer having to dish out lower interest rate of 9-10 per cent on home loans in comparison to 12-14 per cent on builders’ loan from bank, Mr Biswadip Gupta, General Manager, Eden Realty Venture, said. The company may consider continuing the scheme even after the recession, depending on business prospects, he observed.
The flow of fund is essential now, as credit from banks for construction has dried up and the advance booking amounts have also reduced considerably, Mr Shiva Aftana, Vice-President of Ruchy Realty, said.
The company launched in February the pre-EMI subvention on high-end flats (starting from Rs 60 lakh) near E M Bypass. The company has not factored in the extra cost in the price of flats, he said.
Some reservations too
However, Mr Pradeep Sureka, regional President of the Confederation of Real Estate Developers’ Association of India and Managing Director of the Sureka group, differed on the issue, saying that if a project depends upon the scheme for funding, it might get stalled if there were not enough takers for the scheme. The company recently reduced prices of units near Ruby Hospital by 10 per cent and is also evaluating prospects of launching the interest subvention scheme.
“We predict a bit of a price war now, particularly when construction costs are down,” he said. The interest subvention scheme would imply a 10-12 per cent indirect discount on existing prices, according to a developer in the final stages of launching the scheme.
Mr Harshvardhan Neotia, Chairman of the Ambuja Realty Group, said the company would launch the new scheme for a limited period during the downturn in tie-up with HDFC and the State Bank of India.
The company plans to introduce an 18-24 month interest rate subvention for existing project of price range between Rs 3,750 and Rs 4,000 per sq.ft. It is also contemplating launching it in an upcoming middle-income category project of Rs 2,500 to Rs 3,000 per sq.ft range.
Mr Pradip Kumar Chopra, Chairman of the PS group, said the scheme is not viable for high-income group units. “It as an excellent deferred payment option for people who cannot afford to pay pre-EMI interest but it is not a viable mode of discount.” Rather, a direct discount would mean the customer has to pay less on account of stamp duty and registration and also save on income tax benefit on pre-EMI interest payment. The company has reduced prices of units in Rajarhat by 30-40 per cent in the last few months to Rs 1,700-1,800 per sq.ft, he said.
The Hindu Business Line, March 8, 2009, Page15
--------------------------------------------------------------------------------
Developers in Kolkata are waking up to the advantages of the interest subvention scheme, which is considered a win-win for buyers, banks and developers.
--------------------------------------------------------------------------------
Manish Basu
Having remained unreceptive to the idea of reducing home prices at a time of slackening demand, developers in Kolkata are now catching up with their counterparts in other cities in launching a new scheme — the pre-equated monthly instalment (pre-EMI) subvention scheme.
The steep decline in the number of units sold since October has made them look closely at strategies of boosting demand, the most recent being the interest subvention scheme. Those convinced about the scheme have already launched (three to four developers) it or are soon to launch it and those who are doubtful have at least started etching out substitute strategies, such as a direct discount. Either way, the consumer in Kolkata stands to gain.
Under the subvention scheme, the consumer planning to buy a house by going in for a home loan makes only an upfront payment of 15-25 per cent of the home price to the developer while the rest is disbursed to the developer periodically by the bank with which the developer has a prior tie-up. The consumer does not pay anything thereafter till the delivery of the flat or for the period (example-one, two or three year) for which the offer is valid — depending upon the nature of the scheme. The developer in turn pays the pre-EMI amount (which is only the simple interest component) to the bank in phases. After the delivery of the flat, the customer starts paying EMI, which constitutes both principal and interest, till the loan period ends.
Advantage all
According to Mr Abhijit Das, Regional Director of JLL Meghraj, the scheme puts all the three involved stakeholders — buyers, banks and developers — in a win-win situation. “For people staying in rented homes, it makes absolute sense because, on the one hand, they are not burdened by additional monthly payments till they shift to new flats; on the other hand, the extra interest payment due to delay in delivery time falls on the developer, prompting him to speed up construction,” he said.
Mr Sumit Dabriwal, Managing Director, Riverbank Holdings Pvt Ltd, cited a prime concern faced by the potential buyer during the current recession — whether to delay buying as interest rates were expected to come down and property prices were predicted to fall. “The new scheme addresses these issues perfectly,” he said, “on the one hand, the buyer can avail the upside of reduction in interest rates when he actually starts paying EMI and on the other he gets an indirect discount eqivalent to a price cut.”
The company launched a one-year interest subvention scheme in tie-up with HDFC Bank in January for its Rs 35 lakh and above flats in Maheshtala, on the fringes of Kolkata. The project has sold nearly 20 flats since the launch of the scheme compared to little business in the previous four months.
The new scheme may also prove beneficial for the bank as it reduces chances of default, an SBI official related to the development said. “We will, however, be extremely cautious in choosing the developers and only those with a good track record and credibility to meet completion commitment will be considered,” he said.
As for the developer, apart from a direct boost in customer confidence, this will also provide a flow of funds from the banks indirectly with the developer having to dish out lower interest rate of 9-10 per cent on home loans in comparison to 12-14 per cent on builders’ loan from bank, Mr Biswadip Gupta, General Manager, Eden Realty Venture, said. The company may consider continuing the scheme even after the recession, depending on business prospects, he observed.
The flow of fund is essential now, as credit from banks for construction has dried up and the advance booking amounts have also reduced considerably, Mr Shiva Aftana, Vice-President of Ruchy Realty, said.
The company launched in February the pre-EMI subvention on high-end flats (starting from Rs 60 lakh) near E M Bypass. The company has not factored in the extra cost in the price of flats, he said.
Some reservations too
However, Mr Pradeep Sureka, regional President of the Confederation of Real Estate Developers’ Association of India and Managing Director of the Sureka group, differed on the issue, saying that if a project depends upon the scheme for funding, it might get stalled if there were not enough takers for the scheme. The company recently reduced prices of units near Ruby Hospital by 10 per cent and is also evaluating prospects of launching the interest subvention scheme.
“We predict a bit of a price war now, particularly when construction costs are down,” he said. The interest subvention scheme would imply a 10-12 per cent indirect discount on existing prices, according to a developer in the final stages of launching the scheme.
Mr Harshvardhan Neotia, Chairman of the Ambuja Realty Group, said the company would launch the new scheme for a limited period during the downturn in tie-up with HDFC and the State Bank of India.
The company plans to introduce an 18-24 month interest rate subvention for existing project of price range between Rs 3,750 and Rs 4,000 per sq.ft. It is also contemplating launching it in an upcoming middle-income category project of Rs 2,500 to Rs 3,000 per sq.ft range.
Mr Pradip Kumar Chopra, Chairman of the PS group, said the scheme is not viable for high-income group units. “It as an excellent deferred payment option for people who cannot afford to pay pre-EMI interest but it is not a viable mode of discount.” Rather, a direct discount would mean the customer has to pay less on account of stamp duty and registration and also save on income tax benefit on pre-EMI interest payment. The company has reduced prices of units in Rajarhat by 30-40 per cent in the last few months to Rs 1,700-1,800 per sq.ft, he said.
Hindustan Construction Co to complete Lavasa ahead of schedule
Hindustan Construction Co to complete Lavasa ahead of schedule
The Financial Express, Corporates & Markets, March 7, 2009, Page VIII
fe Bureau, Pune
Hindustan Construction Company (HCC) is expecting a total revenue of Rs 1,47,000 crore over the next 10-15 years from it’s Lavasa hill-station project being developed near Pune.
The project will be completed ahead of its schedule, said Ajit Gulabchand, CMD, HCC and chairman, Lavasa Corporation.
“We have sold out all 1,400 apartments and villas in the first phase of the township and have begun work for phase II. The project is expected to be completed by 2015 instead of 2020 as scheduled earlier,” said Gulabchand.
“There have been no cancellations despite current market conditions. The company is working on several new tie-ups in the area of architecture, animation, design, filmmaking, hospitality, education and industry,” he said.
A total of six hotels will be coming up at the project site, with a combined capacity of 1,000 rooms.
Accor will be opening a Pullman and Novotel hotel in the project. Thus far, around Rs 1,500 crore has been invested in the project and it has been funded by a debt equity ratio of 2:1, he said.
Peak investments required for this phase would range Rs 2,000-5,000 crore, he noted.
The Lavasa hill-station project is being developed by HCC along with the Avantha group and Venkateshwara Hatcheries. HCC holds 65% stake in Lavasa Corp, while Avantha Group has 16% and Venkateshwara Hatcheries 12%; 5% is held by local entities.
Axis Bank, Allahabad Bank and Bank Of India together hold around 4.5% in the project and have invested aorund Rs 450 crore in it. Gulabchand said the company will not dilute its equity further at this stage. “Lavasa owns stakes in properties in the project from 11% to 100% in some cases. In the Accor project, Lavasa holds 26% stake; it holds 20% in the NASA space project coming up here,” he said.
On the upcoming Gujarat project, Gulabchand said the company will conduct studies over next couple of years to decide the kind of model that needs to be created. The total investment in this project is around Rs 40,000 crore.
The Financial Express, Corporates & Markets, March 7, 2009, Page VIII
fe Bureau, Pune
Hindustan Construction Company (HCC) is expecting a total revenue of Rs 1,47,000 crore over the next 10-15 years from it’s Lavasa hill-station project being developed near Pune.
The project will be completed ahead of its schedule, said Ajit Gulabchand, CMD, HCC and chairman, Lavasa Corporation.
“We have sold out all 1,400 apartments and villas in the first phase of the township and have begun work for phase II. The project is expected to be completed by 2015 instead of 2020 as scheduled earlier,” said Gulabchand.
“There have been no cancellations despite current market conditions. The company is working on several new tie-ups in the area of architecture, animation, design, filmmaking, hospitality, education and industry,” he said.
A total of six hotels will be coming up at the project site, with a combined capacity of 1,000 rooms.
Accor will be opening a Pullman and Novotel hotel in the project. Thus far, around Rs 1,500 crore has been invested in the project and it has been funded by a debt equity ratio of 2:1, he said.
Peak investments required for this phase would range Rs 2,000-5,000 crore, he noted.
The Lavasa hill-station project is being developed by HCC along with the Avantha group and Venkateshwara Hatcheries. HCC holds 65% stake in Lavasa Corp, while Avantha Group has 16% and Venkateshwara Hatcheries 12%; 5% is held by local entities.
Axis Bank, Allahabad Bank and Bank Of India together hold around 4.5% in the project and have invested aorund Rs 450 crore in it. Gulabchand said the company will not dilute its equity further at this stage. “Lavasa owns stakes in properties in the project from 11% to 100% in some cases. In the Accor project, Lavasa holds 26% stake; it holds 20% in the NASA space project coming up here,” he said.
On the upcoming Gujarat project, Gulabchand said the company will conduct studies over next couple of years to decide the kind of model that needs to be created. The total investment in this project is around Rs 40,000 crore.
Govt refusal to allow foreign partner kills DLF convention centre project
Govt refusal to allow foreign partner kills DLF convention centre project
The Financial Express, March 7, 2009, Page 1
Corporate Bureau, New Delhi
Delhi’s mega convention centre to be built by the country’s largest real estate firm, DLF, has been scuppered, as the government is unwilling to let the company seek a foreign equity partner for the prize project.
Speaking at the Express Group’s Idea Exchange programme on Friday, DLF group chairman KP Singh said, “We are ready to revisit the project if we are allowed to rope in foreign partners for funding, including private equity players.” The Delhi convention centre is one of four state-of-the-art facilities announced in Union Budget 2007-08.
Singh said unless Delhi Development Authority (DDA) allowed a special purpose vehicle for the project to include additional equity players, the project was unlikely to take off. DLF bagged the development, being sole bidder, in July 2007. Its financial bid was Rs 901.8 crore, against a reserve price of Rs 900 crore.
Spread over an area of 14 hectare, the mega convention centre was slated to come up at Dwarka, near the city’s airport, and was billed as one of DDA’s most ambitious projects. The complex was to have an integrated built-up area of 1.83 lakh sq m, comprising a 86,400-sq m convention & exhibition complex, a 60,000-sq m built-up area for a hotel complex, and 36,600 sq m for a commercial complex.
Discussing the government’s role in real estate and urban development, Singh said it should play the role of an enabler and facilitator. “It is not possible for developers to acquire huge tracts of land. As a result, the government should play an active role in acquiring land for developments,” Singh said.
DLF’s township in Dankuni, West Bengal, has been shelved because the state government was unable to acquire 4,840 acre of land. The company subsequently offered to scale down the project to 500 acre. But the state government failed to acquire even this smaller tract of land. The proposed township was originally estimated to cost Rs 40,000 crore and was to be DLF’s biggest project in eastern India.
DLF, which has recently reduced the prices of its properties by 15-20%, is not planning to slash rates any further. Instead, it expects other developers to follow suit, which would lead to a price correction and revive demand. Singh said interest rates should come down further to boost the housing market and EMIs on housing loans should be exempt from income tax.
The Financial Express, March 7, 2009, Page 1
Corporate Bureau, New Delhi
Delhi’s mega convention centre to be built by the country’s largest real estate firm, DLF, has been scuppered, as the government is unwilling to let the company seek a foreign equity partner for the prize project.
Speaking at the Express Group’s Idea Exchange programme on Friday, DLF group chairman KP Singh said, “We are ready to revisit the project if we are allowed to rope in foreign partners for funding, including private equity players.” The Delhi convention centre is one of four state-of-the-art facilities announced in Union Budget 2007-08.
Singh said unless Delhi Development Authority (DDA) allowed a special purpose vehicle for the project to include additional equity players, the project was unlikely to take off. DLF bagged the development, being sole bidder, in July 2007. Its financial bid was Rs 901.8 crore, against a reserve price of Rs 900 crore.
Spread over an area of 14 hectare, the mega convention centre was slated to come up at Dwarka, near the city’s airport, and was billed as one of DDA’s most ambitious projects. The complex was to have an integrated built-up area of 1.83 lakh sq m, comprising a 86,400-sq m convention & exhibition complex, a 60,000-sq m built-up area for a hotel complex, and 36,600 sq m for a commercial complex.
Discussing the government’s role in real estate and urban development, Singh said it should play the role of an enabler and facilitator. “It is not possible for developers to acquire huge tracts of land. As a result, the government should play an active role in acquiring land for developments,” Singh said.
DLF’s township in Dankuni, West Bengal, has been shelved because the state government was unable to acquire 4,840 acre of land. The company subsequently offered to scale down the project to 500 acre. But the state government failed to acquire even this smaller tract of land. The proposed township was originally estimated to cost Rs 40,000 crore and was to be DLF’s biggest project in eastern India.
DLF, which has recently reduced the prices of its properties by 15-20%, is not planning to slash rates any further. Instead, it expects other developers to follow suit, which would lead to a price correction and revive demand. Singh said interest rates should come down further to boost the housing market and EMIs on housing loans should be exempt from income tax.
Developers build smaller offices as demand slows
Developers build smaller offices as demand slows
Sunday Business Standard, March 8, 2009, page 4
To cater to the non-IT market, developers are discounting future rentals to generate cash flows during the downturn.
Neeraj Thakur & Raghavendra Kamath / New Delhi/mumbai
Developers of work places are shifting their focus to non-infotech companies and building smaller offices to buck the slowdown in the commercial property market, realty companies and consultants said.
“The demand for IT space has come down substantially, and we are focusing more on non-IT space.We are developing 2.5 million sq ft of commercial space, of which 1.5m sq ft has already been delivered and the rest will be completed in the next few months,’’ said R Nagaraju, deputy general manager, corporate planning, Unitech, a Delhi-based developer.
Unitech has dropped plans to develop two of the proposed six information technology parks, due to the slump in demand from the IT industry. At least 38 per cent, or 8.3m sq ft of its projected commercial space of 21.4 m sq ft, is on hold.
IT firms, which absorbed 70-80 per cent of office space a couple of years earlier, had cut their requirement sharply as the global economy slowed, consultants said.
DLF, the country’s largest developer, has halted construction work on nearly 16m sq ft of office and mall space out of 62m sq ft of planned construction. In the office space category, the developer has stalled construction on nearly 12m sq ft of the 36m sq ft planned, the company said recently.
Due to lower demand from IT firms and corporates, office rents have fallen 20-30 per cent in cities such as Mumbai, the National Capital Region and Bangalore, among others. Despite this, the percentage of vacant properties has shot up. Vacancy levels, under 5 per cent in 2007, have moved up to 8-9 per cent in 2008. Property consultancy JLLM expects it to reach 16-17 per cent if the projected space gets completed this year.
To cater to the non-IT market, developers are doing everything from building smaller offices, selling properties floorwise and discounting future rentals to generate cash flows during the downturn.
“Non-IT firms are demanding smaller spaces today. We are thinking of cutting sizes of our big offices, so that we can provide customised products to our clients”, said Neetal Naarang , assistant general manager, corporate communication, Parsvnath Developers.
Said Naveen Raheja, managing director, Raheja Developers: ‘’There was a time when clients used to demand 350,000 sq ft space and we did not cater to customers that required office space less than 2,000 sq ft. However, we are ready to deliver even 500 sq ft of office space today.’’
Analysts say developers cannot change their product mix overnight as they have to revise plans and change operations. “It will take at least a couple of months. Just as affordable housing is the norm today, they have turned to affordable offices,’’ said Akshaya Kumar, chief executive of Park LaneProperty Advisors.
Sunday Business Standard, March 8, 2009, page 4
To cater to the non-IT market, developers are discounting future rentals to generate cash flows during the downturn.
Neeraj Thakur & Raghavendra Kamath / New Delhi/mumbai
Developers of work places are shifting their focus to non-infotech companies and building smaller offices to buck the slowdown in the commercial property market, realty companies and consultants said.
“The demand for IT space has come down substantially, and we are focusing more on non-IT space.We are developing 2.5 million sq ft of commercial space, of which 1.5m sq ft has already been delivered and the rest will be completed in the next few months,’’ said R Nagaraju, deputy general manager, corporate planning, Unitech, a Delhi-based developer.
Unitech has dropped plans to develop two of the proposed six information technology parks, due to the slump in demand from the IT industry. At least 38 per cent, or 8.3m sq ft of its projected commercial space of 21.4 m sq ft, is on hold.
IT firms, which absorbed 70-80 per cent of office space a couple of years earlier, had cut their requirement sharply as the global economy slowed, consultants said.
DLF, the country’s largest developer, has halted construction work on nearly 16m sq ft of office and mall space out of 62m sq ft of planned construction. In the office space category, the developer has stalled construction on nearly 12m sq ft of the 36m sq ft planned, the company said recently.
Due to lower demand from IT firms and corporates, office rents have fallen 20-30 per cent in cities such as Mumbai, the National Capital Region and Bangalore, among others. Despite this, the percentage of vacant properties has shot up. Vacancy levels, under 5 per cent in 2007, have moved up to 8-9 per cent in 2008. Property consultancy JLLM expects it to reach 16-17 per cent if the projected space gets completed this year.
To cater to the non-IT market, developers are doing everything from building smaller offices, selling properties floorwise and discounting future rentals to generate cash flows during the downturn.
“Non-IT firms are demanding smaller spaces today. We are thinking of cutting sizes of our big offices, so that we can provide customised products to our clients”, said Neetal Naarang , assistant general manager, corporate communication, Parsvnath Developers.
Said Naveen Raheja, managing director, Raheja Developers: ‘’There was a time when clients used to demand 350,000 sq ft space and we did not cater to customers that required office space less than 2,000 sq ft. However, we are ready to deliver even 500 sq ft of office space today.’’
Analysts say developers cannot change their product mix overnight as they have to revise plans and change operations. “It will take at least a couple of months. Just as affordable housing is the norm today, they have turned to affordable offices,’’ said Akshaya Kumar, chief executive of Park LaneProperty Advisors.
Buyers negotiate prices as demand, property value dip
Buyers negotiate prices as demand, property value dip
The Hindu Business Line, March 9, 2009, Page 2
Market to be inactive for 6 quarters, says builders’ body.
--------------------------------------------------------------------------------
There was no scope for further correction in prices unless a builder wanted to incur loss.
--------------------------------------------------------------------------------
S. Shanker, Mumbai, March 8
Dwindling demand and falling property prices appear to have created a platform for buyers to negotiate prices with developers, which till a year ago was unheard of.
Real estate prices have seen a correction of 15-25 per cent. This apart, a further 5-10 per cent reduction is reportedly happening during negotiations between builders and buyers.
However, a uniform price correction pattern cannot be mapped as correction hinges predominantly on factors such location, demand, supply and the developer’s financial ability to weather the storm in the current economic slowdown.
Ruling out a further price correction in the near term, Mr Anand Gupta, General Secretary, Builders Association of India, said already developers were reducing prices during negotiations.
There was no scope for further correction in prices unless a builder wanted to incur loss, he said while conceding that there were incidents of reduced pricing to facilitate investors to exit.
“No one would want to sell below production cost and no bank funding can be got once that happens,” he said.
Freeze
Mr Gupta sees a sedentary market with stagnant prices over the next six quarters, before sales starts kicking in. Once the economy picks up and the prices are seen steady, sales will happen, he said.
Mr Sanjay Dutt, CEO-Business, Jones Lang LaSalle Meghraj, said the mismatch between supply and demand was such that even if developers reduced prices in the luxury segment, it would still be outside the ambit of a majority of home seekers.
Centrum researchers said high-end home prices in Mumbai are down from the peak values by around 20 per cent and developers were willing to negotiate a further 10-15 per cent once someone exhibits intentions to buy.
Mr Dutt said there has been a correction of 30-40 per cent in the secondary market of central Mumbai, and of 10-15 per cent in the primary market. In the suburbs, developers of some projects are holding on, while others have come down by 10-15 per cent.
Price Corrections
In Bangalore, the primary sales market saw a ray of hope when Sobha Developers officially came down on their asking rates by eight per cent about two months ago. However, no other developer has overtly announced any reduction, though reductions do take place during direct negotiations. This is despite developers seeing a 70-75 per cent drop in sales.
In Delhi, quotes on the secondary residential market have come down by 7-8 per cent with a further reduction of 3-4 per cent known to happen on actual negotiation. The highest incidence of price corrections has been in the suburban parts of NCR.
In Pune, price reductions are still largely a prerogative of individual developers. Those who have sold 85 per cent or more of the flats in their projects are holding on, while dips are increasingly evident among those who have sold 50 per cent or less. Overall, there has been visible softening of rates by 15-20 per cent per cent.
In Kolkata, there is no softening of prices in the primary sales market. Even negotiation with an intention to buy makes no impact. Most transactions are happening on the secondary market, where a substantial rate drop of 20 per cent is noticed.
Subscribe to:
Posts (Atom)
Posts
