Unitech Ltd, India’s second-biggest real estate player by revenue, on Tuesday reported it has booked sales worth Rs 3,913 cr in the first six months of fiscal 2010, selling 10.11 million sq ft, which is almost the same space sold by it in each of fiscal 2007 and 2008—the boom years for real estate.

Out of 10.11 million sq ft, 8.16 million sq ft was booked in the residential segment, the company said in a presentation dated September 30, which was made public on Tuesday. It said that these figures did not cover PLC, parking and club charges.

In the last fiscal, Unitech had sold only about 3 million sq ft in 2008-09, as buyers shied away from the real estate sector in the face of global slowdown.

“The target is to sell 20 million sq ft this year,” said a Unitech spokesperson. The average basic sale price of its projects though has dropped to Rs 3,234 per sq ft during March-September 2009 compared to an average of over Rs 4,000 per sq ft for its projects before September 2008, indicating that the company’s strategy to sell smaller units at lower prices drew response from buyers. Yet, the company has been able to sell less than 50% of the total space it launched between March-September 2009. It had launched a total of 21.3 million sq ft of space (residential and non-residential combined) of which it claims to have sold 10.11 million sq ft during the period.

In its presentation, Unitech said it has sold 6,788 units in its recent projects across nine cities which has generated Rs 2,639 cr. It has close to 60 projects under various stages of development and will be delivering close to 32 million sq ft over the next 3 years. It has launched over 30 new projects in the last 7 months. The company has increased its workforce on project sites in last six months, from 3,500 on April 1, 2009 to 15,600 on October 1, 2009, to deliver existing projects by March 2011.

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

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While there’s space for price rise in up market areas, suburbs may see a correction if festive demand fails

The festive season is considered an auspicious period for buying a new home. But, this time around, potential home owners in Mumbai are faced with the million-dollar question — to buy or not to buy — even as builders ramped up property prices in the city and its suburbs by 10-15% in the run-up to the festivities, and could raise them further.

However, experts recommend a ‘wait-and-watch’ strategy since they expect some clarity on prices to emerge by December. They are of the view that builders raised prices after the general elections in May this year on hopes of speedier economic reforms and that such an action may not be justified in the light of the poor monsoon, which could dampen growth prospects. They feel that prices are likely to bottom out by the end of the year and that even if the fall is as marginal as 5-10%, it may be worth a wait.

“Growth fundamentals are not in place and we are jumping the gun already. Lack of strong fundamentals clearly shows that the spike in prices is sentimental and not justified under current conditions,� said Gulam Zia, director, national advisory services, Knight Frank. “Most developers hiked property prices after the formation of a stable government and anticipation of economic reforms. However, the poor monsoon could play spoilsport.�

However, even if prices are to soften by the year-end, one of the important determinants that would influence the degree of fall is the supply-demand mismatch in the suburbs. “In Mumbai’s western suburbs, prices could stabilize at current levels or marginally correct in the Bandra - Andheri stretch, as the demand is much higher,� said Ashutosh Limaye, associate director (strategic consulting), Jones Lang LaSalle Meghraj.

“If one goes beyond Borivali up to Vasai or Virar, real estate consultants expect some correction in prices. Similarly, even in other central suburbs such as Mulund, Thane and beyond, potential buyers can afford to wait for better deals, as these still are upcoming suburbs.�

Big builders such as Nirmal Lifestyle and Lodha are entering newer suburbs such as Dombivali, Dahisar and Kalyan and are quoting higher prices. “These markets, however, are dominated by local developers who are still offering real estate projects at competitive prices. Hence, there is downward pressure on prices in these suburbs,� Mr Limaye adds. Chembur, which was once seen as a posh locality, has slipped in rankings since surrounding suburbs such as Deonar rose to prominence. However, its excellent connectivity to all key parts of Mumbai has kept prices there as high as Rs 8,000-10,000 a sq ft. There is a rising trend of buying used flats in Chembur, according to brokers in the suburb. “There is good demand for used flats in Chembur, because of the high premium on new constructions. Even redevelopment projects have begun in certain pockets within Chembur. So, it’s a sensible buy for potential owners,� says Rakshesh Shah, a Chembur-based agent.

Navi Mumbai is a well-planned suburb with superior infrastructure, but prices are expected to soften due to abundant supply. Hence, buyers would have an upper hand in negotiating with builders there. Usually, builders witness additional sales to the tune of 20-30% during the Navaratri - Diwali period, with most carrying out a bulk of their business between October and March. However, if they do not clock impressive sales growth this festive season, there would be a downward pressure on real estate prices.

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

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