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| October
2008 | Issue XII |
www.axiomestates.com |
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| INDIAN
REALTY TRENDS |
INSIDE |
| China
and India top property
investment choice
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| The
Asian real estate industry continues to look
good for long term players. US investment
banking company Merrill Lynch is the latest
in a series of companies who are announcing
investment of billions of dollars into the
Asian markets especially in China and India.
In a time when both countries are experiencing
a fall in property prices, developers are
eagerly looking for foreign partners to complete
ongoing projects. Merrill Lynch said the creation
of its Asian Real Estate Opportunity fund
is a natural procedure of business extension.
The Company has raised $2.65 billion in equities
for investment in real estate in Asia from
investors, endowments, pension funds, foundations
and private individuals in Europe, North America,
Middle East and Asia.
Other big funds raised in recent months for
investing in Asian real estate are a $3 billion
fund raised in August by LaSalle Investment
Management and a $3.9 billion . |
fund
raised by MGPA, partly owned by Macquarie
Bank Citigroup another investment giant is
raising a multibillion-dollar follow-up to
a $1.3 billion Asia fund, for investing mostly
in India and China. JPMorgan Chase too plans
to invest more than $1 billion in Asian real
estate over the next three years.
'We see exceptional opportunities in Asian
real estate over the medium and longer term,'
said Tim Grady, managing director and head
of Merrill Lynch Pacific Rim Global Commercial
Real Estate. The fund will invest in property
sectors as well as in real estate companies.
Bulk of the investments will be channelized
in China, India, Japan and South Korea, and
also South East Asia and Australia. This fund
is one of the largest to be raised for Asian
property market this year. |
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Indian
market ready to stand steady
against all odds
At the four day IVCJ conference on Real Estate
Funds and Infrastructure Investment Forum,
industry experts sounded very confident with
the Indian economy. This was in spite of the
Lehman Brothers fiasco just two days before
the conference. Anuj Puri, chairman and country
head, Jones Lang LaSelle Meghraj said in his
speech, "The perceived crisis is one
of sentiments, not of fundamentals. These
developments will not have as significant
a direct impact on the Indian real estate
sector as is currently being feared. Once
the market sentiments recover from the shock,
we expect normalcy to be re-established."
Akashdeep Jyoti, Head-Corporate & Infrastructure
Ratings, CRISIL Ltd. also echoed similar opinion
and talked about ways to minimize investment
risk by investing in private equity funds
and mutual funds created specially for real
estate investment. Many of the other industry
experts and speakers were optimistic about
the India real estate and harping on the stringent
regulatory norms that back the Indian market
and strong end user demand. The conference
was organized by Dickenson Intellinetics and
was attended by well known luminaries of the
realty market. The lead sponsors for the event
were IL&FS Investment and Management Ltd,
Times Private Treaties, Avendus. Other sponsors
were Times Property, Hiranandani Group, Unitech,
CREDAI NCR and others. |
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Siddhitech
Towers, Mumbai
One
of the most ambitious projects in the Dahisar area of Mumbai,
Siddhitech Towers is currently the tallest tower in vicinity,
with 5 levels of podium car park and residential apartments
starting from the 7th floor onwards. Apart from the spacious
2 and 3 BHK apartments on offer, the project features high-end
lifestyle amenities such as gymnasium, health club, podium
garden, home theatre room, library, etc. Apartments from the
17th floor onwards offer sea view and the project's convenient
location, just 4 kilometres from the Western Express Highway,
adds to the excitement. The project developed by Siddhitech
Developers is available at an amazing Rs.1000/sq foot less
than the neighbourhood rates. |
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Construction
has a bright future: Nayak
A
number of new big projects have been initiated in the country
by the Central as well as a few state governments and this
has left the prospects of the construction industry looking
bright. Addressing the BuildArch '08 and BuildUp '08 expo
held in Bangalore, J.P. Nayak, Chairperson, BuildArch '08
& President, Larsen & Toubro, said, "The launch
of new mega projects are clear indicators that the industry
has a bright future".
"I would in fact describe it as a second homecoming for
the civil engineering profession as they will be back to the
fore amongst all professions in the country", added Nayak.
Many constraints require addressing for taking the sector
forward.
"Mega projects mean much more than an expansion in size
and volume. For the scale has brought in sophistication,"
explained Nayak. "Mega projects have seen active involvement
of leading global and Indian consultants and contractors.
The involvement of consultants and contractors has seen introduction
of new materials, equipment, and technologies into construction
in the country. While development of new materials is going
on aggressively, it must be said the manufacturing of the
materials is constrained by large capital investments and
uncertain markets", he added. |
| SEZs
among sunshine industries: Study |
Real
estate in Jammu healthy despite turmoil
In spite of the political turmoil in
J&K and the overall slowdown in the country's real estate
sector, the real estate industry in the state is touted
to have 10% growth. Property dealer Dinesh Kumar said, "We
have around a dozen builders and three of them have already
tied up with major builders at the national level and some
more are busy negotiating JVs."
"There
were some problems last year but I see the real estate witnessing
a growth of around 10% this year," said Murthi Gupta,
head of Nidheesh Builders. "Growth of nuclear families,
continuous migrations from the countryside and sustained
flow of soldiers retiring from services will continue to
maintain the demand for vertical housing, that despite being
a new concept is gradually getting acceptability,"
he added. National level developers like Ansal, Parsvnath
and Kamdhenu have got into several joint ventures in the
J&K valley region.
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Five
sectors that have been identified as sunshine industries affecting
the growth of the real estate industry positively include
SEZs. According to a report released by Jones Lang LaSalle
Meghraj titled The Indian Industrial Real Estate Landscape,
automobile and auto components, semiconductor, telecommunications,
pharmaceuticals and drugs and logistics and warehousing industries
will help the Indian real estate sector glide past all the
bumps in the domestic or global markets. The growth in the
manufacturing sector and the development of SEZs and industrial
townships is also expected to fuel the growth of the Indian
realty industry. The report added, "The growth of the
Indian manufacturing sector through the development of SEZs,
industrial corridors and townships is expected to create a
significant impact in the real estate market." Ongoing
developments in the transport infrastructure have already
attracted investment in the logistic sector from big players
both domestic and international. |
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Decrease
in CRR to soften home loan rates |
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Red
Fort Capital to invest 3200 crore in real estate
Private equity (PE) firm Red
Fort Capital will invest INR 3,200 crore by 2009
to cash in on the liquidity crunch faced by the
Indian real estate industry. The firm will pick
up 50 per cent stake in each of the 10-12 projects
located in various cities, including Delhi NCR,
Mumbai, Bangalore, Chennai, Pune, Kolkata and Hyderabad.
These projects will comprise residential, commercial
and office spaces, budget hotels,warehousing and
logistics spaces.
"Since
the financial crisis started last month, the number
of proposals to us has increased by over 50 per
cent; some of them are well-established, big developers,"
Kuldip Chawlla, Director, Red Fort Capital said.
"As more lending curbs are in place, we have
lots of opportunities now. We are in the process
of closing a number of transactions in many cities.
We are currently talking to about 10 developers
in these cities," he added. He also said that
the company would currently invest only in affordable
housing projects. "We are looking for both
IT and non-IT office spaces. We are also planning
to invest in about 4-8 budget hotels in tier-I and
tier-II cities," he said.
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| CELEB
NEWS |
Kapil
Dev to endorse Tata Housing's project
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Tata
Housing Development Company has signed Kapil Dev as
its brand ambassador to promote its residential project
'Raisina' in Haryana. The project is being developed
in Gurgaon by Tata Housing and Raheja Developers.
The 11.73 acres high-end residential project is has
an estimated investment of about Rs 500 crore.
"Kapil is a legend and one of the greatest all-rounders
in the world and we are proud to have him endorse
our first project in North India. We are excited with
this association as Kapil embodies the spirit and
the thought behind the project," Tata Housing
Development Company Managing Director Brotin Banerjee
said.
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| Speaking
about his association, Dev said: "I am very privileged
to be associated with Raisina Residency and Tata Housing.
I am glad that they have announced this project in my
homeland Haryana and would like to lend my complete
support to their premium and luxurious offering."
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With
the RBI reducing the cash reserve ration by 150 basis points,
the banks are expected to bring down the home loan rates considerably.
The home loan rate, which journeyed from an average of 7%
to 12-13% has largely contributed to reduce demand in the
real estate industry. The increase in the home loan rate came
as a deterrent in an industry, which was already in the midst
of what can be termed a post-boom slump. PS Group Chairperson,
Mr. Pradip Kumar Chopra said, "The home loan rate in
India is among the highest in the world and we expect it to
be reduced by at least 100 basis points after the cut in CRR",
he said. Mr. Abhijit Das, Regional Executive Director, Jone
Lang LaSalle Meghraj said, "The recent move by RBI is
expected to enhance liquidity to the primary and secondary
real estate funding, while arresting further de-growth in
real estate investments in the country".
The first bank to respond to the CRR decrease is the State
Bank of India (SBI). The largest commercial bank in India,
announced plans to slice interest rates on housing loan by
around 50 basis points before Diwali. Encouraged by the Government's
initiative to pump Rs.1,00,000 crore liquidity into the country's
financial sector, SBI is believed to be settling plans to
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bring
down rates after the RBI's credit review.
However, the bank intends to make the individual borrowing
criteria tighter. Other nationalised banks like Punjab National
Bank and Union Bank of India have also brought down home loan
rates by 25-20 bps in October.
In commercial lending to realty sector is concerned though
banks may move slowly. "With frequent advisories from
the finance ministry and the RBI cautioning over exposure
to the real-estate sector, banks have been going slow on lending
to developers", said an SBI official said. Some developers
and bank officials seemed sceptical about the final outcome
of the RBI's action. "Banks are funding real estate sector
with caution only after a project is sanctioned and construction
has started. Time will say whether the cut in CRR will have
any positive impact on the sector", said Mr. Pradeep
Sureka, President, Confederation of Real Estate Developers
Association of India.
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