Indian Real Estate Sector

CalvinH · Post by **CalvinH** » 04 Aug 2010 23:30

RE is tightly controlled by the real estate agents and the financiers. RE agents owns the property for short time using financier money (for which they pay some interest rate for the duration) and sell it to next buyer which could be an REA or end user. If the next buyer is REA he doesnt have to pay the full money instead he will carry forward the financier money part (now paying the interest instead of the first REA) and pay the differential premium to the first REA. The cycle can continue indefintely in absence of real end user with each transaction increasing the value of the property. Depending on how smart the REA is he can make good amount of money with limited capital if he has good connections and is trusted by the financiers.

Its like betting on future using the financier money. Once in a while the REA will loose money and financier will be out there to get the money. You will read a small news item in local newspaper that someone was shot for something related to some property transaction.

Vipul · Post by **Vipul** » 22 Aug 2010 03:03

Realty check! FDI grows 80 times in 5 years.

Figures obtained by TOI show that in 2005, FDI in real estate was a mere Rs 171 crore. That soared to Rs 13,586 crore in 2009-10. In April and May this year, Rs 737 crore in FDI was pumped into the sector.

Singha · Post by **Singha** » 22 Aug 2010 07:51

joint development of business class hotels seems to be a hot area. the high end touristy luxury resorts probably cost much more and have a longer breakeven period, so people are focussing on business hotels.

vera_k · Post by **vera_k** » 07 Sep 2010 10:58

Proposal

Got this in email. Anyone know if the location and company are any good?

akashganga · Post by **akashganga** » 14 Sep 2010 02:15

http://financialsense.com/contributors/ ... host-towns

This articles talks of ghost towns, houses in the US and other countries. India is not mentioned. Recently I spent two months in India and saw lots of tall apartment complexes in Delhi, NOIDA, south India, etc. If this trend of building spree continues even India may face the same issues. Already I see that rents do not cover the EMI in many areas where flat prices have gone up, and interest rates are so high.

Uttam · Post by **Uttam** » 15 Sep 2010 19:33

akashganga wrote:http://financialsense.com/contributors/ ... host-towns
Recently I spent two months in India and saw lots of tall apartment complexes in Delhi, NOIDA, south India, etc. If this trend of building spree continues even India may face the same issues.

I agree that there is temporary oversupply in the housing market in India, but India is in a very different league than US and other countries. The key difference is demographics. India still has a significantly large population that lives in rural areas, and no matter what some utopians believe about welfare of rural masses in rural India, there is no way India can provide services to this large section of society unless we urbanize rapidly. This will create a huge demand for urban houses. In addition, India has much younger population that needs jobs and after jobs they need good houses to live in. Again these tall apartment complexes is the most economic way of achieving that.

I remember growing up in early 90's and seeing a lot of these tall apartments sitting empty on the road that connects Ghaziabad to Delhi (i do not remember the names of these complexes, some of them may have been Kaushambi, Green Valley, etc.). And I heard similar anxious remarks about them. Now these areas are busting at their seems.

SwamyG · Post by **SwamyG** » 15 Sep 2010 19:48

vera_k wrote:Proposal

Got this in email. Anyone know if the location and company are any good?

Looks like it must be less than 10-15 Kms from Gachibowli. So it should be okay.

RamaY · Post by **RamaY** » 16 Sep 2010 08:12

^ I saw these buildings couple of weeks ago on the way. Didn't go inside the venture. Construction is ~60-70% done. Less than 10KM from high-tech city on the way to Kukatpally. Not a bad deel. I heard that you should start at 50% of asking price and then go up. If you bargain well you will get good prices in <3500/SqFt range.

vera_k · Post by **vera_k** » 16 Sep 2010 08:28

Sounds like getting in at 1900/SqFt is a good deal.

krisna · Post by **krisna** » 16 Sep 2010 23:49

India 5th best country for real estate investment: Report

India is ranked as the fifth most attractive destination for future real estate investments in a list topped by China, according to a latest report of FCCI and Ernst and Young.
In the list of top nine attractive destination for real estate investments, China is followed by the US, UK and Singapore.

India ranks fifth on the overall index, as it scores better on the country economy development index and the real estate market index, but fairly low on the regulatory index," the report released here said.
As per the report, there is no single clearance system for approval of investment in real estate sector in India. "In addition, the approval system is not time-bound and take up to two years," it said.

However, India has the potential to even overtake the Chinese attractiveness, "if government allows real estate investment trust (REIT) and real estate mutual funds (REMF)," said Dean Hodcroft, E&Y's Head of Real Estate for India, Europe, Middle East and Africa here.

"However, this source of finance has not seen a similar response in India primarily due to policy issues and lack of clarity on government's intention to promote such alternative source of funding," it noted.

India has a strong macro economic story which needs to be supported by some regulatory changes like availability of liquid vehicle for investment such REMFs and REITs," he added.
Hodcroft said as much as $200 billion private equity fund is waiting to be invested globally and India has a chance to get more than its fair share.

krisna · Post by **krisna** » 17 Sep 2010 00:21

India may face shortage of 26 mn houses by 2012

India will face shortage of over 26 million houses by 2012, which would lead to spurt in housing prices as demand-supply gap widens amid rising purchasing power of the middle class people, a consultancy firm has said.

Demand for residential property is rising sharply because of growing young working population, increasing urbanisation, declining household size resulting in more nuclear families with growing household income and improved availability of loans.

Comparing the investment climates in India and China, Hodcroft said: "While it is easy for investors to get into China, it is extremely difficult to get out. In contrast, it took time for foreign companies to enter India, but exiting is comparatively much easier."
He noted that India was lower ranked in areas that were easy to fix.

Vipul · Post by **Vipul** » 19 Sep 2010 19:23

First duplex in tallest tower goes for 70 cr.

Sometime in 2014, when World One at Lower Parel will be ready for possession, it will be India’s tallest residential tower, rising to 450 metres with 117 storeys. But the moneybags are no longer willing to wait. A deal for a duplex, one of city’s biggest residential transactions, has been sealed for Rs 70 crore.

The tower is coming up on the 17-acre Srinivas Mills compound. Of the 300 flats, eight apartments are dubbed World Mansions, which are nothing short of castles in air. These apartments will occupy the top eight levels of the tower, with one apartment occupying two floors.

The duplex in question is part of the World Mansions, and is located on a floor at least 400 metres from the ground level. It is spread over 10,000 sq ft and divided into a hall, five bedrooms, a modular kitchen, swimming pool and a sun deck. Luxury, anyone?

The developers, Lodha Group, are tight-lipped. The group Managing Director, Abhishek Lodha, said, “A lot of people have shown interest in World Mansions, but no transactions have been finalised.” Realty sources, however, said a private company top brass bought the duplex a few weeks ago.

Real estate experts say it’s a one-off case. Pawan Swamy, managing director, Jones Lang LaSalle Meghraj, a leading international property consultants, said, “It is a one-off deal, but is certainly improving the market sentiment. One reason is, the stock market is doing well, and a lot of money seems to be getting pumped into realty market.”

Swamy said the property of this profile is limited. “Factors like height, project profile, etc work as add-ons,” he said.

In terms of rate per sq ft, cost of an apartment at World One works out to anywhere between Rs 65,000 and Rs 70,000. Swamy said, “It is unfair to break cost down to per sq ft rates for such properties. It probably includes the floor rise, car parking and lot of other elements.”

Analysts said it was difficult to determine whether this is the most expensive residential transaction ever, as there are apartments on Napean Sea Road and Tardeo that are priced between Rs 75 crore and Rs 100 crore

. “But we are talking about the asking price. The actual deals are closely-guarded,” an analyst said.

Bade · Post by **Bade** » 19 Sep 2010 19:27

yawn... tell us something real SDREs can buy and invest.

These one off deals for the super rich don't make a real estate thread.

RamaY · Post by **RamaY** » 19 Sep 2010 19:35

vera_k wrote:Sounds like getting in at 1900/SqFt is a good deal.

Tell me if you get one in that range. I am shopping for one...

Singha · Post by **Singha** » 20 Sep 2010 08:48

the ITC group seems to have considerable land holdings from decades ago in prime locations. in blr apart from the new 5* itc windsor manor hotel near vittal mallya road, they seem to have build a entire lowrise apt complex for 'top officials' using nitesh estates per a ad today. and dont they have a officers colony near vasant kunj on the mehrauli road ? or is it HLL?

Vipul · Post by **Vipul** » 20 Sep 2010 22:43

ITC and HLL also have a lot of Flats/Apartments in the Posh areas in Mumbai.They keep unloading these at good prices and buy other real estate in the upcoming commercial/residential areas.

manish · Post by **manish** » 04 Oct 2010 13:37

Singha wrote:the ITC group seems to have considerable land holdings from decades ago in prime locations. in blr apart from the new 5* itc windsor manor hotel near vittal mallya road, they seem to have build a entire lowrise apt complex for 'top officials' using nitesh estates per a ad today. and dont they have a officers colony near vasant kunj on the mehrauli road ? or is it HLL?

Although I am not 100% (or should I say 400%) sure, I think ITC also owns some sort of a villa/bungalow on Old Madras Road (towards Richmond Road, on the right) in Bangalore, just after Trinity Circle.

Like Vipul says, the corporates keep getting into deals on these things to generate loads of cash whenever needed. IIRC there were rumours during the Lehman crash that Citibank would sell off its BKC office for 800cr or so. Unitech sold off its property in Saket, New Delhi for around 450cr during the same period and used the funds (along with the infusion into Uninor) to stay afloat during the darkest days of 2008-09.

The building was supposed to house their new HQ apparently.

rohitvats · Post by **rohitvats** » 04 Oct 2010 13:48

HLL has disposed most of their RE assets (mainly apartments) in posh locations in Mumbai as well as couple of other cities as well. They have also offloaded their HQ in Churchgate in Mumbai. Coming up with a large SE Asia HQ in Andheri(E). They did rake in lot of cash during bull run in RE Sector.

Lot of manufacturing companies have land in good areas - these were earlier on the outskirts but are now within city limits. Good value to be unlocked.

Vipul · Post by **Vipul** » 04 Oct 2010 22:36

Many mid sized and obscure companies in Mumbai especially in the Thane and LBS marg areas have sold of their companies (land holdings of 4-20 acres) and raked in amounts between 60-400 crores.

Rahul Mehta · Post by **Rahul Mehta** » 27 Oct 2010 06:53

Income Tax act has clauses 23 to 26, which in effect imply that if you have N empty flats, then one flat is exempt as self occupied property . One more flat can be taken out if you have business of your own. Now on rest flats, you must show "deemed rent" as income and pay tax on that income.

AFAIK, income tax dept is not enforcing this law. Otherwise, real estate prices may start crashing.

shyam · Post by **shyam** » 03 Nov 2010 12:25

TIFWIW

Good news! Home prices may fall soon

Rahul Mehta · Post by **Rahul Mehta** » 03 Nov 2010 12:59

shyam wrote:TIFWIW

Good news! Home prices may fall soon

wot is TIFWIW

Manu · Post by **Manu** » 03 Nov 2010 13:56

wot=what
TIFWIW =take it for what it's worth

chackojoseph · Post by **chackojoseph** » 01 Apr 2011 15:46

Real Estate Optimistic on Gudi Padwa

Gaurav_S · Post by **Gaurav_S** » 06 Apr 2011 16:11

Many duped with real estate dreams

link

AHMEDABAD: While the jewellers fell for dream of making big money, commoners were duped by promises of a cheap piece of land in the era of real estate boom. And, many lost crores of rupees. Before Mukesh Jain, 25, a resident of Rajasthan, was arrested by Navrangpura police station officials in October 2010, he had managed to hoodwink many and make more than Rs 2 crore by selling fake housing dreams to 80 naive investors close to the Tata's Nano plant in Sanand.

Jain opened up two swanky offices in Navrangpura and Satellite and with the help of an established name, put on sale a scheme of 600 plots on Sanand-Nal Sarovar Road, where the investors can get one plot free on the purchase of a plot. It was a huge hit with the investors and people, ranging from government officers to senior citizens, lost money.

"Jain even used to take the investors to a plot to show them the scheme. Those who went a step further and asked for the legal documents were refunded quickly. After a successful stint in the city, his next target was Surat realty market," said Navrangpura police station sub-inspector B S Jadeja. Then there is the case of Ghanshyam Patadiya who was arrested by the city crime branch officials in October 2010. Patadiya, a builder who floated Purushottam Dham Flats and Purushottam Dham Bngalows near Thaltej, got a number of buyers. And, he sold one flat to multiple buyers, complete with 'legal' documents. However, when the buyers realised the fraud, they busted his racket.

"There are at least four complaints against Patadiya, out of which three are being investigated by the crime branch and one by Vastrapur police station officials. The total amount of fraud can well be over Rs 5 crore," said a crime branch official.

If you think its too good to be true..then its not true.

Maram · Post by **Maram** » 06 Apr 2011 18:16

Any idea as to how property prices are in guntur- vijayawada region post Telengana situation? any educated guesses?

RamaY · Post by **RamaY** » 07 Apr 2011 23:10

Any idea on going price of Apt per Sq.FT?

ShyamSP · Post by **ShyamSP** » 08 Apr 2011 00:52

Maram wrote:Any idea as to how property prices are in guntur- vijayawada region post Telengana situation? any educated guesses?

Rates from Tirupati to Visakapatnam have gone up very well for last two years. Last year registrations fell to 70% in Hyderabad and surroundings where as in Tirupati-Visaka they are up by average 150%. Registrations numbers (Government data) are indication of strength of buying.

From 2007 to 2010, Hyderabad is flat or up by 20% (mostly due to inflation) and Vijayawada is up 250%. In Nellore district, lands and plots are up 60% - 300% since 2009. Suggestion I got is to buy in Guntur side of Guntur-Vijayawada region as it has more upside potential.

abhischekcc · Post by **abhischekcc** » 21 Apr 2011 09:46

Rohitvats,

What is the likely impact of the RBI restriction on teaser rates, if any?

Ameet · Post by **Ameet** » 22 Apr 2011 23:24

India Builders Face ‘Large-Scale Distress’ on Debt Trap, Knight Frank Says

http://www.bloomberg.com/news/2011-04-2 ... -says.html

India’s real estate industry is expected to face “large-scale distress” amid rising borrowing costs and shrinking access to credit that may force developers into fire sales for assets, according to Knight Frank LLP.

Indian developers will have to repay 1.8 trillion rupees ($40.8 billion) of debt to state-run banks, private equity funds and other lenders over the next two to three years, said Amit Goenka, national director of capital transactions at the Indian unit of Knight Frank. Their cash flow may also be under pressure as creditors seek earlier repayments, he said.

“I see large-scale distress coming up,” Goenka said in an interview today. “Right now it’s more of financial jugglery which is keeping builders alive for a few months before everything starts to cave in.”

Many property companies raised capital at interest rates of between 21 percent and 25 percent from finance companies, while sales volumes dropped by about 50 percent, Sanjay Dutt, chief executive officer of business at the Indian unit of Chicago- based Jones Lang LaSalle Inc., said last month.

Home inventory levels have climbed to 28 months in Mumbai, the highest among the six cities tracked by Liases Foras, a real estate research company whose clients include Housing Development Finance Corp., India’s largest mortgage lender.

Developers need to repay 220 billion rupees and some have defaulted, Goenka said, without naming any company. “There will be continued defaults this year.”

Vasu · Post by **Vasu** » 15 Jun 2011 09:11

Good Morning, all ye office warriors (and others).

news from Panvel in Navi Mumbai (where the new Mumbai airport is to come up).

1,250-acre township planned in Panvel

In a defining real estate development arrangement Bahrain-based investment bank Gulf Finance House (GFH) has partnered with Mumbai-based realtor The Wadhwa Group to develop an integrated township at Panvel.

A privately held real estate developer, Wadhwa Group will develop the various verticals in the project which is spread across 1,250 acres.

The integrated township is part of a huge economic development zone (EDZ) planned by GFH, the land for which was acquired over the last 4-5 years. The land parcel is about 7 kilometers from the new international airport earlier announced in Navi Mumbai.

Spread over an area in excess of 1,700 acres at Panvel, the project is touted to be the country’s largest, foreign direct investment (FDI)-driven integrated development.

The project comprises three distinct components, namely Energy City, IT & Telecom City and Entertainment. On completion, the project will house around 1,40,000 residents and is expected to generate direct employment to over 2,50,000 people and indirect employment to 750,000 people.

Apparently before signing up with this company, GFH had tied up with the state government to set up energy and telecom city projects, but had to be shelved due to bad market conditions.

And where there's real estate, there's bent rules. Reported in the Indian Express:

Real estate analysts said current market regulations don’t allow the bank to exit the deal by selling the land outright to the developer. The land was earlier meant to be developed into a global logistic park by Mumbai-based Valuable group along with GFH.

Last year, Newsline had reported about how the state Urban Development Department had converted 115 hectares of green zone 2 in Raigad district to urbanisable zone to make way for the project.

According to the rules, only agriculture and related activities are permitted in such zones that are mostly in the command areas of irrigation or catchment areas of water resources.

Another 74 hectares falling in the agricultural zone was converted into residential zone for the project.

Singha · Post by **Singha** » 15 Jun 2011 09:45

the big developers who have 100s of crores of loans from the big banks (incl PSU banks) will survive. if they are allowed to go under, so will the pvt banks and the brains trusts who authorized the loans which are now NPAs on paper. the economic and political fallout is hardly something the UPA will want on its hands with general elections approaching.

its the same old pakistan/US-eco story - too big to be allowed to fail. everyone has a vested interest in keeping a good face on things.

if a entity like air india can be kept on life support with billion $ bailouts annually, I dont see why the real economy of the construction sector should get anything less.

Sachin · Post by **Sachin** » 15 Jun 2011 17:58

Mean while in Kerala. Two real estate developers are now on the radars of the police. This is more like a case of cheating or swindling people's money. The realtors had a heavy doze of advertisement campaigns, got lot of people to give them their hard earned money. And even after waiting for ages, there is no flat or money. Apple-a-day realtors and Horizon are the realtors now getting chased by the police. The last I heard all the key people in both these firms are hiding.

Aditya_V · Post by **Aditya_V** » 15 Jun 2011 18:18

vera_k wrote:Proposal

Got this in email. Anyone know if the location and company are any good?

Location seems pretty close Miapur Bast stand on Mumbai Highway, it gets pretty crowded but a lot of It-Vity crowd in Hi Tech city stay there and further down in Bachipally, but Hyderabad real estate is really down with strikes every day and state administration being what it is.

Vasu · Post by **Vasu** » 16 Jun 2011 18:17

Sachin wrote:Mean while in Kerala. Two real estate developers are now on the radars of the police. This is more like a case of cheating or swindling people's money. The realtors had a heavy doze of advertisement campaigns, got lot of people to give them their hard earned money. And even after waiting for ages, there is no flat or money. Apple-a-day realtors and Horizon are the realtors now getting chased by the police. The last I heard all the key people in both these firms are hiding.

The government of India's apparently been debating a new Real Estate (Regulation & Development) Act that is supposed to have, among other things, strong clauses to protect people against fly by night real estate companies. I wonder what's happening with that act?

Manish_Sharma · Post by **Manish_Sharma** » 26 Jul 2011 00:29

Folks I booked a plot in Bangalore with Maxworth Realty in last Feb'. Its near place called Rajangunte, Suradenpura, Hessargatta. The plot they had shown me was opposite some Pharmaceutical College (forgot its name). Plot area is 133 sq.yards for 16 lacs.

http://www.maxworthrealty.com/Max_Garde ... ities.html

http://www.maxworthrealty.com/Max_Garde ... _plan.html

Anybody has idea how its going to fair in next 1 to 1.5 years?

Vipul · Post by **Vipul** » 13 Aug 2011 21:11

Realty Bites: House in Mumbai slums for Rs 40 lakh.

krisna · Post by **krisna** » 18 Aug 2011 00:13

Verdict may open Pandora's box for real estate sector

The Rs 630-crore penalty imposed by the Competition Commission of India (CCI) on DLF Ltd may open a Pandora’s Box for the real estate industry, according to analysts.

CCI imposed the penalty on DLF, India’s largest real estate company, for unfair trade practices, abuse of market dominance and disregard to consumer rights. According to the complainant, the Belaire project in Gurgaon was to be completed by 2009. But it has not been handed over yet. Besides, there were structural changes in the building without informing the buyers, according to the complaint.

How will they take money from DLF with Robert Vadra, having a large stake in DLF.

Gaurav_S · Post by **Gaurav_S** » 04 Oct 2011 11:07

Mahindra plans affordable houses up to Rs 10 lakh

ManjaM · Post by **ManjaM** » 04 Oct 2011 21:52

^^ He is talking of building a 500 sft apartment for 5 lakhs. For that he will have to have construction costs of around 40-50k per 100sft to make any money off the whole project. Current construction costs per 100sft is 1.3-1.6 lakhs. Any real estate/ construction specialists here who can verify if this is even possible in current rates?