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Growth of Kolkata Real Estate

From: www.streetdirectory.com


In the last couple of years, Kolkata real estate, has witnessed manifold increase in residential capital values. The major transactional areas include South Central Kolkata, E M Bypass , Kankurgachi , Phoolbagan, Beliaghata, Garia-Narendrapur in the Southeast, Behala-Joka in the south west, Rajarhat in the northeast, BT Road in the northwest and Howrah in the west. 

The mid-end residential property segment which was available in a range of 8-15 lakh an year back is now available for Rs 20-25 lakh .The premium budget apartments which was available in the bracket of 25-35 lakh one year back has gone up to 45-75 lakh . 

30% of the demand is real estate market in Kolkata is driven by the IT and related sectors. According to real estate consultant Sandip Sen of Calcutta Skyline, 'A little hit has been there for the Middle segment as the remuneration pattern has not been able to match up to the real estate price hike .In Kolkata the average demand is still in and around 20 lakh but there isn't enough supply in this segment.' 

The average size that is sought after in the middle segment is around 1,000 sq ft for around 18-20 lakhs and for the premium segment it is around 1700-2500 for 50-70 lakh. 

Apartments have always been the preferred option vis-à-vis bungalows in Kolkata. Says Sandip Sen, 'Apartments definitely come cheaper and resident can avail of all facilities and amenities in a huge complex.' A lot of projects are coming to Kolkata wherein the apartments and bungalows are part of an integrated township. 

There is a lot of interest generated in the investor community for the city of joy. Most of the big real estate brands such as DLF, Vatika are already there plus FDI is expected to flow into the city in a big way. 

Middle Income Group Affected By Price Hike In Kolkata's Realty - By George Gonigal

From: www.selfgrowth.com


The escalation in real estate values has been across all segments in Kolkata but the worst hit has been the middle income group. With a steady increase of 15-20 per cent in residential property values each year, what was available for the mid segment for Rs 8-15 lakh one year back, has climbed up to 20-25 lakh.
While the premium apartments available in the price bracket of 25-35 lakh an year back has also gone up to 45-75 lakh, the high income group is able to weather the price hike as they have high disposable income and mostly they are working couples.
According to real estate consultant Sandeep Sen of Calcutta Skyline, "In Kolkata the average demand is still in and around 20 lakh. To take an apartment of Rs 20 lakh a customer in usually gets it financed and goes for Rs 17 lakh loan which is 85 per cent of the property value now. This means he must have a salary of Rs 35,000 per month at least.
That is the issue- the hike in salaries has not been keeping pace with the hike in real estate values." Moreover he adds that these are young buyers and the average age of home buyer has decreased to early thirties in the last 5-years only. For the young buyer, the pinch is even more as he has high aspirations of owning a home but is not able to fulfill his dream as the EMI is much more than what he can afford.
For the higher income group which is not price sensitive in Kolkata, there are at least 15 brands in the real estate industry who are catering to their exclusive demand of a lifestyle living.
The average size for a residential unit for the middle segment is around 1,000 sq ft (Rs 18-20 lakh) while for the premium segment, it is around 1,700-2,500 sq. ft available now in the bracket of 50-70 lakh.

Indian HNIs prefer realty investment in India than abroad

From: TNN ECONOMIC TIMES, 20 JUN, 2009


The Indian HNI (high net worth individual) is being aggressively wooed by foreign developers. With the balance of economic power shifting towards Asia, and with India projected to be the world's third largest economy by 2050, and a subsequent increase in the number of wealthy individuals , property consultants from across the globe are making a sales pitch, and also getting the HNI segment interested enough to buy.

HNIs are people with net financial assets (liquid assets) of at least $1 million, excluding primary residence and consumables. Data from consultants like Cap-Gemini and Merrill Lynch suggests that India has the youngest HNI population in the Asia-Pacific region, with the club having even 28-year-olds on their rolls. 

Strong GDP growth, robust figures in industrial and service sectors, high market capitalization , and steady FII inflows are some factors contributing to the rise in HNI wealth. In 2006, India's HNI population crossed the 1 lakh figure, which made it the second-fastest growing HNI segment in the world, after Singapore, where the growth was 21%. 
If one were to analyze the asset allocation of Indian HNIs, data suggests that while equities make up the greatest portion of India's HNIs' portfolio at 31%, 17% of their investibles are in real estate. 

"If you were to look at the total pie of investment by Indian HNI, only 2% of the investment from Indian HNIs is going in overseas real estate ," says Samantha Jerath, a director at Jerath Properties, Delhi-based real estate consultant having a portfolio of many HNIs. He adds, "Barring Dubai and London, I do reckon (investment taking place in) any other place due to cultural differences, unfamiliarity with local laws, language issues." 

Also accessing and monitoring one's investment becomes so much more difficult when it is an overseas investment, as there is paperwork involved, making payments from time to time, and with many real estate investment options available back home with even better appreciation profiles, Indians any day prefer their home country. 

Vikram Baidyanath, a HNI, says out of all global property destinations, London is most attractive to him. "I've spent more than six years in London and it is more of a second home. Besides , it gives a comfort level to be in London and see our products displayed in famous stores. The Asian community has a strong presence and English is understood and spoken by all, so even language is not a barrier." 

Though well travelled, he feels he would not be exactly tempted to invest elsewhere - "To invest in a foreign real estate, either one has to have business interest in a place that makes you travel frequently to that country or be really attached to that place. Also, the appreciation in property is not all that phenomenal to attract anyone to casually invest in any and every global locale." 

Lack of awareness about foreign projects and foreign laws is another deterrent for HNIs from investing in foreign real estate. According to Sandip Sen of Calcutta Skyline who has a good network of HNI clients in the eastern part of the country, "We have found that Indians are not investing a lot in foreign markets, if at all they are investing, it is restricted to UK and the Middle East. Primary constraints in making overseas property investments include unfamiliarity with local laws of that country, fear of being stuck in litigation in another country, plus lack of awareness in general. Also there are regulatory issues." As per RBI regulations, the maximum limit allowed in investments outside India is $200,000 per year. For any higher investments , RBI needs to be approached. 

Dubai has been a popular choice with Indian HNIs and that is corroborated by Dubai-based real estate consultant Mansoor from Spring Rose Real Estate consultants, "A lot of Indian, especially HNIs from South India are investing in retail, while HNIs from Delhi and Mumbai are purchasing apartments from well established brand names in real estate. As a matter of fact, HNIs from India, Pakistan and Bangladesh like to have a foothold in Dubai due to citizenship , tax rebates etc." 

With recession, property prices have depreciated globally. But this has not translated into attractiveness towards overseas properties. On the contrary, according to Dr Devinder Gupta, CEO & CMD of Century 21 India, "Due to the global meltdown and uncertainty in realty sector, many projects have become unviable. Even bankers are not willing to lend. All this has led to Indian HNI being wary of investing overseas." 

There are enough accounts of developers being faced with credit crunch, globally, who have stalled construction work, delaying most of their projects in the pipeline. Developer's cash flow problems and credit crunch has in turn impacted delivery deadlines of projects. 

Samantha Jerath sums it, "Real estate investment is all about perception, trust and ease of accessing and monitoring projects.

Kolkata real estate, has witnessed manifold increase in residential capital values

From: www.articlealley.com - Economic Times


In the last couple of years, Kolkata >real estate, has witnessed manifold increase in residential capital values. The major transactional areas include South Central Kolkata, E M Bypass, Kankurgachi, Phoolbagan, Beliaghata, Garia-Narendrapur in the Southeast, Behala-Joka in the south west, Rajarhat in the northeast, BT Road in the northwest and Howrah in the west. 

The mid-end residential property segment which was available in a range of 8-15 lakh an year back is now available for Rs 20-25 lakh .The premium budget apartments which was available in the bracket of 25-35 lakh one year back has gone up to 45-75 lakh . 

30% of the demand is real estate market in Kolkata is driven by the IT and related sectors. According to real estate consultant Sandip Sen of Calcutta Skyline, "A little hit has been there for the Middle segment as the remuneration pattern has not been able to match up to the real estate price hike . In Kolkata the average demand is still in and around 20 lakh but there isn't enough supply in this segment." 

The average size that is sought after in the middle segment is around 1,000 sq ft for around 18-20 lakhs and for the premium segment it is around 1700-2500 for 50-70 lakh. 

Apartments have always been the preferred option vis-à-vis bungalows in Kolkata. Says Sandip Sen, "Apartments definitely come cheaper and resident can avail of all facilities and amenities in a huge complex." A lot of projects are coming to Kolkata wherein the apartments and bungalows are part of an integrated township. 

There is a lot of interest generated in the investor community for the city of joy. Most of the big real estate brands such as DLF, Vatika are already there plus FDI is expected to flow into the city in a big way
Read more at http://www.articlealley.com

Customer Questions, Realtors Answer: Pre Budget 2011

From: www.magicbricks.com - Pre Budget 2011



With the Budget two days away, anticipations are running high among customers. Rightfully so, they have their concerns about whether the Budget will address their issues or not. Let’s run you through some of these concerns and questions of the customers and what the brokers expect.

One pertinent question that has been raised is whether the property prices are expected to increase or not. S K Rajdev, of brokerage firm- Sole Properties Pvt Ltd reiterates that price rise is prevalent and will continue to take place which will be a point of worry for the customer as loan amounts will become larger. Kolkata Skyline broker, Sandeep Sen agrees with Rajdev’s view and adds that the mid-segment will continue to be hit by the hike in prices and interest rates. “People who don’t have a house still can’t afford one, and the ones who own three are buying more,” says Sen.

Another question that has been posed by the end user is what can be done in the coming time to make the industry more organized. On these lines, Sanjeev Sarkar of brokerage HiTech Consultancy in Bhopal said that government should monitor buyers who are purchasing property in another state. “Buyer should be a localite, someone else buying should not be able to sell it,” says Sarkar. He points out that such trends lead to fake appreciation of a property. “There should be a broad eye to control fake appreciation,” adds Sarkar. Shiv, a broker at Techno Realty, Pune expressed that to make the industry more organized over exploitation in the sector by having different land rate, construction cost, and miscellaneous charges should be stopped. Further, like SEBI regulates the securities market, government must set up a body that monitors the real estate industry.

“Will stamp duties reduce?” – many buyers wish to know if stamp duty charges could undergo a change this Budget. Sarkar was optimistic and said that efforts have already been made to reduce stamp duty charges and more is expected. He added that steps to lower the registration charges should be taken by the state governments so that buying a house becomes affordable. Girish Babu from Mysore, however, sees no positive outcome this time from Budget. “Prices are going high, charges will increase as inflation and interest rates rise, and there is no one overseeing the industry,” he points out.

Kolkata?s Residential Realty on the Rise, Price Wise and Otherwise

From: www.gharproperty.com - Posted on 29 April 2011 by Property Pro.


In the last couple of years, Kolkata real estate, has witnessed manifold increase in residential capital values. The major transactional areas include South Central Kolkata, E M Bypass , Kankurgachi , Phoolbagan, Beliaghata, Garia-Narendrapur in the Southeast, Behala-Joka in the south west, Rajarhat in the northeast, BT Road in the northwest and Howrah in the west.

The mid-end residential property segment which was available in a range of 8-15 lakh an year back is now available for Rs 20-25 lakh .The premium budget apartments which was available in the bracket of 25-35 lakh one year back has gone up to 45-75 lakh .

30% of the demand is real estate market in Kolkata is driven by the IT and related sectors. According to real estate consultant Sandip Sen of Calcutta Skyline, “A little hit has been there for the Middle segment as the remuneration pattern has not been able to match up to the real estate price hike .In Kolkata the average demand is still in and around 20 lakh but there isn’t enough supply in this segment.”

The average size that is sought after in the middle segment is around 1,000 sq ft for around 18-20 lakhs and for the premium segment it is around 1700-2500 for 50-70 lakh.

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Small Town India Ready for Housing Boom

From: In Financial Chronicle, News of Real Estate, India - Posted on Thu Dec 18th, 2008 17:24:18 PM


The cut in interest rates on home loans of up to Rs 20 lakh from public sector banks has the potential of making the small town big. Since land rates as well as construction costs are low in these towns, cheaper loans will surely mean a greater supply of homes and a spurt in housing construction in places away from the metros.

“It’s a question how much money can buy. For Rs 8 lakh to Rs 18 lakh, one can easily buy a plot of land, or construct a house, not just buy an apartment in a small town,” says Kamlesh Kulkarni, a property broker in northern Karnataka.

A 2BHK flat in Bondel in north Karnataka can be bought for about Rs 12 lakh, says Mark Pais, chair man of Pais Builders of Mangalore, “Construction has stopped because there are no buyers. Earlier, little towns like Udupi, Kundapur, Bondel, Suratkal and Mangalore saw a construction boom but those homes have found few takers. Cheap loans will now push their sales.”
It’s the same story elsewhere in India.

In Karjat, about 60 km from Pune, the 100-acre Tanaji Malusare City has 5,000 homes, each 160 to 400 sq ft in area.

Their prices range from Rs 2 lakh to Rs 7 lakh. In the past week, the project has seen brisk bookings in anticipation of the rate cuts, says Pravin Banavalikar, chief executive officer of the project.

The still cheaper rates for loans below Rs 5 lakh will provide a fillip to housing in Yavatmal and Amaravathi in the Vidarbha region of Maharashtra. There, one may get a 2 BHK for around that price.

“In just the past three days, inquiries for land and built-up property have gone up by 25 per cent,” says Abhijit Patil, a broker in Sangli in south Maharashtra. A 2BHK flat in Sangli costs Rs 1,300 to Rs 1,400 per sq ft. Land is available at Rs 150 to Rs 800 a sq ft.

Sharad Agarwal, director of the Kanpur-based BS Structures, says, “The home loan rate cuts are good for price- sensitive people. Unlike in the metros, one can easily find a good house within a budget of Rs 20 lakh in smaller towns.” He foresees a surge in demand in the coming months.

Agarwal, who has so far built houses in the Rs 1 crore-plus category, now intends to build homes that will cost Rs 15 lakh to Rs 20 lakh. In the periphery of Tamil Nadu’s Tuticorin, one can build an independent house of about 1,000 sq ft built-up area on one ground of land (2,400 sq ft) for Rs 17.5 lakh to Rs 20 lakh. “The reduced interest rates will come in handy for people in smaller towns — such as Thirunelveli and Tuticorin — who prefer independent houses to apartments,” says Palani Velu, an official of the Flat Promoters’ Federation of Tamil Nadu. But he quickly adds that people are still waiting for housing prices to come down.

In West Bengal, areas like Uttarpara, Serampore and Bandel, housing costs Rs 700 to Rs 950 per sq ft. With lower interest rates, people may be more inclined to build own houses than buy apartments. A large house will cost between Rs 8 lakh and Rs 10 lakh. “Older and retired people will again get back to buying flats financed with a smaller loan (up to Rs 5 lakh) for a smaller period and a part of their savings. Our expectation is that lot of government employees will now opt to buy their own homes,” says Nilesh Biswas, director of Calcutta Skyline. He also sees the rise of the small developer, who was getting marginalised by big real estate firms. “Next year property prices are going to soften further. With lower rates, people should be able to buy good property for Rs 15-20 lakh, we expect to see more of a boom then,” says Pais.

The coming realty boom in small towns will have spin-offs for others too, like banks, cement, steel and other industries. “The lower rates will ignite demand and also give people an opportunity to own homes. We expect to disburse about Rs 15,000 crore to Rs 20,000 crore through the special loan package,” O P Bhatt, chairman of State Bank of India, is on record as saying.

Says H M Bangur, managing director of Shree Cement and president of the Cement Manufacturers’ Association, “Around 60 per cent of the cement produced by our company is consumed in villages and smaller cities. Cheaper home loans will mean greater construction activity in these places where one can easily build a house within a budget of Rs 20 lakh. This will ultimately lead to a spurt in the demand for cement.” An official of the Steel Authority of India sees the bank decision as helping the steel industry. A JSW official thinks the impact could be more if all private banks too cut rates.

Property enquiries surge in small towns

From: Financial Chronicle - Posted on 17-12-08


Their prices range from Rs 2 lakh to Rs 7 lakh. In the past week, the project has seen brisk bookings in anticipation of the rate cuts, says Pravin Banavalikar, chief executive officer of the project.

The still cheaper rates for loans below Rs 5 lakh will provide a fillip to housing in Yavatmal and Amaravathi in the Vidarbha region of Maharashtra. There, one may get a 2 BHK for around that price.

“In just the past three days, inquiries for land and built-up property have gone up by 25 per cent,” says Abhijit Patil, a broker in Sangli in south Maharashtra. A 2BHK flat in Sangli costs Rs 1,300 to Rs 1,400 per sq ft. Land is available at Rs 150 to Rs 800 a sq ft.

Sharad Agarwal, director of the Kanpur-based BS Structures, says, “The home loan rate cuts are good for price- sensitive people. Unlike in the metros, one can easily find a good house within a budget of Rs 20 lakh in smaller towns.” He foresees a surge in demand in the coming months. Agarwal, who has so far built houses in the Rs 1 crore-plus category, now intends to build homes that will cost Rs 15 lakh to Rs 20 lakh. In the periphery of Tamil Nadu’s Tuticorin, one can build an independent house of about 1,000 sq ft built-up area on one ground of land (2,400 sq ft) for Rs 17.5 lakh to Rs 20 lakh.

“The reduced interest rates will come in handy for people in smaller towns - such as Thirunelveli and Tuticorin - who prefer independent houses to apartments,” says Palani Velu, an official of the Flat Promoters’ Federation of Tamil Nadu. But he quickly adds that people are still waiting for housing prices to come down.

In West Bengal, areas like Uttarpara, Serampore and Bandel, housing costs Rs 700 to Rs 950 per sq ft. With lower interest rates, people may be more inclined to build own houses than buy apartments. A large house will cost between Rs 8 lakh and Rs 10 lakh.

“Older and retired people will again get back to buying flats financed with a smaller loan (up to Rs 5 lakh) for a smaller period and a part of their savings. Our expectation is that lot of government employees will now opt to buy their own homes,” says Nilesh Biswas, director of Calcutta Skyline. He also sees the rise of the small developer, who was getting marginalised by big real estate firms. “Next year property prices are going to soften further. With lower rates, people should be able to buy good property for Rs 15-20 lakh, we expect to see more of a boom then,” says Pais.

The coming realty boom in small towns will have spin-offs for others too, like banks, cement, steel and other industries.

“The lower rates will ignite demand and also give people an opportunity to own homes. We expect to disburse about Rs 15,000 crore to Rs 20,000 crore through the special loan package,” O P Bhatt, chairman of State Bank of India, is on record as saying.

Says H M Bangur, managing director of Shree Cement and president of the Cement Manufacturers’ Association, “Around 60 per cent of the cement produced by our company is consumed in villages and smaller cities. Cheaper home loans will mean greater construction activity in these places where one can easily build a house within a budget of Rs 20 lakh. This will ultimately lead to a spurt in the demand for cement.”

An official of the Steel Authority of India sees the bank decision as helping the steel industry. A JSW official thinks the impact could be more if all private banks too cut rates.

Revival in commercial property

From: By Jharna Mazumdar - Posted on Mar 23 2011


2011 may see the absorption of 35 million sq ft of office space. Between January and March this year, around 5.5 million sq ft of commercial space has been taken up

There is a strong revival in demand for commercial property across the country but the oversupply situation may continue through 2011. In the first three months of 2011 the country saw the absorption of around 5.5 million square feet of office space against 4 million sq ft during the corresponding period a year ago.

All the major cities – Delhi, Mumbai, Kolkata, Hyderabad, Chennai and Pune -- are witnessing a demand revival.

As an indication of the buoyancy in commercial real estate, in one of the biggest land deals ever struck, on March 11, 2011, the Noida Authority in Uttar Pradesh sold a sprawling commercial land for Rs 6,570 crore – a whopping Rs 1.07 lakh per sq m -- to Wave Infrastructure. Three companies — Wave, Amrapali and 3C — had participated in the bidding. The 6,14,000 sq m of land comprising two entire sectors (32 and 25A) in Noida will be used to build the largest commercial space in northern India.

According to Gurgaon-based Shahel Parmendra, managing director (markets), Jones Lang LaSalle India, it is expected that in 2011 (January-December) there will be around 50 million sq ft of office space available in the country, of which around 35 million sq ft will be absorbed.

Parmendra said the NCR area alone is expected to see office space absorption of around 4.5 million sq ft in fiscal 2011, which is a 5 per cent increase from a year ago.

The surge in demand has been triggered by steady hiring in the banking and financial services sectors and IT industry. The overall economic growth of the recent past has also brought more disposable incomes in the hands of consumers, leading to a retail boom. In the October-December quarter, lease/rentals of commercial properties have gone up by 7-10 per cent fuelled by the improved demand.

Mayur Shah, managing director, Marathon Group, said, “We are seeing 100 per cent increase in demand in 2010-11 compared with 2008-09 when we went through the economic meltdown.”

Marathon Group recently launched a four-lakh sq ft commercial property in Lower Parel in Mumbai. “Around 90 per cent of our commercial property has been booked and we are planning to launch another commercial property of four lakh sq ft area by June,” Shah said.

However, Parmendra points out, although demand is likely to increase for commercial properties, rents may not move in line with demand due to oversupply.

In locations like Bandra-Kurla in Mumbai, Cyber City in Gurgaon, and Hyderabad’s SEZ, prices may go up, but in other locations prices are unlikely to increase despite the improved demand as there is ample supply, he said.
“Within Mumbai, Bandra-Kurla continues to hold considerable tactical value for corporate office space occupiers. Lower Parel has also set an astounding pace in Grade A office space development, and the forward momentum set by some recent key projects has now found a natural growth extension in Dadar. With the completion of a couple of new landmark Grade A office projects, Dadar has now joined the fray for Grade A business space in Mumbai where both commercial and residential prices are seen moving up,” Parmendra explained.

According to Harjith Bubber, chief financial officer and managing director of CCI Projects, there is an uptrend in utilisation of commercial property, and “rentals for commercial space in Mumbai’s western suburbs have gone up by 10-15 per cent”.

Bubber said that CCI Projects has already acquired a 22-acre land in Borivili, a suburb in Mumbai’s Andheri, on which it plans to develop a commercial and residential project as well as a mall.

Vestian Global Workplace Services, a real estate services subsidiary of the Chicago-headquartered Vestian group, attributes the revival in Hyderabad’s commercial space to the expansion by IT/ITeS, wherein rentals across different micro-locations in the city have gone up by 5-8 per cent in the last two quarters.

Shrinivas Rao, Vestian’s CEO - Asia Pacific, said, “During slowdown phase (Q4 2008- Q1 2010), demand fell by almost 30-45 per cent across different micro-locations. Rentals of commercial space dropped by almost 20-30 per cent and the vacancy rate went up as high as 30 per cent.”

Pointing out that the IT-ITeS sector remained the key source of demand for commercial space, Rao said, “Investors are looking to invest in commercial properties but the preference is for properties which are leased and situated in a good location.”

Developers are more optimistic for residential asset class properties compared with commercial asset class as the former is almost 80 per cent of the total real estate market size, and a sizeable proportion of residential projects can be sold in the pre-launch phase.

“This characteristic helps developers in project risk mitigation and funding during the construction phase. In comparison, the scope for pre-lease is less in the commercial segment and the funding needs to be done by the developer. Besides, project fund requirement is comparatively less in the residential segment,” said Rao.

When it comes to the eastern region or specifically Kolkata, commercial spaces have always been in limited supply because of which rental values have always shown an upward trend in most high street locations. Malls such as Forum and South City witnessed an appreciation in rentals of up to 5 per cent in the second half of 2010.

Going forward, the demand for commercial space will gain momentum in 2011, with projects that are in the final stages of completion likely to see acceleration in construction activity.

Rental and capital values are also likely to increase across malls. Tenant queries and lease transactions by retailers executing their expansion plans will also go up significantly over the next 12 months, Ritwik Das, managing director, BlueChip Projects, told FC Build.

There is however a rider. “Be it in Kolkata or elsewhere, malls coming up in good locations and constructed by experienced developers with credible track record and with a professional mall management team for active tenant mix management will maximise these opportunities and record a good rate of absorption,” said Das.

Nilesh Biswas, director, Calcutta Skyline, a leading realty research, marketing and brokerage firm, said that demand for commercial space is mostly coming from IT/ITeS, social infrastructure segments like education and healthcare, services sector like parlours, and the hospitality industry comprising hotels and restaurants.

The other interesting trend in Kolkata is that new central business districts (CBDs) are coming up in places like Rashbehari Connector, Bantala (for IT/ITeS), Prince Anwar Shah Road and Tollygunge, among other places. This will also push up demand for commercial space further, said Biswas.

Chennai is also witnessing some uptrend in demand but it is not very significant. According to Rajesh Babu, CEO, Recs Group, a boutique property consultancy firm in Chennai, the Guindy area and central business district witnessed a slight upward movement in commercial space rentals owing to demand from IT & non-IT segments.

On OMR, Chennai’s IT corridor, rentals have shown a slight upward movement and the scenario is positive upto the toll plaza. Beyond the toll plaza, it has remained more or less stable at last year’s rental levels. In the case of Ambattur, a western industrial suburb of the city, commercial rentals are more or less stable, mainly because of oversupply in the region.

“When we refer to commercial space in Chennai, a bulk of it is only IT, as there is very little stock coming into the market for non-IT. Overall, close to 3.7 million sq ft of commercial space was absorbed in Chennai last year (2010),” said Babu.

“Further, demand for SEZ space was good last year and it continues to hold good for this year. However, it is still too early to ascertain the impact of the 18 per cent MAT imposed in this year’s budget,” Babu added. Even here, the city-based SEZs are preferred over those located in and around the city’s suburbs

Shailesh Ghorpade, MD & CEO, Azure Capital Advisors, a real estate focused investment company, said, "The oversupply situation in commercial real estate may persist during 2011 despite strong demand revival, primarily due to the huge supply pipeline -- including projects in advanced stages of construction as well as vacant stock in completed projects that is yet not fully assigned to occupiers. As such, rental values for commercial properties are likely to stabilise during 2H11. This stabilisation in rental values may induce institutional investors/HNIs to make investments in this asset class which may result in yield compression for commercial properties in 2011. While rentals would stabilise, capital values for commercial properties are likely to see appreciation on y-o-y basis."

Real estate analysts believe the market is experiencing its second growth (2nd Coming) phase.

From: Vivek Seal - Posted on Sep 29 2010

There are expectations of a mid-term price correction in the residential market. The market is currently witnessing an increase in both volumes and prices across the country after several quarters of muted growth. Real estate analysts believe the market is experiencing its second growth phase.

The first phase of volume growth with stable or marginally declining prices was witnessed in the fourth quarter of the last financial year and the first quarter of this financial year. The second phase of high volumes along with rising prices started from the end of the first quarter.

However, with prices reaching their lifetime high and breaching it in several regions, experts expect the volumes to take a hit as customers delay their buying decisions in hope of a price correction.

“If we witness further price inc¬reases, we could see stable¬/marginally declining volumes, but pricing continue to move up and new launches decline before both volumes and prices decline in the fourth phase,” Ajay Mathrani, real estate analyst at Kotak, said.

Mumbai, the financial capital of India, has seen property breaching their 2008 peaks, impacting absorption levels in the region. Property brokers in Delhi and Mumbai said developers are offering discounts on bulk buying. Recently DLF offered 3-5 per cent discount to customers for its Capital Greens project in Delhi. However, as it launched the phase three of the project, it hiked the prices by over 40 per cent as demand outpaced supply. Analysts expect prices in central Mumbai to decline over the next 6-12 months due to a combination of oversupply and high prices. The prices of some projects in Mumbai are above their previous peaks, leading to a decline in sales volume. In central Mumbai, prices of some projects have risen to Rs 20,000-25,000 per sq ft, which in some cases is higher than the previous peak.

DLF and Unitech have lined up their luxury project launches in the city, which may push prices in the short-term. After a two-year lull, big land deals in Mumbai have resulted in escalation of prices especially over past nine months.

According to Propequity, a real estate data and analytics firm, property prices appreciated in Tardeo and Upper Parel in south Mumbai by 31 per cent and 57 per cent respectively in the second quarter, whereas central suburb witnessed a 20.9 per cent rise over the third quarter of last year.

Meanwhile, the inventory levels across Mumbai, National Capital Region (NCR), Bangalore and Che¬nnai continued to decline due to a combination of developers focusing on execution of existing projects and fewer launches due to the monsoon.

Mumbai has witnessed a correction in unit size over the last six months to match consumer preferences. It has registered a decline in unsold inventory in the last 12 months indicating a revival in absorption levels and thereby an increase in prices in the new launch projects. Mumbai has witnessed a decrease in unsold inventory by 44.7 per cent this year.

The prices of some residential projects in Gurgaon are higher than the previous peaks and this is leading to a decline in sales. The prices of some projects increased to Rs 7,000-8,000 per sq ft, which in some cases is higher than the previous peak. Gurgaon’s rival Noida has seen sales volumes indicating strong demand for housing schemes, most volumes are from new launches, raising the possibility of speculator broker sales.

“Most builders have concentrated on completing the existing projects and selling the existing inventory rather than launching new projects. Hence, unsold inventory has come down.” R Jai¬shankar, MD at Brigade Enterprises, said.

The inventory levels have also gone down significantly in the IT capital of India, Bangalore. “Ban¬galore has not witnessed significant price increases in the last six months. There has not been much change in prices in second quarter as against last year. Correction in unit sizes happened in the first half of 2009 when developers started looking at smaller units to make the total cost of purchase more affordable without really compromising on the rate per square feet. Demand is healthy and not many new projects are launched, so unsold inventory has gone down,” Ravindra Pai, MD at Century Real Estate, said.

In Kolkata, property prices have gone up by 10-20 per cent in the second quarter of this financial year. According to Nilesh Biswas, director at Calcutta Skyline, a realty research and brokerage firm, the mid-income segment is growing at a fast rate and the luxury segment has just started to show an upward trend.

“As far as correction in sizes is concerned, Kolkata had actually shown the way to Mumbai and other cities. In Kolkata, size correction took place immediately after the recession had set in. Riverbank Holdings project at Batanagar, Rosedale Valley, DCL, Shrachi, Sunrise Green, Urbana are some of the cases in point where there have been corrections in sizes,” Biswas added.

When asked about the inventory levels in Kolkata, Biswas said that “in Kolkata one gets unsold inventory only in under-construction stage. That’s because, the stock is very low here when compared with other cities. That way, if unsold inventory levels have gone down by 40 per cent in Mumbai and other cities, in Kolkata, it must have gone down by over 70-75 per cent.”

With the upcoming festival season and the inventory levels going down, several developers are waiting to launch new projects. “There has been price escalations in Delhi in the range of 5-8 per cent and I expect further increases in the coming months, so buyers should get their flats soon,” Pars¬vnath’s chairman Pradeep Jain said.

“We expect the onset of the festival season to result in the launch of numerous projects across cities as reduced inventory levels and developers’ debt repayment obligations will induce them to generate cash flows through pre-sales and speedy execution of ongoing projects,” Aashiesh Agarwaal, analyst at Edelweiss Research, said.

Bangalore inventory levels have steadily declined as absorption has outpaced launches for 15 months, while the Chennai market has also seen dip in inventory levels with transactions remaining steady. With the IT/ITeS sector effecting wage hikes of up to 15 per cent, end-user demand has picked up which is expected to translate into improved volumes going forward.

“Because of the new airport and demand, prices in north Bangalore have been more or less stable throughout. In my view, the prices of apartments have gone up to the tune of 5-10 per cent. Not too many affordable projects have been launched. About 80 per cent of our population are in the need of affordable homes. Of the 80 per cent, 10-12 per cent fall in mid-income group, while 5-6 per cent come under luxury segment. In Bangalore – apart from Whitefield – there is nowhere you can find oversupply. I don’t think there will be a pricing correction in Bangalore. Even during recession, luxury units were selling at high price. In east Bangalore, there has been a drastic price fluctuation,” Sankey Prasad, MD at Synergy Property Deve¬lopment Services, said.

Analayts are expecting the southern market to offer scope for higher prices compared to volume up tick as “prices are yet to peak out”. “The Indian real estate sector has bounced back from its most trying times and sentiments are definitely positive. Property prices have been on a rise over the past 12 months. Prices have gone up in the range of 8-10 per cent when compared with the corresponding period last year,” Jaishankar said.

Repco Home Finance to cut lending rates

From: Finance Chronicle - Posted on December 29, 2008


STATE-RUN Repco Home Finance (RHFL), majority owned by Repco Bank, would be cutting its prime lending rate by 25 to 50 basis points in January, a top official said.

“With the benchmark interest rates set to go down further, we would be cutting our prime lending rate by 0.25 per cent to 0.50 per cent from the present 12 per cent by end of January,” S V Balasubramanian, executive director of Repco Home Finance told Financial Chronicle.

RHFL, which started in 2002, is focused on lending for affordable housing in tier-II and tier-III cities. The lender at present has a network of 28 branches across Tamil Nadu, Andhra Pradesh, Karnataka and Pondicherry. The loan size range from Rs 500,000 to Rs 20, 00,000 and nearly 95 per cent are under the floating category.

The company plans to disburse Rs 500 Crore and increase its loan book to Rs 1,000 Crore by March 2009.

RHFL had loans outstanding of Rs 655.08 Crore and disbursed Rs 275.58 Crore in fiscal year 2008.Balasubramanian said the company is on track to achieve its targets, helped by its direct-selling model, which has helped to cut operating costs and improve efficiency.

In December 2007, US private equity firm Carlyle Group picked up 49 per cent stake in the company for $27.7 million. RHFL now has a capital adequacy of 26 per cent, return on capital employed of 27 per cent and return of assets of 2.85 per cent.

Balasubramanian added that with the private funding, the company is adequately capitalized till 2010 to fund expansion into other states such as Maharashtra and Haryana.

“Though Carlyle is ready to bring in more funds if needed, we would be looking at fresh capital once we reach business of Rs 2,500 Crore and look at initial public offering in 2011,” he added.

In fiscal year 2008, RHFL’s net profit grew 35 per cent Rs 15.57 Crore, from Rs 11.5 Crore last year.

The ups and downs of housing

From: The Hindu - Posted on 27/12/2008


It is interesting to watch the sudden surge from almost all concerned to save the housing sector. The first push came from the Reserve Bank of India.

Then came the Central Government’s stimuli package. Now, it is the turn of the banking system to come to provide low interest rates to small and affordable houses. What can be the ultimate shape of things to come? Here is an account of the past, present and possible future of housing in India.

The setting up of the National Building Organisation (NBO) in the year 1954 was perhaps the first governmental initiative in independent India.

Till the formulation of the comprehensive National Housing Policy which was adopted by the Parliament in 1988, housing remained an individual enterprise.

Houses for the poor
Once the basic needs such as food and clothing were met through the implementation of first three Five Year Plans, the attention of the Government was directed towards providing shelters to the rural masses.

Loans and subsidies were made available to encourage rural housing. Budgetary provisions were made to support the sector, especially the small segment.

Central and State schemes were also set in motion to encourage housing development. The seventh Five Year Plan document gave housing the ‘priority’ tag as well.

Medium and large segments
Loans from banks and other financial institutions were the main stay in the growth of the large and medium housing segment.

Further, long-term loan came to be recognised as a fundamental requirement of housing development, as the investment has been found to be large.

Lending institutions started considering home loans as a safe and secure portfolio, especially when the property prices went on the upward curve.

In addition, when the industrial sector depended on market borrowing to finance major projects, banks had to look for alternative investment channels.

This situation led to growing exuberance in the housing market which, in turn, raised the housing loan portfolios of banks to such an extent that, at one juncture, the RBI had to advise banks during 2003-04 to control the unbridled expansion.

With the rising demand for bank loans and the increasing cost of funds, banks too raised the interest rates in general and home loans in particular. Quality of lending took a back seat and follow-up supervision also suffered. Coupled with the rising interest, increasing cost of construction materials, stamp duty and registration charges too pushed up the overall cost. Investment in housing thus became a burden. This situation lead to slackening of demand and slump in the housing market.

The downslide
The U.S financial crisis and its ramifications on other nations compelled almost all countries to come out with ‘stimuli’ packages.

This gave a new opening to the Indian housing sector too.

The Government, Central Bank, State Governments, and even the builders and developers came forward with various concessions to support the sector. Some of the support plans have been:

Reduced rate of interest at 9.25 per cent p.a. for fresh housing loans up to Rs. 20 lakh.

Creation of a small loan cut-off level at Rs. 5 lakh, at 8.5 per cent interest p.a., again for fresh loans only.

Free life insurance cover for the borrowers to help recovery in case of death of the borrower.

Reduced margin of 10 per cent for loans up to Rs. 5 lakh and 15 per cent for loans above Rs. 5 lakh and up to Rs. 20 lakh.

Reduction in CENVAT by four per cent, in order to help reduction in cost of construction materials.

Stamp duty cut by some State Governments, such as Andhra Pradesh, for property registrations (from 7.5 per cent to 2.5) for flats having a plinth area of up to 1200 sq.ft.

Reduction of 0.5 per cent interest by Housing Development and Finance Corporation even for existing loans.

Reduction in Prime Lending Rates (PLR ) by many public sector banks such as SBI, ICICI Bank, BOI, BOB, OBC, Canara Bank, IOB, Indian Bank and many more, including some private sector banks, which will reduce interest for all slabs and consequent reduction in EMIs.

Steep reduction in interest, ranging from 0.75 to 2.25 per cent, by LIC Finance.

The RBI/Govt. package specifies that the reduction in interest rate should be in force for a period of five years.

There are a few clear positives. The lull in the property market will vanish, at least for a while. The small borrower will definitely be benefited to a large extent. The low interest rate regime is likely to percolate to the entire spectrum of economy.

Some steps that may be required to sustain the momentum.
February-March, the ‘budget’ months of the coming year, are only a few months away. Central and State Governments must avoid further taxes and levies.

All State Governments should revise the guidance value for registration of property transactions and cut the stamp duty/registration charges.

Special quota of steel and cement may be made available to small segment, say, up to 1,000/1,200 sq.ft.

Service tax may also be abolished or reduced to the defined ‘small’ housing segment.

Corporation Bank’s special housing loan package

From: The Business Line - Posted on 22/12/2008


Corporation Bank has introduced a special package housing loan scheme and announced certain relief for MSME sector.

A press release said here that Corporation Bank has introduced special package housing loan scheme for a limited period from December 17 to June 30.

Under the scheme, the interest rate on loans up to Rs 5 lakh and up to 20 years is 8.50 per cent. The margin for this loan stands at 10 per cent.

Interest rate on loans above Rs 5 lakh and up to Rs 20 lakh, and up to 20 years is 9.25 per cent. The margin for this loan will be 15 per cent.

Processing charges and pre-payment penalty will not be levied for the above loans. The scheme is applicable only for fresh loans sanctioned and disbursed during the above said period, subject to other terms and conditions.

The release said that the bank is also offering certain relief and concession for MSME sector.

The interest rate is reduced by 100 basis points on all existing and fresh credit to micro enterprises, and by 50 basis points for all existing and fresh credit to small and medium enterprises.

LIC housing arm sees rise in demand next year

From: Finance Chronicle - Posted on 22/12/2008


Housing demand, which has remained subdued in 2008 due to high prices and interest rates, is likely to pick up in the new year in the backdrop of a declining interest rate regime, a leading home finance company said. “Although there is a temporary slowdown, the demand for housing will increase in 2009,” LIC Housing Finance director and chief executive R R Nair said.

While he would not predict price movements in the realty sector, Nair said that there was a “possibility” of them increasing. Advising buyers not to delay their home purchases in the hope of a fall in prices, Nair said, “Builders may start jacking up prices once they liquidate their inventories.

“Now, rates have started falling. Builders might wait for a while, for two months or so, to liquidate their inventories. After that, it is anybody’s guess (on a likely increase).” “To me, it appears that this is the right time (for home-buys).” Asked whether the sector was facing a slowdown pan-India, Nair said that this phenomenon was confined only to a few pockets and was not an all-India problem. “There might be slowdown in a few pockets, including Mumbai and Bangalore, but there is no problem elsewhere,” he said. Asymmetric price hikes in a few regions was the main reason for the slowdown, Nair added.

“Price escalation happened more disproportionately in Mumbai and to some extent in the national capital region (NCR). This phenomenon was not witnessed to that extent in cities such as Chennai and other places,” Nair said.

However, the price increase was not artificial but a result of the natural phenomenon of demand and supply, he said. “At present, demand emanates from genuine end-users and hence, this would not lead to any major defaults (in repayment of loans),” he added.

Realty prices flared up till January this year, after which they either stabilised or started declining except in select locations where they increased, he said.

“The downward trend in prices was wrongly attributed to hike in interest rates,” Nair said.

According to him, despite the increase in interest rates, customers stand benefited to the tune of 35 per cent. Prices across the board declined by 20 per cent and were it not for the rate hikes, they would have flared up by another 15 per cent, Nair said.

“Now, however, customers stand benefited to the tune of 35 per cent,” he said.

As an example, he said, LIC Housing Finance had increased its interest rates by 1.25 per cent till December, which worked out to be Rs 80 for an equated monthly instalments of 20 years.

Price reduction in the sector has been a minimum of 20 per cent across the board. If the interest rates had not increased, prices would have further gone up by an additional 15 per cent.

Developers unlikely to reduce prices voluntarily: FICCI

From: Finance Chronicle - Posted on 21/12/2008


Despite talks of recent downturn in property prices, developers are unlikely to reduce prices, as the realty players feel that their properties are well- priced, says industry body FICCI.

“Voluntary reduction of property prices are not on the cards of developers. Barring very few developers, who have already reduced their prices, majority feel that their properties are rightly priced,” said the Chamber in its latest study on the scenario of property prices in the country.

According to the report, developers may cut prices “by 10-15 per cent and not beyond only if the situation does not improve in the next few months”.

The study underlined that developers seemed to have realised the need for affordable and mid-range housing to survive the current slowdown.

FICCI also said due to higher risks of investing in real estate, the sector would witness lower private equity deals in the next 12 months, as funds would not be easily accessible.

“…Valuations are expected to go down further and the costs are going to be very high for developers,” it added.

Regarding housing projects, FICCI said: “After having reached its peak, residential real estate in India will witness a steady down cycle for next few months. There is time and cost overrun in the existing projects while new projects are being deferred.”

Such a situation would eventually lead to a reduction in price in the coming four quarters and the market was expected to turn in favour of end-users, the report said.

HDFC, LIC Housing follow banks, cut lending rates

From: The Hindu - Posted on 20/12/2008


Mumbai, Dec. 19 Concerned about losing business to public sector banks, which cut interest rates on home loans earlier this week, leading housing finance companies – HDFC and LIC Housing Finance – lowered their lending rates on Friday.

HDFC has reduced its Retail Prime Lending Rate by 50 basis points and introduced two slabs – up to Rs 20 lakh and above Rs 20 lakh – for floating interest rate home loans.

HDFC, India’s largest housing finance company, will offer floating interest rate home loans of up to Rs 20 lakh, and above Rs 20 lakh at 10.25 per cent and 11.25 per cent respectively with effect from December 22. Public sector banks had reduced their rates to 8.5-9.25 per cent earlier this week, for home loans up to Rs 20 lakh.

Currently, HDFC, irrespective of the quantum of home loan, charges an average floating interest rate of 11.75 per cent.

The 50 basis points reduction in HDFC’s retail prime lending rate (RPLR) to 14.5 per cent will also benefit the existing borrowers. Since all floating rates are linked to RPLR, existing borrowers, depending on their profile, will now pay interest rates between 11 and 12.25 per cent, that is, 225-350 basis points below RPLR of 14.5 per cent.

“We have been able to bring down our costs due to improved operational efficiency and good quality portfolio,” said Ms Renu Sud Karnad, Joint Managing Director, HDFC.

LICHF rates

Comparatively, LIC Housing Finance, which cut interest rates on home loans with effect from December 17, is offering floating interest rate loans a tad cheaper. A home buyer can avail himself of loans up to Rs 20 lakh for five-year tenure at 9.25 per cent. Loans of more than five years duration are available at 9.75 per cent.

For loans above Rs 20 lakh, LICHF floating interest rate home loans will vary in the 11-11.25 per cent range, depending on the profile of the customers.

Before the revision, the company had an uniform lending rate of 11.5 per cent irrespective of the amount and the duration.

“We are expecting our cost of funds to come down as we should get funds from the National Housing Bank through the refinance window at cheaper rates,” said Mr R.R. Nair, CEO, LIC Housing Finance.

Meanwhile, Bank of Rajasthan announced a reduction of up to 150 basis points on fresh loans of up to Rs 30 lakh with effect from December 22.

The lowest floating interest rate being charged by the bank is 10 per cent (11.50 per cent as of now) for loans of up to five years and the highest floating interest rate being charged by the bank is 11.50 per cent (12.50 per cent) for loans above 15 years and up to 20 years.

Where demand for housing space goes up

From: The Hindu - Posted on 19/12/2008


The Rajiv Gandhi Salai, popularly known as IT Corridor, which was made a toll road recently, is among the finest roads in the city.

Multi-storey buildings housing offices of every leading player in the software industry is a pointer to Sholinganallur’s contribution to the growth of the IT sector in Chennai. But, just like many other urban local bodies flush with funds and yet face challenges when it came to implementing welfare works, Sholinganallur too has its own.

The town panchayat, no doubt, has come up with pioneering novel schemes, like the kitchen garden that has become a catchword among administrators and elected representatives of urban and rural local bodies. It gets an annual revenue of nearly Rs.15 crore, many times more than other town panchayats can even imagine, thanks to the software industry. Street-lights are bright and roads well-laid, but not all of them.

The geographical variations within the town panchayat — from the fishing hamlets along the coast in Akkarai, Panaiyur and Kudumiyandithoppu to the areas sandwiched between East Coast Road and Rajiv Gandhi Salai and also some places adjoining Buckhingham Canal and the massive software complexes — make it a unique urban pocket.

The population has grown from 15,557 in 2001 according to the census, to about 35,000 now. A substantial portion of its annual revenue comes as professional tax levied on the 18,000-odd software engineers and associated staff who come to Sholinganallur for work everyday.

“Yes, the IT revolution has improved quality of life to a large extent, but there is also another side to this story,” said S.V.Prem, an entrepreneur and a resident of Ponni Amman Koil Street. The demand for high-rise buildings to accommodate software companies has led to the influx of a few thousand workers from other parts. “We are not complaining, but the demand for housing has mounted a pressure on the environment just like it is happening in nearby Perungudi or Thoraipakkam,” he said.

The need for vast open spaces for housing and disposing of garbage has resulted in a severe strain, including on waterbodies. The dumping of garbage in an open space next to the Buckhingham Canal and alongside Kalaignar Karunanidhi Salai connecting Rajiv Gandhi Salai and ECR was threatening to make it another Pallikaranai, Mr. Prem said.

The town panchayat originally had a dozen water sources and half of them were rendered unusable post-tsunami. Now, they are continuing to tap drinking water from the existing six sources and supplying the same to residents. The town panchayat is hopeful of getting water from Chennai Metropolitan Water Supply and Sewerage Board soon. A considerable amount of the population is concentrated in the fishing hamlets and amenities there need improvement. Collection of toll for using Rajiv Gandhi Salai has come in for sharp criticism from residents of Sholinganallur.

Authorities said the quality of basic amenities in the town panchayat was far better than in other local bodies in the city’s fringes and they were not stopping with that. A lot of thrust was being given to equip each of the 15 wards with the necessary basic infrastructure to make sure they were content and self-reliant.

Marg in tie-up with Surbana to introduce prefab construction tech

From: The Hindu - Posted on 19/12/2008


In discussions with Singapore, Malaysian cos to bring in production facility
Chennai, Dec. 18 The Chennai-based Marg Ltd, an infrastructure and real estate development company, has tied up with Surbana International Consultants, Singapore, to introduce prefabricated construction technology for residential and industrial development.

Addressing a press conference to announce the tie-up with Surbana, a Temasek-owned company, Mr G.R.K. Reddy, Managing Director, Marg Ltd, said Surbana would be the consultant supporting Marg to bring in infrastructure and equipment to introduce precast and prefabricated construction methods for Marg’s subsidiary New Chennai Township Pvt Ltd.

The company is setting up Marg Swarnabhoomi, the integrated township with SEZs focussing on engineering and multi-services sectors. The township coming up 80 km south of Chennai will have a total built up area of over 30 million sq ft including 15,000 residential units and supporting social infrastructure.

The objective is to bring down construction costs through modern technologies that reduce construction time and offer value to the consumers. Marg is in discussions with Singapore and Malaysian companies to bring in the production facility to manufacture the moulds for prefabricated elements for buildings and the support infrastructure.

Initially, Surabana would design the residential units to come with the prefabricated technology. Marg will construct over 500,000 sq ft of residential space as a pilot project. This would then be expanded and possibly applied for development commercial space also. While it is a proven technology, the extent of the benefits that it offers under Indian conditions would become apparent through the model project, Mr Reddy said.

Mr R.S. Prakash, Vice President (Business Development), South Asia, Surbana, said that the company has three decades experience in designing precast and prefabricated structures. It has been associated with developing more than a million dwelling units in Singapore. The technology brings with it a wide range of advantages including speed of construction, environment-friendly approach – prefabricated structures earn additional points from rating agencies that certify green buildings – and quality.

Surbana is an integrated professional consultancy provider in urban planning, architectural and engineering design and project management.

Unitech plans affordable housing projects

From: The Hindu - 19/12/2008


Investment of Rs 2,500 cr on 10,000 residential units
NEW DELHI: Country’s second biggest realty firm Unitech Ltd plans to invest Rs 2,500 crore to launch 10,000 residential units in the Rs 30-50 lakh category by the next fiscal.

The company would launch affordable housing projects in Gurgaon, Noida, Greater Noida, Kolkata and Chennai, where it has land banks. “We have land at various places. We are in a position to launch a number of projects,” Unitech Chairman Ramesh Chandra told PTI.

Asked how many housing units the company plans to launch, he said, “It could go up to 10,000 units by next fiscal. It will need an investment of Rs 2,500 crore on construction. Land anyway I have it”.

The housing units would be offered to customers in the range of Rs 30-50 lakh, Chandra said, adding that the company would launch the housing projects taking into account the affordability of that particular city.

Mr Chandra noted that affordable housing is determined by two things — market conditions and location. “These two things will determine how much will be luxury housing and how much will be affordable. But naturally affordable housing has a far higher percentage,” he added.

Mr Chandra pointed out that the company would not launch any luxury housing project in the near future seeing the present market condition. “Luxury housing will continue, but that may form a much smaller percentage of the total offering.

When it was more investor oriented, may be luxury housing was 30 per cent. Now, it may be 7-8 per cent,” he said. Chandra said it was possible to offer houses in the “affordable range” if developers reduce the size of the units, focus on value enginee ring and are prepare to work on lesser margins.

Property enquiries surge in small towns

From: Finance Chronicle - Posted on 17/12/2008


THEIR prices range from Rs 2 lakh to Rs 7 lakh. In the past week, the project has seen brisk bookings in anticipation of the rate cuts, says Pravin Banavalikar, chief executive officer of the project.

The still cheaper rates for loans below Rs 5 lakh will provide a fillip to housing in Yavatmal and Amaravathi in the Vidarbha region of Maharashtra.

There, one may get a 2 BHK for around that price.

“In just the past three days, inquiries for land and built-up property have gone up by 25 per cent,” says Abhijit Patil, a broker in Sangli in south Maharashtra. A 2BHK flat in Sangli costs Rs 1,300 to Rs 1,400 per sq ft. Land is available at Rs 150 to Rs 800 a sq ft.Sharad Agarwal, director of the Kanpur-based BS Structures, says, “The home loan rate cuts are good for price- sensitive people. Unlike in the metros, one can easily find a good house within a budget of Rs 20 lakh in smaller towns.” He foresees a surge in demand in the coming months. Agarwal, who has so far built houses in the Rs 1 crore-plus category, now intends to build homes that will cost Rs 15 lakh to Rs 20 lakh. In the periphery of Tamil Nadu’s Tuticorin, one can build an independent house of about 1,000 sq ft built-up area on one ground of land (2,400 sq ft) for Rs 17.5 lakh to Rs 20 lakh.

“The reduced interest rates will come in handy for people in smaller towns-such as Thirunelveli and Tuticorin-who prefer independent houses to apartments,” says Palani Velu, an official of the Flat Promoters’ Federation of Tamil Nadu. But he quickly adds that people are still waiting for housing prices to come down.

In West Bengal, areas like Uttarpara, Serampore and Bandel, housing costs Rs 700 to Rs 950 per sq ft.

With lower interest rates, people may be more inclined to build own houses than buy apartments. A large house will cost between Rs 8 lakh and Rs 10 lakh.

“Older and retired people will again get back to buying flats financed with a smaller loan (up to Rs 5 lakh) for a smaller period and a part of their savings.

Our expectation is that lot of government employees will now opt to buy their own homes,” says Nilesh Biswas, director of Calcutta Skyline. He also sees the rise of the small developer, who was getting marginalised by big real estate firms. “Next year property prices are going to soften further. With lower rates, people should be able to buy good property for Rs 15-20 lakh, we expect to see more of a boom then,” says Pais.

The coming realty boom in small towns will have spin-offs for others too, like banks, cement, steel and other industries.

“The lower rates will ignite demand and also give people an opportunity to own homes. We expect to disburse about Rs 15,000 crore to Rs 20,000 crore through the special loan package,” O P Bhatt, chairman of State Bank of India, is on record as saying.

Says H M Bangur, managing director of Shree Cement and president of the Cement Manufacturers’ Association, “Around 60 per cent of the cement produced by our company is consumed in villages and smaller cities. Cheaper home loans will mean greater construction activity in these places where one can easily build a house within a budget of Rs 20 lakh. This will ultimately lead to a spurt in the demand for cement.” An official of the Steel Authority of India sees the bank decision as helping the steel industry. A JSW official thinks the impact could be more if all private banks too cut rates.

Future perfect

From: Financial Chronicle, By JHARNA MAZUMDAR - Posted on 31th March, 2011


Call them space-age homes, they are increasingly becoming the benchmark for residential properties There is a steady shift towards dry wall technology for residential projects. It gives flexibility to modify the interiors, and is faster to build BUYING a home is a major step in one's life ¬ it's perhaps the most critical investment decision most people make. And a home today is much more than the conventional roof over one's head. With increasing demand for smart or spaceage homes, developers are adopting new technologies to cater to the desires of a new generation of homebuyers who have the pocket to match.

The new technologies are not restricted to automated homes.

The latest trend in architectural design is flexible construction.

This allows the customization of the available space according to one's requirements, Mumbai-based Vijay Group has launched a luxury project called Orion incorporating the latest "dry wall" technology. This technology has hitherto been used mainly in commercial structures like hotels where the size of rooms can be adjusted by flexible dividers.

Now it is being used in residences -instead of concrete walls, the flexible dividers can be used to create space according to the need.

"The construction of Orion has cost us around 15 per cent more as we have introduced four levels of security surveillance, sensor controlled lift, gate video door phone and dry walls," Gautam Thacker, director of Vijay Group, said.

CCI Projects, another Mumbai developer, is also introducing dry wall technology for its upcoming Rivali Park project.

It was always popular in the commercial sector, but now, with changing customer preferences, this technology is finding many takers. India's real estate sector is seeing a steady shift towards the adoption of dry wall technology for residential projects. "Dry wall construction gives flexibility to design the interiors," said Harjith Bubber, CEO & MD of CCI Projects.

There are many advantages of dry wall construction as it is 8-10 times lighter than conventional brick and block construction. Construction is also faster by five to eight times. It is more flexible in terms of modifications and refurbishments whenever needed.

"Rivali Park is opting for dry wall construction looking at the requirements of today's home buyers. Over the next few years, through adoption of modern construction techniques by builders and greater demand from end clients for highperforming, environment-friendly buildings, dry wall construction is set for significant growth," Bubber said.

Kolkata-based Siddhi Group says that it will soon have "one of its kind" one-room multi-facility studio apartments. Xanadu, as the developer has named it, has been inspired by the mythical summer palace of King Kublai Khan and the mystique mansion of Mandrake, and promises to offer all the amenities of a super premium HIG lifestyle electronic access, remote illumination, bathroom with Jacuzzi, space-saver furniture, intelligent workstation, Wi-fi, broadband, phone console, power gym, spa, meditation room, nightclub, business centre, a Laundromat, round the clock house-keeping services, a 24X7 coffee shop, a convenience store, an icemaker at the end of every corridor, touchscreen security system enabling international standard security services, a miniplex, lounge bar and a splash pool.

Interestingly, the flat owners will be able to use all the facilities at no extra cost.

Sanjay Jain, joint MD of Siddha, had earlier told FC Build, "We will now take Xanadu to different tier II cities across the country.

Our endeavour will be to develop Xanadu as a brand for studio apartments and smart homes. The next ports of call for Xanadu will be Jaipur, Pune, Bhubaneswar and Raipur.

Siddha Group has also finalised three other locations in and around Kolkata.

The first Xanadu project at Rajarhat in the eastern fringes of the city will have 320 flats, all studio apartments of sizes varying from 500 sq ft to 600 sq ft in the price range of Rs 14-18 lakh. The project will have 10storied buildings spread in two blocks. The ground floor and basement will be dedicated for parking, while the residential flats will start from the first floor, which will also include a lawn surrounded by the two blocks.

The demand for smart apartments are coming from "IT/ITeS employees from Sector V, F&B (food and beverage) professionals from the adjoining five-star hotels and fine-dining restaurants and corporate houses and also live-in couples, non-resident Bengalis, single parents and retired couples with senior corporate background," said Nilesh Biswas, director, Calcutta Skyline, a leading realty research, marketing and broking company.

Bangalore-based Silvan Innovation Labs has installed its home automation systems in high-end apartments at Indira Nagar, Bangalore, constructed by Value Design Build. The project, VDB Cardinal, comprises 10 apartments, each apartment having its own swimming pool.

Seema Mohta, deputy general manager (business development), VDB Cardinal, said, "Home automation systems at VDB Cardinal have been a great value addition. These have been one of the USPs for customers of Cardinal. I do not think home automation systems are meant only for high-end projects and affluent customers. At VDB, we would consider installing home automation systems in all our future projects depending on the target segment's needs."

Some of the home automation systems installed at VDB Cardinal include EPBX connection between security and the apartment, video door phone, LPG gas leak detector, and other automation systems covering security and safety aspects that come with the option to upgrade.

Avinash Gautam, VP security & automation business, Silvan Innovation Labs, said, "We are seeing strong interest growing towards smart homes year on year in India, both from builders as well as consumers. As consumers look for possible solutions to simplify their life and minimise the time consumed in day-to-day chores, builders look at it as differentiators."

The company has developed a range of security products. For instance, if someone rings the bell when the person is not at home, the home automation system transfers the ring to the cell phone. "You can actually talk to the person outside the door, without letting him know whether you are at home or not, and if it is your near and dear one, you can remotely open the door from your cell phone," he said.

It is quite possible products such as iPads and smart phone screens can be used as user interface to control automated products at home, without the need for a separate console. As mobile phones are becoming more and more central to people's lives, it is evolving from being a communication device to an extended device, where it is taking on the avatar a home control device. An individual doesn't need to carry a separate device as a cell phone is always with him or her, Gautam explained. With a lot of buzz around global warming and rising energy bills, there is a strong desire in bringing a change in the way we live.

Solutions optimising energy consumption is one of the important things in the home automation space, he said.

There are products with which one can set a timer to water the plants automatically, electric equipment can be switched on and off without being present at home, Gautam added.

However, home automation products are not picking up in a big way in India and are restricted to high-end luxury houses as pricing is not within the budgets of most consumers, he said. Hence, Silvan Innovation has developed technologies for the Indian market indigenously. "We are seeing good traction for our products. We believe we can change the landscape in this space."

Said Ramesh Nair, MD west India, Jones Lang LaSalle, "Given the rapid pace of change in technology, the real es tate industry has to gear up for the future.

Buildings will increasingly be designed around work to provide the knowledge worker of the future with incredibly fast and powerful resources. They will be filled with sensors interacting with each other, without involve ment of people, to improve the effi ciency and performance of build ings. Developers will realise that connectivity is crucial, appearance is less important and flexibility is the key."

Nair explained that at present we use several electrical and electronic devices at home, each with a differ ent user interface. "By using smart home technology all these devices can be centrally controlled and have a single user interface which in turn reduces day to day maintenance and reduces ener gy consumption."

T Chitty Babu, chairman & CEO of Akshaya Homes, a Chennai-based developer, says his company has been working on smart home projects. Said he, "Technology is all-pervasive "Technology is all-pervasive today and has permeated into home design. Smart homes connect all de vices and appliances in a house so they can communicate with each other. Anything in a home that uses electricity can be put on the home network.

Whether one gives that command by voice, re mote control or computer, the home reacts. Most applications relate to lighting, home security, home theatre and entertainment and thermo stat regulation."

He added, "We have delivered the first smart home in Chennai. Our project `Aikya' in Adyar in Chennai, has been provided with smart devices that can be control the lighting, air-conditioning and the security of the apartment through a single console."

Chitty Babu explains that smart homes have various benefits. "One can control the temperature in the house, dim lights, control the volume of the audio-video system from any room, heaters in the bathroom can be programmed to come on automatically at a pre-defined time so that the water is warm when you enter. Most smart home products are designed to save on energy. Another benefit is security. Using smart devices one can light up the entire home if motion is detected and also send alerts through e-mail when there is a motion in the house when there should not be any. Or the security system can call you if there is an alarm. You can also view your home even when you are not there using smart devises."

The demand for such homes is on the rise especially from tech savvy people. Cities like Bangalore, Chennai, Delhi-NCR and Mumbai are seeing smart homes being launched in a big way, Chitty Babu said.

BEYOND LUXURY

From: Financial Chronicle, Page: CZEHRA NAQVI, New Delhi - Posted on April 28, 2011


These homes come with facilities like sports complex, pools for individual houses, spa, cafe, concert halls and designer interiors Super-luxury homes are more like plush hotels ¬ and they are the flavor of the times. What makes them so exclusive?

An exquisite villa on an island off the coast of Mumbai, with an exclusive speedboat to pick up your guests from the mainland A home located around a nine-hole golf course designed by world famous architect Graham Cooke Your home interiors from the bedroom to the tableware-done up by none other than the country's leading designer Sabyasachi W ELCOME to the world of super-luxury living.

Following the bounce back from the recession, `super luxury' has become the buzzword in India. Be it cars or homes, the focus has moved to exclusive offerings that would make `luxury' pale in comparison.

India has over 85,000 Ultra High Net worth Individuals (UHNIs) and their numbers are swelling at a fast clip. They seek exclusivity that goes beyond luxury to suit their brand value. What better way than a home that pampers you and wows everyone? Super luxury residences are the flavor of the times, catering to the needs of a niche consumer group for whom a few extra cores don't matter.

So, how does one define super-luxury living? Going by what developers and architects have to say, there are a host of contributing factors, ranging from design, size and facilities to the location of the property.

"Today, we have customers with high purchasing power who want to have the best of facilities and services and are willing to spend money for their lifestyle," Shakti Nath, CMD of Logix Group, told FC Build.

"Location is of prime importance. Then come the specifications offered, size of rooms and personalized services. The view from the house plays a very important part.

Other factors that count are value-added features like on-call service, lounges and spa."

Nath mentions one such property recently launched by Logix Group`La Première'.

It is an integrated project that brings together hospitality, luxury retail, corporate offices and luxury residences. Every apartment has a private plunge pool, steam and Jacuzzi, while residents get an exclusive lounge bar managed by Marriott, an urban spa by L'Occitane, fitness centre by Evander Holyfield Gymnasium, exclusive luxury men's salon and nightclub, among others.

The interiors boast of specifications like Italian marble flooring, teak woodwork, centralized air-conditioning with VRF, European modular kitchen, and on-call services such as private butler and laundry service.

Rajinder Kumar from Rajinder Kumar Associates, the architects firm that has carried out the master planning for La Premiere, explains, "Iconic building, spacious unit plans, large master bedroom, walk-in closet, elaborate 4fixture separate toilets for him and her, steam and sauna facility, deep terraces with plunge pool and landscaping, entrance lobby with concierge, high-end club with spa, and green surroundings are some of the things that customers demand the most."

Anuj Puri, MD, Jones Lang La Salle Meghraj, says anything above Rs 10 cores ($2.5 million) will fall in the super-luxury category, while Rohtas Goel, CMD of Omaxe, puts the figure at Rs 5 cores onwards.

Says Puri, "There is a lot more confidence in the market, so there has been a definite resurgence in property demand. It is, however, largely limited to Delhi, Mumbai and Bangalore."

He echoes Nath's views on enhanced facilities. "These homes come with facilities such as sports complex, pools for individual houses, spa, café, concert halls and the like.

In fact, super-luxury homes are more like a hotel than a house."

Location is a key factor. Almost all luxury properties claim to insulate you from the hustle and bustle of city life. But, as Puri explains, the ideal location would be within the heart of the city, not on its periphery.

"Customers want their homes to be located within the city, but the moment they step into the compound, they should be transported away from it. The view, the calm ambience that’s the thing."

Talking about area specifications that define super-luxury homes, Goel of Omaxe says, "The area varies from city to city, depending on the open spaces available. For Mumbai, it would be about 1,500 sq ft. For Noida, it will be somewhere around 4,000 sq ft. The prices, of course, start from Rs 5,000-6,000 per sq ft."

He emphasizes that specifications like use of Italian marble do matter a great deal.

Sanjey Roy, GM, corporate communications, DLF, defines another kind of luxury.

"In the case of the `Aralias' project that we developed in Gurgaon, we gave the four walls along with a designer to our clients, which gave them the freedom to design their own home." The market price of these homes at present is above Rs 20 crore, he informs.

Mantri Developers' `Espana' project, located near Bangalore's IT hub, offers similar op tions. Housing 440 super luxury 3to 5-bedroom apartments, they provide full flexibility to customers. As a result, the houses are shell-bare and buyers will have the option of picking and choosing from a wide range of fittings, fixtures and floorings to give their home a touch of originality and individuality.

Nilesh Biswas, director, Calcutta Skyline, says, "In Kolkata, super-luxury living is defined by the presence of a swimming pool, sauna, Jacuzzi, shower cubicles, terrace, central AC, state-of-the-art club facilities, use of Italian marble, to name some. Of course, since location is always a status symbol, it also adds to the super-luxury status. Anything above Rs. 13,000-14,000 per sq ft comes with a super-luxury tag," he told FC Build.

Kolkata's tallest residential tower, `Urbana', is coming up over 67 acres. It is a project of the Bengal NRI Complex, a joint venture between Emami, Shrachi, Sureka Group, Nahata, MKJ and JB Group in association with the West Bengal government.

Every apartment in Urbana will come with video-door phones and have earthquake resistant structures.

Pradeep Sureka, chairman, Sureka Group, adds that Urbana would house the city's most exclusive club with 80,000 sq ft of luxury and entertainment. To be called Club Urbana, it will offer a large VIP lounge, Olympic length infinity pool, gym, spa and various sports facilities, which no other club in the city can claim to have.

Then there is `Ganga Awas', being developed by Ambuja Realty, which will have around 90 unitsbungalows and apartments. Ganga Awas will come with three different types of units -Riviera, Hermitage and Gardenia.

Harsh Neotia, chairman of Ambuja Realty, informs that the units at Riviera will have personalized lily pools, personalized front and back lawn, river facing terrace, open to sky courtyard and a spectacular promenade view.

Each Hermitage unit would have a person alised patio terrace, individual sit-out terrace and enhanced privacy through provision of intimate spaces. Gardenia will offer zamindari structures imparting an old world feel and have a personalised garden surrounded by groves and thickets.

Jones Lang La Salle's Puri clarifies that both condominiums and villas can come within the super-luxury bracket, depending on their specifications and the city where they are located. "In Delhi and NCR, you will find villas, so also in Bangalore which has a lot of available space to construct sprawling homes. But in Mumbai, with its space constraints, condominiums are also super-luxury. For instance, the condos that were constructed on the land where liquor baron Vijay Mallya had his house cost more than Rs 10 crore each," he said.

Another aspect that adds to the super-luxury allure is the involvement of `branded' designers and architects. Kamal Khetan, MD, Sunteck Realty, feels that ultra-luxury homes, if styled by interior designers and artists, would not just increase the cost of the apartment but also add to the `branded' tag.

The designer-model has been followed by Samira Habitats, which is betting big on its 187 premium villas project, offering 2BHK, 3BHK and 4BHK options with total built-up area ranging from 1,456 3,000 sq ft at Alibaug, near Mumbai. Apart from the state of the art clubhouse and lavish spa, the project has tied up with leading fashion designer Sabyasachi to deck up the interiors. The ace designer will design everything in the house right up to the tableware, creating an individual identity for five limited edition homes. The project also offers residents an added luxury-a speedboat service from the developers that would take them to and fro from the coast.

Mantri group's Espana in Bangalore is also a `designer project'. It been designed by Hafeez Contractor and Belt Collins Singapore has done the landscaping.

M3M Golf Estate in Gurgaon is yet another example in high-end living, featuring what it calls `7-star luxury apartments' built around a 9-hole reversible `In City' golf course designed by world famous architect Graham Cooke. The price of each apartment ranges from Rs 4 crore to Rs 12 crore.

Mumbai realtor Disha Direct is focusing on destination homes on the outskirts of the city.

"We are constructing villas in places like Lonawala, Murbad, Shahpur and Igatpuri," Santosh Naik, MD of Disha Direct says. Disha has also recently launched Reso Villa, which is on the Ahmedabad highway. Reso Villa is surrounded by the Deharaja river, Biliya mountains, Jaysagar Lake and waterfalls.

There is a large latent demand for superluxury living that exists in India, especially with the rapidly growing ranks of UHNIs.

Although it is very difficult to pinpoint the exact market size for these, realtors are quite upbeat given the increasing demand.

Demand for luxury property has increased over 15 per cent over last year, Sandeep Karnavat, director, Sunjana Realtors, says.

Of course, what takes the cake is `Antilla'-Reliance boss Mukesh Ambani's 27-storey home in Mumbai (each storey is double the normal height, so that makes it equivalent to 60 storeys), valued at $2 billion by Forbes magazine. The house has three helipads, hanging gardens, a two-storey health centre, an entire floor for home theatre and entertainment, and parking space for 168 cars (all of which reportedly belong to him!).

Get smart about sample flats

From: Financial Chronicle


Sample flats have emerged as a powerful marketing tool in the real estate industry. A sample flat replicates the actual apartments in a project with exact floor areas and showcases all possible facilities. For a potential homebuyer sitting on the fence, sample flats, the industry feels, often help firm up a decision as a dream is converted to reality.

Usually sample units/apartments are used for luxury and premium projects. The fact that they are furnished enables customers to understand how the available space could be optimally utilised. However, across cities, buyers have often encountered situations when, at the time of delivery, their dream home has turned into a poor shadow of the sample unit shown to them months ago. Caveat emptor (let the buyer be aware) or so the phrase goes.

There is no compulsion on the buyer to buy anything but a completely unfurnished flat. According to industry estimates, a well-embellished sample flat could cost 30 per cent more than the normal unit. “While we do see many instances where a luxury apartment buyer is impressed sufficiently to ask for an exact replica of a sample flat, such buyers have the requisite financial capacity to pay for the embellishments. There is little sense in being either carried away or prejudiced by the appearance of a sample flat. These flats are showcases, meant to incite interest and indicate the ‘lifestyle potential’ of the project,” said Mrunal Duggar, vice-president – residential services, Jones Lang LaSalle India.

Once a buyer gets a fair idea of how furnishings and colour schemes have been used, he or she should draw a mental picture of how it could be done differently. A prospective buyer has -- and should exercise -- the option of asking for some or all of the showcased features to be included in the flat he or she wishes to purchase, but these will come at an extra cost. Remember, that regardless of the sample flat’s appearance, the developer will quote for the unfurnished flat, which means that the price includes the flooring, balcony area (if any), ceilings and walls, and nothing more.

Some feel the term ‘sample’ may be confusing. “I would any day go with the term ‘sample flats’ instead of ‘model flats’ because we, at Blue Chip Projects, are very particular about not confusing the potential homebuyer with something that we will not deliver. I think an ethical developer should only showcase exactly the product that he will offer -- and we do just that,” Ritwik Das, managing director, Blue Chip Projects, told FC Build. Das admitted that many developers invest heavily in developing and decorating these sample or model flats, because that helps them to lure customers. They engage high-end interior designers, use rich upholstery, upmarket furniture and bright colours to make the flats look much larger and wider in size and brighter than what it would actually be.

Nilesh Biswas, director, Calcutta Skyline, a leading realty research and brokerage firm, said, “Showcasing a sample or model flat is not as important in case of affordable housing (LIG and MIG flats) as it is in the case of luxury or premium residences.”

Others feel the term ‘sample’ happens to be more popular and hence its wide usage. Kruti Jain, director, Kumar Urban, says that there is not much difference between a sample flat and a model flat. Usually, a sample is known as the best potential of the flat, which is not a real fit for an average working person, while a model flat is a kind of design structure.

“In other words, a sample or a model flat gives an idea to buyers about the utilisation of space and design. Sample is a more popular word which buyers know well and can relate to, so builders use this term on a regular basis,” said Jain.

Builders also feel that if you ask a buyer after purchasing a unit whether the sample flat helped in making the decision, only 40 per cent say yes. They give more credit to the planning of the unit. But developers try to add everything possible in order to favourably influence a buyer’s decision.

For example, if a project is made for a particular community, various ideas from home temples to home offices are incorporated in the sample. Other ways to light up a room would include latest wallpapers, multipurpose furniture, mouldings on walls, lighting and false ceiling, murals, among other embellishments.

Harjith Bubber, CEO & managing director, CCI Projects, said that a user research study conducted by the Barratt Group has found that potential home buyers want to see what a finished room or apartment will look like with different possible furniture layouts, along with a floor plan. When asked about wide differences in the sample and actual unit sold, some developers claimed that there are no stark contrasts. “In terms of what finishes are being offered to the home buyer, the sample or model flat shows/has exactly those finishes. For example, if a specific flooring/tile has been promised/is being provided, that very same tile, in the same size, is used in the sample flat. Similarly, for any of the other finishes promised to the customer, exactly that finish is shown in the sample flat,” Bubber said.

Ravindra Pai, managing director, Century Realestate, feels that customers are mature enough to understand the concept of sample flat. The difference between “sample” and “model” is only a play with words. “The intent is important. The developer should not misguide customers by showing something that they do not intend on providing. However, there is nothing wrong in depicting the lifestyle potential as a sales tool,” said Pai. A home is amongst the few products where a customer is making a purchase without seeing the product and this is a big decision. Typically, if a flat costs a customer Rs 40 lakh, around Rs 15 lakh is spent on the embellishments for a sample flat, he added.

Neville Vaswani, managing director, Vaswani Group, is of the view that rather than go with a preconceived set of dos and don’ts, the potential buyer should ideally be aware of the internal specifications of the finished product prior to their visiting the model unit. “They could compare and ask clear-cut and informed questions on any variations that they notice. In certain cases, specific elements of the show flat such as modular kitchen, shower partitions, etc., are ‘optional extras’, which are provided by the builder at an additional cost, and would clearly be indicated/ signposted as such,” said Vaswani.

Snehal Mantri, director-marketing, Mantri Developers, said sample flats are here to stay. “Just as a brochure and floor plan offer to buyers information about the apartment, a sample flat allows him to experience his home before he can purchase it. Today the Indian consumer is evolved, looking for maximum information before making even the smallest purchase. A sample flat appeals to this mature consumer and helps him understand the minute details of his dream converting to reality as it helps him visualise what all material will be given to create a luxury home,” he said.

While flooring, paint and other aspects such as kitchen counter and toilet counters, CP fittings, etc., are mostly done in sync with the actual finished product, in most cases the model unit is also done up with exclusive furnishings, wardrobes, woodwork, modular kitchens and so on, which are not part of the finished product.

Revival in commercial property

From: Financial Chronicle, CJHARNA MAZUMDAR, New Delhi - Posted on March 24, 2011


2011 may see the absorption of 35 million sq ft of office space. Between January and March this year, around 5.5 million sq ft of commercial space has been taken up IN HIGH DEMAND Delhi, Mumbai, Kolkata, Hyderabad, Chennai and Pune are witnessing a demand revival In Noida, a 6 lakh sq m piece of commercial land was snapped up at Rs 1.07 lakh per sq m In Kolkata, commercial spaces are in limited supply, so rental values have shown an upward trend The rise in demand has been due to steady hiring in the banking and financial services and IT industries In the Oct-Dec quarter, rentals of commercial properties have gone up by 7-10%

THERE is a strong revival in de mand for commercial property across the country but the over supply situation may continue through 2011. In the first three months of 2011 the country saw the absorption of around 5.5 million square feet of office space against 4 million sq ft during the corresponding period a year ago.

All the major cities ¬ Delhi, Mumbai, Kolkata, Hyderabad, Chennai and Pune -are witnessing a demand revival.

As an indication of the buoyancy in commercial real estate, in one of the biggest land deals ever struck, on March 11, 2011, the Noida Authority in Uttar Pradesh sold a sprawling commercial land for Rs 6,570 crore ¬ a whopping Rs 1.07 lakh per sq m -to Wave Infrastructure. Three companies -Wave, Amrapali and 3C -had participated in the bidding. The 6,14,000 sq m of land comprising two entire sectors (32 and 25A) in Noida will be used to build the largest commercial space in northern India.

According to Gurgaon-based Shahel Parmendra, managing director (markets), Jones Lang LaSalle India, it is expected that in 2011 (January-December) there will be around 50 million sq ft of office space available in the country, of which around 35 million sq ft will be absorbed.

Parmendra said the NCR area alone is expected to see office space absorption of around 4.5 million sq ft in fiscal 2011, which is a 5 per cent increase from a year ago.

The surge in demand has been triggered by steady hiring in the banking and financial services sectors and IT industry. The overall economic growth of the recent past has also brought more disposable incomes in the hands of consumers, leading to a retail boom. In the October-December quarter, lease/rentals of commercial properties have gone up by 7-10 per cent fuelled by the improved demand.

Mayur Shah, managing director, Marathon Group, said, "We are seeing 100 per cent increase in demand in 2010-11 compared with 2008-09 when we went through the economic meltdown."

Marathon Group recently launched a four-lakh sq ft commercial property in Lower Parel in Mumbai. "Around 90 per cent of our commercial property has been booked and we are planning to launch another commercial property of four lakh sq ft area by June," Shah said.

However, Parmendra points out, although demand is likely to increase for commercial properties, rents may not move in line with demand due to oversupply.

In locations like Bandra-Kurla in Mumbai, Cyber City in Gurgaon, and Hyderabad's SEZ, prices may go up, but in other locations prices are unlikely to increase despite the improved demand as there is ample supply, he said.

"Within Mumbai, Bandra-Kurla continues to hold considerable tactical value for corporate office space occupiers. Lower Parel has also set an astounding pace in Grade A office space development, and the forward momentum set by some recent key projects has now found a natural growth extension in Dadar. With the completion of a couple of new landmark Grade A office projects, Dadar has now joined the fray for Grade A business space in Mumbai where both commercial and residential prices are seen moving up," Parmendra explained.

According to Harjith Bubber, chief financial officer and managing director of CCI Projects, there is an uptrend in utilisation of commercial property, and "rentals for commercial space in Mumbai's western suburbs have gone up by 10-15 per cent".

Bubber said that CCI Projects has already acquired a 22-acre land in Borivili, a suburb in Mumbai's Andheri, on which it plans to develop a commercial and residential project as well as a mall.

Vestian Global Workplace Services, a real estate services subsidiary of the Chicagoheadquartered Vestian group, attributes the revival in Hyderabad's commercial space to the expansion by IT/ITeS, wherein rentals across different micro-locations in the city have gone up by 5-8 per cent in the last two quarters.

Shrinivas Rao, Vestian's CEO Asia Pacific, said, "During slowdown phase (Q4 2008Q1 2010), demand fell by almost 3045 per cent across different micro-locations.

Rentals of commercial space dropped by almost 20-30 per cent and the vacancy rate went up as high as 30 per cent." Pointing out that the IT-ITeS sector remained the key source of demand for commercial space, Rao said, "Investors are looking to invest in commercial properties but the preference is for properties which are leased and situated in a good location."

Developers are more optimistic for residential asset class properties compared with commercial asset class as the former is almost 80 per cent of the total real estate market size, and a sizeable proportion of residential projects can be sold in the pre launch phase.

"This characteristic helps developers in project risk mitigation and funding during the construction phase. In comparison, the scope for pre-lease is less in the commercial segment and the funding needs to be done by the developer. Besides, project fund requirement is comparatively less in the residential segment," said Rao.

When it comes to the eastern region or specifically Kolkata, commercial spaces have always been in limited supply because of which rental values have always shown an upward trend in most high street locations.

Malls such as Forum and South City witnessed an appreciation in rentals of up to 5 per cent in the second half of 2010.

Going forward, the demand for commercial space will gain momentum in 2011, with projects that are in the final stages of completion likely to see acceleration in construction activity.

Rental and capital values are also likely to increase across malls. Tenant queries and lease transactions by retailers executing their expansion plans will also go up significantly over the next 12 months, Ritwik Das, managing director, BlueChip Projects, told FC Build.

There is however a rider. "Be it in Kolkata or elsewhere, malls coming up in good locations and constructed by experienced developers with credible track record and with a professional mall management team for active tenant mix management will maximise these opportunities and record a good rate of absorption," said Das.

Nilesh Biswas, director, Calcutta Skyline, a leading realty research, marketing and brokerage firm, said that demand for commercial space is mostly coming from IT/ITeS, social infrastructure segments like education and healthcare, services sector like parlours, and the hospitality industry comprising hotels and restaurants.

The other interesting trend in Kolkata is that new central business districts (CBDs) are coming up in places like Rashbehari Connector, Bantala (for IT/ITeS), Prince Anwar Shah Road and Tollygunge, among other places. This will also push up demand for commercial space further, said Biswas.

Chennai is also witnessing some uptrend in demand but it is not very signifi cant. According to Rajesh Babu, CEO, Recs Group, a boutique property consultancy firm in Chennai, the Guindy area and central business district witnessed a slight upward movement in commercial space rentals owing to demand from IT & non-IT segments.

On OMR, Chennai's IT corridor, rentals have shown a slight upward movement and the scenario is positive upto the toll plaza.

Beyond the toll plaza, it has remained more or less stable at last year's rental levels. In the case of Ambattur, a western industrial suburb of the city, commercial rentals are more or less stable, mainly because of oversupply in the region.

"When we refer to commercial space in Chennai, a bulk of it is only IT, as there is very little stock coming into the market for non-IT. Overall, close to 3.7 million sq ft of commercial space was absorbed in Chennai last year (2010)," said Babu.

"Further, demand for SEZ space was good last year and it continues to hold good for this year. However, it is still too early to ascertain the impact of the 18 per cent MAT imposed in this year's budget," Babu added.

Even here, the city-based SEZs are preferred over those located in and around the city's suburbs.

Shailesh Ghorpade, MD & CEO, Azure Capital Advisors, a real estate focused investment company, said, "The oversupply situation in commercial real estate may persist during 2011 despite strong demand revival, primarily due to the huge supply pipeline -including projects in advanced stages of construction as well as vacant stock in completed projects that is yet not fully assigned to occupiers. As such, rental values for commercial properties are likely to stabilise during 2H11.

This stabilisation in rental values may induce institutional investors/HNIs to make investments in this asset class which may result in yield compression for commercial properties in 2011. While rentals would stabilise, capital values for commercial properties are likely to see appreciation on y-o-y basis.

Public sector banks cut rates on new home loans

From: The Hindu - Posted on 16/12/2008


Public sector banks have brought cheer to small home loan seekers by cutting rates on Monday under a new package aimed at stimulating demand in the retail housing sector.

Loans up to Rs 20 lakh will now be available at 8.5-9.25 per cent a year for tenures up to 20 years.

The offer will be valid only for new loans up to June 30, 2009.

Currently, the interest rate on these loans average around 10 per cent for most PSU banks.

The package also includes lower margins (borrowers’ contribution), waiving of processing and pre-payment charges and free life insurance cover for borrowers.

These measures were announced at a press conference held by leading public sector banks including State Bank of India, Bank of India and Union Bank of India.

All public sector banks will offer the new loan package with immediate effect, said Mr O.P. Bhatt, Chairman, SBI.

Under the scheme, the interest rate on home loans up to Rs 5 lakh, for a maximum period of 20 years, will not exceed 8.5 per cent for the first five years. The margin for this segment has been reduced to 10 per cent, from the current 20-25 per cent.

This means a borrower can get loans up to 90 per cent of the value of the house.

The interest rate on loans up to Rs 20 lakh for a maximum period of 20 years has been fixed at 9.25 per cent and the margin has been reduced to 15 per cent.

During the first five years, if any bank introduces a home loan product at a lower rate, then the borrowers will be offered that rate. After the first five years the interest rate will be reset from the date of the first drawal and borrowers have the option to go for fixed or floating rates.

The package does not apply to existing home loan borrowers and cannot be swapped with an existing loan.

Explaining the rationale behind offering a package only for new housing loans, Mr Bhatt said that the aim is to increase demand for housing loans, as this will also help boost sectors such as cement and steel.

“The aim of the new scheme is to stimulate the economy. Banks will pass on the benefits of the lower interest rates also to existing customers by way of cut in prime lending rates,” he said.

Mr T.S. Narayanasami, Chairman and Managing Director, Bank of India, and Chairman, Indian Banks’ Association, said “The common man should have the comfort that his or her EMI will not get affected for the next five years.”

For most public sector banks, about 80 per cent of the home loan portfolio is made up of loans up to Rs 20 lakh. The estimate is that about Rs 15,000-20,000 crore would be disbursed under the new package in the two loan categories.

Mr Bhatt said that this move by public sector banks could put some pressure on private and foreign banks to cut rates, as this segment of home loans is a good portfolio with good recovery for all banks.

While banks may take a hit of 2-3 per cent on their margins due to the lower interest rates, it is for a short time and will be made up by windfall profits in treasury incomes, in a scenario where bond yields are falling, Mr Narayanasami said.

Mr R.R. Nair, Director and Chief Executive, LIC Housing Finance, said the move by the public sector banks would pose a business challenge to housing finance companies. “We would look into a revision in our business models and our lending rates.”

Builders and prospective buyers see housing horizon brightening Realty Check

From: The Hindu - Posted on 11/12/2008


With the economic growth stimulus package announced by the Reserve Bank of India a few days ago, builders and property buyers are expecting a change in the present scenario in the housing market, particularly a gradual reduction in the interest rates on home loans.

Other developments associated with global economic outlook are, however, making the banks and companies extending home loans remain cautious. “Despite a new hope, the housing loan segment remains very dull,” said an official of a public sector bank.

Some of the public sector banks have recently instructed their branches to increase the margin money to be brought in by the home loan seeker to around 40 per cent. It was previously around 20 per cent. Officials of the banks, which had effected such increase, felt the realty prices were still inflated. The banks need to take precautionary measures to prevent any possible market correction from affecting their profits in future, they added.

“Now most of the loans are secured demand loans (SDL) and the number of housing loans disbursed by the branch has dwindled. Our branch used to give around 100 housing loans per month some months ago,” says an official of a public sector bank.

Despite the government’s measures to help the housing sector, there is still reluctance on the part of banks to disburse housing loans as the fear of a deterioration of the global economic condition is looming large.

Officials of the State Bank of India, however, said the margin requirement for housing loans was 25 per cent. They claimed that the number of seekers of home loan have reduced despite the willingness of the bank to lend.

“Our customers say they have come to know that the prices are inflated. So they are waiting for a correction,” says an official. The rate of interest of housing loan offered by HDFC is 11.25 floating. Its officials said a further reduction of interest rate is likely. But other factors also determine the demand of the housing loans, according to officials.

The National Housing Bank recently has directed housing finance companies to reduce the loan-to-value ratio of the housing loans to 75 per cent.“It has also made amendments in order to regulate the housing finance system in the country,” said a senior executive of HDFC.The RBI has also decided to permit the HFCs registered with National Housing Bank to raise short termforeign currency borrowings under the approval route as a temporary measure in order to help the housing sector.

“The reduction of interest rate on housing loans may have an impact on the middle and lower income buyers,” said T.Chitty Babu, chairman and managing director of Akshaya Homes. “Such reduction will make buyers enthusiastic only if supported by other initiatives of the government,” according to Suresh Jain, MD of Vijayshanthi Builders. “More tax incentives may help in bringing down the property prices,” he added.

A senior official of a PSU bank said that the interest rate cut may not bring a sweeping change in the condition of the housing sector as recession was demand led.

The demand will increase only if the people realise that the value of the property is not inflated, he added.

Package to lower home costs on cards

From: The Finance Chronicle - Posted on 10/12/2008


In yet another attempt to revive the housing sector, the government is framing a comprehensive package to stimulate demand. The package is expected to suggest, among other things, easing of environmental approvals for projects and a reduction in the stamp duty levied by states. The idea is to lower the overall cost of buying a house.

The package is expected to announce new norms to speed up environmental clearance for projects and urge state governments to bring down their stamp duty rates to a countrywide uniform 5 per cent. The duty now varies from state to state. In some states it is as high as 11 per cent.

The package is being given final touches by the urban development ministry and the National Housing Bank (NHB). “We are working with the government on the package. It is expected to be announced soon,” NHB chairman and managing director S Sridhar told Financial Chronicle.

Real estate developers feel that easier environmental clearance and lower stamp duties will go a long way in boosting the sector.

“It takes close to a year to get the mandatory environmental clearance. This significantly delays projects and pushes up costs,” Rohtas Goel, president of the National Real Estate Development Council and chairman of Omaxe, said.

Goel said, “Lowering stamp duties to around 3 per cent will go a long way in rationalising and reducing realty prices in the long run.”

Pradeep Jain, president of the Confederation of Real Estate Developers Association of India for NCR and chairman of Parsvnath Developers, said, “We would love to see faster approvals for realty projects. The mandatory environmental clearance should take a maximum of 30 days instead of one year.”

Sridhar said most of the steps announced in recent times related to finance in the housing sector. The package on the anvil would deal with regulatory and other non-financial issues. “The RBI has been addressing the interest rate issue to make finance more easily available and at a cheaper rate to purchase houses. The new package would deal with other issues that need to be ironed out to spur demand for housing,” he said.

The government and the RBI have already announced a series of steps to prop up the housing sector that has been crumbling both because demand has vanished and funding is difficult to come by. The measures include a Rs 4,000 crore RBI line of credit to NHB to refinance housing finance companies and easing of norms for rescheduling loans.

RBI has decided to categorise loans up to Rs 20 lakh given by housing finance companies from credit lines extended by banks as priority sector lending.

On Sunday, announcing the Rs 30,000 crore stimulus, the government said public sector banks would offer separate packages for home loans up to Rs 5 lakh and those between Rs 5 lakh and Rs 20 lakh. It is expected that interest rates for both categories would be soft.

Sridhar said NHB had been providing inputs on the impact on housing of the government and RBI decisions. “Home loan rates are falling. We are providing inputs on the likely movement of interest rates for home loans in future and on the impact of lower lending rates on housing demand. We are also providing suggestions on the segment that we feel are most suited to spur demand.”

He said the concessions provided in the package would aim at stimulating demand in “the lower and middle segment”.

HDFC Bank, Union Bank lower rates

From: Financial Chronicle - Posted on 09/12/2008


HDFC Bank on Monday lowered its benchmark rate for best borrowers by 50 basis points or half a percentage point to 16 per cent. This would bring down the rates for all loans, including auto, home, education and personal loans. Public sector lender Union Bank of India also reduced benchmark rate for best borrowers by 75 basis points to 12.5 per cent.

The cut by HDFC Bank will be effective in two tranches of 25 basis points each, the first from December 15, 2008 and the second from January 1, 2009. The country’s second largest private sector bank by assets has more than 11 million customers. Last Thursday, the bank had slashed interest rates on deposits.

Paresh Sukthankar, executive director, HDFC Bank, said, “The drop in the benchmark rate is pursuant to the reduction in the bank’s incremental cost of funds and the significant easing seen recently in the monetary stands and the local currency money markets.”

Union Bank of India said it has cut the benchmark rate for best borrowers to ensure credit to productive sectors at lower rates for sustaining growth momentum. The cut will be applicable to both the existing and new customers of the bank and all benchmark rate -related portfolios.

Last week, RBI cut both the rate at which it lends to banks and the rate at which banks park their surplus funds with the central bank by 100 basis points each to boost the economy in the wake of a global financial crisis. RBI now lends to banks at 6.5 per cent, whereas banks get an interest of 5 per cent on their funds parked with RBI.

After the recent rate cut by RBI, HDFC Bank is the first private sector bank to reduce its benchmark rate. Till now, ICICI Bank has announced a cut of 150 basis points to 11.5 per cent for new home loan borrowers of loans up to Rs 20,00,000. On Saturday, Yes Bank had announced a 50 basis points reduction in its PLR to 16.5 per cent.

The industry and analysts are expecting a further cut in the rates by RBI. Goldman Sachs on Monday said RBI would further cut its overnight lending rate by 150 basis points. Nomura Financial Advisory also projected a similar cut in the rate.

Yet another round of rate cuts coming

From: Finance Chronicle - Posted on 05/12/2008


The Reserve Bank of India (RBI) will follow up within a fortnight the steps it announced over the weekend with deeper cut in its key rates to make bank loans for consumers, home and auto buyers and companies cheaper.

The fresh initiative will include another 50 basis point reduction in the rate to 6 per cent at which RBI lends overnight funds to banks. The rate at which banks park their excess money with RBI will also be reduced by 100 basis points to 4 per cent.

RBI expects the rate cuts announced on Saturday to translate into a sharp lowering of bank lending rates.

A further phased reduction in the proportion of deposits that banks must keep with RBI will also be considered. RBI will, in the meantime, re-assess the cost and availability of money in the market, according to a finance ministry official. A cut in this rate too was expected over the weekend but did not materialise.

In five tranches during October 6 – November 1, RBI cut the proportion of bank cash it impounds by 350 basis points, injecting over Rs 3,00,000 crore into the system.

RBI will officially scale up the target for commercial credit by 20 per cent. Credit flows have not reflected the enhanced volume of cash available with banks both because of the static targets and greater risk perceptions in lending.

Prime minister Manmohan Singh, who also holds the finance portfolio, wants the targets raised immediately.

On Saturday, RBI allowed the buyback of foreign currency convertible bonds. To make things easier for Indian companies seeking to raise money abroad, RBI will reduce the average period of maturity of external commercial borrowings (ECBs) from seven years to three.

For borrowings of $100 or more, the cap of Libor plus 200 basis points on the rate of interest on ECBs will be revisited.

There may be more reliefs to the housing and realty sectors. RBI may ask banks and financial institutions not to renegotiate terms of existing loans.

A refinancing window opened for small and medium enterprises and low-end housing may be widened to include all housing loans.

The safety net given to some commercial realty projects may also be widened to cover all real estate projects.

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