Thursday, July 23, 2009
India slips in FDI ranking
India slips in FDI ranking
Business Standard, July 23, 2009, Page 6
D Ravi Kanth / Geneva
India has dropped to third place in global foreign direct investments (FDI) this year following the economic meltdown, but will continue to remain among the top five attractive destinations for international investors during the next two years, says Unctad (United Nations Conference on Trade and Development) in a new report on world investment prospects.
Last year, India was ranked second in global FDI flows after China. While China continues in the top place, the US climbed up to second place this year, thanks to a surge in investments by Chinese and Indian companies, who acquired several sick American firms.
However, overall FDI prospects for India remain buoyant, says James Zhan, a senior Unctad official and one of the authors of the latest report. “India will remain among the top five destinations,” said Zhan, suggesting that the Bric countries will hog most of the investment flows once FDI growth starts picking up after 2010.
The report titled, ‘World Investment Prospects Survey 2009-2011’ has listed FDI prospects by industry, particularly the “business-cycle-sensitive” industries such as automotives and other transport materials, metal and non-metal products and chemicals. It also spells out FDI prospects by host region.
Expressing sharp concern over rising “investment protectionism”, with economic stimulus packages contributing to “smart” protectionism, it has underscored the need to keep markets open to attract FDI in the coming years.
With the global economic and financial crisis having wreaked havoc on FDI plans of multinational companies, Unctad expects gradual recovery from next year.
HDFC net up 21%,QIP okayed
HDFC net up 21%,QIP okayed
The Economic Times, July 23, 2009, Page 1
Our Bureau MUMBAI
HDFC on Wednesday unveiled plans to raise Rs 4,000 crore by placing debentures with institutions, as it announced a 21% rise in first quarter profits and spoke about a resurgence in demand for housing.
Shareholders of India’s top mortgage lender approved the qualified institutional placement (QIP) of the non-convertible debentures with warrants, which allow its holders to buy shares in the future, at the firm’s annual meeting.
HDFC chairman Deepak Parekh said the strike price for the warrants would be at a premium to present market levels.
Mr Parekh, who has run HDFC for three decades and is set to become nonexecutive chairman after relinquishing executive duties at the end of 2009, told shareholders there would not be any bonus issues until 2012-13—making it 10 years after the last bonus issue.
SEZ developers seek more time
SEZ developers seek more time
The Financial Express, July 23, 2009, Page 2
fe Bureau, New Delhi
An increasing number of special economic zone (SEZ) developers are asking for additional time to develop the tax-free industrial enclaves due to insufficient demand for space, land acquisition problems and the liquidity crunch arising in the backdrop of the global economic crisis.
The Board of Approval on SEZs under the commerce ministry has got 74 requests from developers of the zones for extension of their validity period, citing the global economic crisis, commerce minister Anand Sharma told the Rajya Sabha on Wednesday.
“About 53 SEZ developers have since been granted extension of one year, subject to the same terms & conditions as envisaged in the original approval,” Sharma told the upper house of Parliament.
The number of applications related to extension of the validity period of the zones increased since January this year. Meanwhile, the Board has given its nod to scrap five notified zones belonging to Delhi-based realty major DLF and Mumbai-based K Raheja Universal.
The global economic crisis has led to drop in demand in overseas markets, which in turn have made the zones - exclusively meant for exports - less attractive as a business venture. In addition, SEZ developers are finding it difficult to source cheap loans to build the zones. This has led to increase in number of application for extension of the mandatory time period under which a zone has to be developed.
Under norms prescribed by the SEZ Act of 2005, a formally approved SEZ - zones with land under possession - have to take “effective steps to make the zone operational within three years.” Moreover, zones with in-principle approval — SEZs which are yet to acquire land — have to complete acquisition of land within one year of grant of the status.
Meanwhile, the government has taken a series of steps to help developers of the zones to tide over the crisis. This includes allowing developers and units of the SEZs to access cheap overseas loans through external commercial borrowing route for developing industrial infrastructure.
Moreover, rules related to computation of income tax exemptions were also tweaked in the Budget presented by finance minister Pranab Mukherjee this July to ensure that the developers and units get greater benefit. “These measures will help developers and units of the zones in tiding over this difficult period,” said LB Singhal, director general of Export Promotion Council for EoUs and SEZs.
At the moment, there are over 700 SEZs that have been given formal and in-principle approval.
Q1 direct tax kitty grows 3.65% to Rs 59,465 crore
Q1 direct tax kitty grows 3.65% to Rs 59,465 crore
The Economic Times, July 23, 2009, Page 9
Refunds To Taxpayers Grow 52% To Rs 17,600 Crore
Our Bureau NEW DELHI
THE government’s tax kitty grew by a modest 3.65% in the first quarter of the current financial year. A high base effect—high growth in April-June 2008—and higher refunds this year have been largely responsible for the modest growth.
“The first quarter of last financial year was better in terms of growth, so if we compare on a quarter-to-quarter basis, this figure is reasonable,” KPMG executive director Vikas Vasal said. Direct tax collections had grown by over 38% in the first quarter of 2008-09.
Direct tax collections must grow by at least 9% for the government to achieve its budget target of Rs 3,70,000 crore. Any shortfall in tax collections, especially direct taxes that now constitute most of the government’s revenue collections, will put further pressure on the fiscal deficit—the difference between the government’s total expenditure and receipts—pegged at 6.8% for the current fiscal. A higher deficit means more borrowings, which could put pressure on interest rates, thereby increasing cost of funds for the private sector. However, collections are expected to be better in the second half of the financial year as the economic recovery stabilises.
Direct tax collections, which include taxes such as those on corporates, firms and individuals, stood at Rs 59,465 crore during the first quarter of the current fiscal against Rs 57,373 crore during the corresponding quarter last financial year, according to official data released by the Central Board of Direct Taxes. Taxpayers received Rs 17,600 crore as refunds from the government. This represents a 52.01% growth over Rs 11,578 crore given in refunds in the first three months of last fiscal.
“Lower growth in net tax collection was mainly on account of higher tax refund outgo,” an official statement said here on Wednesday. Corporate tax collected during the period was also 3.31% higher at Rs 35,709 crore compared with Rs 34,566 crore in April-June 2008-09. On the personal income tax front, which includes fringe benefit tax and securities transaction tax, the government collected Rs 23,780 crore, a growth of 4.38% compared to last year.
FBT recorded a negative growth of 7.56% at Rs 1,031 crore (Rs 1,115 crore) and STT declined 9.90% to Rs 1,462 crore (Rs 1,623 crore).
Govt to take call on stimulus measures after G20 meet
Govt to take call on stimulus measures after G20 meet
The Economic Times, July 23, 2009, Page 9
Gireesh Chandra Prasad NEW DELHI
THE government is likely to take a relook at its strategy of continuing economic stimulus measures after finance ministers and central bank governors from the group of 20 nations (G20) meet in September to assess whether the green shoots of economic recovery are real.
The government, which had said in the budget that it would continue to provide further stimulus to the economy as there were still uncertainties on the revival of the global economy, will have a clearer picture when world leaders assess the situation at the Pittsburgh summit in September, said a government official, who is privy to the thinking. Rolling back the stimulus measures and cutting fiscal deficit are essential as many economists have pointed out that systemic risks have now migrated from the private sector to national governments due to historic gaps in receipts and spending.
“The G20 will assess whether the green shoots of recovery are real, whether it is time to exit from the economic stimulus measures and whether there would be inflationary pressure if growth starts picking up,” the official said. Ben Bernanke, chairman of the US Federal Reserve, on Tuesday said there were signs that the world’s largest economy was starting to stabilise. The worldover, governments are now contemplating how to exit from stimulus measures—tax cuts and lower interest rates—without disrupting economic revival.
The forthcoming meetings of the G20 leaders in July and September are also likely to look at the contentious issue of climate change finance. “For adaptation and mitigation, we need funding. The deliberations are likely to examine how funds can be mobilised for this,” the official said. Part of the funding would come from the market through carbon trading.
The government will also take a call on regulating certain financial sector entities such as credit rating agencies and merchant banks, taking inputs from a G20 task force comprising global associations of accounting and securities market regulators. The International Accounting Standards Board and International Organisation of Securities Commissions are working out the details now.
Demand for housing picking up
Demand for housing picking up
The Economic Times, July 23, 2009, Page 10
HOWEVER, Mr Parekh assured shareholders that the company would consider preferential allotment of shares in HDFC Standard Life to HDFC shareholders whenever the insurance firm chose to go public.
HDFC reported a net profit of Rs 564.92 crore for the quarter to end-June, up from Rs 468 crore in the year-earlier period. Although profits improved, HDFC’s net interest margins declined slightly, falling to 2.19% for the quarter from 2.21% in FY09 and 2.32% the year before.
Mr Parekh said that margins in the earlier years were flattered by cheaper cost of funds thanks to the preferential allotment of shares to Carlyle and Citigroup, which raised Rs 3,114 crore in May 2007. The HDFC chief also said that there was a resurgence in demand for housing, which was preventing property rates from falling while increasing loan growth.
HDFC approved loans worth Rs 12,259 crore during the quarter, up 23% year-on-year, while disbursals grew 21% to Rs 8,688 crore. Compared with the preceding quarter—the last quarter of the previous fiscal year—HDFC’s loan approvals and disbursements grew 45% and 19%, respectively.
Responding to a query on outlook for interest rates, Mr Parekh said, “With the increased government borrowing, going forward everyone expects interest rates to rise. But for the present, there is ample liquidity and interest rates are soft”.
Shares in HDFC closed 4.43% down at Rs 2,410.30 on Wednesday amid concerns of the expected equity dilution as a result of its proposed fundraising.
One analyst at a private bank, who did not wish to be named, said there were concerns that the Rs 4,000-crore QIP issue which could expand the company’s equity base by 3.5% would put further pressure on margins. “The money will be used to buy shares of HDFC Bank, which will not earn as much income as, say, lending for home loans,” the analyst said.
Montek allays fears over hardening of interest rates
Montek allays fears over hardening of interest rates
The Economic Times, July 23, 2009, Page 14
PTI NEW DELHI
PLANNING Commission deputy chairman Montek Singh Ahluwalia, on Wednesday, allayed fears over significant hardening of interest rates in view of the high government borrowings, pegged at around Rs 4.5 lakh crore this fiscal.
“I think the only fear we will have is that the fiscal deficit is high...It is not going to be high. It would be brought down next year. In view of that, I don’t expect to see any significant hardening of interest rates”, Mr Ahluwalia said.
“This fear of interest rate hardening is actually based on an area concerned about the size of fiscal deficit, I think the fear that the fiscal deficit will remain high in subsequent years is not correct,” he added.
The budget has made it amply clear that there are good reasons why fiscal deficit is high this year.
It would come down next fiscal and come down again a year after, he said. The Fiscal Responsibility and Budget Management (FRBM) papers has projected fiscal deficit to come down to 5.5% next fiscal and 4% a year after against 6.8% estimated for the current fiscal. “A lot of this fear about rising interest rates is the expectation that the government will keep on borrowing.” “I think, this year borrowings will not crowd out anybody for the simple reason... all the data, which we have, suggests that the investment this year is below normal...investment is not taking place at the rate at which it is taking place a year ago. That means there is room for the public sector to increase the fiscal deficit,” he said.
Since Lehman Brothers collapsed in the middle of September last year, the RBI has cut short term lending rate (Repo) by 4.25 percentage points and short term borrowing rate (Reverse Repo) by 2.75 percentage points, signaling lower interest rates in the market.
Banks have cut their lending rates, but not to the extent that RBI measures have intended. Now, certain quarters fear that interest rates will keep rising following huge market borrowings by the government and little money will be left for private players in the market. It is this fear that Ahluwalia allayed.
Realty April-June net seen slumping as sales dip
Realty April-June net seen slumping as sales dip
Economic Times, July 23, 2009 (22 Jul 2009, 1554 hrs IST, REUTERS)
MUMBAI: Mid-cap real estate developers are expected to show a slump in sales by half to as much as 90 percent in the June quarter, as home buyers stay clear of purchases, according to a poll of brokerages.
Margins are also seen squeezed as many launch cheaper housing to boost unit purchases, but the firms are expected to show a fall in their bottomline by at least 60 percent, or plunge to losses during the quarter over a year-ago, according to the poll.
"Mid-income is boosting demand. There is a huge gap in supply-demand." Shailesh Kanani, analyst at Angel Broking said.
"Margins (are) likely to come under pressure due to change in product mix," Macquarie Research said. "Sales expected to drop significantly year-on-year due to a slowdown in the physical property market."
Besides launching lower-cost housing, builders have tried to reschedule loan repayments and raise funds through share placements with institutional buyers in the first half of 2009.
"Profit after tax (is) set to improve sequentially, and in the quarters ahead, owing to balance sheet deleveraging," Religare Hichens Harrison said in a report.
"Going ahead, we expect a build-up of momentum in launches in the affordable housing segment," a report by Edelweiss Securities said.
"General confidence in the economy and affordability will be the key demand determinants over the next one year," according to the Edelweiss report.
Commercial demand, which helps builders' expand, should revive by FY11, Angel's Kanani said.
Economic Times, July 23, 2009 (22 Jul 2009, 1554 hrs IST, REUTERS)
MUMBAI: Mid-cap real estate developers are expected to show a slump in sales by half to as much as 90 percent in the June quarter, as home buyers stay clear of purchases, according to a poll of brokerages.
Margins are also seen squeezed as many launch cheaper housing to boost unit purchases, but the firms are expected to show a fall in their bottomline by at least 60 percent, or plunge to losses during the quarter over a year-ago, according to the poll.
"Mid-income is boosting demand. There is a huge gap in supply-demand." Shailesh Kanani, analyst at Angel Broking said.
"Margins (are) likely to come under pressure due to change in product mix," Macquarie Research said. "Sales expected to drop significantly year-on-year due to a slowdown in the physical property market."
Besides launching lower-cost housing, builders have tried to reschedule loan repayments and raise funds through share placements with institutional buyers in the first half of 2009.
"Profit after tax (is) set to improve sequentially, and in the quarters ahead, owing to balance sheet deleveraging," Religare Hichens Harrison said in a report.
"Going ahead, we expect a build-up of momentum in launches in the affordable housing segment," a report by Edelweiss Securities said.
"General confidence in the economy and affordability will be the key demand determinants over the next one year," according to the Edelweiss report.
Commercial demand, which helps builders' expand, should revive by FY11, Angel's Kanani said.
Developers move to new projects as older ones lag
Developers move to new projects as older ones lag
MINT, Posted: Wed, Jul 22 2009. 9:48 PM IST
Possession delays irk buyers even as realty firms launch budget housing schemes to ramp up cash flowsShabana Hussain and Madhurima NandyNew Delhi / Bangalore: Home sales in India may be on the rebound, with real estate firms launching new projects to tap a revival in housing demand, but Ajay Jain remains an angry customer of DLF Ltd, the country’s largest property developer by sales.
Tall claims: The DLF Belaire project in Gurgaon. Only half the work has been completed so far at the site.Rajkumar/MintSingapore-based Jain, 49, who signed up in August 2006 for a four-bedroom apartment in DLF’s Belaire project in Gurgaon, a satellite town south-east of New Delhi, is upset that he has paid the developer at least 85% of the cost of the flat—Rs2.4 crore—but only half the work has been completed so far at the site.
At the time of booking, Jain said, he was told that the project would be completed in three years—by August 2009. After paying two-three instalments, DLF gave Jain the buyer agreement in February 2007, which said that possession would be given within three years of signing the agreement.
“Though DLF has collected the money for this project, they are not bothered about completing it and instead, they keep investing in other projects,” Jain said in a phone interview with Mint. Belaire is likely to be delayed by 15 months, say real estate consultants.
Buyers such as Jain—those who bore the brunt of the downturn along with developers—are in plenty. Since mid-2008, projects of almost every developer across cities have been stuck, delayed or shelved. Average delays have ranged from six months to a year.
But what irks buyers even more now is that while several existing projects are stuck mid-way, developers have started launching new ones. These projects, mostly in the budget range, promise possession to buyers within two years, yet there are few signs that the pace of construction at existing, delayed projects will be accelerated.
DLF declined to comment as it was in the mandatory silent period ahead of its first quarter results, likely to be released later this month.
Since mid-2008, projects of almost every developer across cities have been stuck, delayed or shelved
In November, the company’s chairman K.P. Singh had said its assets under construction spread over hotels, residential and commercial projects were delayed because of lower demand and an industrywide liquidity crisis.
DLF’s Belaire and Park Place projects in Gurgaon are likely to be delayed by 15-18 months, say consultants. Belaire was to be ready by August and Park Place by October. A visit to the sites showed that both projects are far from completion. At both sites, only the structure of the towers are ready. The DLF website reflects as much: Structural work is in progress both at Park Place and Belaire, it says.
With these projects lagging, DLF launched 2.8 million sq. ft of residential projects in the first quarter of fiscal 2010, compared with 2.1 million sq. ft launched during the first quarter of fiscal 2009, according to a July report by Motilal Oswal Financial Services Ltd, a brokerage firm.
This is true of other developers, too, who have launched new projects—mostly in the budget or affordable housing category—to generate cash flows even as their existing projects await completion.
According to Motilal Oswal, real estate developers, including DLF, Unitech Ltd, Indiabulls Real Estate Ltd, Puravankara Projects Ltd and Housing Development and Infrastructure Ltd, have launched 36 million sq. ft of residential space in the quarter gone by, compared with 2.6 million sq. ft in the year-ago quarter, across cities such as Mumbai, New Delhi, and its suburbs, Bangalore, Chennai and Hyderabad. Of this, developers have already sold 44%, or 16 million sq. ft, of homes.
Widespread delays
Unitech’s Fresco, Escape and Harmony projects, all within a 300-acre township, Nirvana Country in Gurgaon, look delayed as well.
According to Unitech’s website, Escape and Harmony are to be delivered in the January-March quarter of 2010 and the first phase of Fresco is expected to be completed by the last quarter of 2009.
But during a visit to the Escape construction site last week, site workers said construction had just restarted after a lull and it would take at least a year-and-a-half to finish the project.
At Escape, only the structure is ready, but the landscaping within the project is still not done.
Arvind Panwar, a buyer at the project, is visibly worried. He had bought a three-bedroom apartment in Escape for around Rs1 crore in July 2006. He had opted for a down payment plan, paying 95% of the cost of the flat at one time in return for a 10-11% discount on the base price of the flat (parking slots, club houses and other amenities are typically charged extra).
Panwar, 35, who works with a tech firm in California, US, feels weighed down by loan instalments of around Rs70,000 every month.
“I am worried because I am paying my (loan) EMIs regularly, but there is no clarity on when the possession of the apartment will be given,” he said. EMI is short for equated monthly instalment.
Panwar’s buyer agreement says the flat would be delivered within three years—a deadline that matures next month. “The penalty for delay that they have said they will pay (Rs5 per sq. ft per month) is nothing compared with the EMIs I am paying,” he said. “I have been getting lots of emails from Unitech and brokers on the new projects they have launched. I get frustrated when I see those mails.”
Unitech had not responded to Mint’s queries on email and text messages until late Wednesday.
In Mumbai, with five projects still at various stages of construction and far from completion, local realty firm Neptune Developers Pvt. Ltd has launched two more this year.
A 125-acre affordable housing project was launched in March near Kalyan, about 50km north of south Mumbai, and an upmarket, 30-storey twin tower project in Bhandup, a northern suburb of the port city, in April.
The developer is clear about the urgency to do so. “One needs to run the show and for that, one needs to keep adding cautiously to one’s portfolio even when times are not that good. We are only launching projects that will sell and ensure cash flow,” said Nayan Bheda, managing director of Neptune.
The firm has sold 2,000 of 2,100 apartments in its budget housing project at Kalyan, said Bheda, and expects the development at Bhandup, priced at Rs5,000 a sq. ft, to sell out,too. The quantum of sales at the Kalyan project could not be independently verified by Mint.
A realty consultant seconds Bheda’s candidness. “Some developers are launching new projects in a particular price category to ensure cash flow to fund construction of its delayed, existing projects even at a lower profit margin,” said Ashutosh Limaye, associate director (strategic consulting) at Jones Lang LaSalle Meghraj, a property advisory.
Construction at Neptune’s projects running behind schedule has picked up after slowing down, Bheda said, without giving any more details.
It doesn’t help, as a spokesman for Parsvnath Developers Ltd said, that realty firms see further liquidity pressure as buyers at older projects default or delay their instalments due to the developer.
Bangalore developer Brigade Enterprises Ltd has nearly 20 projects at different stages of construction, each of which is lagging behind by at least six months from completion dates expected earlier, M.R. Jaishankar, chairman and managing director of the company, said at a press meet earlier this month.
The Brigade Gateway-branded luxury apartments project in north Bangalore, for instance, is at least 10 months behind schedule and several blog sites on the Internet are flooded with complaints on the delay from customers there. The company has plans to enter the budget housing segment.
MINT, Posted: Wed, Jul 22 2009. 9:48 PM IST
Possession delays irk buyers even as realty firms launch budget housing schemes to ramp up cash flowsShabana Hussain and Madhurima NandyNew Delhi / Bangalore: Home sales in India may be on the rebound, with real estate firms launching new projects to tap a revival in housing demand, but Ajay Jain remains an angry customer of DLF Ltd, the country’s largest property developer by sales.
Tall claims: The DLF Belaire project in Gurgaon. Only half the work has been completed so far at the site.Rajkumar/MintSingapore-based Jain, 49, who signed up in August 2006 for a four-bedroom apartment in DLF’s Belaire project in Gurgaon, a satellite town south-east of New Delhi, is upset that he has paid the developer at least 85% of the cost of the flat—Rs2.4 crore—but only half the work has been completed so far at the site.
At the time of booking, Jain said, he was told that the project would be completed in three years—by August 2009. After paying two-three instalments, DLF gave Jain the buyer agreement in February 2007, which said that possession would be given within three years of signing the agreement.
“Though DLF has collected the money for this project, they are not bothered about completing it and instead, they keep investing in other projects,” Jain said in a phone interview with Mint. Belaire is likely to be delayed by 15 months, say real estate consultants.
Buyers such as Jain—those who bore the brunt of the downturn along with developers—are in plenty. Since mid-2008, projects of almost every developer across cities have been stuck, delayed or shelved. Average delays have ranged from six months to a year.
But what irks buyers even more now is that while several existing projects are stuck mid-way, developers have started launching new ones. These projects, mostly in the budget range, promise possession to buyers within two years, yet there are few signs that the pace of construction at existing, delayed projects will be accelerated.
DLF declined to comment as it was in the mandatory silent period ahead of its first quarter results, likely to be released later this month.
Since mid-2008, projects of almost every developer across cities have been stuck, delayed or shelved
In November, the company’s chairman K.P. Singh had said its assets under construction spread over hotels, residential and commercial projects were delayed because of lower demand and an industrywide liquidity crisis.
DLF’s Belaire and Park Place projects in Gurgaon are likely to be delayed by 15-18 months, say consultants. Belaire was to be ready by August and Park Place by October. A visit to the sites showed that both projects are far from completion. At both sites, only the structure of the towers are ready. The DLF website reflects as much: Structural work is in progress both at Park Place and Belaire, it says.
With these projects lagging, DLF launched 2.8 million sq. ft of residential projects in the first quarter of fiscal 2010, compared with 2.1 million sq. ft launched during the first quarter of fiscal 2009, according to a July report by Motilal Oswal Financial Services Ltd, a brokerage firm.
This is true of other developers, too, who have launched new projects—mostly in the budget or affordable housing category—to generate cash flows even as their existing projects await completion.
According to Motilal Oswal, real estate developers, including DLF, Unitech Ltd, Indiabulls Real Estate Ltd, Puravankara Projects Ltd and Housing Development and Infrastructure Ltd, have launched 36 million sq. ft of residential space in the quarter gone by, compared with 2.6 million sq. ft in the year-ago quarter, across cities such as Mumbai, New Delhi, and its suburbs, Bangalore, Chennai and Hyderabad. Of this, developers have already sold 44%, or 16 million sq. ft, of homes.
Widespread delays
Unitech’s Fresco, Escape and Harmony projects, all within a 300-acre township, Nirvana Country in Gurgaon, look delayed as well.
According to Unitech’s website, Escape and Harmony are to be delivered in the January-March quarter of 2010 and the first phase of Fresco is expected to be completed by the last quarter of 2009.
But during a visit to the Escape construction site last week, site workers said construction had just restarted after a lull and it would take at least a year-and-a-half to finish the project.
At Escape, only the structure is ready, but the landscaping within the project is still not done.
Arvind Panwar, a buyer at the project, is visibly worried. He had bought a three-bedroom apartment in Escape for around Rs1 crore in July 2006. He had opted for a down payment plan, paying 95% of the cost of the flat at one time in return for a 10-11% discount on the base price of the flat (parking slots, club houses and other amenities are typically charged extra).
Panwar, 35, who works with a tech firm in California, US, feels weighed down by loan instalments of around Rs70,000 every month.
“I am worried because I am paying my (loan) EMIs regularly, but there is no clarity on when the possession of the apartment will be given,” he said. EMI is short for equated monthly instalment.
Panwar’s buyer agreement says the flat would be delivered within three years—a deadline that matures next month. “The penalty for delay that they have said they will pay (Rs5 per sq. ft per month) is nothing compared with the EMIs I am paying,” he said. “I have been getting lots of emails from Unitech and brokers on the new projects they have launched. I get frustrated when I see those mails.”
Unitech had not responded to Mint’s queries on email and text messages until late Wednesday.
In Mumbai, with five projects still at various stages of construction and far from completion, local realty firm Neptune Developers Pvt. Ltd has launched two more this year.
A 125-acre affordable housing project was launched in March near Kalyan, about 50km north of south Mumbai, and an upmarket, 30-storey twin tower project in Bhandup, a northern suburb of the port city, in April.
The developer is clear about the urgency to do so. “One needs to run the show and for that, one needs to keep adding cautiously to one’s portfolio even when times are not that good. We are only launching projects that will sell and ensure cash flow,” said Nayan Bheda, managing director of Neptune.
The firm has sold 2,000 of 2,100 apartments in its budget housing project at Kalyan, said Bheda, and expects the development at Bhandup, priced at Rs5,000 a sq. ft, to sell out,too. The quantum of sales at the Kalyan project could not be independently verified by Mint.
A realty consultant seconds Bheda’s candidness. “Some developers are launching new projects in a particular price category to ensure cash flow to fund construction of its delayed, existing projects even at a lower profit margin,” said Ashutosh Limaye, associate director (strategic consulting) at Jones Lang LaSalle Meghraj, a property advisory.
Construction at Neptune’s projects running behind schedule has picked up after slowing down, Bheda said, without giving any more details.
It doesn’t help, as a spokesman for Parsvnath Developers Ltd said, that realty firms see further liquidity pressure as buyers at older projects default or delay their instalments due to the developer.
Bangalore developer Brigade Enterprises Ltd has nearly 20 projects at different stages of construction, each of which is lagging behind by at least six months from completion dates expected earlier, M.R. Jaishankar, chairman and managing director of the company, said at a press meet earlier this month.
The Brigade Gateway-branded luxury apartments project in north Bangalore, for instance, is at least 10 months behind schedule and several blog sites on the Internet are flooded with complaints on the delay from customers there. The company has plans to enter the budget housing segment.
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