Plans To Develop Prime Property in Chennai

Maytas Properties, a closely-held firm run by the son of disgraced Satyam founder B Ramalinga Raju, has tied up with Bangalore-based Shriram Properties to develop a prime property in Chennai.

It hopes to get loans from banks by pledging the sale proceeds of the developed property as collateral and raise money from banks to complete the up market Maytas Hill County project.

“The deal will ensure that funds flow into the company in small amounts now with the major portion starting in six months when sales begin at the Chennai project. We have also discussed with banks to let them have rights over those funds which will give them confidence to provide immediate funds as additional loans,� said Ramalinga Raju’s younger son Rama Raju in a letter to the customers of Maytas Hill County.

Shriram Properties is an arm of the Shriram Group and has projects in Bangalore, Kolkata, Chennai, Coimbatore and Vijaywada. Both companies will develop around 14 acres of prime property in Chennai.

The Hill County project has been in a limbo for over a year now. The company faced execution problems after Ramalinga Raju confessed to perpetrating an Rs 7,000-cr fraud at Satyam Computers. Maytas needs around Rs 150 cr to complete the project.

Rama Raju Jr has been facing the ire of several customers who have not been given possession of the property. A criminal complaint has been launched against him for defrauding customers.

Besides, the promoters are under pressure to sell their stakes in projects or even exit the business as they have failed to honors commitments made to customers. The company has also denitrified one of its three Special Economic Zones in the city outskirts.

Two other projects — Jubilee Hills Landmark and Jubilee Hills Park View — have also been halted due to the credit crunch.

While Maytas Properties hopes to win customers’ confidence, the move has seemingly irked many of them. According to a few customers, the deal means they will have to wait till the company reaps profits from the project.

Courtesy:- ET dt:- 14-10-09

Office rentals, which dropped 40% from their peak in the middle of 2008, stabilized across the country in the September quarter as fresh bookings for office spaces partly reduced inventories, says a report by international property consultant CB Richard Ellis. There was no change in office rentals in some of the major office locations in the national capital region, Mumbai, Bangalore, Hyderabad and Kolkata, while rentals at some others in Chennai and Pune fell by 5-6% in the quarter ended June 30. In contrast, rentals in Connaught Place in Delhi and Gurgaon in Haryana registered an increase of 5-8% in the last quarter.

“The increase in demand is largely due to improving economic conditions, positive market sentiment and growing corporate confidence. However, it would take some time for the supply demand gap to get bridged. Thus, both rentals and capital values are expected to remain stagnant or under downward pressure in the medium term,” said Anshuman Magazine, chairman and managing director for south Asia at CB Richard Ellis. The rentals in Connaught Place increased marginally by Rs 10 per sq ft to Rs 230 per sq ft after having slipped 30% from its high in June 2008. Similarly, offices in Gurgaon attracted 8% higher rental at Rs 65 per sq ft after registering a decline of 33%.  

While most locations in the national capital region saw no change in rentals compared to the preceding quarter, some locations faced significant vacant spaces which were highest for Jasola at 50% and Saket at 25%. In Mumbai, vacant spaces were high at 25% in Bandra Kurla Complex and 22% in Lower Parel even after corporates took up new office spaces. Mumbai is expected to witness an additional supply of 3.5 million sq ft by 2010 that may add to the vacancy level and keep rentals under pressure, says CB Richard Ellis. 

Courtesy:- ET dt:- 09-10-09

Q3 will be better than the second, say bankers and builders.

It took just two hours for DLF, the country’s largest property developer, to sell all the 1,250 apartments in the second phase of its Capital Greens project near the Moti Nagar area of Shivaji Marg (Najafgarh Road) in West Delhi. The project was launched on September 23 and the prices were around 25 per cent lower than the prevailing market rates. In Mumbai, Rustomjee, a prominent private property developer, got bookings for 44 apartments in its Global City project in Virar, a distant suburb of Mumbai, in the first two days of a property exhibition organized by the Maharashtra Chamber of Housing Industry (MCHI) from October 1-4.

The developer has already received bookings for 600 apartments in the Global City and another 200 apartments in Rustomjee Urbania project in Thane, on Mumbai’s outskirts, in the last three months, all in the Rs 10 lakh to Rs 50 lakh category. 

Another realty firm Nahar Group says it has sold 800 apartments in its Amrit Shakti project in Powai in the last five months. Nahar expects booking for another 15 apartments after MCHI exhibition. 

After witnessing a revival of sorts in home sales in the first and second quarters, developers are hoping to cash in on the demand for affordable homes in the third quarter too, due to a large pent-up demand and the general feeling that prices may not go down further. 

“Buyers have realized that prices may not go down further and there is no point in waiting now,” says a senior State Bank of India executive. SBI’s stall at the property exhibition got over 500 enquiries every day during the four-day exhibition and the bank expects a good conversion. 

All bankers are also expecting the good run rate on home loan disbursals to continue. ICICI Bank Managing Director Chanda Kochhar expects a surge in home loan disbursals in the third quarter. “The confidence is coming back due to increased job security and the feeling that real estate prices have corrected enough,” she says. There is also a general consensus that interest rates have bottomed out, she says. 

JS Augustine, director of marketing at Everest Developers, says there was a huge pent-up demand which is coming into the market now. Buyers who were holding back are now buying. Developers who had pulled back a lot of projects earlier are also launching new projects given the improvement in the market,’’ Augustine says. 

The period from October 2008-March 2009 was the toughest period for developers when property sales touched lowest levels since 2004. Property prices had fallen over 40 per cent from their peak in 2007-08 as buyers stayed away due to salary cuts and fears of job losses. 

But successive interest rate cuts, stimulus packages from the government and overall improvement in economic conditions changed the scenario since April this year with the country’s biggest developers, DLF and Unitech, selling over 6,500 units in the first quarter of FY 2010.

“We expect better sales in Q3 and Q4 as well. We have got very good response in Delhi which gives a good value for developers like us,’’ says Rajeev Talwar, group executive director of DLF. Even a Unitech spokesperson said the company expects to continue its growth momentum in the coming quarters. 

Home loan lenders are naturally bullish. SBI is targeting a growth of 30 per cent in the current quarter against 21 per cent in 2008-09. HDFC, the country’s largest home loan provider, saw disbursals rise 22 per cent in first quarter and expects the trend to continue. 

Normally, there is a lag of three to six months from the time of purchase and disbursal of loans by a bank or a housing finance firm. 

Developers, which have increased prices by 10-15 per cent in the last six months, say this is the best prices buyers can get. 

“Prices have bottomed out. We do not see any reason to cut prices further. Though prices will not go up sharply, they will certainly go up slowly in the coming months,’’ says Parag Shah, general manager, sales, Nahar Group, which sells apartments in Rs 60 lakh-Rs 75 lakh in its Powai project. 

Apart from launching premium housing projects in the last few months, developers have also withdrawn freebies such as free parking, waiver on stamp duty, and free holidays and soon after the spurt in sales. “Last year there was a recession and sales were sluggish. That is why developers needed to doll out freebies. Now products sell without this,” says Nahar’s Shah. 

But that’s precisely why some analysts are concerned. Pankaj Kapoor, chief executive of Liases Foras, a realty research firm, says “there is high demand only in the lower price bracket of Rs 10-20 lakh. August and September sales have fallen by 20 to 25 per cent as developers have increased prices again. There is still lukewarm response for premium properties,’’ he says. 

Prospective buyers like Govind Chitre, a retired government employee, agrees: “The moment developers see increase in the Sensex, they jack up the prices. They charge on the super built-up area, which is really absurd. I feel there should be a strong regulatory authority to control builders.’’

Courtesy:- BS dt:- 06-10-09

Realty major Parsvnath Developers is understood to have raised Rs 225 crore through equity sale of two of its projects to private equity investors and plans to utilize the funds to reduce its Rs 1,600 crore debt and meet construction costs.

Sources said the company had closed two transactions – one worth Rs 150 crore and another Rs 75 crore – with private equity firms.

The company has sold stakes in its two projects located in the national capital region (NCR). The company’s spokeperson declined comment.

With these two deals, Parsvnath has raised over Rs 500 crore in the last four months through private placement of shares and stake sales at project level. The fund-raising exercise is meant to cut its debt amounting to Rs 1,600 crore by at least half by the end of this fiscal.

The company also intends to strengthen its balance sheet by improving cash flow, which has taken a hit due to slow-down in the property market and the global financial crisis.

During this week, Parsvnath raised $35 million(nearly Rs 170 crore) through the qualified institutional placements (QIP) route by issuing shares at Rs 121.25 a share.

The company yesterday announced selling an additional 4 percent stake in a North Delhi project to Red Fort Capital for Rs 25 crore. In June, it had sold an 18 percent stake in the same project to Red Fort Capital for Rs 90 crore.

The company might raise more funds as it has obtained approval from its board to raise up to Rs 2,500 crore through QIP and other instruments.

After the QIP, the company’s share prices have gone up by 17 percent. Its share prices have risen to Rs 147.55, as of yesterday, on the BSE.

Courtesy:- BS dt:- 03-10-09

For promoting a planned and healthy real estate development of colonies and apartments in big cities, the housing and urban poverty alleviation ministry has drafted a bill and invited suggestions from experts. "The government has taken a major initiative in the shape of a model Real Estate (Regulation of Development) Act for which the ministry has held preliminary discussions with various stakeholders," Housing and Urban Poverty Alleviation Minister Kumari Selja said.

Courtesy:- HT Business dt:- 06-10-09

Realty firm Emaar MGF, which plans to raise Rs 3,850 cr through an initial public offer, will utilize over half of this fund to repay its debt alone to strengthen its balance sheet.

Emaar MGF, a joint venture between Dubai-based Emaar Properties and domestic firm MGF, has a debt of Rs 5,807.79 cr as on August 31 and plans to utilize Rs 1,972.1 cr raised from the public in part repayment.

The repayment will also include the debt of special purpose vehicle (SPV) created by the company for developing the Commonwealth Games Villages — Emaar MGF Construction.

The realty major had filed its draft prospectus with market regulator SEBI to raise Rs 3,850 cr through an IPO on September 29.

“In order to deleverage its balance sheet, the company intends to repay Rs 1,772.6 cr of its outstanding debt from the proceeds of the fresh issue,” the Draft Red Herring Prospectus (DRHP) of the company said.

Some of the lenders to the company include Unit Trust of India Mutual, HDFC, L&T Infrastructure Finance Company, Axis Bank, LIC, Citibank, ABN Amro Bank, HSBC and SBI.

“The company proposes to utilize a part of the proceeds of the fresh issue to the extent of Rs 199.5 cr for funding Emaar MGF Construction (the SPV), which proposes to utilize for the repayment and prepayment of loan facilities availed by it,” the DRHP of Emaar MGF said.

Besides, the realty firm would pump in Rs 820 cr for redemption of certain redeemable preference shares. It would also invest Rs 276.8 cr in paying development and license renewal charges.

The remaining part of the proceeds is proposed for general corporate purposes, including acquisition and brand building exercise.

Emaar MGF had filed its DRHP for the second time with SEBI to rise up to Rs 3,850 cr, much lower than what it had planned to mop up last year.

Courtesy:- ET dt:-03-10-09

There are many ways to make every room in your home a little greener without spending much or detracting from your style. One of the biggest contributors to the pollution is paint. Choose paints that no or low volatile organic compounds, or VOCs. Go less toxic by choosing furniture with natural finishes and organic materials. The best option is to recycle furniture and give it a makeover. You could also use reclaimed wood, but it could prove to be a little expensive. Fabrics are also going green. One hundred percent cotton is a good choice, as is hemp, silk, linen and wool. Bamboo fabric is the latest addition to the list. Patterns inspired by nature are in demand. Bold floral, leaf designs, and bright colors are all available in natural fabrics. Opt for organic rugs and carpets. For eco friendly flooring options cork and bamboo flooring are excellent choices. They not only look terrific but are also sustainable in the long run.

Courtesy:- ET Realty dt:- 02-10-09

Real estate developers are jittery ahead of the introduction of the draft of a bill to regulator the sector in the coming Parliament session. While the draft has been circulated to elicit views from various stakeholders, its exact shape is not clear.

The draft envisages an industry regulator with powers to administer projects, protect buyer’s interest and punish developers not adhering to regulation, but it is facing criticism.

While the bill talks strongly of the processes that a developer needs to undergo before even launching a project and to safeguard the interest of buyers, the National Real Estate Development Council (Naredco), an industry association, feels that timely completion of housing projects is not the sole responsibility of the developers.

"All stakeholders like brokers, contractors, architects should be made accountable and not just the developer," said R.R. Singh, director-general, Naredco, told Hindustan Times.

The builders do not seem receptive to the bill in its current form. "We cannot accept it in its current form and will talk to the government," said Rohtas Goel, chairman of Delhi-based builder Omaxe Ltd. "It would be unfair to treat a civil offence as a criminal which the bill talks of."

Builders insist that getting government approvals is a time-consuming process and needs to be simplified. The draft bill seems to have taken that into account.

The Model Real Estate (Regulation and Development) Act ­ as the draft is called ­ seeks "to establish a framework of standard procedures and norms for speedy processing and grant of permissions, building approvals and licenses."

This would be done in consultation with the state government or the competent authority, it says.

Despite the reservations from builders, industry experts see the planned law as a welcome change for the Indian real estate industry, which is widely perceived to be disorganized. The law is expected to drive growth by smoothening procedures and introducing higher accountability.

"Currently, only listed real estate companies are accountable for ways in which they conduct their business and it is not true for smaller players.

Such an agency would make unlisted companies equally accountable," said Ashutosh Limaye, associate director --strategic consulting, Jones Lang LaSalle Meghraj. "If this authority performs the intended functions efficiently, it can do much to induce confidence in foreign real estate players intending to invest in India".

Courtesy:- HT Business dt:- 30-09-09

Many areas in South Delhi along the Outer Ring Road have taken a hard hit owing to development work along the stretch, and rentals have plunged here, says Vivek Shukla

Long and unending traffic jams, now even on public holidays, are taking the sheen off some of the better-known posh South Delhi colonies, especially those close to Outer Ring Road. This when only a couple of years ago there were hardly any bottlenecks one would encounter along Outer Ring Road. As construction work related to Metro Rail, flyovers, and widening of roads go on and on along Outer Ring Road, this whole activity is forcing high-profile tenants out of areas like Panchsheel park, SDA, Hauz Khas, Mayfair Garden, among others.

New tenants are also avoiding such places in their search for new rented accommodation. Everybody will testify that if one were to drive to any of these places from CP for some work, then one would encounter traffic snarl-ups and jams at Defense Colony, BRT corridor, Asian Games Village, apart from routine heavy traffic. And if it rains or there is some mishap along the way, then it is an extended session on the road.

Right from Nehru Place to R K Puram, the stretch is badly affected due to chaotic scenes on Outer Ring Road - and the worst part is nobody can say when things will settle down.

Realty expert Anil Makhijani of Mak Realtors presents a very grim picture of the whole scenario. According to him, there used to be a veritable rush of people, always on the look out for accommodation in areas like Panchsheel Park, SDA, Hauz Khas and Mayfair Garden even as recently as one-two years ago.

“You cannot say the same thing for all these areas now, as well as other colonies close to Outer Ring Road - all because of the massive traffic woes. Those who have no option but to take the Outer Ring Road to reach their office or home suffer the most due to the snail pace of traffic and the daily jams,” says Makhijani.

Naturally, in order to save themselves from such a messy situation, many tenants staying in areas close to the dreaded Outer Ring Road have moved to areas like Defence Colony, Lajpat Nagar-3, South Extension, and Safdarjung Enclave in recent months. As for those who have offices in either Gurgaon or Noida, they have either shifted or are thinking of moving houses.

Dr Mahesh Sharma of the department of traffic management, IIT, says the mess on the Outer Ring Road is a result of some very bad planning among various government bodies and that it calls for an urgent review to sort out the matters.

Meanwhile, a realtor says the rentals have never seen such a dip in these colonies. If realtors are to be believed, the average rent in these places has come down by up to 25% to 30%. It is a big fall by any standards. As if this were not enough, there are no takers for houses in all these posh places. Another realtor Pradeep Mishra of Sainik Estates says there are many residents in colonies all over Delhi who run their household from rental income and they are sure to be affected if they don’t get rental income on a regular basis.

Ashok Mirchandani (name changed), a photographer by profession, has been living in Mayfair Garden for several years now. His father, who was a journalist, built this Mayfair Garden house when the area, dominated by Sindhis, came into existence. He very candidly admitted that rental income is the only regular income he has. After retirement, he runs his home from the money he gets from his tenant. “As there are not many takers for Mayfair Garden, I am really worried - I need a tenant within the next two-three months for my vacant first-floor house, otherwise it will be difficult for me to run my household,” he confides. He knows pretty well that tenants avoid his area as reaching there is like conquering some difficult mountain.

Courtesy:- TOI dt:- 26-09-09

US President Barack Obama in an interview aired on Sunday said all signs point to the US economy starting to grow again but there may not be enough new jobs created until next year.

“I want to be clear, that probably the jobs picture is not going to improve considerably — and it could even get a little bit worse — over the next couple of months,” he said in an interview taped on Friday with CNN’s “State of the Union.”

“And we’re probably not going to start seeing enough job creation to deal with the rising population until sometime next year,” Obama said, adding that 150,000 additional jobs must be added each month just to keep pace with population growth.

Federal Reserve chairman Ben Bernanke said on Sept. 15 that the worst US recession since the Great Depression of the 1930s was probably over but the recovery would be slow and it would take time to create new jobs. Insigns the US economy is recovering, retail sales rose at the fastest pace in 3-1/2 years in August and a gauge of New York state manufacturing activity hit a nearly two-year high.

Obama has sought in recent weeks to highlight the signs of an improving economy in an effort to boost his popularity, which has suffered amid a heated debate over his plan to overhaul the nation’s healthcare system.

In the interview, Obama said he will leave it up to Bernanke to pronounce whether or not the recession was officially over. But he said the financial markets were working again and manufacturing had even ticked up, in terms of production, last month. “So all the signs are that the economy’s going to start growing again,” he said.

Obama said jobs figures tend to be the last to catch up in an economic recovery. “The other problem is, we lost so many jobs that making up for those that have already been lost is going to require really high growth rates,” he said.

Obama is going to Pittsburgh during the week to host the Group of 20 leaders of the biggest industrialized and developing economies.

“That’s part of what the G-20 meeting in Pittsburgh is going to be about, making sure that there’s a more balanced economy,” he said.

“We can’t go back to the era where the Chinese or the Germans or other countries just are selling everything to us, we’re taking out a bunch of credit card debt or home equity loans, but we’re not selling anything to them,” he said.

Courtesy:- Et dt:- 21-09-09