Premium localities sell well in Delhi, Chennai

A weekly snapshot of some big-ticket city deals.

Delhi-NCR
An apartment admeasuring 3,700 sqft located in Malcha Marg was leased out for a monthly rental value of Rs 3,75,000. The rental values in this location range from Rs 2,75,000 4,25,000 per month and this apartment is well within this range and has seen an appreciation of around 12% over the previous year due to restricted supply and high demand, especially from expatriate community.

Malcha Marg is one of the citys most sought-after residential locations, due to its strategic location being equidistant from the established CBD and new business district of Gurgaon. Additionally,the location, due to excellent town planning,offers congestionfree traffic movement.

Chennai
An independent house located at Rambagh, Besant Nagar, was taken on lease by a major corporate. The house admeasuring around 5,000 sqft is located in the prime residential boulevard of the city. The monthly rental of Rs 3,00,000 per month is moderately higher than the prevalent rental for high-end residential units in the area, due to the fact that its location is equidistant from the central business district (CBD) of the city as well as from other emerging business locations. The area, by virtue of being an established residential location, also has good social infrastructure, including retail and entertainment, education and healthcare.

Pune
A three-bedroom apartment unit, admeasuring 1,441 sqft was sold in Chinchwad for a total cost of Rs 49,05,871. The per square foot value of this property is around Rs 3,400 per sq ft, which is in line with the current prevalent values in the location. This mid-ranged apartment complex is located in the suburban location of Pune, which is currently going through a transformation, with many apartment complexes and gated development being planned in the location. The area has been gaining importance due to its convenient location and good access to various office and commercial locations across the city.

Hyderabad
A residential apartment admeasuring 3,170 sq ft was purchased in an under-construction project in Madhapur, Western Hyderabad,at a capital value of Rs 4,250 per sq ft. The property,being built by a prominent national developer,houses apartments ranging from 2,200 sqft to 4,375 sqft in the configuration of three and five-bedroom units. The apartment is located in Madhapur,a part of Mindspace IT Park and adjacent to Westin Mindspace Hotel,in the Western part of Hyderabad. This area has seen a growth in demand for residential units owing to the fact that it is a prominent office location. The location has, due to a steady increase in demand, seen a growth of around 6% in capital values over the past three months. Being located in close proximity to work places, this premium project is expected to garner significant interest from end users. Source: MagicBricks

Recovery in realty

15 Mar 2010 12:16 AM PDT

Delhi:

Residential markets across major cities of India have seen significant appreciation in values towards the close of 2009. This trend is most prominent in NCR and Mumbai, the two key residential markets in India, where values in Oct-Dec 2009 appreciated, compared to the same period the year before, says Cushman and Wakefield in a report.

The report said that recovery in NCR and Mumbai is a definite precursor to the expected trends in 2010. However, it would be premature, the report adds, to predict a bounce-back for the entire sector. The other markets which are still witnessing some correction are expected to stabilize only in the next 3-6 months. These are expected to see positive signs of recovery by the middle of this year, when values across the board would stabilise but will remain within acceptable range.

The average increase in capital values in various micro-markets in these two metro areas has been in the range of 3% to 25% over the previous year, the report shows (see chart). Most micro-markets in these two cities have recorded stable to appreciating capital values over the last quarter as well.

NCR and Mumbai have shown a faster recovery than other cities due to the fact that these are high-demand markets, both from end users and investors, who were holding back their requirements as a result of economic slowdown , which created a kind of uncertainty in the job markets. The best outcome of the slowdown is the emergence of affordable housing in the country.

At the same time, the strong recovery in the economy led to sharp upward correction in the capital values for mid-ranged housing due to the quantum of demand and affordability.

Certain broad trends that were noticed across cities were that peripheral and the suburban markets witnessed the highest correction but were also one of the first markets to bounce back, C&W says. Another shift in the trend is the rise in demands for properties under construction.

The report said, there was a clear shift towards readyto-move-in properties during the beginning of the year, when there was uncertainty on the capability of a developer to complete a project. But that has receded now resulting in a rise in risk appetite for properties under construction.

In the NCR region, demand for affordable housing in the range of Rs 20 lakh to Rs 40 lakh could be understood from the fact that a number of projects completely sold out within a couple of days of their launches. Recently, in Noida, Supertech , which launched apartments for Rs 9.75 lakh, (this is the first project in NCR for sub-Rs 10 lakh) could sell around 500 apartments in a couple of days.

The new trend has led to increase in the volume of transactions. Supertech CMD, R K Arora, says that the developers have now shifted to high-volume business from high margin ones. However, he also pointed out that this became possible because of the relaxation in the density norms (number of apartments allowed to be constructed on a given area). Therefore, the construction activities are set to rise in 2010. Source: MagicBrick

Haryana set to join hands with private firms to develop NCR

13 Mar 2010 11:38 PM PST; Chandigarh

Haryana has decided to become a Joint Venture (JV) partner with private players on the line of Tamil Nadu and Karnataka to give a push to development of facilities and infrastructure in the national capital region cities of the state.

The initiative was taken as most entrepreneurs are interested in setting up their units near Delhi, finance minister Capt Ajay Singh said while presenting the state budget.

The extension of 7.05 km long Delhi-Gurgaon Metro link to the Industrial Model Township (IMT) Manesar, linking Mundka (an area in outer Delhi) with Bahadurgarh, the last township of Haryana bordering Delhi and extension of Delhi Metro to Faridabad are some of the projects the government has taken up this year,the minister said.

“The JV would be set up to monitor and expedite such projects which would not only benefits lakhs of people in Faridabad, Gurgaon and Bahadurgarh but also improve the infrastructure,” Ajay Singh said.

Besides, the Haryana budget has a special allocation for augmenting drinking water supply in Gurgaon, Manesar, Bahadurgarh, Sampla and Badli townships. For creating investment opportunities in the state, the budget has also allocated funds for the extension of the IMT, Manesar, allotment of land to SEZ for the IT industry in Gurgaon and development of Roz Ka Meo, an area falling under Mewat district. The government has proposed to earmark rupees 1,200 for the completion of these projects. Gurgaon is one of the cities selected for development under JNNURM and for developing city bus services,the finance minister said.

Creation of Haryana infrastructure development board (HIDB) headed by CM Bhupinder Singh Hooda has also been planned to give a boost to infrastructure development. Souce: ET

Delhi is best city to live in,glitzy NCR is no match

New Delhi:
Despite all its problems, Delhi offers the best quality of life to its residents among all cities in the country, according to a Liveability Index released by CII.
In the index, based on surveys, Delhi outscores metros like Mumbai, Chennai, Bangalore and Kolkata; NCR towns Gurgaon, Noida and Faridabad;and even planned cities like Chandigarh.

Delhi ranks first on parameters like population density, safety, transport, education, job opportunities and accidents. The only red line in the capitals card is health care, where the city is ranked 17th. Kozhikode, Thiruvananthapuram, Kochi and Kolkata score high on this front.

Among NCR cities,Gurgaon ranks ninth on the list it tops the chart on housing and educational facilities but lags behind due to lack of job opportunities, crime and unsafe roads and public transport. Noida ranks 27th due to poor health care, crime rate, no public transport and high rate of accidents. Source: MagicBricks

Mumbai, Pune realty markets remain stable

A weekly round-up of some big-ticket city deals

Mumbai

A residential apartment, covering an area of 1, 850 sq ft, was leased out in the plush Altamont Road area for a rental value of Rs 275, 000 per month. The location has been commanding an average rental value of Rs 2, 00, 000-3, 50, 000 per month for mid-segment residential units and has remained stable over the last quarter.

The apartment is fully furnished, including white goods. The current economic stability, coupled with an increase in enquiries and lucrative financing schemes being offered by several banks, will stimulate demand. This is likely to result in some appreciation in capital values in this location. Altamont Road is one of the most highly sought after destinations in Mumbai, and is home to many prominent social and corporate citizens in the city. The area commands a premium due to factors such as high quality of construction, distinguished neighbourhood, adequate social infrastructure, including film and entertainment, education and healthcare, etc.

Pune

An apartment, admeasuring 4, 000 sq ft in Kalyani Nagar, was leased out to a corporate for a monthly rental of Rs 160, 000. This high-end apartment was well within the prevalent range of Rs 1, 10, 000-210, 000. While prices in this micro market have remained stable over the last two quarters, they are expected to appreciate on account of the growing demand from expatriates and corporates due to its proximity to the airport, railway station and central business district.

Another apartment in Kharadi, admeasuring 2935 sq ft, was sold for Rs 14, 381, 500. This mid-segment apartment commanded an average capital value of Rs 4, 900 per sq ft, which is within the expected range of Rs 4, 500-5, 500 per sq ft. The location, which once was an unexplored fringe area of Pune, has seen some hectic development activities in recent times, with infrastructure and connectivity also improving. Its proximity to the airport, Koregaon Park, Kalyani Nagar, Viman Nagar and Ranjangaon is an added advantage.

Delhi-NCR

A residential apartment in a high-end gated community in Gurgaon was leased out for a rental value of Rs 100, 000 per month. This high-end condominium is spread across an area of 3, 890 sq ft, and comes with amenities such as swimming pool, gymnasium, along with two dedicated car parks and a domestic helps quarter.

Gurgaon has been one of the preferred residential locations in NCR, owing to its growing importance as a commercial sector, especially for expatriate and senior officials of corporates as it is in the vicinity of their work places. The residential options are high in quality while being cost-effective compared to other locations in NCR. In addition, Gurgaon has over the years developed excellent social infrastructure like entertainment and retail, healthcare and education. This lease was within the commanded range of Rs 100, 000-175, 000 for high-end residential properties in the area. Source: MagicBricks

HDFC Bank, ICICI, Kotak hike rates for home loans

New Delhi:

HDFC Bank, ICICI Bank and Kotak Mahindra have raised rates on home and auto loans, reflecting the stiffening market that may lead to the Reserve Bank of India (RBI) hastening with a lift in its policy rates from record lows to fight inflation.

These private banks have raised lending rates by as much as 100 basis points, following the hardening of market rates even as the central bank holds on to low rates to avoid derailing the economic growth. A basis point is 0.01 percentage point. RBI has started slowly rolling back some liquidity-boosting measures and has indicated it may not hesitate to raise rates. It raised the cash reserve ratio by 75 basis points in the last review.

“Auto loan rates have been marginally increased by 50 bps,” said Pralay Mondal, country head (retail assets & credit cards), HDFC Bank. “The increase in the cost of funds is being passed on to customers. It has been done to protect our margins.”

Banks are raising lending rates to maintain their profitability after they increased deposit rates in the last few months to attract funds that were beginning to go to higher-yielding stocks and real estate. Investors are seeking higher returns instead of safe bank deposits since prices are running far ahead of the interest rates that banks are offering, leading to negative real returns.

With the partial rollback of tax cuts in the budget, cars, televisions, petrol and travel have become expensive, which could fuel inflation further. Food prices are rising at 18%.

The first signs of interest rates hardening came from the bond markets where yields on the benchmark 10-year bond have risen 10-12 bps since the budget. Since the RBI announced the 75 basis point hike in cash reserve ratio requirement, yields have gone up by 40 bps. The yield on the 10-year government securities are close to 8%, up nearly 3 percentage points from their lows last year. Times of easy money are slowly becoming history.

“We had increased fixed deposit rates by 75 bps in the past couple of months. The increase in lending rates is to align it with the rise in deposit rates,” said Kamlesh Rao, head (retail assets), Kotak Mahindra Bank.

Axis Bank was the first to cease its teaser loan rates in February after the monetary policy. The bank was offering a fixed rate of 8.25% for two years. Others who pulled out cheap loans are the government-owned Union Bank and Canara Bank.

But bigger ones that are flush with funds such as State Bank of India and Punjab National Bank and even Bank of Maharashtra are continuing with teaser rates, which the RBI has warned against. Teaser rates loans are those where interest rates are low in early years, but progressively climb, making it tough for consumers to repay. This is similar to the US subprime loan regime which caused the global credit crisis.

The increase in lending rates, which comes just before the end of the financial year, is an indication that lenders are bracing for an end-of-the-year tightening in markets. Liquidity is scarce in mid-March when corporates remit their advance taxes to the government. Source; MagicBricks

Service tax may take toll on realty

4 Mar 2010, 1102 hrs IST, Paramita Chatterjee, ET Bureau SOurce: Economic Times
NEW DELHI: After many months in the dumps, the housing sector was finally sniffing at a recovery as buyers returned gradually, lured by sharp price cuts and teaser loans. 

But a Budget proposal to levy service tax on houses under construction is threatening to crimp the sector’s fragile recovery as the resultant price hike is certain to dissuade fresh buyers. The proposal, a bolt from the blue, purported to spur builders into completing projects faster after rampant complaints of long delays.

Though that remains to be seen, an immediate effect will be the prices of incomplete houses rising by 3% after a service tax of 10.3%, including surcharge, is imposed. The levy is based on an earlier Income Tax Department circular, held up due to resistance from developers, which set 33% of the house price as services.

Housing project comprises land, raw material, labour and services. Though services include branding and selling of a project, there is an unwritten understanding that no ‘service’ was being provided till a developer passed a property title to a buyer.

Back-of the- envelope calculations show that a Rs 30-lakh housing property will see a price hike of at least Rs 1 lakh after the service tax is effected.

“Affordable housing will be impacted the worst,” said Niranjan Hiranandani, chairman of Mumbai-based developer Hiranandani Constructions, adding that everyone in that category must now pay developers in installments.
The Budget proposal, coming after the Reserve Bank of India’s incessant frowning on teaser loans, will wane demand further, say realty watchers.
Most houses are typically sold during construction with buyers paying in phases. The Budget proposal means that even buyers who have to pay, say, the remaining 5% of the overall cost during possession, will have to cough up more.

The proposal could also pose problems in calculating remaining payments though it will ratchet up demand for
ready-to-move properties, say realty watchers.

As for developers, the market’s response to the proposal will determine their long-term plans. “Affordable housing will now become unaffordable ,” said Rajeev Talwar, managing director of DLF, the country’s largest developer.

“Housing is a state subject and the move is impinging.” Real estate was among the worsthit sectors in the global downturn as buyers kept away and banks became wary of lending. But teaser loans, some even as low as 8.25% much below their prime lending rate (PLR), last year stalled the decline.

But builders fear that the introduction of a service tax and absence of teaser loans will compound the problem of oversupply of residential and commercial properties in several parts of the country. 

Realtors to seek service tax rollback on housing

3 Mar 2010, 1655 hrs IST, PTI; Source: Economic Times


NEW DELHI: Real estate developers have called an emergency meeting to assess the impact of the service tax on housing and will approach the government for rollback of the Budget proposal. 

"We will call a meeting of the association to discuss the Budget proposals, particularly the levying of service tax on housing which will have a negative impact on the realty sector," industry body National Real Estate Development Council (NAREDCO) President Rohtas Goel said.

Goel, who is also the Chairman and Managing Director of realty firm Omaxe, said the dates for meeting has not been decided yet. The meeting is likely to be attended by a number of leading developers, including realty firms DLF and Unitech.

In the Finance Bill 2010-11, the government proposed that construction of real estate complexes will attract service tax, unless the entire consideration for the property is paid after the completion of construction.

While some developers are of the view that the service tax of 10.3 per cent would be imposed on 33 per cent of the total sales value, others feel it should be imposed on 33 per cent of the total construction cost.

"We will demand rollback of this proposal, otherwise it will have detrimental impact on the housing sector," NAREDCO senior Vice President Sanjeev Srivastava said.

DLF pricing its New Delhi project 60% higher

Vivek Seal / DNA

Wednesday, February 24, 2010 3:36 IST

New Delhi: In the strongest endorsement yet of the turnaround in the real estate sector, DLF Ltd, India’s largest developer, is pricing its housing project in Delhi 60% higher than its previous launch.
The project, Capital Greens 3, which is expected to be launched next month, has been tentatively priced at Rs 12,000 per square foot, according to real estate brokers.

Phase I and II of the Capital Greens project, which waslaunched in April and October last, were sold off in a couple of days as they were priced at Rs 5,500 per sq ft and Rs 7,500 per sq ft, respectively, much lower than the then-prevailing price of Rs10,000 sq ft.

DLF had recently indicated in a conference call that demand for luxury homes is back so it would launch some projects in this year.

Phase III of Capital Greens has been termed as a luxury project by the developer with offerings of four-bedroom apartments of 2,600 sq ft in 26-28 storey buildings.

The higher pricing was helped by recent healthy sales in the luxury home segment, as DLF sold more than 550 apartments of about 2 million sq ft in the National Capital Region, while it booked about 1 million sq ft of sales in the mid-income housing segment in new Gurgaon, Bangalore, Goa and Kochi.

Analysts said DLF’s margins were negatively impacted earlier because of the slew of launches in the affordable housing segment last year. Source: DNAIndia

Asian Hotels Splits into 3 Entities

The 28-year-old partnership that brought the Hyatt hospitality brand into the country has formally ended with the three key promoters creating three distinct entities. Sushil Gupta, Shiv Jatia and Umesh Saraf, who came together to establish the three Hyatt properties under the umbrella of Asian Hotels Ltd, have got the Delhi High Court’s nod for a de-merger, thereby splitting the erstwhile company into three separate firms. The three Hyatt properties in the country will now be operated by three companies. While Shiv Jatia will run Hyatt Regency in New Delhi, Sushil Gupta will have control of the Hyatt Regency in Mumbai via Chillwinds Hotels Ltd. Similarly, Umesh Saraf will operate the Hyatt Regency, Kolkata through Vardhman Hotels Ltd.

On Wednesday, Asian Hotels announced the company’s name stands changed to Asian Hotel (North) Ltd. It is understood that the same will be undertaken for the other two firms involved in the de-merger. As on October 31 last year, R K Jatia and the Shiv Jatia Group held 26.8 per cent in Asian Hotels, while Saraf Industries and Forex Finance, representing the Saraf interests, held 15.16 per cent in the company. The Gupta group held another 17.25 per cent. “The three groups have been together for almost 30 years. However, each of us have our own interests and want to pursue our own plans. By undertaking the de-merger, it is a win-win situation for all of us,” Sushil Gupta told Business Standard.

He added that, despite the de-merger, there would be cross-holding across the three companies for sometime, but did not divulge the details of this arrangement. In its filing before the Delhi High Court, available on the BSE website, Asian Hotels said the three promoters have independent interests in the hospitality industry, “which may create potential conflict of interest situations”, leading to an impact on shareholders’ interests. Therefore, with an eye on minimising conflict of interest and maximising growth and future prospects, the Kolkata and Mumbai undertakings should be transferred and vested in Chillwinds Hotels and Vardhman Hotels respectively, the petition argued.

It is understood that the three constituent groups were exploring opportunities to establish properties across geographies, which could have led to some discord. Gupta, for instance, intends on setting up a hotel in Delhi. Moreover, Magus Estates and Hotels, part of the Jatia Group, has already opened a Four Seasons property in Mumbai and is scouting for other locations. Source: indianrealtynews.com

Residential market to lead realty recovery in 2010: CRISIL Research

A recent 10-city CRISIL Research report on the real estate market indicates that demand in the residential market is expected to turn positive in 2010 owing to improvement in affordability, steady economic growth and greater liquidity. However a decline in the currently over-priced capital values of all the three real estate segments - residential, commercial and retail - will persist through 2009. Further the commercial and retail markets will continue to witness erosion in lease rentals through the next two years.

The CRISIL Research City Real(i)ty Report provides comprehensive information and analysis of more than 400 areas across 88 micro markets in 10 cities - Ahmedabad, Bengaluru, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Mumbai-MMR, NCR and Pune.

Mr. Sudhir Nair, Head, CRISIL Research says, “Accelerated growth of Indian economy, recovery of global
economy, improved liquidity and expected fall in interest rates are key factors that will signal demand revival in the residential segment. This segment is likely to see a much faster revival due to strong underlying demand for housing and supply coming at attractive price points.”

Sudhir further adds, “Demand in the commercial and retail segment is likely to remain under stress for the next two years owing to excess supply and weak offtake.” The CRISIL Research City Real(i)ty report indicates that capital values for residential sector and lease rentals for commercial and retail properties have substantially corrected till March 2009 due to a slowdown in both the domestic and global economies, and also due to real estate becoming unaffordable. Cities such as Kochi, Chandigarh and Pune, which have greater investor presence as against end-users, witnessed a greater fall in capital values compared to other cities.

The situation is expected to continue through 2009 and 2010, particularly so for the commercial and retail segments. However CRISIL Research believes that demand for houses will improve in 2010, backed by lower home loan interest rates as well as better job security owing to higher growth in the economy. Hence, capital values are likely to stabilise in the first half of 2010, and increase during the second half of the year.
CRISIL Research feels that the pace of economic recovery and confidence revival will have an impact on
sentiments across all the real estate categories and will be an important variable to watch out for.