Mumbai most preferred for investing in properties: Survey

CHENNAI: The country's financial capital Mumbai ranked as the most preferred destination for investing in properties, while Chennai has displaced Bangalore in the South, a survey conducted by an online portal said here on Tuesday.

The survey, "Trend in residential space across top cities in the current scenario" ranked Mumbai as the most preferred destination to invest in property while in south, Chennai was the first place for property investments, overtaking Bangalore.

Cities like Patna, Nashik, Tiruchirapalli and Madurai have also become favourite destinations for property investments, the survey said.

It said 60 per cent of respondents felt interest rates for home loan would come down further in the coming months, while 40 per cent evinced interests on properties with an area between 500 to 1,000 square feet.

Over 3,000 people from the metros and other cities, including Pune, Thane, Coimbatore, Ahmedabad and Vadodara participated in the survey.

"Market sentiments are reviving and people are willing to invest. Based on our survey, more than 60 per cent of customers are looking at buying residential properties in the next six months. They also are expecting a lowering of interest rates on home loans", Consim Info Founder and CEO Murugavel Janakiraman said.

ET

Realty April-June net seen slumping as sales dip

MUMBAI: Mid-cap real estate developers are expected to show a slump in sales by half to as much as 90 percent in the June quarter, as home buyers stay clear of purchases, according to a poll of brokerages.

Margins are also seen squeezed as many launch cheaper housing to boost unit purchases, but the firms are expected to show a fall in their bottomline by at least 60 percent, or plunge to losses during the quarter over a year-ago, according to the poll.

"Mid-income is boosting demand. There is a huge gap in supply-demand." Shailesh Kanani, analyst at Angel Broking said.

"Margins (are) likely to come under pressure due to change in product mix," Macquarie Research said. "Sales expected to drop significantly year-on-year due to a slowdown in the physical property market."

Besides launching lower-cost housing, builders have tried to reschedule loan repayments and raise funds through share placements with institutional buyers in the first half of 2009.

"Profit after tax (is) set to improve sequentially, and in the quarters ahead, owing to balance sheet deleveraging," Religare Hichens Harrison said in a report.

"Going ahead, we expect a build-up of momentum in launches in the affordable housing segment," a report by Edelweiss Securities said.

"General confidence in the economy and affordability will be the key demand determinants over the next one year," according to the Edelweiss report.

Commercial demand, which helps builders' expand, should revive by FY11, Angel's Kanani said.

ET

States, PE firms queue up for Tata's Nano home

MUMBAI: Tata Housing Development Company, a subsidiary of Tata Sons, which recently announced low-cost housing project Shubh Griha, is learnt to be in talks with various state governments for developing similar projects. The houses are priced at around Rs 4 lakh.

Managing director & CEO of Tata Housing Brotin Banerjee confirmed the news. “There have been some proposals from state governments offering us partnerships for affordable housing projects, but we have no announcement to make now,” he said.

It is believed that the company may adopt the public-private partnership (PPP) route with the state governments by year-end. It was not possible to ascertain which state governments have approached Tata Housing for these projects. The company is also believed to be in talks with private equity players for its forthcoming projects, which could cost anywhere between Rs 1,500 and Rs 2,000 crore.


Meanwhile, it’s also learnt that the company would soon announce three more projects with an investment of around Rs 300 crore around Mumbai and Pune. A senior official in the company told ET, “We have the option of 16 land parcels in Mumbai where we can start the projects. Some land deals will be an outright purchase while we will go in for a JV with the land owner in the case of the others,” the official added.

Tata Housing’s Shubha Griha project will come up at Boisar, which is about two-and-half hours by train from Mumbai. This project will be ready in two years. “For the new projects, we would give preference to those who did not get their home in Boisar,” the official said. This project is often referred to as the Nano housing project.

The company had earlier said that around 16,000 forms were sold for this project with 5,500 people having applied. Eventually, 1000 houses would be allotted through a random selection of forms or a lottery system.

Earlier, Tata Housing had announced that they would build a total of 16,000 houses within the next two years across the country. Referring to the option of bringing in private equity money, the official said, “In the affordable housing project the return is anywhere between 20% to 25% which is lesser than what normally prevails.
We are in talks with PE players who would not mind lesser but secure returns,” the official added.

Tata Housing recently tied up with Micro Housing Finance Corporation (MHFC), a microfinance institute, and intends adopting the same model going forward. “Our customers belong to low-income groups who can buy a house but may not have documents required to obtain a housing loan. The MFIs and other financial institutions we have tied up with understand this and provide loans without these documents,” added Mr Banerjee.


Soruce:ET

Real estate market could recover by Diwali

After a long time we are witnessing real estate developers taking pride in reducing or slashing rates in Mumbai, Thane and Navi Mumbai to encash on the existing demand in the real estate market.

The good deals may be offered for a few weeks or for the first ten properties or for a killer deal for a time-bound two days or similar schemes but yes, the writing is clear on the wall that the willingness to connect with the "real" pricing has dawned on the developers to sell at reduced prices to encourage more and more sales.

With the new UPA government there are a lot of hopes and it will be interesting to see how the next few months unfold for the property market. We still need a great deal of transparency to be infused in the way we deal in the property market.

The sales teams in the builder/ developer offices are at their all-time creative best with sales tactics. This is also a good sign and a dawning that if the wheel stops there will be a crisis of sorts of the kind witnessed earlier this year, when sales plummeted big time.

They now understand clearly that with buyers unwilling to relent on unrealistic pricing, there is an even greater need to price competitively, maybe with a lower profit margin, than holding on to the price and project as the interest meter runs. The mantra for developers in the present times, I guess, is to be aware of the markets (realistic demand and supply) and the competition, which the buyers know today.

For a buyer to understand the market more clearly before making a decision, he/she must understand at which juncture the market is hovering; also, with fresh developments in the political arena, what the impact will be in coming months. An important point to note would be that, yes, there has been a correction up to 15 to 30% already in the market post December 2008 and prices have come to September 2008 levels, which were already high in any case and up on account of the festival demand which happens nearly post monsoons by default.

After a correction, slowdown, or a 30% reduction, one should not expect the markets to gallop again, but the next couple of years at least will be stable, as after a correction you cannot go up again quickly. With a stable government we can expect more rational policies but a stock market kind of jerk in prices will be unrealistic in the property prices and may be termed speculative. Let us be sensible for once; just when things have just started moving a little, let us not think of killing the golden hen and taking out all eggs at one time.

A good 2BHK in the suburbs is not less than Rs 6 to 8 million, which is not cheap by any standards. Our city still does not have the appropriate
infrastructure to support high pricing in the suburbs, especially with connectivity issues , and with a lot of developers under a liquidity crunch it is essential to send out the right signals. The buyer today is under tremendous pressure even when it comes to documentation and with many banks tightening the belts on approvals , it is essential to invest in a project which offers 100% complete paperwork.

All of us know that with the archaic legal systems we live in, there are always loose ends somewhere and this is one area all developers should focus on. Nearly 78% of buyers in today's market would opt for a loan to procure the new property and most would prefer a loanto-value ratio (LTV) of around 80-85%, which typically means that if the title is not clear and transparency of the paperwork is missing, the deal will not happen.

The uncertainty and fear factor still weighing heavily on a buyer's mind gets manifested in the fact that 59% of respondents on a survey would like to buy only a ready possession property or a property nearing completion as past trends have shown delays in construction.

With the current economic slowdown, they are more concerned today about possession timelines. Only about 20% home buyers are keen to invest in properties at their launch stage at attractive prices, and even that, only of selective developers who have a track record. This is as per a survey that a leading bank conducted after the recent Thane exhibition. The developers need to work very hard to win this confidence.

In order to capture the client who is looking to buy a home in today's market conditions, one should look at microanalysis on both demand and supply first. The maximum demand is in the price range of Rs 40 lakh, going up to the Rs 1 crore bracket, and that too, for ready-to-move into homes.

Looking at the buyer's mind, if he is looking at Malad, he wants to try to find a house in Andheri, or similarly, if he is looking at Navi Mumbai, he wants to experience Chembur or Ghatkopar or any other location where he can compromise and get it within a particular price range.

Of course, when he is out on the field he wants to know if rates have bottomed out in the location, project or surrounding location. This typically means a delayed decision of the informed buyer; from the time he puts together his first potential shortlist, it can easily be a period of a month or two. If builders start telling them they will increase prices, they will go to the nearest competitor. In a buyer's market, they know they can pit one against the other.

The coming weeks will be interesting, with stock markets climbing, recession clouds disappearing and the hopes that the new UPA government will bring in fresh policies for the housing industry. With all this, there is a strong chance that there may be a great deal of movement during the Diwali period.

The cycle had slowed down in Diwali 2008 and can come back with a bang September 2009 onwards, but this depends on prices being stable. It may be an opportune moment through the end of the year to sell as much and increase liquidity and focus on new projects. So, let us hope with this competition, the buyer encashes.

ET Sandeep Sadh is CEO, Mumbai Property Exchange. The views expressed are personal.)

New launches trigger demand in realty sector

NEW DELHI: After witnessing an acute slowdown during the third and fourth quarter of 2008, the real estate sector has shown some recovery in the first quarter of 2009 ending March 31. If trends of absorption for the period January-March 2009 are any indication , a report prepared by PropEquity Research suggested there has been a surge in absorption in majority of the cities.

A recent study conducted by PropEquity across Mumbai, Bangalore , Chennai, Hyderabad, and Gurgaon in NCR reveals that absorption has been high among the residential new launches in the first quarter of 2009 in Mumbai, Chennai and Gurgaon.

The study attributes the success rate in absorption to the price correction and reduction in unit sizes introduced by developers in these cities. However, Bangalore and Hyderabad, which witnessed fewer new launches during the period, experienced a low absorption.

The real estate sector experienced one of the worst kinds of slowdown in demand because of rise in the interest rates in the January-March 2008, by almost 2 percentage points, to 12%. At the same time, the prevailing prices of residential apartments in most of the cities made them unaffordable for most buyers. The situation further worsened after global financial markets got affected due to the failure of banks and brokering houses in the US and Europe.

This also affected Indian real estate market very badly and demand plummeted. According to the report , While October-December 2008 saw the nadir with absorption of only 1,113 units in Mumbai, the first quarter of 2009 witnessed the launch of over 14,478 residential apartment units and a corresponding absorption of 5,746 units. As against this, during October-December 2008, 3,096 units were launched, the report said. That means, in the first quarter of 2009, 40% of the launched apartments were sold, which is considered to be a good turnover.

Similarly, in Gurgaon, during January-March 2009, 815 units were sold while 4,490 units were launched. As against this, in October-December 2008 quarter, only 587 units were sold from 3,708 units launched. Therefore, both the absorption and launch figure showed sign of recovery.

The first quarter of 2009 showed a significant turnaround in realty activity in Chennai as well. While the number of apartments launched during Make home loan repayment easy
EMIs and tenure
Land as investment
Buying house? Quote price
the fourth quarter more than doubled to 3,764 units from 1,567 units in the quarter ending December 2008, the absorption increased by more than three times to 1,450 in the quarter ending March 2009, from 468 in the previous one. In Bangalore, however, the number of apartments launched in the first quarter of 2009 declined to 2,571 units from 4,149 units in the previous quarter. But, the absorption level improved slightly, to 764 units, as against 739 units in the previous quarter.

In Hyderabad, both the number of units launched and absorbed declined to 1,286 and 347 in the first quarter of 2009, from 2,512 and 440 respectively in the last quarter of 2008.

The report says the main reason for increase in absorption of the new launched products is drop in the per sq ft rate and the reduction in the size of the units, which brought their prices within the affordable range of buyers. The report says most of these units were launched at a price almost 40% lower than the average pricing of apartments that were available in the first quarter of 2008. The average unit size of these apartments was also lower by almost 35%. As a result, 74% of the residential apartment absorption that took place in Mumbai in the first quarter of 2009 constituted the new launch products.

According to Samir Jasuja, founder & CEO of PropEquity, “The increase in this high absorption trend can be attributed to price correction and reduction in unit sizes adopted by developers. This encouraging trend is indicative that the markets are poised for a recovery if proactive measures are adopted by the real estate community to offer the right product at the right price to the consumers.”

This trend continued in Gurgaon and Chennai where the new launches have witnessed high absorption after the unit sizes were reduced and average prices corrected by almost 15% to 25%. As anticipated, 61% of the total absorption in Gurgaon and 58% of the total absorption in Chennai in the first quarter of 2009 was constituted by the newly launched residential apartment units.

Source:ET

Tulip to invest Rs 100 cr to build housing project in Gurgaon

NEW DELHI: Real estate firm Tulip Infratech will invest Rs 100 crore over the next three years to develop 400 apartments in Gurgaon.


"Seeing the demand for affordable housing project, we are coming up with 400 flats in first phase at Gurgaon-Sohna road. The basic selling price of the three-bedroom apartment has been fixed at Rs 25 lakh," Tulip Infratech Ltd Chairman and Managing Director Praveen Jain said.

Asked about the project cost, Jain said the investment will be about Rs 100 crore, including land.

The company has land and the construction cost would be funded through customers advances and debt, he added.

Jain said the project 'Tulip orange' has been launched and the construction work is expected to start by August. The project will be completed within three years.

At present, Tulip Infratech is developing three housing projects, comprising 1,200 apartments, at a total investment of Rs 500 crore. The two projects are located in Gurgaon and Sonepat.

The company would start delivering the flats in Sonepat, where it has sold 50 per cent of 640 flats, by the end of this year, Jain said.

About Gurgaon projects, he said the mid-income housing project would get completed by the end of next year, but there would be some delay in the premium residential project as only 20 per cent out of 252 apartments has been sold so far due to significant fall in demand for high-end products.

Source: ET

Builders, politicians cheer affordable homes in India

MUMBAI: A recent state government lottery for about 4,000 low-cost apartments in Mumbai drew more than 430,000 applications, underlining the need for affordable housing in a country where housing is also a top election issue.

Political parties of all hues have seized on affordable homes as a vote getter in India's ongoing general election, plugging in to the frustration of millions priced out of a real estate boom fuelled by a robust economy and a six-year bull market.

Developers too, stung by the credit crunch and sagging demand for offices and premium residences, have turned to a middle class segment that may be more immune to the economic slowdown.

"For the government it makes sense from a vote bank perspective," said Anuj Puri, managing director of real estate consultancy Jones Lang LaSalle Meghraj. "For builders, this slump may last two to three years. How do they pay salaries, keep their lenders happy? This is the option."

Parties have been quick to seize the opportunity in a country where home ownership tops every wishlist, and is part of the trio of basic amenities alongside electricity and roads promised by every politician to mostly rural voters.

The Congress party-led government has recently encouraged states to release land for affordable homes, invited private partnerships and stepped up funding of rural housing.

The Congress government in Maharashtra state has declared 2009 as the year of "Housing for the Common Man", with a plan to build 1 million affordable homes, while the Congress government in Delhi held a lottery for 5,000 flats that got 500,000 applications.

The opposition Bharatiya Janata Party has vowed to build 1 million homes every year in its manifesto.

AFFORDABLE HOUSING IMMUNE TO CREDIT CRUNCH

But it is not just politicians taking an interest in votes. Investors stung by a slump in the wealthy real estate sectors are increasingly looking at investment in affordable housing.

This kind of housing is "seriously undersupplied" in India, according to a Goldman Sachs report. More than 30 million units are needed because of growing urbanisation.

Mumbai, long a magnet for migrants from poor states, is home to one of the 10 most pricey residential neighbourhoods in the world, yet more than half its 17 million residents are homeless.

Demand has also stayed robust because these buyers do not depend on bonuses or stock-market gains said Puri, who defines an "affordable" home as costing no more than five times the buyer's cumulative salary, or 2.2-3.5 million rupees ($44,000-$70,000) for an average middle-class family in India.

This segment of buyers appears relatively insulated from the credit crunch, as is evident from robust motorbike sales and the record number of new mobile phone users being added every month.

"Ironically, the sector which was one of the principal causes of the financial market meltdown in the U.S. may just offer downside protection in India -- the fortune at the bottom of the pyramid," said the Goldman Sachs report.

Since India eased rules on property investment in early 2005, foreign investors such as Citigroup and Morgan Stanley have piled in, causing land prices to double in major cities.

But as the credit crisis spread, it put the brakes on several big projects; affordable housing on the other hand, is relatively insulated as there is little foreign funding.

Top developers such as DLF, Unitech, Omaxe and Parsvnath are targeting the segment now, with about two dozen projects in Mumbai's suburbs alone, even as high-ticket commercial and residential projects have stalled.

The Mumbai draw was more keenly awaited than the election.

"I didn't want to regret later that I didn't even make an attempt at getting an apartment 30-40 percent cheaper," said Jitendra Patil, 29, an advertising executive.

Source:http://economictimes.indiatimes.com

Office rentals drop up to 37 pc in Jan-Mar

NEW DELHI: Office rentals declined up to 37 per cent in India during the first three months of the year due to sluggish demand, as business houses held back expansion plans to tide over the economic slowdown.

According to a study of eight Indian cities by global real estate consultant Cushman & Wakefield (C&W), supply in the cities outstripped absorption by 45 per cent in the January-March period of 2009.

Subsequently, drop in rentals in major business districts of the country ranged between three per cent and 37 per cent as compared to the previous three months.

For instance, at Lower Parel in Mumbai, office rentals fell by as much as 37 per cent in the first quarter of the current year, the study said.

Worli and Bandra Kurla Complex areas of the financial capital witnessed decrease of rentals by 29 per cent and 20 per cent respectively, it said.

"The first quarter of the year can be termed as the weakest so far in terms of commercial office take up across major cities in India as compared to a similar period for the last 2-3 years. Renegotiations and migration to more cost effective locations has been the norm for the cautiously advancing corporate sector," C&W Executive Director Kaustuv Roy said.

Though supply levels in the market is expected to fall, C&W predicted rentals to remain under pressure in the coming few months as well.

"Going forward we are likely to see supply contraction. Acutely affected areas like IT/ITeS and certain corporate office destinations will see deferment of projects to bridge the gap between supply and demand.

"While rental values are expected to be under pressure in short to medium term, going forward lower rentals are likely to have a more positive impact on the absorption numbers," Roy said.

Source:http://economictimes.indiatimes.com/Markets/Real-Estate/Office-rentals-drop-up-to-37-pc-in-Jan-Mar/articleshow/4429839.cms

Indiabulls Real sells Mumbai property to BCI for Rs 30 cr

MUMBAI: Real estate firm Indiabulls Real Estate (IBREL) has sold 15,730 sq ft of area in its upcoming commercial complex at Lower Parel in central Mumbai for Rs 19,000 per sq ft to the British Council (BCI). The property firm has also signed leasing agreements with leading corporate houses such as Reliance Capital, Aditya Birla Group, IDFC and Indusind Bank for rents ranging between Rs 175 and Rs 225 per sq ft.

“We have done an outright sale deal with British Council recently at Indiabulls Centre at Lower Parel for around Rs 30 crore. We feel that we received a decent valuation, given the current tight situation in the real estate market,“ Indiabulls Group spokesperson Gagan Banga told ET. He also confirmed signing of the lease rental agreements with a few corporate houses.

IBREL holds a 45% stake in Indiabulls Property Investment Trust (IPIT), a Singapore-listed entity, which owns two prime properties at Lower Parel — Indiabulls Centre and Elphistone Mills.

Industry sources said IBFEL command high prices, vis-à-vis its peers in central Mumbai. “After Bandra-Kurla Complex, Lower Parel has emerged as the next commercial hub as rentals are hovering much lower than Nariman point, the main business district of the city,” a senior official of property consultant Lang LaSalle Meghraj (JLLM) said.

According to a report on India office market by international property consultants CB Richard Ellis, tower I of the Indiabulls Centre (450,000 sq ft) is the only newly-constructed building, which is operational and ready for occupation in the Lower Parel area.

The report said, despite the general lack of demand, extended business districts like Lower Parel and Worli have witnessed a revival of construction activity in many of the projects that were earlier stalled. Industry sources said that IBREL is sitting on a cash reserve of around Rs 3,000 crore and is on the prowl for half-finished projects and other land asset buyouts as property prices have crashed around 50% during the past one year.

“Currently, most of the developers are raising debt. But there is a limit for middle and small developers to raise debt. They will have to go for equity at one point. Another three to six months down the line, we expect more projects will come up for raising funds through equity. We will evaluate them,” Mr Banga said.

Currently, the cash-strapped real estate sector is desperately seeking funds for revival. Various reports indicate that around Rs 4,500 crore to Rs 5,000 crore worth of projects across the country are facing great difficulty in finding takers.

Source:http://economictimes.indiatimes.com/Markets/Real-Estate/Indiabulls-Real-sells-Mumbai-property-to-BCI-for-Rs-30-cr/articleshow/4427590.cms

Residential property rates may fall 35%

Realty brokers in India expect residential property prices to settle down at a 25-35% discount on the current listed prices over the next couple of months, according to a recent survey.

The demand for homes remained muted in the otherwise busy season of January-March, the findings of the nationwide property brokers’ poll, conducted by financial services company Edelweiss, indicate. The only projects selling are those priced at least 25-30% lower as against the ongoing market rates, while real estate companies reluctant to slash prices are struggling to clear inventory.

“Customers are coming back for deals. Prices have begun to consolidate at 30-35% discount to the list prices,” realty company Orbit Corp’s corporate strategy head Ram Yadav says.

Some aggressively priced new projects, including Lodha’s project in Thane, HDIL’s in Andheri and Nirman Lifestyle’s Mulund project, are doing well in Mumbai. “HDIL’s Rs 7,651/sq ft at Andheri is a good price as compared to Rs 6,000/sq ft at which the state housing development authority MHADA is selling its flats in a similar area,” says Santosh Naik, MD and CEO of Disha Direct, a real estate marketing company.

Property dealers, the report says, don’t see a recovery in the domestic realty market any time soon as buyer sentiment is expected to remain subdued due to the weak economic environment.

According to the survey, 76% of the brokers expect prices to decline over the next three months and about 53% of them see the trend continuing over the next one year.

City wise, Bangalore is the least pessimistic with 32% of the brokers surveyed having a negative price outlook over the next one year, while Chennai is the most bearish with 73% expecting a decline in realty value.

Sales during the January-March quarter are expected to be much lower (less than 50%) than what they were in the corresponding quarter last fiscal.

India’s largest real estate companies DLF and Unitech are faced with unsold inventory and increasing interest costs. Things do not seem to be getting better for at least another year for either of these developers

Soruce:http://economictimes.indiatimes.com/Markets/Real-Estate/News-/Residential-property-rates-may-fall-35/articleshow/4387266.cms

DLF, DAL raise Rs 1,100-cr debt from HDFC Bank

NEW DELHI: The country’s largest property firm DLF and its promoter group company DLF Assets (DAL) have together raised around Rs 1,100 crore as debt from HDFC Bank through lease rental discounting (LRD) of their properties. The fresh round of debt raising will ease cash flow at DLF.

A DLF spokesperson declined to comment on fund raising, but two senior company executives confirmed the raising of debt through LRD. LRD allows a property owner to raise funds against the expected rentals from the property in future.

Privately held DAL has raised around Rs 800 crore while DLF has raised the rest. The fresh debt will help DAL pay DLF for the properties it had earlier purchased. As of December 2008, DAL owed Rs 5,400 crore to DLF.

DLF had earlier raised over Rs 3,000 crore in debt from Punjab National Bank (PNB), Life Insurance Corporation (LIC), State Bank of India (SBI) and Bank of India (BoI) between December and February, mainly to repay short-term debt.

DLF’s impressive sales and profit figures in the past several quarters were significantly based on its transactions with DAL, a company floated by DLF’s promoter KP Singh. Property sales to DAL contributed 43.5% to revenues and 35% of DLF’s profit before tax for the December 2008 quarter.

DAL, which has attracted investments from the US hedge fund DE Shaw ($400 million) and UK-based Symphony Capital (estimated $650 million), was originally proposed to be listed on the Singapore Stock Exchange, as a real estate investment trust. The global economic downturn, however, forced DLF to change its plan last year, and the company has since been trying to raise equity in DAL through private placement.

While announcing the December quarter earnings, DLF vice-chairman Rajiv Singh had said that DAL will raise around Rs 2,000 crore through private equity deals. He said that DAL would raise the same amount through lease rental discounting, if equity deals didn’t materialise.

Market analysts see the rising receivables from DAL, as the single-biggest concern for DLF. Meanwhile, DE Shaw is also looking at exiting its investment in DAL and any loss to it on account of a fall in market value of DAL has to be compensated by DLF promoters. As per JP Morgan’s estimates, DAL’s market value has fallen to $1.5 billion from $2.2 billion in 2007.

In view of this, DLF is weighing several options aimed at extinguishing receivables from DAL and help DE Shaw exit DAL.

First is to let DAL raise funds through LRD and pass that on to DLF, which would then use the money to buy DE Shaw’s investment in DAL.

Second option is to convert entire receivables into equity in DAL. This would mean DAL picking a majority stake in DAL. “DLF could look to buy a part stake in DAL at some stage, to provide a one-time resolution of balance sheet debtors. This could be done through converting outstanding debtors on balance sheet to an equivalent stake at an appropriate cap rate,” said JP Morgan in a recent report.

Third option being discussed by DLF management is to merge DAL with itself. This may probably require DLF to raise debt to buy DE Shaw’s investment in DAL, following which DAL will be merged with DLF. The merger may entail DLF issuing convertible bonds to Symphony Capital. DLF can’t issue fresh shares to Symphony, a foreign investor, as the realty company is also executing many non-FDI compliant projects

Source:http://economictimes.indiatimes.com/Markets/Real-Estate/DLF-DAL-raise-Rs-1100-cr-debt-from-HDFC-Bank/articleshow/4382390.cms

No clear sign of recovery in real estate market

MUMBAI: There seems to be no clear sign of recovery in the real estate market. Even the otherwise busy season (January to March) could not prove to be any better than the previous quarters. This is evident from the offtake of inventory at project sites of various developers.

A recent property brokers’ poll conducted by Edelweiss on the residential property market also throws up the same results. The only projects that are selling are the ones that are priced at least 25-30% discount to the ongoing market rates. In fact, some of the new projects (Lodha’s project in Thane, Dombivili, HDIL’s project in Andheri and Kurla) launched in Mumbai and around did see some good response as they were priced very attractively.

Buyer sentiment is expected to remain negative due to weak economic environment. Consequently, property volumes would remain muted and prices would decline further.

As per the survey, 76% brokers expect price trend to be negative over the next three months and 53% brokers expect price trend to be negative over the next one year.

Location wise, Bangalore is the least pessimistic market with 32% brokers having negative outlook over the next one year. On the other hand, Chennai remains the most pessimistic with 73% brokers having negative outlook for the same period.

This would further have a subdued impact on the earnings estimates for the sector. Sales are expected to be down by more than half of what they were in the March’08 quarter. Both DLF and Unitech, the largest players of the sector, are faced with unsold inventory and increasing interest costs.

No utopian situation can lend a helping hand to the declining operating profit of these developers, and things do not seem to be getting better for another year for either of these developers.

By ET Intelligence Group

DDA: No allotments till final scam report

NEW DELHI: The DDA on Monday assured the Delhi High Court that it would not begin the process of flat allotment to the winners of DDA housing scheme until the Economic Offence Wing (EOW) of the city police completes its investigation into the alleged scam.

The housing body also submitted its in-house inquiry report about the alleged scam before Justice Hima Kohli. The agency claimed to have carried out an exhaustive in-house probe into the entire affair and found "nothing amiss.''

After taking cognizance of the report the court asked EOW to expedite the investigation and posted the matter till July 30.

The court was hearing a bunch of petitions seeking cancellation of the draw of lots, which took place in January. Petitioners have alleged that DDA had illegally allowed applicants under the scheduled tribe category from other states to participate in the exercise.

According to the petitioners, under the DDA Act the housing body is not entitled to accept the applications filed by the people who are residents of states other than Delhi. Some of the petitioners have also challenged the eligibility criteria drawn up by DDA for the draw.

In January, the housing body held the draw for allotment of 5,000 flats under the housing scheme but later a complaint was registered accusing it of committing irregularities during the draw.

The EOW of Delhi Police's crime branch is probing the alleged irregularities in the draw and so far seven persons, including Laxmi Narayan Meena, a former SBI employee and a resident of Rajasthan's Jhunjhunu district, have been arrested.

Source:http://timesofindia.indiatimes.com/articlelist/msid--2128839596,curpg-3.cms

Now, DLF's sops for realtors marketing Chennai project

CHENNAI: Perhaps, it is difficult market conditions that has made realty major DLF incorporate a new element in its overall selling strategy. After trying to woo consumers through its price reduction strategy, it has now announced an incentive package for realtors, marketing its ‘Garden City’ project in Chennai.

It was last Saturday, that around 20 realtors got back their marketing verve when they heard that the Gurgaon-based DLF plans to revise the incentive package for agents upward to 3% against the industry norm of 2%.

"With developers finding it difficult to sell in these turbulent times, the scheme of 3% commission for new bookings has reassured us," a realtor told ET, on conditions of anonymity.

Hanu Reddy, ICICI Property Search, Home Bay and Century Realtors are some of the key organised brokers/agents, who have been empanelled to market the 3,493-apartment project.

DLF Southern homes head K K Raman said it is a "limited period offer" that is valid upto May 31. "The market needs stimulus to bounce back and this is just one element in our overall strategy," he told ET.

While 35% of the sales, so far booked, has been through the DSA (direct selling agents) route, he said this percentage is much lower when compared Delhi.

He added that in the last four days, 14 fresh bookings had been made, though he was unable to quantify the DSA contribution.

Historically, DLF is known to have a generous track record as far as commissions are concerned, but unlike other geographies where its relationship with local brokers help it to make sales, it was faced with a different experience in the metro.

"Here, the DSAs have to work much harder because of the market characteristics. For, end-customers have the habit of negotiating with the builders directly," Mr Raman points out.

DLF does not have a strong marketing base in the city and hence its attempt to revise its agent commission is unprecedented. It has caught the attention of the market with industry experts assessing DLF’s total brand spend for a project of this magnitude to be close to Rs 75 crore.

One of the realtors even said there were plans to revise the incentives to 4% on future deals.

For this project, DLF has deployed about 40 realtors, some of whom are overseas. "Their client base and strong linkages with the international customers are factors that our company evaluates to empanel DSAs," Mr Raman said.

Source:http://economictimes.indiatimes.com/Markets/Real-Estate/Now-DLFs-sops-for-realtors-marketing-Chennai-project/articleshow/4222219.cms

Unitech in talks with Oriental Bank to sell office space

NEW DELHI: Real estate firm Unitech is in talks with Oriental Bank of Commerce (OBC) to sell its office building in Saket, New Delhi, said a top company executive.

If the deal materialises, it could fetch Unitech around Rs 500 crore. The company is also simultaneously in talks with 7-8 wealthy individuals to sell floors in that office, in the event of a deal with OBC not working out.

“We are working on two options — either selling the entire building to one buyer or different floors to multiple buyers,” said Unitech MD Sanjay Chandra. The six-floor 2.2 lakh sq ft office, which is almost ready to be occupied, can fetch around Rs 500 crore if sold to one buyer and higher if sold floor-wise to multiple buyers.

“Our aim would be to maximise realisation. But the deal will also depend on how soon we can close it,” said Mr Chandra, adding that the negotiation process with Oriental Bank of Commerce has been initiated.

Unitech, which has a total debt of Rs 10,000 crore on its balance sheet, has been looking to raise fresh funds through sale of its assets to repay debt and cover for its operational expenditure. Besides its Saket office, Unitech is also in the process of selling its mid-segment hotel in Gurgaon.

It is understood that the company has entered into an agreement with a wealthy individual Roop Madan, a Delhi-based auto dealer, to sell its hotel for around Rs 230 crore. Unitech has also sell-off some land parcels in Gurgaon lately to raise funds.

These asset sale would help the financially-troubled firm to get fresh capital, but wouldn’t be enough to sail it through the tough times. That’s why the company is also looking at diluting stake to private equity funds at project as well as company level to raise fresh funds. “We expect to raise around $500 million through private equity deals at company as well project level,” said Mr Chandra.

“We are talking to 6-7 real estate funds to raise capital for our mid-income residential housing projects in the national capital region and in Mumbai,” said Mr Chandra.

Soruce:http://economictimes.indiatimes.com/

Big ticket land deal in offing in Chennai Boat club road

CHENNAI: A big ticket land deal is underway in the posh Boat Club road of Chennai. It is a land parcel of 31.9 grounds, owned by the TVS-group firms. The price expected is Rs 6 crore per ground (1 ground = 2,400 sq ft), multiple sources in realty circles confirmed to ET.

It is learnt the lands are owned by TVS Motor, TVS Electronics, TVS Investments and other associate firms, managed by brothers Venu Srinivasan and Gopal Srinivasan. The deal is directly handled by the officials of the companies though leading realty consultants were keen to get the mandate.

Group sources did not want to comment on the deal. It is learnt that Gopal Srinivasan is directly handling it by banking on his contacts in Chennai business circles. The process of sale began about three weeks back, when the elite circle of the metro’s hi-profile buyers were intimated about it. Of the 40-odd parties sounded, 8 to 9 have evinced interest, sources said.

To facilitate easy transfer of the corporate ownership of the lands in the primary residential area, it has been split into five plots. It is also viewed as a strategy to woo high-networth individuals given the fact that the real estate prices are perceived to be heading south, sources say. The plot sizes of the ‘L’ shaped property range from 4 to 10.5 grounds.

All the same, TVS firms are also keeping the option of going in for a block deal, if they get a good offer. In value terms, the deal would set a new benchmark in Boat Club as this is rated as a big ticket one compared to the last few deals clinched between 2005 and 2007.

Earlier, two deals (Rs 42 crore and Rs 80 crore) were struck by the Maran brothers, while Mukesh Ambani’s brother-in-law Shyam Kothari bought 2.4 acres in 2007 at Rs 175 crore. The last high-value transaction in Boat Club was concluded at Rs 5 crore per ground.

It is gleaned from sources, the TVS deal has attracted about eight interested parties, which include some influential businessmen and high networth individuals.

It is being marketed as a ‘vaastu’ compliant site. The other special feature mentions is the largest open space available in the area with exclusive private access away from the main road.

Lease rentals in the upmarket location range between Rs 80,000 to Rs 2.50 lakh per month depending on the size of the houses/flats.

As part of the efforts to abide the regulations of the Adyar Owners’ Association, the interested parties are told the plots have to be developed only as residential houses.

They can construct not more than two residential units and not less than 4,800 sq ft built-up area in each plot. With a ground plus one dwelling format, each plot has provisions for garage and servant quarters, which would be an integral part of the residence.

Though some of the prospective buyers whom ET spoke said the maximum price one ground would fetch is Rs 4 crore, a veteran builder, residing in Boat Club, says "the strategy of selling in small pieces may get them buyers."

For long, this land belonged to Binny Mills. As part of its revival plan, it was sold to Som Dutt Builders for Rs 60 lakh/ground in the late nineties.

Later, in the early part of the decade, 45 grounds were acquired by the firms managed by brothers Venu Srinivasan and Gopal Srinivasan, for a consideration of Rs 41 crore. After retaining a portion for themselves, 31.9 grouns is now up for sale.

Source:http://economictimes.indiatimes.com/Markets/Real-Estate/Big-ticket-land-deal-in-offing-in-Chennai-Boat-club-road/articleshow/4210785.cms

Govt orders special audit of DLF

NEW DELHI: The government informed Parliament that it has ordered a special audit of the accounts of the real estate giant DLF Ltd and would take necessary action after scrutiny.

"A special audit under section 142(2A) of the I-T Act has been ordered in the case of Delhi Lease and Financing Ltd, also known as DLF for the assessment year 2006-07", Minister of state for finance S S Palanimanickam said in a written reply in the Lok Sabha.

The audit report, the Minister said, "is being examined during the scrutiny proceedings, for taking necessary action..."

When asked whether some housing companies had misled the Income-Tax department regarding their income and profits, Palanimanickam said "Yes" and added that the details, which are being collected, would be tabled in the House shortly.

The Minister also clarified that the government has not ordered a special audit of the accounts of the Darbari Lal Foundation.

The income-tax department can order a special audit of the accounts of a company or individual under Section 142 (2A) of the Income-Tax Act in the interest of revenue.


Soruce:http://timesofindia.indiatimes.com/Business/Govt-orders-special-audit-of-DLF/articleshow/4189734.cms

DDA likely to give itself a clean chit

NEW DELHI: The DDA internal inquiry report on alleged irregularities in the draw of lots for housing scheme 2008 is finally ready. It was submitted to lieutenant governor Tejendra Khanna and the Union urban development ministry on Friday. Though authorities remained tightlipped about the contents of the report, sources said it was expected to give the authority a clean chit.

On January 5, the urban development ministry had directed DDA to set up a three member committee to carry out an inquiry in the alleged irregularities.The report which was first sought within three days went through a number of deadline extensions before finally making its way to the L-G's office on Friday. According to sources, the report indicates that there were no irregularities on the part of DDA as far as the draw of lots was concerned. However, the contents of the report will only be made public later.

Meanwhile the economic offences wing of Delhi Police, which has been probing the alleged scam in the allotment process, is still in the midst of verifying the same and identity of every allottee. If indeed the internal report gives DDA a clean chit, then it will be a report on expected lines. Ever since th process came under the scanner, DDA has stoutly denied any wrongdoing on its own part.

The three member committee included DDA finance member Nand Lal as chairman, director vigilance Alok Swarup and deputy chief legal advisor Gupta as members. The UDM at the time of ordering an inquiry had said no one involved in the draw should be a part of the internal inquiry. However, sources indicated that Swarup was very much present at the time of the draw, putting a question mark on the fairness of the report.

Meanwhile, additional commissioner of police (EOW), SBK Singh, said he had no information about the DDA report.

While ordering a high-level inquiry by DDA officials into the alleged scam, the Union urban development ministry in January had also asked DDA not to issue allotment letters to successful allotees. "When there is widespread suspicion about the draw of lots, it is better to clear it through an inquiry. Till the inquiry is complete, physical possession of flats will be not be given," Union urban development minister S Jaipal Reddy had said.

Soruce:http://timesofindia.indiatimes.com/Cities/DDA-likely-to-give-itself-a-clean-chit/articleshow/4163404.cms

Realty funds go slow on raising money

MUMBAI: It's not the best of times for real estate funds. Given the slowdown, they are going slow on raising money from investors - a process referred to as the drawdown option, on account of paucity of investment opportunities.

Typically, a real estate fund works on a commitment from its investors for the amount to be raised. Initially, the fund collects about 20-25% of the committed amount. As and when investment opportunities crop up, funds make a drawdown on investors. Under normal practice, investors get about a month to pay such drawdowns.

Funds are now realising that it has become difficult to deploy money in the current market. This has resulted in a slow down in calling for drawdowns. Over the past 2-3 years, several companies, including India REIT, Milestone Capital Advisors, HDFC and Kotak, raised money from local as well as overseas investors. The ticket size for the domestic funds was between Rs 25 lakh and Rs 5 crore.

Anand Jain-promoted Urban Infrastructure Fund, which had a minimum ticket size of Rs 1 crore, closed its first fund in a year-and-a half. After the rights issue in May last year, the fund has not exercised the drawdown option. In case of Kotak India Real Estate Fund, launched in July 2007 with a ticket size of Rs 5 crore, only 47% of the committed amount has been drawn down.

“We have not asked for any money in the past nine months, since we do not find any suitable investment opportunities,” said a fund official requesting anonymity. India REIT’s case is similar. It has two domestic funds with a corpus of Rs 430 crore and Rs 550 crore, respectively. “Though we completed the drawdowns six months ago, only 75% of the funds have been deployed,” Ramesh Jogani, MD, India REIT Advisors, said.

Bucking the trend is Milestone Capital Advisors, which thinks it is the right time to invest in real estate. It chose to make a drawdown option on investors in its fund, Milestone Domestic Scheme II, a month ago. “There have been some requests from investors asking for extensions, but such cases are few and less than 10%,” Ved Prakash Arya, CEO, Milestone Capital Advisors, said.

Soruce:http://economictimes.indiatimes.com/Markets/Real-Estate/Realty-funds-go-slow-on-raising-money/articleshow/4152551.cms

Correction in real estate is bound to come: Parekh

NEW DELHI: Expecting correction in real estate prices, country's largest housing finance company HDFC Ltd today said it would cut interest rates in case costs of fund comes down.

"Where flats are more expensive, the drop will be sharper than where the flats are cheaper... correction is bound to come," HDFC Chairman Deepak Parekh told reporters here.

Asked whether HDFC would cut interest rates, he said, "if the availability of money...if our cost of fund comes down, we will certainly reduce rates."

HDFC last relaxed its housing loan rates in December 2008, cutting down rates for home loans above Rs 20 lakh by 50 basis points.

The rate for loans above the said category was reduced to 11.25 per cent from 11.75 per cent earlier.

It also introduced a new slab of housing loan below Rs 20 lakh with interest rate of 10.25 per cent.

Following the easing of benchmark rates, the Equated Monthly Installment (EMI) for the existing and new borrowers would come down.

On the policy rate cut, Parekh said, since inflation numbers are down RBI may take some measures after few weeks.

"RBI would take some steps, may not be immediately but may be after a few weeks," he said.

Source:http://economictimes.indiatimes.com/Markets/Real-Estate/articlelist/1058830.cms

Geojit launches Property Services Division

MUMBAI: Geojit Financial Services on Wednesday launched its property services division, which will offer investors and builders a single transparent platform to buy/sell office and commercial spaces and residential apartments/flats.

The new division will start operations in Kochi, and will gradually cover the other major locations in the state. In the next phase, the other states in South India will be covered followed by the rest of India. The company also aims to tap the large NRI populations in the Gulf to meet their property investment needs by leveraging its presence through joint ventures in UAE and Saudi Arabia.

Said C J George, managing director, Geojit, “Real estate has emerged as an important asset class for retail investors. Through this initiative, Geojit plans to move up the service-value ladder to include new asset classes that require advice and service.”

For the service the company has tied up with some realtors like Abad Builders, and RDS Project. Further, Geojit inked an agreement with HDFC Bank for selling home loans and in the process of signing the same with ICICI Bank shortly. Joseph Nivin will head the new division.

Source:http://economictimes.indiatimes.com/Markets/Real-Estate/Geojit-launches-Property-Services-Division/articleshow/4149694.cms

Posh South Mumbai apartments yet to revert to owners

MUMBAI: World War II may have ended more than six decades ago, but for 75 Mumbai-based families the battle hasn’t ended. They are fighting to get back their sprawling flats their fathers and grandfathers had rented out to naval authorities then.

Over the years, some died and now their children are fighting to get back the flats, each costing a few crores even in today’s downcast real estate market condition.

Between 1940 and 1945, the British navy based in Mumbai rented these flats, mainly in south Mumbai, to house sailors and other personnel. Over 250 flats in prime localities like Cuffe Parade, Colaba, Churchgate, Marine Drive, Napean Sea Road and a few in Bandra and Vile Parle were rented out by their owners for a princely sum of less than 10 paise per square foot.

Interestingly, there were no written agreements when these flats were given out, but only verbal assurances that the properties would be handed back once the war ended.

However, the Indian Navy which took over these flats after Indpendence, has been diligently paying the rent and getting receipts from the owners every month. For instance, a 2,000 sq ft flat in south Mumbai fetches a rent of barely Rs 800 a month.

"Most of these flats are huge, their bathrooms are as big as some of the bedrooms in modern constructions," said J Patel, one of the aggrieved flat owners.

Of the 250 flats, there are 75 flats which the Navy is still occupying. These flats could be collectively worth over Rs 200 crore if you taken a conservative Rs 3 crore per flat," said another owner, not wishing to be identified.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Posh_South_Mumbai_apartments_yet_to_revert_to_owners/articleshow/4115913.cms

Property prices may come down by another 20%

MUMBAI: Real estate developers are likely to cut home prices by an additional 20% in a bid to lure purchasers and customers who might otherwise shift to other financial commitments, as the current fiscal draws to a close in March.

With banks also starting to cut home loan rates, people close to the development say that the first quarter of the next fiscal could see a substantial jump in home sales.

Property rates across the country have fallen by about 15-20% with the decline in the economic situation.
According to analysts, the impact from the ongoing financial crunch and mounting pressure from various other circles, could peak by the end of March. That’s when many developers will be forced to sell unsold stock at a much cheaper price, said one executive with a leading developer.

Currently, a lot of real estate developers are rushing to clean up their highly leveraged balance sheets. “In their last attempt to save diminishing margins, we could see some developers make their moves in the last quarter of FY09. To boost sales, a further cut in prices are unavoidable,” said an analyst from a leading investment bank.

India’s property market has been among the hardest hit by the global financial turmoil, as high interest rates and gloomy economic prospects have driven out buyers and squeezed funds for real estate developers.
DLF vice-chairman Rajiv Singh, India’s largest real estate company, has already gone on record to say that prices could crash by another 15%.

Real estate consultants have factored a sharp reduction in rates. “Past experiences show that if the rates range between 7-8%, sales volumes jump substantially,” said Knight Frank India chairman Pranay Vakil, a property consultancy firm.

“After SBI, ICICI Bank and HDFC Bank cut rates, I expect a jump in sales volumes. Developers are also under mounting pressure to meet their interest payment deadlines. It seems, they are also ready to cut the prices further,” he added.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Property_prices_may_come_down_by_another_20/articleshow/4072643.cms

Noida: Meltdown hits mega project

NOIDA: So badly has Noida been hit by the economic meltdown that its most ambitious commercial area project, to be built on 3.82 lakh square metres in Sector 94, may not come through as the consortium concerned is unable to pay for the land as agreed.

The builders consortium, Business Parks and Town Planners (BPTP), is learnt to have written to New Okhla Industrial Development Authority to say that it is unable to pay it at the agreed rates. The consortium had beaten some major developers in an open bid for constructing a commercial and business complex in Sector 94 on March 11 last year. It had bid for the land at the rate of over Rs 1.30 lakh per square meter. And, while the consortium made an initial payment of more than Rs 1,300 crore of the Rs 5,000 crore at the time, as registration money and allotment money, it was unable to make any more payments.

Confirming this, NOIDA chairman, Lalit Srivastava, told this correspondent , '' The government had recently announced a policy to deal with just such things in times of recession. The consortium will have to pay 10 per cent of the amount so far paid, to NOIDA, as penalty. It will also keep the land it has already been able to pay for. The rest of the land will be forfeited. Such defaulters have been asked to submit their proposals by June. But, this case is coming up for discussion in the NOIDA board this Friday.''

A senior BPTP official said: '' It is true that we are not able to pay for the land, but the turmoil in the global market is doing this to so many companies. This is why we have written to NOIDA to tell them that we would like to avail of the schemes the state government has announced for such cases. We are waiting for their reply.''

Meanwhile, the number and value of land transactions in Noida, including Greater Noida, have gone down sharply. Sub-registrar Tej Singh Yadav told TOI: '' We have been able to meet only 30 per cent of the target set for revenue recoveries in January. Last January , we met 47 per cent of the target. The number and total value of the registries done in the first 11 months of 2008 was about half of that of the corresponding period in 2007. It was only in the last 15 days of December that about half of the calendar year's registries were done, in terms of both value and number.

This was because in the last half of December people somehow got the mistaken impression that the state government was going to raise the property and rent agreement registration rates very soon.''

Meanwhile, said a senior revenue official, sale and purchase of land and buildings have almost come to a standstill in Noida as well as Greater Noida. People are waiting for prices to fall further, before they make a move. Srivastava agreed that the situation was grim.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/Noida_Meltdown_hits_mega_project/articleshow/4074035.cms

Key financier of DDA scam surrenders

NEW DELHI: Vijay Patanjali, one of the alleged main financiers of the fraudulent applications that led to the Delhi Development Authority (DDA) flat allotment scam, surrendered in a district court on Monday.

Patanjali, a resident of Shalimar Bagh in northwest Delhi, has allegedly provided money for a large number of applications made with forged documents, according to the Economic Offences Wing (EOW) of Delhi Police that had raided his premises.

Soruce:http://timesofindia.indiatimes.com/Cities/Key_financier_of_DDA_scam_surrenders/articleshow/4063922.cms

Real estate to witness turnaround after next 2 quarters: Kotak

AHMEDABAD: The real estate sector could witness a turnaround in the next two quarters and would see fund flow after that, Kotak Realty Fund CEO S Srinivasan has said.

"It will take at least two quarters before the fund flow to estate developer community begins, and the sector can witness a turnaround," he said yesterday at a seminar organised by the Gujarat Chamber of Commerce and Industries here.

Amongst the league of big ticket realty funds, Kotak realty fund currently has corpus of Rs 3,500 crore, which it would invest in the next one to two years.

"Kotak as a leading realty fund has corpus of Rs 3,500 crore to invest in real estate deals even at the land acquisition stage, out of which so far we have invested Rs 1,200 crore," Srinivasan said adding that they intend to invest the balance in the next one to two years.

In last three years, we have witnessed excesses across all sectors, including real estate and it will take sometime before the sanity is restored, Srinivasan said.

Highlighting the opportunities and challenges in finance, banking for the real estate sector, Srinivasan said "as developers we should work in coordination with planners to regulate the frenzy in construction of shopping centres."

According to Srinivasan, the planners (government) should impose restriction on construction of malls within a specified catchment area.

He suggested that developers should build up balance sheets despite all odds such as zoning regulations, tax saving measures, so as to show that its a sustainable business model.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/Realty_Trends/Rich_households_to_outnumber_poor_homes_in_2009-10/articleshow/4031618.cms

Warrants against DDA scam financiers

NEW DELHI: A Delhi court has issued non-bailable warrant against Suresh Kumar Meena and Vijay Kumar, associates of Deepak Kumar who is the whistleblower of DDA scam.

Suresh Kumar Meena and Vijay Kumar are the major financiers of the scam and had been absconding since the scam came to notice.

Interestingly, Suresh Kumar Meena had sold its flat in Rohini for Rs 30 lakh to finance the scam.

Meanwhile, CFSL Hyderabad, from where forensic report on software used in DDA housing draw is awaited, has asked for the server along with the original copy of the software used in the process.

The Delhi police are scanning call details of 18 people, who were named by master mind M L Gautam, former DDA official.

Currently, the total number of persons who have been in custody for their alleged involvement in the forgery and cheating in the flat allotment scam has gone upto six.

The draw of lots for 5,238 DDA flats took place December 16, 2008. Delhi Police started investigations after a man, who was allotted a flat in the draw, told the police that he had neither applied for a flat nor had a Permanent Account Number (PAN) card.

Deepak Kumar, who allegedly blew the lid off the scam after he fell out with some fellow real estate agents, and three others - retired DDA employee ML Gautam, real estate agent Raju Ram and Laxmi Narayan Meena - have already been arrested.

Source: http://timesofindia.indiatimes.com/Cities/Delhi/Warrants_against_DDA_scam_financiers/articleshow/4041055.cms

Chennai realtors in race for Rattha Group's 9-ground property

CHENNAI: The buzz in Chennai realty market is about the trend favouring joint development of projects by those having small and big land parcels. They prefer strategic partnerships to tide over cash crunch.

One such deal that seems to be taking final shape is a 9-ground property of Rattha, a diversified group with interests in exports, infrastructure, SEZ and hospitality.

A bevy of realtors are in the fray to jointly develop the Rattha north-east facing property, at Velachery, near MPL Motors showroom. Given the current market dynamics, the valuation per ground is pegged between Rs 1.80 crore and Rs 2 crore. Though the last big sale that happened in this area fetched Rs 2.5 crore per ground, the company is expecting to realise Rs 27 crore from the deal, according to realty sources.

Ceebros, KGEYes, Akshaya and Vishranthi are among those who are in the race, while some of them are still being approached through real estate consulting firms.

Two of the metro's well-known builders — Vishranti and Akshaya — confirmed that they were among the contenders, while a senior TrueValue Homes official said they too had been approached by Jones Lang LaSalle-Meghraj (JLL-M) last week with a proposal to jointly develop it. The official also said TVH wanted to see the site before taking any decision.

Banking on its expertise of developing properties jointly, Akshaya Homes chairman Chitty Babu said "we are in the race," when contacted by ET on Friday. About 80% of the 142-residential, commercial and IT projects executed by Akshaya have been through the joint-development route. Akshaya has 1.6 million sq ft of ongoing projects.

Rattha promoter Gurmeet Singh, contacted by ET today, said it has decided to drop the idea of sale. A JLL-M official too feigned ignorance about being mandated to do the transaction.

Incidentally, the Rattha group had announced its intention to develop an IT SEZ in Porur on 26 acres for Rs 1,750 crore. In May last, Mr Rajeev Misra global head of Deutsche Bank's credit card business, in his individual capacity had acquired 30% stake in the SEZ for Rs 262 crore.

However, sources in the know said the Rattha group has denotified the SEZ due to downturn and instead looking at a residential project.


Ratthas also forayed into hospitality through a tie-up with Ascott group of Mauritius when the latter upped its stake to 89% from 49% in Rattha Citadines Hitec City Aparthotel.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Chennai_realtors_in_race_for_Rattha_Groups_9-ground_property/articleshow/4025860.cms

NBO to launch housing index by March '09

NEW DELHI: The Reserve Bank of India (RBI) has asked a government agency that collects statistics on the country’s housing construction activities to launch a housing start-up index by March 2009, to help it assess the impact of fiscal and monetary stimulus offered to revive the sector.

The index, to be launched by the National Building Organisation (NBO) under the ministry of housing & urban poverty alleviation, will offer reliable data to RBI and other government agencies, facilitating speedy decision making.

A senior NBO official, who asked not to be named, said the index would be released on a quarterly basis. It will be made available on a monthly basis later. The base year of the index is 2003-04.

All major economies use similar indices to assess economic activity using demand and supply data on the housing sector. As housing is a sector with high forward and backward linkages, the proposed index will be useful in assessing demand and supply situations in other sectors, such as cement and steel.

An advisory committee constituted by the central bank will meet by the year-end to review the implementation of its directive, said the NBO official.

DR Dogra, deputy managing director with credit rating agency CARE, said that lack of a reliable database on housing hampered decision making in the country. The data for the proposed index would be collected on the basis of building permits issued by local authorities.

Soruce; http://economictimes.indiatimes.com/Markets/Real_Estate/Policy_/NBO_to_launch_housing_index_by_March_09/articleshow/3848509.cms

Rich households to outnumber poor homes in 2009-10

NEW DELHI: The wheel of fortune continues to spin in India, with each level of household income set to move a notch higher next year. For the first Investment Tips

time, the number of high-income households is set to exceed the number of poor households in 2009-10, while more than five million mid-income households will hit the high-income bracket.

According to an exclusive analysis done for ET by the National Council of Applied Economic Research’s (NCAER) senior fellow Rajesh Shukla, next year will see the size of high-income homes - with an annual household income (AHI) of more than Rs 2.85 lakh - rise to 46.7 million, overtaking the number of poor households at 41 million. The NCAER study pegged AHI for poor homes at less than Rs 71,000.

The study assumes a GDP growth rate of 6.7% for 2008-09 and 5.7% for 2009-10 based on average forecasts by nine Indian and global firms such as Goldman Sachs, Nomura Securities and Kotak Mahindra Bank.

For 2008-09, NCAER has estimated 42 million high-income households and 43.3 million poor households. Medium-income households with AHI between Rs 71,000 and Rs 2.85 lakh are forecast to rise to 140.7 million in 2009-10, up from 138.4 million in 2008-09.

Thus, over a million poor households will move into the mid-income bracket and nearly 5 million mid-income ones will hit the high-income category.

The growth estimates used for calculating the income demographics this fiscal year and next are more conservative than the government’s forecasts. The Prime Minister’s Economic Advisory Council expects India’s GDP to grow by 7.1% this fiscal and by 7-7.5% in 2009-10.

The period between 2004-05 and 2007-08, when GDP growth averaged 9.4%, witnessed the sharpest reduction in the number of poor households - down 19.3 million to 46.3 million in 2007-08.

During that period, the number of high-income households jumped 17 million to 37 million, while the number of mid-income households rose by around 16 million to 136 million.

The economic slowdown of the past one year is sure to come in the way of poverty reduction. Between 2005 and 2008, the number of poor households in India dropped 11% year-on-year.

But the current slump will bring that reduction rate down to 6.6% in 2008-09 and still lower, at 5.2%, in 2009-10, underscoring the need to return to what Prime Minister Manmohan Singh terms as “superior” economic growth.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/Rich_households_to_outnumber_poor_homes_in_2009-10/articleshow/4031618.cms

Govt to DDA: Build 40,000 houses every year

NEW DELHI: The controversy over the genuineness of the recent allotment of DDA flats has had a positive fallout.

Wiser by the mad scramble for the scarce flats which helped scamsters to set up bogus applicants, the Centre has asked DDA to use the tonnes of cash at its disposal to build 40,000 flats every year.

In a stern directive to the agency, which has been derelict in carrying out its mandate to provide affordable housing to the ever-increasing population of Delhi, Centre has asked DDA to come out with specific provisions to construct 40,000 houses a year, beginning next year itself.

The target of 40,000 may appear ambitious given the lethargic ways of the DDA. The agency, which has amassed a huge fortune by selling large tracts of land it controls, has been routinely criticised for not carrying out its charter.

The letter from urban development secretary M Ramachandran to DDA vice-chairman Ashok Kumar Nigam stands out for the sense of urgency it displays.

Ramachandran told TOI, "An estimated 40,000 people migrate to Delhi every year, so DDA needs to build the same number of houses which is compulsory mandate of the agency."

He said if DDA, which has monopoly over land resources, focussed on its primary mandate of providing shelter to people, there would be plentiful supply and such scams could be averted.

"We have asked DDA to come out with budgetary provisions to meet the shortage. The agency has no problem of resources, hence taking up this initiative should come easy," Ramachandran said.

"DDA should give special focus on housing and the ministry is ready for any support if needed," he added.

The DDA first built houses in 1967 and in the 40 years since, has sold just around 4 lakh flats, miserably failing to cater to the spiralling housing need in the Capital. To make matters worse, houses offered by private builders are beyond the reach of most middle-class families, leave aside the poorer sections.

The Centre's advice has come after DDA resisted the UD ministry's policy on encouraging public-private partnership in housing sector. It had also sought to restrict the agency's role in land acquisition and construction.

DDA failed to come out with its PPP policy on housing even three years after the ministry moved the proposal, an official said.

DDA is vested with complete authority for land acquisition, development and allocation, besides the responsibility of providing affordable housing to all.

The ministry is disturbed by the fact that over 5 lakh people applied for 5,000 flats in the recent DDA housing scheme. In its last offer in 2006, DDA had received over 2 lakh applications for 3,500 flats. To top it, the allotment has come under cloud with charges of rigging flying around.

The last official estimate of the Capital's housing need was done by the 2001 Census. It had put housing shortage at one lakh units which did not take into account the 40 lakh people who live in illegal colonies.

According to Delhi's Master Plan 2021, the city's population is expected to be 2.3 crore by then. An additional 24 lakh houses would be needed ― 4 lakh to clear the backlog and the rest to account for increase in population. The Master Plan has pointed out that only 53% of the housing need is met by institutions, with the rest in the unorganised sector.

Despite the huge deficit, DDA has neglected the housing part and concentrated more on land sale and purchase.

Source; http://timesofindia.indiatimes.com/Cities/Govt_to_DDA_Build_40000_housesyear/articleshow/4034318.cms

Developers focusing on affordable housing projects

MUMBAI: The escalating cost of housing coupled with the current economic slowdown has forced developers to turn their attention from the affluent segment to the mass segment. This is the story that is slowly spreading across the country.

Be it the distant suburbs of Mumbai or for Greater Noida or Faridabad or even tier-II cities like Indore one is seeing a flurry of housing projects with a price tag of less than Rs 20 lakhs – this segment is typically referred to the affordable segment.

“During the past three years, there were not enough apartments that were available in this affordable segment which has now led to this huge pent up demand,” said Haware Builders executive director Sanjay Haware. This is what has led to the one room kitchen apartments, apart from the slighter larger 1 bedroom, hall, kitchen (BHK), making their way back into the market.

Haware Builders, for instance, has launched a project with 525 apartments situated in Navi Mumbai’s Kalamboli with 325 sq ft each. These come at a price of 5.25 lakh. The builder claims that all the apartments were sold in just three days. Its more recent project in Thane, which is located just outside Mumbai, will have 750 flats. That, too, seems to have taken off well. “Some applications will spill over to the next phase,” said Mr Haware.

Others in the business admit to the trend. “Ever since interest rates and property prices have fallen, there have been enquiries for affordable houses,” said Nirmal Lifestyles managing director Dharmesh Jain. His company plans to offer apartments in the range of Rs 10-50 lakh which will be located outside Mumbai in places such as Kalyan, Dombivli and Thane.

In addition to Nirmal, others like Marathon, Sheth Developers, Evershine Developers have plans to offer affordable houses in Mumbai and the adjoining areas.

In Faridabad, which is close to Delhi, builders like BPTP and Triveni have offered housing at Rs 20 lakh. Delhi-based Omaxe is taking that concept forward. Its project priced at Rs 10 lakh located in Pithampur near Indore will target the government employees who draw salaries in the range of Rs 15,000-20,000. It has bought 120-acres each in Indore, Raipur and Bhopal for its affordable housing projects.

“These employees have secure jobs and they will be able to pay the monthly installment of Rs 5,000. We expect a huge demand for houses that will cost Rs 10 lakh,” says Omaxe director DP Srivastav. He added that individuals today want to own a house when they are 30-year-old compared with a time when the age to buy housing at 50.

In Ghaziabad, builders such as Ajnara and Supertech Builder are in the affordable housing space. The deterrent in the construction of economical housing has been the land prices in areas around Mumbai and Delhi.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Developers_focusing_on_affordable_housing_projects/articleshow/4014247.cms

Year 2010 to be declared as Year of 'affordable housing'

NEW DELHI: As recommended in the national conference of housing ministers, the year 2010 is likely to be declared as the year for "affordable housing."

The housing ministers' conference held here yesterday was inaugurated by Minister of state for Housing and Urban Poverty Alleviation Kumar Salja and attended by ministers from 15 states and Union Territories.

The meet also recommended the states to draw up the road map and a vision for slum-free city.

As per other recommendations, banks were asked to make reservation of atleast one per cent of their priority sector lending funds for economic weaker section (EWS) housing.

The National Urban Housing and Habitat Policy 2007 adopts the goal of affordable housing for all and seeks to promote multiple schemes and private-public partnerships in order to achieve it.

Selja asked the state governments to supplement the efforts of the Centre in creation of additional stocks by increasing supply of serviced land and new houses by direct intervention through state housing boards, development authorities and cooperative sector.

Selja also suggested providing one time incentive in the form of relaxation of floor area ratio norms as appropriative incentives which is likely to lead to softening of land prices and induce downward trend in house prices.

The meet recommended review of existing legal and regulatory framework for acquiring additional lands into the market and vertical construction for redevelopment of slums.

Soruce: http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Year_2010_to_be_declared_as_Year_of_affordable_housing/articleshow/4013664.cms

Unitech seeks govt’s okay to raise $1 b through GDR issue

NEW DELHI: India's second-largest listed realty company Unitech has sought the government’s approval to float global depository receipts (GDRs) to raise up to Rs 5,000 crore ($1 bn). The GDR issue will reduce the promoter stake to 36.71% from 67.45% on December 31, 2008.

The promoter stake had already come down by 7% to 67.4% in the three months ended December 08. A Mumbai-based real estate analyst, who did not wished to be named, attribute this decline to the sale of pledged shares by the financial institutions. The company did not comment on the stake decline or shares pledged with lenders. The shares of Unitech fell 3.4% to Rs 28.30 on Thursday.

On December 22, the Unitech board had approved plans to raise Rs 5,000 crore through fresh issuance of securities, including equity shares, convertible preference shares, debentures, GDRs and ADRs.

GDRs are shares issued to non-resident Indians in the overseas market. Unitech has stated in its application to foreign investment promotion board (FIPB), the nodal body for clearing foreign investments, that it will issue 40 crore GDRs at a price of Rs 36.78, calculated as per the GDR scheme. Post-investment, the GDRs will comprise 45.57% of the total shareholding.

Analysts are skeptical about Unitech’s ability to attract enough GDR subscribers, given the state of global markets. Moreover, Unitech’s portfolio of assets, one-tenth of which comprise non-FDI compliant projects, might hinder speedy approval from the government.

The company has given an undertaking that GDR proceeds will be used only in the FDI-compliant projects, but the government may not allow Unitech to induct FDI without asking it to hive off non-FDI compliant projects.

Recently, the government rejected the Gurgaon-based Vatika group’s proposal to retain non-FDI compliant assets after FDI infusion. Real estate developers seek to retain such assets in a bid to ensure higher valuations. Unitech has reduced its debt obligation due by March to Rs 600 crore from Rs 2,500 crore through repayments and roll-over of dues.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Unitech_seeks_govts_okay_to_raise_1_b_through_GDR_issue/articleshow/4019336.cms

DDA scam: Deepak's custody till Jan 31

NEW DELHI: A trial court on Tuesday sent Deepak Kumar, alleged whistle blower in the DDA flat allotment scam, to judicial custody till January 31.

The court has also allowed the police a 10-minute interrogation of Deepak in connection with another FIR.

Additional Chief Metropolitan Magistrate Digvinay Singh sent Deepak to 11-day judicial remand in the first FIR lodged against him.

The Economic Offences Wing told the court that they had lodged two new FIRs against Deepak in connection with the case. The police said, during investigation, five PAN cards were recovered from Deepak, three of which carried his name. The other two were in Deepak's company and sister’s name.

In the second FIR, the police said two cheques received from Raju Ram another accused, currently in judicial custody, were given by Deepak Kumar and the account from which these cheques were issued belonged to one Rajiv Kumar.

A direct selling agent, Dinesh, has also been arrested in connection with the second FIR. The police said it was Dinesh whose photograph was on the account form of Rajiv Kumar.

Source: http://timesofindia.indiatimes.com/Cities/DDA_Deepaks_custody_till_Jan_31/articleshow/4007267.cms

Defensive DDA points to rules

NEW DELHI: A day after TOI reported about DDA allotting a flat in Mayur Vihar in the 2008 housing scheme when it was not even in the list of flats on sale, the agency claimed the flat was allotted as per existing rules. While it was learnt that several other flats that had been built earlier were also allotted in the present scheme, police said investigations were on.

Speaking to Times City, DDA spokesperson Nemo Dhar said: "For housing scheme 2008, 5,010 flats were ready for occupation. On allotment day though, 5,238 flats were allotted, which included cancelled or surrendered flats from previous schemes.'' Citing the DDA brochure which states in clause 24-B that the agency could increase or decrease the number of flats on offer in the scheme at any time, Dhar maintained that the Mayur Vihar flat was allotted under that rule.

Meanwhile, the Delhi Police, which received the complaint on Monday, said a probe was on. "We are investigating the matter and have sought details from DDA. The application and loan form of the allottee are also being examined," said additional CP (EOW) SBK Singh.

The allottee lives in Gazipur and said she had applied under the MIG category. The flat was earlier allotted to one Samir Bali in 2004, but he surrendered it. Similarly, flats situated in Jhilmil, East of Loni Road, Nand Nagri and Kondli Gharoli were grouped for offer under category code 28, which initially comprised 12 flats. The number was increased to 35 later, with the one at Mayur Vihar being included in it. Sources in DDA claimed that it was a practice that had been followed earlier as well. "Whenever there are a small number of houses within a certain diameter, the flats are bundled into a single group, so as to make it easier for the computerised draw,'' said a senior DDA official.

As part of the group, several two-bedroom flats in Mayur Vihar surrendered or cancelled from previous schemes were thus made part of the allotment process. DDA officials claimed that the grouping under Kondli Gharoli was presumed to be Mayur Vihar as the earlier scheme treated it similarly. Said an official, "Applicants knew that the flats under the Kondli group also included flats from Mayur Vihar, though the brochure didn't specifically say so. There was, however, a list of areas which were part of this group, so there could be no miscommunication.''

The agency now claims that the allotment was not made with any malafide intentions, as the practice of including flats from earlier schemes was well-known.

Soruce:http://timesofindia.indiatimes.com/Cities/Defensive_DDA_points_to_rules/articleshow/4003755.cms

Scam in DDA draw widens to general list

NEW DELHI: The alleged scam in allotment of DDA flats may go just beyond the 1,400 flats in the reserved category — EOW officials have stumbled upon the fact that one applicant was allotted a flat that was not even part of the draw. Senior police sources say they may now press for cancellation of the entire draw.

According to the list of successful applicants put out on the DDA website, Geeta Verma (name changed) was allotted an MIG flat in Mayur Vihar. Mayur Vihar was not on the list of locations that DDA published in its application brochure for the 2008 draw. TOI is in possession of documents which prove this mysterious allotment.

Police have found that the flat was featured in the 2004 draw but when TOI visited the flat on Sunday, it was locked and neighbours said it had never been occupied. At present market rates, the flat would be worth about Rs 45 lakh. Top police sources say, in their preliminary report to the government, they may now press for cancellation of the entire draw.

Police officers who have made preliminary inquiries about the allottee of flat number 92 — which went to application number 609219 —say she is related to a serving DDA official who is now under the scanner. "The Mayur Vihar allotment also means that at least one of the flats constructed under the 2008 scheme was not allotted. So, where did that flat go? That's a question DDA will have to answer now," said a police officer.

There was no response from DDA. "I cannot comment without checking the information with the department concerned," said director (public relations) Nemo Dhar, seeking time till Monday. Despite repeated attempts, DDA vice chairman A K Nigam was not available for comment.

Geeta, the Mayur Vihar flat allottee, had applied through a bank so her contact details were not available on the DDA website. "We are examining the matter. We have traced her address and other antecedents but are yet to speak to her. We are also in touch with the authorities and have sought clarification from them," said a senior EOW officer.

The revelation comes days after the arrest of former DDA staffer M L Gautam, who cops now believe could be the mastermind of the scam. Gautam had cornered 38 flats in the draw — a finding that raises serious doubts about the draw process itself. The final word, whoever, can come only when the software examination is completed in Hyderabad.

DDA sources claimed in big schemes when flats go unallotted - because allottees fail to make payments - these are often transferred in the name of DDA officials who then sell the flats in the next scheme. There are also rumblings that the number of flats constructed is more than that for which lots are drawn. The present draw of lots held on December 16 had 5,238 flats — 3600 flats were under the general category while others were given to reserved category.

Source: http://timesofindia.indiatimes.com/Cities/DDA_draw_scam_widens_to_general_list/articleshow/3998782.cms

Buying a home? Some things to remember

MUMBAI: With property prices and interest rates on a downward spiral, the real estate sector could witness some buying activities in the coming months. Though property consultants recommend ‘waiting’ for a few months to get better deals, some home-seekers may be tempted to kick off their house-hunting expedition soon.

While it’s better to avoid rushing into a decision, you can start looking out for a house right away. “Once the market bottoms out, home-seekers will start making a beeline for properties and loans. If you have identified your ideal home beforehand, you will be a step ahead of others. You can jump at the earliest opportunity available — in terms of price as well as interest rates,” says Ashish Shah, director, KPMG. Lack of buying activity means that it is a buyer’s market at the moment, and is likely to strengthen from hereon. “You can start quoting the price that seems reasonable to you.

Try quoting a price that is 50% less than the highest price a property in the locality commanded in the past,” suggests financial planner Kartik Jhaveri. Yet, another method of determining a property’s worth is to ascertain if it would continue to be in demand five years later. If the answer is in the affirmative, you can consider sealing the deal. Approaching a real estate agent posing as a seller could be a good idea to determine the real price of the property — chances are that the selling price would be considerably different from the purchase price.

Your heart may be set on a plush residential complex replete with state-of-the-art facilities, but that should not make you lose sight of your basic needs. For instance, if a well-equipped complex is not close to any railway station/bus stop, and you do not own a private vehicle, commuting could turn out to be a nightmare.

Hence, when you commence your house-hunting mission, it is advisable to keep a list of ‘must-have’ attributes ready. Keep an eye on time taken to commute to school and workplace. In addition to quality of construction, evaluate the existing infrastructure — roads, water and power supply, play grounds, shops catering to day-to-day needs and so on. Finding the perfect house is nearly impossible, but comparing shortlisted properties will help you zero in on the one that meets most of your requirements.

“This apart, present and future market drivers, financial ability and personal investment objectives should be borne in mind,” adds Raminder Grover, CEO, Homebay Residential, a subsidiary of property consultancy firm Jones Lang LaSalle Meghraj. A ruthless assessment of your financial situation — current as well as future — is essential; factor in possible pay cuts and job loss.

In case you are planning to sell your old flat and buy a new one, it is advisable to do so only after securing sales proceeds. While bridge loans
meant for such funding gaps are available, in the current scenario, it is better to steer clear of avoidable liabilities.

Consider old flats
If you are not fixated on ‘ultra-modern’ amenities, you can consider buying an old flat. If you locate a well-maintained house in the desired locality that boasts of robust ancillary infrastructure, there is no reason why it should not be considered. After all, the strain on your budget will be minimal. “The difference in prices of new and resale properties would depend on various factors, but would usually be a third less than that of a new property,” says Mr Grover. However, a comparison between new and old houses should also cover renovation costs the latter would necessitate. Besides, if you intend to sell it in future, the resale value would have dwindled significantly.

Check if the property is already mortgaged
Many times, builders start developing properties after mortgaging the same to institutions that extend finance to the project. “If it is mortgaged, you must insist on getting a no objection certificate (NOC) from the lender or satisfy yourself that your rights under the purchase contract are not subservient to lenders,” says Rajesh Narain Gupta, managing partner of law firm SN Gupta & Co. Moreover, you must insist on an occupation certificate, sanctioned building plan and the building completion certificate.

Get clarity on refund
While signing the contract, the buyer should enquire about the time frame within which the project will be completed and the penalty the builder would be liable to pay in the event of a delay. “The builder would be legally liable to render a refund if it can be proved that he has not met his part of the contract. Such circumstances would include unreasonable delays in completing the construction, flawed construction, flawed title or evidence of previous claims on the property or the land on which it stands,” says Mr Grover. Adds Mr Gupta: “Buyers should also enquire about the portion of advance paid that will be forfeited and the time frame within which the balance will be refunded, in case they choose to cancel the booking.”

Soruce: http://economictimes.indiatimes.com/Markets/Real_Estate/Realty_Trends/Buying_a_home_Some_things_to_remember/articleshow/msid-3980864,curpg-2.cms

Ex-officer arrested in DDA scam

NEW DELHI: A retired officer of Delhi Development Authority was on Thursday arrested after evidence cropped up against him in the DDA flat allotment fraud, while a property dealer is understood to have been detained for questioning.

M L Gautam, who retired from DDA's telephone department in 2004, was taken into custody yesterday for questioning and later was formally arrested after his involvement was established, police said.

"Gautam has been placed under arrest after evidence cropped up against him during interrogation," Joint Commissioner of Police (Crime) Amulya Patnaik said.

This is the third arrest by Economic Offences Wing (EOW) of Delhi Police's crime branch, which is investigation into a complaint that a cartel of property dealers and DDA officials conspired to rig the draw of allotment and cornered flats reserved for SC/STs.

Laxmi Narayan Meena, a sacked bank employee, and Deepak Kumar, a law graduate, were earlier arrested for allegedly collecting details of SC/ST people and submitting applications for the flats earmarked for them without their knowledge.

Suresh Kumar Meena, a property dealer, who is absconding, is understood to have been detained by investigators but there was no official confirmation on it. When asked, Patnaik refused to confirm the detention saying investigations were progressing and it was not appropriate time to comment on it.

Soruce: http://timesofindia.indiatimes.com/Cities/Ex-officer_arrested_in_DDA_scam/articleshow/3981724.cms

Unitech banks on Rs 800-cr loan rejig

NEW DELHI: Unitech, India’s second largest listed real estate company, is looking at restructuring a Rs 800-crore loan from public sector banks, as it attempts to save itself from sinking under the huge debt burden. The company is pinning its hopes on debt restructuring, asset and stake sales to private equity (PE) funds to pay a debt of Rs 2,500 crore, which is due by March ’09.

“We are in discussions with public sector banks for rescheduling our loans,” Unitech head of strategy and planning, R Nagraju told ET. Another company executive, requesting anonymity, said Unitech was seeking to restructure a loan of over Rs 800 crore.

The Reserve Bank of India (RBI) recently allowed banks to restructure loans taken for commercial real estate without turning them into non-performing assets (NPAs). The RBI directive had come following intense lobbying by realty firms, which were finding it difficult to service debt, as sales had dried up and fresh debt was not available.

Most developers are hopeful that banks will reschedule their loans. “It makes sense for banks to reschedule loans, as it will help them show lower NPAs on their books. If banks were to re-possess land, given as collateral by developers, they may get in trouble,” says a Delhi-based mid-sized developer, who didn’t want to be named.

“Land in most cases was over-valued, and prices have been falling since the loans were disbursed. Moreover, in a market, where you have no buyer for land, banks are unlikely to recover even half their cost,” the developer added. Unitech is also expected to pay Rs 200 crore by March for the land it purchased earlier. Mr Nagraju says the company need not pay land dues immediately, as it is yet to get possession of the land.

Unitech is also banking on the sale of its assets, including hotels, office building and land parcels to raise cash. While any deal on its hotel in Gurgaon or office building in New Delhi is yet to be finalised, the company has reportedly sold off a few land parcels meant for institutional use. The company recently sold one school plot for around Rs 30 crore.

Unitech is also looking at raising funds through private equity infusion at company and project levels. Unitech is holding an extraordinary general meeting (EGM) on January 19 to seek shareholder approval to raise Rs 5,000 crore by issuing fresh equity or convertible instruments. The RBI had raised the ceiling for FII holdings in Unitech to up to 100% in November 2007.

The company has been holding negotiations with multiple PE players to raise between $300-$500 million by issuing convertible debentures at the company level and around $200 million by selling stakes in mid-income housing projects.

Source: http://economictimes.indiatimes.com/Markets/Real_Estate/News_/Unitech_banks_on_Rs_800-cr_loan_rejig/articleshow/3965573.cms