June 12 Marks the biggest and first of its kind tie-up in the private sector, Real Estate major K Raheja Corp is working with former US president Bill Clinton-led Clinton Climate Initiative (CCI) to retrofit their buildings across the country to cut greenhouse gases.
Mumbai is one of the cities listed from India, where K Raheja Corp has started work on Inorbit Mall in Malad and a hotel in Powai, first in their list of 20-odd buildings to be retrofitted. Read More
Property prices in and around Calcutta could shoot up by as much as 15 % as city developers contemplate a basket hike in product prices to combat a steep rise in input costs. The real rise in realty rates, though, could be tempered by a slack market.
According to Pradeep Sureka“There’s no way we can absorb the entire burden of escalation in the cost of steel and cement, the two basic raw materials in real estate construction. We are in dialogue with our members and prices for new properties are set to be revised upwards soon,”.
Cement prices have gone up 20 %, while steel is dearer by 40 %, followed by the recent hike in petroleum products, to push builders into a corner since they are forced to absorb the 20-25 % rise in construction costs in pre-sold projects.
However, given the demand slowdown in an inflation-hit market, increased interest rates and the specter of dearer home loans, real estate developers could find it difficult to go for a one-shot rack rate hike.
“Yes, builders might be forced to spread the hike across installments, given the cautious consumer mindset,” felt Pradip Chopra of the PS Group, former secretary of Credai Bengal.
Members of Credai Bengal are scheduled to meet next week to discuss the sale price hike of upcoming properties. Builders in Bangalore and Pune have already announced a rack rate increase, while Mumbai is set to follow suit on 16th june.
Sureka feels the prices of new flats in city core areas would go up by five to seven per cent while in suburbs, where construction cost is often 80-90 % of the project cost, thanks to cheaper land, property prices could soar even 10-15 %.
“Prices are bound to go up, sooner than later, and the LIG and MIG segments would be the worst-hit,” agrees Chopra. He feels there would be a scramble for price correction in new projects and unsold stocks as developers rush to recover losses incurred on pre-sold products with no escalation clause.
Not just cement, steel and oil, but rising labour and contractor fees plus transportation cost have also contributed to the difficult situation, points out Piyush Bhagat of the Space Group. The city realty firm has already announced a 12 % rise in the sale price of a housing project in Belur.
“The quantum of hike has to be left to individual companies, because the profile of the product and the location all matter,” says the Credai Bengal president whose company, the Sureka Group, has announced an upward revision of Rs 100 per square foot in two of its Rajarhat projects.
Around 2,500 flats are being built in city core areas and 6,000-7,000 in the suburbs.
Renting a house in Bangalore is as easy as never before. Thanks to notable increase in the rate of urbanization in this part of the country. Often Bangalore is termed as the IT capital of India. Many IT professionals come to Bangalore for various training activities as many IT majors have their head quarters located in this city. Also Bangalore is ideal place for education since many educational institutes are located in and around the city. Many students from other states like Maharashtra and Andhra Pradesh come here for education purpose. All these people are taken good care as many house rent options are there in the offering for them. Another reason for growth of the rental market could be that many working professionals come over on some official and stay for a short period of year. For such people renting a house would be ideal instead of purchasing a house. Read More
City-based real estate developer PS Group is setting up an IT park in Sri Lanka with an investment of $80.4 million.
The company has entered into a joint venture with Sri Lanka Institute of Technology and Infinity Parks Ltd, another city-based real estate company, to develop this project.
Mr. Pradip Chopra, chairman and managing director of PS Group, said, “This is our first international project and we feel there are lots of such opportunities in neighboring countries. This IT park project will provide direct and indirect employment to 20000 and 80000, respectively”. Read More
As new government policies drive progress towards addressing climate change and other key environmental issues, the real estate markets around Asia and the world will change its look quickly and adopt green building concept, both in developing new buildings and improving existing ones, .
This transformation will be driven by various combinations of regulation, government incentives and changing market dynamics. Read More
Real estate developer BPTP Group has paid Rs 1000 crore to the Noida authorities as the first instalment for its ambitious 95-acre project.
The privately held developer said that the rest of the payment, of Rs 250 crore, would be made very soon.
DNA Money had last week reported about BPTP making the payment early this week. Read More
As oil prices continue to rise, stock markets across the world are finding it difficult to find any support. The recent fall in Indian market has been very quick. Market experts were expecting technical bounce, but the markets lost further ground.
On 9th june(today), Stock markets opened lower and BSE benchmark Sensex dropped below 15,000. Real Estate, Banking and Metal stocks were among worst hit. Real estate major DLF touched its lifetime low in today’s trading session. At 1.30 pm, BSE Sensex was down by 519 points at 15,053.
ITC, RCom, Reliance Industries, L&T and ONGC were among major losers. Tata Motors, Tata Steel and TCS were trading lower compared to Friday’s close. ICICI Bank, HDFC Bank, HDFC and SBI were trading much lower compared to earlier close.
Ranbaxy Labs was the only stock among heavyweights trading in positive zone. Technology stocks were trading marginally lower.
Global markets are also weak due to slowdown in economic growth and higher oil prices. US unemployment data hit investor sentiment and Dow Jones closed lower last week.
India Equity Partners (IEP), a three hundred million dollar India focused private equity fund, possibly will raise around one billion dollar corpus coming year to invest in India.
“We were going slowly earlier as the equity market was pricey,” said Steven Wisch, the US-based managing partner of IEP. The fund was raised one year and six month ago and so far 40 % has been used in investments in companies like Bharti Infratel, Mannapuram Group of Companies and Hyderabad-based port management company Ocean Sparkle ITD. Read More
Leading home loan lender ICICI Bank said that growth in the real estate sector has been impacted due to high interest rates and prices but maintained that there was no asset bubble in the sector.
ICICI Bank Joint Managing Director Chanda Kochhar said, “Clearly there is a slowdown in the number of deals …interest rates have gone up from 8% in the past to now 12% and prices too have gone up but an asset bubble is not there”. She further said that a correction was expected as the present slowdown was in number of deals and not so much in prices. Read More
To help citizens in filing their property tax returns on time to avail themselves of the offered rebates, the Municipal Corporation of Delhi will open 800 additional collection windows across the city.
MCD Standing Committee Chairman Mr. Vijender Gupta said, “A private company is being engaged and will offer tax- payers the option of making payment online at these newly opened windows by using ‘Itz Cards’. The tax-payer can then collect the receipt of the amount paid on the spot after paying ‘convenience charges’ at 2.4%.” Read More
The Sebi’s recent decision to allow mutual fund firms to play in realty space has opened up a fresh avenue for individual investors. One month ago, Sebi had approved the inclusion of real estate and issued a set of guidelines. Prior to that, only high networth individuals were allowed to invest in realty directly. Read More
Emirates Islamic Bank (EIB), a leading Islamic financial institution in the region, plans to launch a 2nd fund focused on the Indian real estate market following the doing well closing of its Danat India RIA Fund, the bank said on 3rd june.
The bank said the new fund will add to a growing portfolio of funds aimed at producing wealth for investors in the UAE.
EIB has successfully closed the Dh270 million Danat India RIA fund, which invests in the Indian real estate sector. The bank has paid up to Dh60m and collected Dh210m through subscriptions in the UAE and other GCC countries.
The bank, through the fund, will acquire 77.78 % equity in the Danat RIA Company, which has been established with the principle purpose of acquiring 500 acres of land to develop an integrated middle-income township within the boundaries of New Delhi. Indian investors own the residual stake in the company.
Faisal Aqil, general manager of retail banking at EIB, said the fund – the first EIB fund committed for investment in the Indian real estate sector – could achieve its targeted subscription.
“Construction of the project has already started and the mandate is for three years. However, the EIB has the right to extend the fund’s mandate to four years according to developments in the project.
“The target market of the township will be New Delhi’s growing middle-income population who are seeking more affordable housing opportunities,” he said.
Sobha Developers, a Bangalore-based realty major focussed on residential space, is looking at diversifying its portfolio through slum redevelopment schemes and special economic zones (SEZs), retail and commercial projects.
Mr. Raghav Menon, Executive director, said that the company would build an SEZ in either Tamil Nadu or Kerala. He said, “We haven’t decided on the place yet. We will also enter retail and commercial project development”. Read More
After being three years on the top, India has finally lost its position as the most preferred destination among upcoming markets for retail investment, according to the 7th annual global retail development index (GRDI) by management consulting firm A.T. Kearney.
The GRDI ranks countries among the thirty emerging markets on the basis of their retail investment attractiveness.
Vietnam occupies pole position in 2008. The country’s leap from the fourth place in 2007 to the top spot this year was driven by strong GDP growth, changes in its regulatory structure favoring foreign investors and increase in consumer demand for modern retail concepts.
India, Russia and China —the top three countries in last year’s GRDI fell to 2nd, 3rd and 4tf places, respectively, in the 2008 GRDI.
While India, Russia and China remain important destinations, high real estate prices in big cities and growing competition have decreased the attractiveness compared with the last years and forced retailers to look for opportunities in Tier II and III cities.
“India continues to be a dominant force in AT Kearney’s annual GRDI report. While India has slipped to No. 2 this year, it continues to be a favored destination for global retailers. However, challenges such as skyrocketing real estate costs, a lack of good commercial property and complex regulations for foreign entry have caused the slide in ranking,” said Hemant Kalbag, principal (consumer industries and retail practice), AT Kearney India.
Vietnam’s twenty billion dollar retail market place is very small compared with India or China, but the absence of competition and an 8 %GDP growth make it an attractive opportunity for global retailers, says the report.
Moreover, the Vietnamese consumer is among the youngest in Asia, with seventy nine million below the age of 65. Moreover, the country’s consumer spending increased by more than 75 % between 2000 and 2007.
But all is not lost for India. The retail market opportunity here is larger than ever at $510 billion and spending patterns and consumer maturity are growing faster than what most retailers had forecast.
However, there are a few stumbling blocks that have emerged. Foreign players entering India today face stringent regulations, a clouded political atmosphere, soaring real estate costs and a fiercely competitive domestic retailer group, said the report.
Over the last two years, land prices have shown a northward trend. Now, it’s time now for a realty check.
Record land auction at Mumbai’s Bandra-Kurla Complex– like the Rs 46,000 per square feet buy by Wadhwa Builders in November 2007 are passe. The last auction at BKC, by Jet Airways, has seen rates tumbling to Rs 32000, a drop of a whopping 30% in just about four months. Read More
Pacific Star International (Thailand) plans to bring more foreign funds to invest in the Thai property market as assets here can generate high returns at double-digit rates.
“They are global financial institutions, banks and insurance companies, who aim high and are happy to invest here. Investing in Thai properties could produce an internal rate of return of 15%,” Daniel Ross vice-president for business development and direct investment said.
The parent company Pacific Star Group from Singapore now manages five property funds including the US$250-million Asian Real Estate Prime Development Fund, which was set up offshore to invest in property markets across Asia. The fund initially had a policy to allocate ten percent of total assets to Thailand.
Among the money poured in the Thai real estate market, some went to two joint ventures with SET-listed Asian Property Development (AP).
“We’re looking to raise more funds and expand the fund size to four hundred million dollar in a few months,” Mr Ross said.
Pacific Star International is now studying two or three possible deals, which would be settled within this year. It also plans more ventures with AP in the future if any interesting projects arise.
Mr Ross noted that the company was interested in developing new hospitality projects in prime destinations such as Samui and Phuket. Wealthy investors, particularly from the Middle East, are very interested in owning beachfront resort villas in the kingdom.
Pacific Star International is currently involved in four projects. Two are joint ventures with AP while the other two, Sathorn Gardens and Eight Thong Lor, are being developed on its own.
Urasate Navanugraha, the company’s assistant vice-president for asset development, said the four projects were progressing well. Sathorn Gardens has just finalized sales of hundred units in the first phase and 20% of ninety five units in the second phase have been reserved.
“We expect to sell out all units in the second phase by September. After that, we will decide what to do with the remaining one hundred fifty five units based on market situations,” he said.
The property company plans to stage road shows in Hong Kong, Singapore, Dubai and India over the next five months to promote Sathorn Gardens, two 41- storey condominium buildings. The average selling price is 100,000 baht per square metre.
The Eight Thong Lor mixed-used project launched presales of condominiums early this year with a 40% booking. The project would have 5,000 sq m of retail space, a serviced-apartment zone and residential condominiums. Construction is expected to be completed by the middle of next year.
