Monday, August 31, 2009
Centre Wants To Put In Place Well-Defined Property Rights
Centre Wants To Put In Place Well-Defined Property Rights
The Times of India (Chennai edition)
Mahendra Kumar Singh, New Delhi, August 31, 2009
India’s litigation-ridden property rights system might finally get a much-needed makeover, with the urban development ministry writing to state and local authorities to put in place a property title certification system to ensure conclusive title guarantees. The ministry also plans to organize a workshop for local officials to help chalk out an action plan.
This could revolutionise the land market and also have major implications for India’s economy. Celebrated economist Hernando de Soto has pointed out that capitalism truly succeeds only in countries with well-defined property rights. In developed countries, assets can be leveraged as collateral to take loans, which form the basis of entrepreneurship. But the lack of property rights in developing countries turns assets into ‘dead capital’.
It’s an argument that resonates in India, with property disputes being a bane for millions. The cult hit ‘Khosla ka Ghosla’ made the point humourously, but many people have suffered the same problem first-hand, and found nothing even remotely funny about it.
The Times of India (Chennai edition)
Mahendra Kumar Singh, New Delhi, August 31, 2009
India’s litigation-ridden property rights system might finally get a much-needed makeover, with the urban development ministry writing to state and local authorities to put in place a property title certification system to ensure conclusive title guarantees. The ministry also plans to organize a workshop for local officials to help chalk out an action plan.
This could revolutionise the land market and also have major implications for India’s economy. Celebrated economist Hernando de Soto has pointed out that capitalism truly succeeds only in countries with well-defined property rights. In developed countries, assets can be leveraged as collateral to take loans, which form the basis of entrepreneurship. But the lack of property rights in developing countries turns assets into ‘dead capital’.
It’s an argument that resonates in India, with property disputes being a bane for millions. The cult hit ‘Khosla ka Ghosla’ made the point humourously, but many people have suffered the same problem first-hand, and found nothing even remotely funny about it.
Is recovery here? GDP data today
Is recovery here? GDP data today
Hindustan Times, HT Business, August 31, 2009, Page 23
All eyes are on India’s gross domestic product (GDP) data for the April-June quarter, set to be released on Monday amid hopes of a strong economic rebound after factory output rose 7.8 per cent in June — the strongest growth in 16 months.
Manufacturing, which accounts for 80 per cent of overall industrial output, grew by 7.3 per cent. Consumer durables grew by a healthy 15.5 per cent, reflecting a rise in spending on goods like televisions and refrigerators.
Government officials said industrial output is estimated to have clocked a 7 per cent growth in July — the data for which would be released in less than a fortnight.
Recent data, including automobile production, indicate that industrial output data for July would reflect expansion, even though exports have faltered.
But there are two big question marks —plunging exports and deficient rainfall.
Exports fell an annual 27.7 per cent in June to $12.8 billion, the ninth straight monthly fall. It is estimated to have fallen 28 per cent in July.
“Despite positive growth and signs of recovery in the first quarter of 2009-10, the growth outlook for the industrial sector remains mixed,” the Reserve Bank of India has said in its latest annual report.
If rains continue to be elusive, these scattered greenshoots of recovery could dry up in no time. Agriculture accounts for around 17 per cent of the GDP.
“The agricultural growth prospects in 2009-10 have to be assessed taking into account the output impact of deficient monsoon,” the RBI said.
“Given our risk scenario of a 5-8 per cent decline in agricultural GDP, we can expect this year’s shortfall to shave 1 percentage point from overall GDP growth,” Standard Chartered economist Samiran Chakraborty commented.
Hindustan Times, HT Business, August 31, 2009, Page 23
All eyes are on India’s gross domestic product (GDP) data for the April-June quarter, set to be released on Monday amid hopes of a strong economic rebound after factory output rose 7.8 per cent in June — the strongest growth in 16 months.
Manufacturing, which accounts for 80 per cent of overall industrial output, grew by 7.3 per cent. Consumer durables grew by a healthy 15.5 per cent, reflecting a rise in spending on goods like televisions and refrigerators.
Government officials said industrial output is estimated to have clocked a 7 per cent growth in July — the data for which would be released in less than a fortnight.
Recent data, including automobile production, indicate that industrial output data for July would reflect expansion, even though exports have faltered.
But there are two big question marks —plunging exports and deficient rainfall.
Exports fell an annual 27.7 per cent in June to $12.8 billion, the ninth straight monthly fall. It is estimated to have fallen 28 per cent in July.
“Despite positive growth and signs of recovery in the first quarter of 2009-10, the growth outlook for the industrial sector remains mixed,” the Reserve Bank of India has said in its latest annual report.
If rains continue to be elusive, these scattered greenshoots of recovery could dry up in no time. Agriculture accounts for around 17 per cent of the GDP.
“The agricultural growth prospects in 2009-10 have to be assessed taking into account the output impact of deficient monsoon,” the RBI said.
“Given our risk scenario of a 5-8 per cent decline in agricultural GDP, we can expect this year’s shortfall to shave 1 percentage point from overall GDP growth,” Standard Chartered economist Samiran Chakraborty commented.
Residential prices creep up
Residential prices creep up
The Hindu Business Line, August 31, 2009, Page 15
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With demand, especially in the affordable segment, picking up, developers are getting back to the customary practice of hiking the rates.
--------------------------------------------------------------------------------
S. Shanker
Call it better home loan rates or just improved consumer confidence and market sentiment, demand in the residential category, particularly in the affordable segment, has picked up.
And, as bookings and enquiries pour in, developers, particularly in Mumbai, have gone back to the customary practice of hiking rates, which have risen 20-30 per cent since May and continue to go up by the day as bookings grow.
Sales improve
Of late, there has been a marked improvement in sales across metros. DLF reported bookings for 1,356 apartments, measuring 2 million sq.ft, for its project Capital Greens, on a single day.
Indiabulls Group, which launched an affordable home project in Gurgaon, has closed over 100 bookings of its launch of 200 in the first phase. The project is a cluster of 800 apartments.
In Mumbai, Kalpataru Group’s project in Thane saw 110 flats sold in 10 days at Rs 3,100 per sq.ft. Another of its project at LBS Marg logged a sale of 50 flats after the rate for a two-and-a-half BHK was reduced from Rs 98 lakh to Rs 82 lakh. At the distant western Mumbai suburb of Virar, a residential township project promoted by Rustomjee and Evershine on 217 acres registered sale of 174 apartments at Rs 1,700 a sq.ft.
“DB Realty project at Dahisar registered 1,400 bookings, even before construction began,” says Mr Suman Memani, Associate Vice-President, Religare Securities, who also points out that prices have since gone up, particularly in the Mumbai suburbs.
Prices go up
According to Mr Memani, HDIL’s Versova project launched at Rs 7,500 a sq.ft had since gone up to Rs 9,500. Similarly, DB Realty had raised prices at Dahisar to Rs 3,300, from Rs 2,700. The most recent instance is of the Harasiddhi Group, which launched its offering in Goregaon, near here, at Rs 10,000 a sq.ft (carpet area), raised the price to 10,300 a sq.ft.
In general, the price hike creeps in after 50-60 per cent of the project gets sold out. In some ways developers are testing the waters and gauging how much the market can absorb. In any case, after the major chunk is sold any developer can afford to wait for a better tiding, he says.
The price increase is only 5-8 per cent since May, says Mr Anand J. Gupta, General Secretary, Builders Association of India.
Justifying the increase, Mr Gupta says it is purely based on demand-supply dynamics. Builders, who were languishing for want of enquiries, now see a silver lining on the horizon, after they had lowered prices to the maximum to stimulate demand.
Mr Gupta points out that historically real estate had either gone up or come down. It had never been stagnant and in places where it had been constant, development was rather stunted such as in Baroda and Ahmedabad. For ages, the only reason for real estate remaining a choice asset class is because it appreciates, he says.
NO JUSTIFICATION
Mr Pawan Swamy, Managing Director - West India, Jones Lang LaSalle Meghraj, sees little justification for escalation in rates at this point in time. The corrections that have taken place in overheated locations of cities such as Mumbai were required, since developers had priced themselves out of the market.
The fact that the slowdown forced them to rationalise their rates has been working to the developers’ advantage, and one would have assumed that the recent market dynamics had delivered a clear and unequivocal message.
However, Mr Swamy feels that there has been a resurgence of demand for residential property in many markets that are not seeing much supply. In such locations, a number of developers who have successfully sold a sizable component of their existing projects are now attempting to see what kind of price escalations the market will be able to accommodate.
This is, to a significant extent, a gamble that can backfire if the developer in question misjudges market dynamics.
However, this is not happening across the board, but rather in high demand-low supply locations and only among developers who have sufficient capital clout. Nevertheless, much depends on the buyer community — if such price escalations are pandered to, we may be looking at price bubbles building up in such locations.
Last month, Mr Deepak Parekh, Chairman, HDFC, cautioned developers against raising prices, stating that such a move would stall recovery of the segment. He was also sceptical about the builder fraternity’s commitment to the affordable housing segment.
The Hindu Business Line, August 31, 2009, Page 15
--------------------------------------------------------------------------------
With demand, especially in the affordable segment, picking up, developers are getting back to the customary practice of hiking the rates.
--------------------------------------------------------------------------------
S. Shanker
Call it better home loan rates or just improved consumer confidence and market sentiment, demand in the residential category, particularly in the affordable segment, has picked up.
And, as bookings and enquiries pour in, developers, particularly in Mumbai, have gone back to the customary practice of hiking rates, which have risen 20-30 per cent since May and continue to go up by the day as bookings grow.
Sales improve
Of late, there has been a marked improvement in sales across metros. DLF reported bookings for 1,356 apartments, measuring 2 million sq.ft, for its project Capital Greens, on a single day.
Indiabulls Group, which launched an affordable home project in Gurgaon, has closed over 100 bookings of its launch of 200 in the first phase. The project is a cluster of 800 apartments.
In Mumbai, Kalpataru Group’s project in Thane saw 110 flats sold in 10 days at Rs 3,100 per sq.ft. Another of its project at LBS Marg logged a sale of 50 flats after the rate for a two-and-a-half BHK was reduced from Rs 98 lakh to Rs 82 lakh. At the distant western Mumbai suburb of Virar, a residential township project promoted by Rustomjee and Evershine on 217 acres registered sale of 174 apartments at Rs 1,700 a sq.ft.
“DB Realty project at Dahisar registered 1,400 bookings, even before construction began,” says Mr Suman Memani, Associate Vice-President, Religare Securities, who also points out that prices have since gone up, particularly in the Mumbai suburbs.
Prices go up
According to Mr Memani, HDIL’s Versova project launched at Rs 7,500 a sq.ft had since gone up to Rs 9,500. Similarly, DB Realty had raised prices at Dahisar to Rs 3,300, from Rs 2,700. The most recent instance is of the Harasiddhi Group, which launched its offering in Goregaon, near here, at Rs 10,000 a sq.ft (carpet area), raised the price to 10,300 a sq.ft.
In general, the price hike creeps in after 50-60 per cent of the project gets sold out. In some ways developers are testing the waters and gauging how much the market can absorb. In any case, after the major chunk is sold any developer can afford to wait for a better tiding, he says.
The price increase is only 5-8 per cent since May, says Mr Anand J. Gupta, General Secretary, Builders Association of India.
Justifying the increase, Mr Gupta says it is purely based on demand-supply dynamics. Builders, who were languishing for want of enquiries, now see a silver lining on the horizon, after they had lowered prices to the maximum to stimulate demand.
Mr Gupta points out that historically real estate had either gone up or come down. It had never been stagnant and in places where it had been constant, development was rather stunted such as in Baroda and Ahmedabad. For ages, the only reason for real estate remaining a choice asset class is because it appreciates, he says.
NO JUSTIFICATION
Mr Pawan Swamy, Managing Director - West India, Jones Lang LaSalle Meghraj, sees little justification for escalation in rates at this point in time. The corrections that have taken place in overheated locations of cities such as Mumbai were required, since developers had priced themselves out of the market.
The fact that the slowdown forced them to rationalise their rates has been working to the developers’ advantage, and one would have assumed that the recent market dynamics had delivered a clear and unequivocal message.
However, Mr Swamy feels that there has been a resurgence of demand for residential property in many markets that are not seeing much supply. In such locations, a number of developers who have successfully sold a sizable component of their existing projects are now attempting to see what kind of price escalations the market will be able to accommodate.
This is, to a significant extent, a gamble that can backfire if the developer in question misjudges market dynamics.
However, this is not happening across the board, but rather in high demand-low supply locations and only among developers who have sufficient capital clout. Nevertheless, much depends on the buyer community — if such price escalations are pandered to, we may be looking at price bubbles building up in such locations.
Last month, Mr Deepak Parekh, Chairman, HDFC, cautioned developers against raising prices, stating that such a move would stall recovery of the segment. He was also sceptical about the builder fraternity’s commitment to the affordable housing segment.
After a lull, land deals make a comeback
After a lull, land deals make a comeback
The Hindu Business Line, August 31, 2009, Page 15
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Coinciding with the return of buyer interest in select pockets of the residential market and the improved liquidity position of builders, land auctions are inching back into the spotlight.
--------------------------------------------------------------------------------
Moumita Bakshi Chatterjee
The slowdown in the property market, induced by the global meltdown and negative sentiments, had dealt a body blow to the mega land deals, in the country. But the gloom seems to be finally lifting. Coinciding with the return of buyer interest in select pockets of residential market and the improved liquidity position of builders, land auctions are inching back into the spotlight.
Consider this. DLF Ltd recently made headlines when it walked away with 350.7 acres in Gurgaon, for an estimated Rs 1,750 crore, marking one of the largest land deals in the country. The prime land, on the Gurgaon-Faridabad road, had been put on the block for re-bid after the only bidder in the first round (DLF) had drawn attention to certain difficulties in project implementation.
HSIIDC (Haryana State Industrial & Infrastructure Development Corporation) re-invited bids in July this year with easier terms and conditions, including staggered payment plan spread over seven years. This time, DLF clinched the deal with its winning bid of Rs 12,000 per square metre — two other bidders did not qualify on technical grounds.
The land in the Delhi suburb would be used for development of commercial, residential, sports complexes, and an 18-hole golf course. DLF, however, remains tight-lipped about the project, but sources say that the land deal is “positive” for the company, given its proximity to South Delhi on one side and the existing golf course on the other.
DLF is not the only one going after such transactions. Earlier this year, Anant Raj Industries decided to set aside nearly Rs 400 crore from its cash reserves, to acquire land for upcoming residential projects.
So are the land deals back in reckoning, after a long dry spell? Industry experts believe that land acquisition will gather pace, but will remain largely need-based.
“The market definitely is improving, new projects are being launched and the cash flow, for builders, is getting back in shape on the back of QIP issues and some proposed public offers that are being lined-up,” says Mr Manish Aggarwal, Executive Director, Investment Services, Cushman & Wakefield (C&W) India.
Time to buy
While the conditions are turning positive, the biggest clincher clearly is land valuation. In many cases the land prices have corrected nearly 60-70 per cent, says an industry observer.
Agrees Mr Amit Sarin, Director and CEO, Anant Raj Industries. “It is the best time to buy land — the valuation is a fraction of the 2007-level. Everyone is announcing low cost and affordable housing projects and the main ingredient of low cost in real estate is the land cost, not construction cost,” Mr Sarin points out.
But Anant Raj Industries, itself a zero-debt company, expects land buying to remain selective for a while.
“It is not a trend in the industry. It will happen only in those cases where the land costs are extremely attractive and the builder has a comfortable liquidity position,” he adds.
The company has stayed away from aggressive land buying over the last 2-3 years.
No frenzy likely
Real estate consulting firm CBRE too does not foresee the return of land frenzy seen in 2007-2008. “Companies are not rushing into transactions. They are more cautious and evaluating deals carefully on parameters such as potential for development, location, margins and valuation,” says Mr Anshuman Magazine, Chairman and Managing Director, CB Richard Ellis South Asia Pvt. Ltd.
The Hindu Business Line, August 31, 2009, Page 15
--------------------------------------------------------------------------------
Coinciding with the return of buyer interest in select pockets of the residential market and the improved liquidity position of builders, land auctions are inching back into the spotlight.
--------------------------------------------------------------------------------
Moumita Bakshi Chatterjee
The slowdown in the property market, induced by the global meltdown and negative sentiments, had dealt a body blow to the mega land deals, in the country. But the gloom seems to be finally lifting. Coinciding with the return of buyer interest in select pockets of residential market and the improved liquidity position of builders, land auctions are inching back into the spotlight.
Consider this. DLF Ltd recently made headlines when it walked away with 350.7 acres in Gurgaon, for an estimated Rs 1,750 crore, marking one of the largest land deals in the country. The prime land, on the Gurgaon-Faridabad road, had been put on the block for re-bid after the only bidder in the first round (DLF) had drawn attention to certain difficulties in project implementation.
HSIIDC (Haryana State Industrial & Infrastructure Development Corporation) re-invited bids in July this year with easier terms and conditions, including staggered payment plan spread over seven years. This time, DLF clinched the deal with its winning bid of Rs 12,000 per square metre — two other bidders did not qualify on technical grounds.
The land in the Delhi suburb would be used for development of commercial, residential, sports complexes, and an 18-hole golf course. DLF, however, remains tight-lipped about the project, but sources say that the land deal is “positive” for the company, given its proximity to South Delhi on one side and the existing golf course on the other.
DLF is not the only one going after such transactions. Earlier this year, Anant Raj Industries decided to set aside nearly Rs 400 crore from its cash reserves, to acquire land for upcoming residential projects.
So are the land deals back in reckoning, after a long dry spell? Industry experts believe that land acquisition will gather pace, but will remain largely need-based.
“The market definitely is improving, new projects are being launched and the cash flow, for builders, is getting back in shape on the back of QIP issues and some proposed public offers that are being lined-up,” says Mr Manish Aggarwal, Executive Director, Investment Services, Cushman & Wakefield (C&W) India.
Time to buy
While the conditions are turning positive, the biggest clincher clearly is land valuation. In many cases the land prices have corrected nearly 60-70 per cent, says an industry observer.
Agrees Mr Amit Sarin, Director and CEO, Anant Raj Industries. “It is the best time to buy land — the valuation is a fraction of the 2007-level. Everyone is announcing low cost and affordable housing projects and the main ingredient of low cost in real estate is the land cost, not construction cost,” Mr Sarin points out.
But Anant Raj Industries, itself a zero-debt company, expects land buying to remain selective for a while.
“It is not a trend in the industry. It will happen only in those cases where the land costs are extremely attractive and the builder has a comfortable liquidity position,” he adds.
The company has stayed away from aggressive land buying over the last 2-3 years.
No frenzy likely
Real estate consulting firm CBRE too does not foresee the return of land frenzy seen in 2007-2008. “Companies are not rushing into transactions. They are more cautious and evaluating deals carefully on parameters such as potential for development, location, margins and valuation,” says Mr Anshuman Magazine, Chairman and Managing Director, CB Richard Ellis South Asia Pvt. Ltd.
SEZs all set to regain position of prominence
SEZs all set to regain position of prominence
The Economic Times, August 31, 2009, Page 19
While SEZ marketing activities have been low key and nondescript for a while, things are slowly changing, says Kamlesh Pandya
Global trends suggest that barely 10 per cent of special economic zones (SEZs) that are planned actually fructify, says Mayur Shah, MD of Marathon Group. At Nexzone, his upcoming IT and ITeS SEZ site in the periphery of Navi Mumbai, Shah says that the global trend is reflected in India too. "Ninety per cent of the Indian SEZs that were to be announced have been dropped and the remaining 10 per cent will succeed," he says. "Times will be positive, from now on," he predicts.
"All indications are that the markets in Europe and North America will be back to business, between April and September of next year," he says. That will bring back smiles on the faces of Indian IT and ITeS companies and also BPO and KPO companies, but it will also create new challenges for them. IT and ITeS SEZs can prove to be among the best solutions for these challenges, feels Shah. World class infrastructure will be the key to the success of not just IT and ITeS SEZs, but also of manufacturing and industrial SEZs, says Shah. The tenants for these will be a mix of mid-sized Indian companies that will be looking to go global, as well as some of the large players in the respective domains, explains Shah.
Any marketing strategy in terms of SEZs should be directed at new domestic and international companies, gearing up to enter the Indian market and hoping to expand operations after deployment, points out Abhishek Kiran Gupta, head (research), Jones Lang LaSalle Meghraj.
Commercial real estate specialist, Mohanjeet Sehgal, sees valueadditions when it comes to SEZs, over the next couple of years. "Policy flip-flops and land acquisition issues have created a negative impression, especially when STPI was granted a year's extension in the last budget," he says. "However, when the STPI concessions cease, ultimately those who have space in IT and ITeS SEZs will be clear winners," he insists. In Navi Mumbai and its periphery, he sees great potential for BPO and KPO companies at SEZs. "Marketing activities for SEZs were rather slow, till recently. Now, companies are comparing different aspects of leasing space in SEZs in Navi Mumbai vis-à-vis Mumbai's central suburbs. It is decision making time, now," he says.
Rajesh Gadgil has just made a presentation to a large company that is looking out for SEZ space in Thane. "SEZs totally change the outlook of potential lease tenants," he says. It is not just the large players that are considering its positives, says Gadgil, who adds that smaller sized IT spaces will also get good demand from start-ups and small entrepreneurs.
According to Ashok Kumar, principal and managing director, CresaPartners India, the target audience for SEZs and the issue of striking the right balance between portfolio and tenant mix, needs to kept in mind. While SEZs are needed to accelerate GDP growth and attract foreign investment, the 'indecision' on land acquisition and other policies has resulted in numerous SEZs not being able to take off, he points out.
SEZs are not a suitable or tempting platform for existing STPI-based companies seeking to consolidate, cautions JLLM's Abhishek Kiran Gupta. "In addressing the target audience of large, new companies, the marketing strategy should highlight the fact that new companies can avail of the full tax benefits that SEZs provide and that these benefits will continue to be applicable as they expand operations," he suggests.
India is known for its entrepreneurial spirit and the IT, ITeS and BPO/ KPO sector are no different, shares Dilawar Nensey, joint MD, Royal Palms. "Lease rental is an important factor that impacts the small-sized start-up entrepreneur," points out Nensey and innovative schemes may just help the IT/ ITeS/ BPO/ KPO entrepreneur get the right sized start-up for his project.
Nensey echoes Shah's thoughts that the sector is bound to flourish and that a unit in a SEZ makes long term business sense. "India will always remain an IT/ ITeS superpower and SEZs will be the key to ensuring that we remain competitive in global markets," he concludes.
Rlys creates land bank of 1.12 L acre
Rlys creates land bank of 1.12 L acre
The Financial Express, August 31, 2009, Page 3
Press Trust of India, New Delhi
With a view to utilise surplus land for commercial purposes, Railways have now created a land bank of 1.12 lakh acre across the country.
“Our land bank is ready now as we have surplus land of 1.12 lakh acre at 103 sites across the country. This will be utilised for commercial purposes,” railway minister Mamata Banerjee said on Sunday while flagging off three trains here.
She reminded about the benefits of the Kisan Vision scheme, which aims at running special trains from production clusters of perishable goods to consumer centres transporting fruits and vegetables.
The scheme aims to benefit farmers by creating cold storage facility for vegetables and other perishable items, she said, adding “Experts are examining the scheme.”
She also announced starting of the much talked about Duranto train services for Kolkata, Pune and Mumbai from Delhi by mid-September.
More than 40 of the total 79 trains announced in the Budget are ready to be flagged off within next 15 to 20 days, she said.
Banerjee flagged off the Delhi Sarai Rohilla-Sadulpur Express named Pragati Express and. She promised more trains from Delhi like a ladies specials from Delhi to Panipat & Ghaziabad and Shatabdi Express between Delhi and Kanpur would be started soon .
Besides, she also flagged off the extended service of the Bandra terminus-Jaipur Express up to Delhi Sarai Rohilla from Delhi Cantonment station, the new building of which was also commissioned by her.
On the crucial Kashmir rail link project, she said track laying work from Qazigund to Ananatnag is complete now and the services will be operational soon.
The Financial Express, August 31, 2009, Page 3
Press Trust of India, New Delhi
With a view to utilise surplus land for commercial purposes, Railways have now created a land bank of 1.12 lakh acre across the country.
“Our land bank is ready now as we have surplus land of 1.12 lakh acre at 103 sites across the country. This will be utilised for commercial purposes,” railway minister Mamata Banerjee said on Sunday while flagging off three trains here.
She reminded about the benefits of the Kisan Vision scheme, which aims at running special trains from production clusters of perishable goods to consumer centres transporting fruits and vegetables.
The scheme aims to benefit farmers by creating cold storage facility for vegetables and other perishable items, she said, adding “Experts are examining the scheme.”
She also announced starting of the much talked about Duranto train services for Kolkata, Pune and Mumbai from Delhi by mid-September.
More than 40 of the total 79 trains announced in the Budget are ready to be flagged off within next 15 to 20 days, she said.
Banerjee flagged off the Delhi Sarai Rohilla-Sadulpur Express named Pragati Express and. She promised more trains from Delhi like a ladies specials from Delhi to Panipat & Ghaziabad and Shatabdi Express between Delhi and Kanpur would be started soon .
Besides, she also flagged off the extended service of the Bandra terminus-Jaipur Express up to Delhi Sarai Rohilla from Delhi Cantonment station, the new building of which was also commissioned by her.
On the crucial Kashmir rail link project, she said track laying work from Qazigund to Ananatnag is complete now and the services will be operational soon.
Drop in housing loans slows retail credit growth
Drop in housing loans slows retail credit growth
The Hindu Business Line, August 31, 2009, Page 1
Education loans’ share rises.
M.V.S. Santosh Kumar
Retail credit, which was until a couple of years ago, viewed as a big growth driver for banks, has seen steep moderation in the recent past, data from the RBI Annual Report released this week show.
Data show that the proportion of retail loans to total non-food credit actually fell from 24.5 per cent to 21.6 per cent between 2004-05 and 2008-09. Except for education loans, all other retail loan segments witnessed a moderation in growth over the past year.
Retail credit after expanding by 32 per cent in the 2004-07 period, moderated to an 11 per cent growth for the next two years. The reason for the slowdown may be attributed to banks’ asset quality concerns rising due to the economic downturn. Retail credit offtake too slowed.
Housing proportion falls
Housing loans, the dominant category of retail loans, grew at just 9 per cent annually during 2007-09, after a 31 per cent annual growth in the previous 3 years. Housing loans constitute almost half of the retail credit outstandings, with almost 73 per cent of this falling under priority lending – below Rs 20 lakh loans.
The subdued growth can be traced to the disproportionate increase in property prices and rising interest rates until recently.
Housing loans saw their share in the retail loan pie fall from 52.2 per cent in 2004-05 to 49.4 per cent as of May 22, 2009. However, housing credit may pick up on the rollout of new housing loan schemes and moderating property prices.
Credit card loans and education loans, the two fastest growing categories, have both increased their share in retail credit in recent years.
Of these, education loans alone continued to grow at a strong pace of 39.2 per cent in 2008-09.
Credit card loans, which managed to expand at a swift pace until 2007-08 saw growth drop to 6.1 per cent in 2008-09.
Credit cards have seen their share go up from 2.5 per cent of the retail credit to as much as 4.9 per cent, a pointer to rising income levels and increased consumption, especially in urban areas and metros. Education loans have seen significant demand in the last few years. Despite its unsecured nature, this portfolio doubled its share in loans to 5.2 per cent in the latest financial year. Loan against fixed deposit is another segment which has seen a steady 13 per cent growth in the last five years.
These loans are given at small spread over the deposit rate, as the loan is already secured by the deposit. The consumer durable loans segment is the only segment which has witnessed decline in outstandings over years.
But it is clear that this trend had little to do with actual sales, as industrial production data show consumer durable sales expanding over this period.
The Hindu Business Line, August 31, 2009, Page 1
Education loans’ share rises.
M.V.S. Santosh Kumar
Retail credit, which was until a couple of years ago, viewed as a big growth driver for banks, has seen steep moderation in the recent past, data from the RBI Annual Report released this week show.
Data show that the proportion of retail loans to total non-food credit actually fell from 24.5 per cent to 21.6 per cent between 2004-05 and 2008-09. Except for education loans, all other retail loan segments witnessed a moderation in growth over the past year.
Retail credit after expanding by 32 per cent in the 2004-07 period, moderated to an 11 per cent growth for the next two years. The reason for the slowdown may be attributed to banks’ asset quality concerns rising due to the economic downturn. Retail credit offtake too slowed.
Housing proportion falls
Housing loans, the dominant category of retail loans, grew at just 9 per cent annually during 2007-09, after a 31 per cent annual growth in the previous 3 years. Housing loans constitute almost half of the retail credit outstandings, with almost 73 per cent of this falling under priority lending – below Rs 20 lakh loans.
The subdued growth can be traced to the disproportionate increase in property prices and rising interest rates until recently.
Housing loans saw their share in the retail loan pie fall from 52.2 per cent in 2004-05 to 49.4 per cent as of May 22, 2009. However, housing credit may pick up on the rollout of new housing loan schemes and moderating property prices.
Credit card loans and education loans, the two fastest growing categories, have both increased their share in retail credit in recent years.
Of these, education loans alone continued to grow at a strong pace of 39.2 per cent in 2008-09.
Credit card loans, which managed to expand at a swift pace until 2007-08 saw growth drop to 6.1 per cent in 2008-09.
Credit cards have seen their share go up from 2.5 per cent of the retail credit to as much as 4.9 per cent, a pointer to rising income levels and increased consumption, especially in urban areas and metros. Education loans have seen significant demand in the last few years. Despite its unsecured nature, this portfolio doubled its share in loans to 5.2 per cent in the latest financial year. Loan against fixed deposit is another segment which has seen a steady 13 per cent growth in the last five years.
These loans are given at small spread over the deposit rate, as the loan is already secured by the deposit. The consumer durable loans segment is the only segment which has witnessed decline in outstandings over years.
But it is clear that this trend had little to do with actual sales, as industrial production data show consumer durable sales expanding over this period.
The REIT way
The REIT way
The Economic Times, August 31, 2009, Page 18
Are Indian REITs ready to make a mark or are they losing business to those from overseas markets? Kamlesh Pandya analyses
In a scenario where real estate is becoming out of reach for small investors, to invest and reap profits, real estate investment trusts (REITs) are a good way for the investor class to invest in the sector. It also benefits developers, as more funds are pumped into real estate. REITs/REMFs offer an innovative option for investors to buy and trade shares in the real estate sector and collect dividends from capital appreciation and rental incomes, explains Atul Modak, head, Kohinoor City Project.
REITs are generally classified into three broad categories - equity REITs, mortgage REITs and hybrid REITs. "The best benefit of REITs is fast and easy liquidation of investments in the real estate market, unlike the traditional way of disposing real estate," he explains. However, it is important to have proper regulation and utilisation of these funds and total transparency in the whole process. For REITs to be a success and contribute to the growth of the economy, initial tax sops to the investors and REITs will be helpful, he feels.
REITs in the Indian scenario, are yet to take off, says Ashok Kumar, principal and managing director, CresaPartners India. "Certainly, we are losing out on such opportunities to overseas REITs, as it does not seem to be a priority for the government," he regrets. The real estate sector in India is still complex and the regulators have to fix a lot of policies and valuation issues, in advance, for REITs to become functional, he adds. "If one considers the union budget 2009-10, there was no mention about FDI in real estate or REITs and REMFs. However, we hope that the FM will announce some relief for the sector, post the budget," adds Kumar.
Realtor Bharat Mailk points to a paper, 'Indian REITs: Are We Prepared', by the ASSOCHAM and CRISIL and says that REITs in India would have the potential to hold at least five per cent share of the total global real estate market, by 2010. The size of this global market would touch US $ 1,400 billion, according to the paper. "According to the paper, by 2010, REITs alone would hold a market size of US $ 70 billion of the total real estate market, as the concept is gaining ground in countries like India and other developing nations," he says, laying out the statistics. In the Indian context, REITs can help provide an exit route for developers, to revolve funds more efficiently. It will also provide opportunities to retail investors to participate in the real estate sector and provide asset diversification to corporate investors, besides building a vibrant secondary real estate market, adds Malik.
REMFs are the Indian version of the international REITs, adapted to the Indian mutual funds platform, explains Shobhit Agarwal, joint MD (capital markets), Jones Lang LaSalle Meghraj. "In the current context, while everybody is now working on entry and creating assets, the important question of who will buy these assets to provide an exit to the developers / investors needs to be addressed,'' he points out. The leveraging allowed in the case of Indian REITs is the lowest (at 20 per cent of the value), compared to 35 per cent in the case of Malaysia, Hong Kong, Singapore, and Taiwan and 200 per cent in the case of Korea. This could result in a lower yield and because it is not really leveraged, the risk taken is also more," he cautions.
Mihir Dhruva, CEO of Siddharth Group is of the opinion that REITs should be more preferred by the 'low-risk, low-return' investor segment. "Sentiments, which contributed significantly to the depressed market in FY 08-09 are now reversing," says Dhruva. "This has been reflected in reports coming from different cities, showing revival of real estate transactions and REITs should have a positive response as a result," he concludes.
The Economic Times, August 31, 2009, Page 18
Are Indian REITs ready to make a mark or are they losing business to those from overseas markets? Kamlesh Pandya analyses
In a scenario where real estate is becoming out of reach for small investors, to invest and reap profits, real estate investment trusts (REITs) are a good way for the investor class to invest in the sector. It also benefits developers, as more funds are pumped into real estate. REITs/REMFs offer an innovative option for investors to buy and trade shares in the real estate sector and collect dividends from capital appreciation and rental incomes, explains Atul Modak, head, Kohinoor City Project.
REITs are generally classified into three broad categories - equity REITs, mortgage REITs and hybrid REITs. "The best benefit of REITs is fast and easy liquidation of investments in the real estate market, unlike the traditional way of disposing real estate," he explains. However, it is important to have proper regulation and utilisation of these funds and total transparency in the whole process. For REITs to be a success and contribute to the growth of the economy, initial tax sops to the investors and REITs will be helpful, he feels.
REITs in the Indian scenario, are yet to take off, says Ashok Kumar, principal and managing director, CresaPartners India. "Certainly, we are losing out on such opportunities to overseas REITs, as it does not seem to be a priority for the government," he regrets. The real estate sector in India is still complex and the regulators have to fix a lot of policies and valuation issues, in advance, for REITs to become functional, he adds. "If one considers the union budget 2009-10, there was no mention about FDI in real estate or REITs and REMFs. However, we hope that the FM will announce some relief for the sector, post the budget," adds Kumar.
Realtor Bharat Mailk points to a paper, 'Indian REITs: Are We Prepared', by the ASSOCHAM and CRISIL and says that REITs in India would have the potential to hold at least five per cent share of the total global real estate market, by 2010. The size of this global market would touch US $ 1,400 billion, according to the paper. "According to the paper, by 2010, REITs alone would hold a market size of US $ 70 billion of the total real estate market, as the concept is gaining ground in countries like India and other developing nations," he says, laying out the statistics. In the Indian context, REITs can help provide an exit route for developers, to revolve funds more efficiently. It will also provide opportunities to retail investors to participate in the real estate sector and provide asset diversification to corporate investors, besides building a vibrant secondary real estate market, adds Malik.
REMFs are the Indian version of the international REITs, adapted to the Indian mutual funds platform, explains Shobhit Agarwal, joint MD (capital markets), Jones Lang LaSalle Meghraj. "In the current context, while everybody is now working on entry and creating assets, the important question of who will buy these assets to provide an exit to the developers / investors needs to be addressed,'' he points out. The leveraging allowed in the case of Indian REITs is the lowest (at 20 per cent of the value), compared to 35 per cent in the case of Malaysia, Hong Kong, Singapore, and Taiwan and 200 per cent in the case of Korea. This could result in a lower yield and because it is not really leveraged, the risk taken is also more," he cautions.
Mihir Dhruva, CEO of Siddharth Group is of the opinion that REITs should be more preferred by the 'low-risk, low-return' investor segment. "Sentiments, which contributed significantly to the depressed market in FY 08-09 are now reversing," says Dhruva. "This has been reflected in reports coming from different cities, showing revival of real estate transactions and REITs should have a positive response as a result," he concludes.
Promoters Get Cold Feet About Ipos
Promoters Get Cold Feet About Ipos
The Telegraph, Mumbai, August 30, 2009
Equity investors hoping to subscribe to IPOs may have to wait for some time. Promoters are reluctant to test the market’s appetite for new stocks, though shares have rallied upwards on the back of good liquidity, while there has been a strong buzz around IPOs (initial public offerings).
According to Prime Database, 13 companies — mainly mid-cap firms — have received Sebi’s approval as early as September last year for public floats aggregating over Rs 2,000 crore.
Another 21 companies have filed offer documents and are awaiting for their proposals — worth over Rs 8,000 crore — to be cleared. These include the offerings of power companies such as JSW Energy and Indiabulls Power.
“We are seeing IPOs at the rate of one a month. Companies are still nervous, thanks to the volatile markets, and fear that they will not be able to get the right price. They are waiting for a reasonable period of stability in the markets,” said Prithvi Haldea, chairman and managing director of Prime Database, a private agency that tracks IPOs.
“While the 30-share BSE sensex has shot up from 9903 points on January 1 to 15922 points on August 28, 2009, this has been accompanied by increased intra- and inter-day volatility. The market is making swings of 5-10 percent on the upside and downside,” said a trader with a leading Mumbai-based brokerage.
Godrej Properties, which received approval in June for a Rs 600-crore issue, may launch its IPO in the next couple of months.
“We are looking at the IPO seriously now. The markets show signs of stability, but I can’t really commit myself on whether we will launch the issue in the next three months,” Milind Korde, executive director and president of Godrej Properties, said.
Analysts said an IPO rush was unlikely for some time, though private firms are very keen. A recent offering by Adani Power was oversubscribed 20 times — the retail subscription was much lower — and is trading 4 percent above its listing price.
Uniform Code For Realty Valuations Likely Soon
Uniform Code For Realty Valuations Likely Soon
Mail Today, New Delhi, August 31, 2009
Devesh Chandra Srivastava, New Delhi
Unexpected rise or fall in property prices will soon be a thing of the past.
Industry players and experts in the realty segment are coming together to develop a regulatory framework for property valuations in the country on the lines of international norms. But there are challenges on the path of entering a phase of maturity, according to realty experts.
Kirit Budhbhatti, secretary, Centre for Valuation Studies, Research and Training (CVSRT), said, “ There is no Act to regulate the profession till date in India. So, formation of uniform guidelines on the lines of International Financial Reporting Standards (IFRS) will help setting standards in the country.” Adopting IFRS norms will enable companies to benchmark with global peers and improve brand value.
Importantly, there is hardly any training facility in India that can guide young professionals aspiring to become an independent valuer. Lack of training during the job is also a problem in India. On- job training along with the required degree is a must.
Renowned real estate experts assembled in a national conference on ‘ Valuations: The Emerging Roadmap for India’ jointly organised by the Royal Institute of Chartered Surveyors and Confederation of Indian Industries (CII) in New Delhi on August 27- 18.
Rajiv Shah, managing director of the Mumbai- based firm, R. B. Shah and Associates, said, “ Very few firms try to use fresh talents in the industry. Valuers in India are fragmented. The institutions controlling the learning/ training part are in decaying state. The brick and mortar system of valuation has to be more investor and market savvy.” Association with some professional organisation makes them to understand the flow of money and return on investments.
“ Valuers also need to know the history of pricing of a said property. Consumption of property has a cycle of seven- eight years. So does its pricing. Valuers need to work on projections based on the history,” said Sachin Gulaty, head of valuations, Jones Lange LaSalle- Meghraj.
Importantly, according to current market standards, valuers earn a small amount for their work. On the other hand, outsourcing the job of evaluating becomes a costly affair for corporates.
Though, the National Housing Bank (NHB) and the Indian Banks’ Association ( IBA) are working on draft guidelines for property valuers associated with them, a vast majority of private valuers and independent professionals will still not come under the purview of NHB or IBA. So setting a uniform code will benefit all.
Creating a framework for the fee structure, depending on the location and the area of the property is a must.
Moreover, when two parties — seller and purchaser — join hands for a deal on a property, both parties might not use the same valuer or institution for the evaluation.
Anshuman Magazine, CMD, CB Richards Ellis- South Asia Private Ltd, said, “ Therefore, there would be difference in values assigned to the property in question. This might impact the transaction or might even lead to the breaking of the deal on the issue of disagreement over the price. It is therefore a must that price variation should not be much. Else, there would be a conflict.” In this regard, Robert Peto, vice- chairman (capital markets), DTZ, suggested, “ While evaluating, it is the duty of the valuer to keep the purchaser in mind. Valuation should be done through the eyes of purchaser rather than the vendor.”
Centre Wants To Put In Place Well-Defined Property Rights
Centre Wants To Put In Place Well-Defined Property Rights
The Times of India (Chennai edition)
Mahendra Kumar Singh, New Delhi, August 31, 2009
India’s litigation-ridden property rights system might finally get a much-needed makeover, with the urban development ministry writing to state and local authorities to put in place a property title certification system to ensure conclusive title guarantees. The ministry also plans to organize a workshop for local officials to help chalk out an action plan.
This could revolutionise the land market and also have major implications for India’s economy. Celebrated economist Hernando de Soto has pointed out that capitalism truly succeeds only in countries with well-defined property rights. In developed countries, assets can be leveraged as collateral to take loans, which form the basis of entrepreneurship. But the lack of property rights in developing countries turns assets into ‘dead capital’.
It’s an argument that resonates in India, with property disputes being a bane for millions. The cult hit ‘Khosla ka Ghosla’ made the point humourously, but many people have suffered the same problem first-hand, and found nothing even remotely funny about it.
The Times of India (Chennai edition)
Mahendra Kumar Singh, New Delhi, August 31, 2009
India’s litigation-ridden property rights system might finally get a much-needed makeover, with the urban development ministry writing to state and local authorities to put in place a property title certification system to ensure conclusive title guarantees. The ministry also plans to organize a workshop for local officials to help chalk out an action plan.
This could revolutionise the land market and also have major implications for India’s economy. Celebrated economist Hernando de Soto has pointed out that capitalism truly succeeds only in countries with well-defined property rights. In developed countries, assets can be leveraged as collateral to take loans, which form the basis of entrepreneurship. But the lack of property rights in developing countries turns assets into ‘dead capital’.
It’s an argument that resonates in India, with property disputes being a bane for millions. The cult hit ‘Khosla ka Ghosla’ made the point humourously, but many people have suffered the same problem first-hand, and found nothing even remotely funny about it.
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