Real estate developer TDI Infrastructure has launched Tuscan City in TDI City, Kundli. Tuscan City is spread over 40 acres of land, situated next to NH-1. The township will offer plots in sizes varying from 250 to 500 sq. yds, row houses, independent floors (2 and 3 BHK) and villas. 80% of the area in Tuscan City would be dedicated to the greens and the township will have classic fountains, water bodies, cobbled pavements and central piazzas.

Courtesy:- ET dt:- 24-05-2009

Parsvnath Developers will invest Rs 135 crore to develop an IT Park in Gurgaon and is eyeing a sales realisation of Rs 350-370 crore from the project. “The company is already in possession of the land and will invest Rs 135 crore in construction of the IT Park. The expected realisation from the project is approximately Rs 350-370 crore,” Parsvnath said. The IT Park will have an office space of 7 lakh sq ft. The project is located at Gurgaon-Sohna road and would be completed within three years from the start of construction. “The government recently has been taking both fiscal and monetary measures to revive all the sectors. I am confident that IT/ITeS segment will regain old glory and we'll witness tremendous response from our prospective customers for IT Park,” Parsvnath chairman Pradeep Jain said. “Recognising strong growth potential of the IT/ITeS sector, we have announced its maiden foray in the IT Park segment through the launch of Technica Cyber Park,” he added.

Courtesy:- ET dt:- 24-05-2009

Hopes are high that the deeply troubled US housing sector has finally seen the worst of the recession and financial crisis. But new data on May 19 raised questions about that optimism. US housing starts hit a record low, dropping 12.8% in April, to an annual pace of 458,000. Housing starts are down 79.8% from their peak in January 2006. A sharp drop in construction of multifamily dwellings drove the reading, with single-family starts actually up 2.8%.

However, the overall record low disappointed economists and investors, who had seen signs in recent months that housing might have hit bottom. With housing starts at a record low, “it’s early to pop the cork,” says Michael R Englund, chief economist for Action Economics. Yet, Englund and other economists told BusinessWeek, the data don’t contradict hopes that housing might be near a bottom.

IN THE PROCESS OF BOTTOMING OUT

A drop in construction activity is certainly troubling for the overall economy and for unemployment trends. But a drop in housing starts might actually be good news for the sector’s eventual rebound, says Gary Wolfer, chief economist at Univest Wealth Management.

One of the housing market’s main problems is a glut of supply — too many homes for sale. Idle homebuilders mean fewer new homes coming onto the market, thus hastening a bottom for the market. “We’re getting there in a brutal fashion,” Wolfer says, but at least we’re “in the process of bottoming out.”

Keith Hembre, chief economist at First American Funds, worries that further home foreclosures could continue to drive the proliferation of “for sale” signs across the country.

However, he does see reasons to hope for a revival in demand. The government is helping: Low interest rates make mortgages more easily affordable (if you can qualify for one) and the federal government is providing an $8,000 tax credit in 2009 for first-time home buyers. “The signs are there that demand has generally hit bottom,” Hembre says — and it may even be improving somewhat.

A RECOVERY START FOR HOMEBUILDERS?

First-quarter earnings reports from homebuilders have bolstered the case for guarded optimism.

 “For the homebuilding industry, we think that probably the worst is over,” says Kenneth Leon, a Standard & Poor’s equity analyst who covers the homebuilders. Key metrics seemed to improve in the homebuilders’ first-quarter earnings reports, Leon says, including net orders, backlog, and the pace of homebuilder write-offs.Still, industry players continue to post quarterly losses.

Investors had a mixed reaction to the April housing starts data. Though the record decline was cited by some market observers as a troubling sign for the overall economy, shares of the largest homebuilders were mixed.

On May 19, Pulte Homes dropped 2.6%, to 10.03, but Toll Brothers slipped just 0.7%, to 19.51, and D R Horton gained 1.8%, to 9.96.

HOMEBUILDERS: NOT OUT OF THE WOODS   

After two very difficult years, homebuilders are trading solidly higher so far this year. The S&P Homebuilding index rose almost 19% in the first four months of 2009.

S&P’s Leon doesn’t expect “a full sustained recovery” for the housing sector until the end of 2010. And several factors could derail or delay the housing market’s recovery, experts say.

Fresh foreclosures could flood the market with supply, even as homebuilders cancel new projects. Credit troubles could make it hard for buyers to get mortgages. Right now, “affordability is very attractive—if you can qualify and get a mortgage,” Leon says.

Even if activity returns to the housing sector, home prices could continue to fall for some time.

 “While we are well into the housing bottoming process, we are a long way from recovery,” Stifel Nicolaus analyst Michael R Widner wrote on May 19. “Our math suggests we have a couple years to go before excess inventory clears and paves the way for significant housing sector improvement,” he added. —BusinessWeek

Courtesy:- ET dt:- 24-05-2009

Things have started to look up real estate developers who for the last few months were reeling under the double whammy of poor buyer demand and low availability of funds.

 In a month’s time, three major developers including DLF, Unitech and India bulls Real Estate have raised money through the financial market indicating the beginning of a revival of investor confidence. They are using the money to restructure business, cut debt and expand projects.

 “Availability of credit, for both developers and buyers, and an improvement in demand are essential for a complete recovery,” Anshuman Magazine, managing director, South Asia, at real estate consulting firm CB Richard Ellis.

Indiabullls this week announced an institutional placement of shares to raise Rs. 2,656 crore.“India bulls is a debt-free company and we will use the funds to fund our real estate and power business,” Gagan Banga, director, India bulls told Hindustan Times.

Last month, Unitech raised Rs. 1,621 crore through a qualified institutional placement (QIP) which led to the promoters’ stake falling to 51 per cent. They now plan to inject Rs 1,000 crore through convertible warrants to take it to 61 per cent, informed sources said.

Last week, DLF’s promoters diluted 10 per cent stakes to aid promoter-controlled leasing affiliate DLF Assets Limited (DAL).  “We are pleased to follow through our commitments with this game changing transaction” Rajiv Singh, vice chairman, DLF had said.

Courtesy:- HT dt:- 22-05-2009

 Delhi-Based Industrialist Buys 2-L Sq Ft Building That Was To House Debt-Laden Realtor’s Corporate Office

India’s second-largest real estate firm, Unitech, has sold its office building located in New Delhi’s plush Saket area for around Rs 500 crore to an unidentified property investor, after more than six months of negotiations with multiple prospective buyers. Unitech MD Sanjay Chandra said the deal was sealed for more than Rs 500 crore, but didn’t disclose the buyer’s name. However, people familiar with the negotiations pegged the deal at Rs 425-450 crore and only identified the buyer as a Delhi-based industrialist.

The buyer plans to let out space in the 2-lakh sq ft building, which is ready and was earlier meant to house Unitech’s corporate office, to other companies. Unitech’s present corporate office is located in Gurgaon. Unitech had been expecting a price of more than Rs 500 crore for the building and had earlier been in talks with HDFC to sell it. The financial institution has in the past denied holding talks with Unitech on this, but had said the Saket property was mortgaged with it as collateral for a loan worth Rs 30 crore given to the real estate developer. A severe downturn in the real estate sector and an extraordinary level of debt that Unitech had piled on its balance sheet forced the company to put several of its assets on the block, including Saket office building and a hotel in Gurgaon. The downturn, which saw most home buyers and corporates stay away from the property market, made it difficult for Unitech to sell its properties.

After many months of negotiations with several buyers, the company sold its hotel in Gurgaon for Rs 231 crore to a car dealer Roop Madan early this year. Unitech had a total debt of Rs 10,000 crore as of December-end 2008 and found it difficult to keep pace with its repayment schedule. Loans due to several banks and mutual funds were restructured, after the Reserve Bank of India allowed restructuring of commercial real estate loans. As part of its deleveraging process, Unitech also went in for a qualified institutional placement (QIP) to raise around Rs 1,600 crore last month. The company has now announced that it aims to raise further equity in the company to improve its debt-to-equity ratio, which helps in bringing down the cost of funds for the company. Unitech will also issue warrants to the promoters, who plan to pump in Rs 1,000 crore in Unitech to raise their stake, said a company executive on condition of anonymity. The holding of the Chandra family has dropped from 64% to 51% post-QIP as fresh shares were issued to outside investors.

Courtesy:- ET dt:- 21-05-2009

Located In Saket, New Delhi, The Property’s Sale Is Part of a Plan to Sell Assets and Cut Debt

Unitech, the country’s second-largest real estate developer, said it sold an office space in Saket, New Delhi for Rs 500 crore as part of a plan to raise money from asset sales to repay debt. The sold property, which was originally built as the company's corporate office, has gone to a wealthy individual. The entire money is expected to be received by June, an informed source said. The realtor had been negotiating the office property's sale for a few months and had finally closed the deal, the source said. A company spokesperson declined to comment. This is the second such sale by the Sanjay Chandra-managed company in the past two months. Unitech raised Rs 231 crore (Rs 2.31 billion) in April from the sale of its 199-room Marriott Courtyard hotel in Gurgaon for Rs 231 crore to a Delhi-based auto dealer, Roop Madan.

Unitech, DLF and other real estate developers are stepping up asset sales to cut debt and generate cash to complete unfinished projects. Realtors relied heavily on borrowed funds to spur expansion but were caught in a trap after a global slowdown curbed demand for office, shop and residential properties.

Unitech has about Rs 7,800 crore (Rs 78 billion) of debt on its books and plans to cut this by at least Rs 1,000 crore (Rs 10 billion) by the end of this fiscal year. Most of the repayment is expected to come from additional capital infusion into the company by promoters and by asset sales.

The company aims to raise Rs 1,600 crore (Rs 16 billion) in the fiscal year ending March 31 from the sale of non-core assets, including the Saket office complex and four additional hotel properties located in Noida, Kolkata and Gurgaon. The developer had earlier indicated plans to raise at least Rs 900 crore (Rs 9 billion) by June from such asset sales.

"The cash flow from asset sales will put the company's financial condition back on track," said a Mumbai-based analyst.

Unitech's promoters raised Rs 1,625 crore (Rs 16.25 billion) in April from the sale of shares to qualified institutional investors. The company's board on day approved a plan to allow the promoters to infuse an additional Rs 1,000 crore (Rs 10 billion) through issue of warrants that are convertible into shares at a later date.

Courtesy:- BS dt:- 21-05-2009

Even though remittance from NRI’s has been increasing, the real estate sector has received a very small pie of it because many feel that Indian real estate is overvalued

Last year, after RBI spelt out clear norms for NRIs to invest in property, and with NRIs holding Indian passport no longer requiring prior permission before investing, there was a spurt in NRI investment in Indian realty.

According to Omaxe's Rohtas Goel, "The policies set out by the government regarding property investment and repatriation, has made investments in India more favorable. NRIs can acquire residential/ immovable property in India, rent it out, transfer or sell it, if required. However, the regulations do not permit the NRIs and PIOs to acquire property like agricultural land, plantations and farmhouses. Moreover, GOI is allowing 100% repatriation, so NRI's can now also take out the rental income and capital investment in the property outside India, subject to the foreign exchange regulations."

One noticed that NRIs, including young professionals, technology workers and domain-specific consultants invested in property back home, both in the semi-premium and premium categories. One, they wanted to have a house of their own in their home country if they decided to return and the house covered both investment as well security factors, and two, this could be used as their holiday home, which stayed fully furnished and was used for a few weeks annually.

However, with the market downturn, the scenario changed complete ly. Even though there has been increasing remittance, to the tune of $30 billion now, and it topped list of countries in the world in 2007 (according to World Bank study) where expatriates remitted money to their home country, real estate has received a small pie of the total investment.

According to NRI Prashant Tandon, who is wary of parking his funds in real estate, "Indian real estate was overvalued all along, and now it is closer to realistic levels. I do not think I want to put money on a risky asset class. I would much rather put it in some safer instruments, eg fixed deposits, bonds or bluechip companies."

However, developers say NRIs are investing more in residential projects, compared to retail or office real estate, after the recent home loan interest rate cuts and price cut by developers. The criteria for investment for NRI community in Indian real estate have surely changed. Prashant sums it up, "We evaluate (investments) based on certain parameters - is it close to the bottom and will it rebound anytime soon?"

Courtesy:- Et dt:- 15-05-09

Realty major Indiabulls Real Estate on Monday informed BSE that it would raise $600 million (Rs 2,820 crore) through qualified institutional placement (QIP) of securities. This is the first time that a company has taken advantage of the surge in the stock markets after the general elections.

According to the company, the decision was taken by the board of directors on Monday. The company also informed the BSE that it has decided to make an issuance of equity shares of a face value of Rs 2 to qualified institutional buyers (QIBs). The QIP proceeds could be utilised for funding the company’s pending projects.

Courtesy:- Et dt:- 19-05-2009

Cash-Strapped realtor DLF is selling its 66% stake in Hindoostan Spinning and Weaving Mill in central Mumbai to a Chennai-based serial entrepreneur for Rs 310 crore.

India’s largest real estate company had acquired the mill land in 2007 jointly with Mumbai-based Akruti Builders for real estate development.

DLF vice-chairman Rajiv Singh confirmed the development. “The deal is happening, but we would not be able to share any further detail at this point of time. We can only say that the buyer is a corporate buyer. We will announce other details later,” he said.

Market sources, however, confirmed that the buyer is a Chennai-based serial entrepreneur presently settled outside India. The entrepreneur is a value investor who is currently negotiating several big-ticket deals. He is also making an attempt to reenter the Indian telecom sector, which he

had quit some years ago.

A senior DLF executive said the deal has already been struck. Only some formalities are remaining to complete the sale, he said, requesting anonymity. While DLF is selling its share of 5 acres, its partner Akruti is holding on to its share of 3 acres and might sell it to another buyer. Vimal Shah, managing director, Akruti City, declined to comment on the development.

Akruti is looking at a higher valuation for the property, said a person privy to the development. DLF is also pursuing Akruti to sell its stake to the same buyer, he said, adding Akruti Builders is also in need of cash and may finalise a deal soon.

 “The valuation for the total 8 acres is around Rs 450 crore. But Mr Shah should be able to share his side of the story,” said the DLF executive. He denied that the deal is a distress sale.

Hindoostan Spinning and Weaving Mills, the defunct private mill located near the Siddhivinayak temple at Prabhadevi, was bought by the present owners for Rs 350 crore in 2007. It is not yet clear how DLF would use the proceeds from the deal.

Courtesy:- ET dt:- 14-05-09

The current slowdown has forced developers to come up with innovative schemes to woo buyers. While some are offering flats on rent that can be bought later, others are paying initial EMIs. And these are getting good response too. Neha Dewan finds out

Call them desperate measures or innovative schemes. The troubled times in the real estate sector have created a window of opportunity for buyers. In a bid to perk up demand and win over prospective clients, builders are introducing buyer-friendly financial schemes. A last ditch effort to give a boost to the residential segment, these schemes are receiving a good response from customers.

In Pune, a few local builders have recently introduced financial schemes which are representative of an individualistic real estate market, according to global real estate consultancy Jones Lang LaSalle Meghraj (JLLM). These are ‘rent now, buy later’, or ‘book now and pay back the difference if the prices fall’.

A prominent development house — Mont Avert Homes — offers potential buyers the option of renting a 2BHK at a minimum rent of Rs 12,000 per month and with a deposit of Rs 1 lakh, and buying the rented flat at a later date. The payments made, should purchase of the flat ensue, are then treated as down payments. A lock-in period of three years is also part of the agreement. This allows occupants to either continue on a rental basis or to buy a flat they have grown familiar with at a date when the rates would conceivably have sunk to more rational levels.

Another Pune-based developer, Rohan Builders, on the other hand, takes a down payment on an under-construction flat in any of six ongoing projects and offers to pay back the difference in the current and future market rates if the market corrects further at a later stage.

But it is not just Pune that is witness to such schemes. Other cities are also seeing a flurry of activity as far as innovative ideas are concerned. Delhi-based developer TDI, for instance, is currently offering two schemes — assured rent for 22 months post construction and gross adjustment in the construction expense. Various options under both the schemes are offered to customers so as to fit their pockets. The construction time spans between 10 and 12 months in either of the schemes. The plot owner will make the entire payment in four equal installments starting from the day of registration.

Some such as Omaxe are incentivising buyers by offering a 5% discount to all existing customers making timely payment for the project.

So are these schemes helping lift the current state of the real estate market? Says Pawan Swamy, MD, western India, JLLM, “The response has been varied, with the final asking price, location and exact specifications of the properties being the main criteria. Where the location and client catchments for a project is good, such financial schemes have proved to be real market movers and have made a difference of up to 25% in a project’s selling potential.”

Paresh Chawla, associate director, Real Estate Practice, Ernst & Young feels that deals are becoming more attractive now as the days of irrational exuberance are over. “The key difference is that today it is a buyers’ market, against a speculative market earlier. To sustain themselves, developers will have to necessarily be innovative and price sensitive going forward.”

Developers say customers have been responding to such schemes especially in these times. R K Mittal, CMD, CHD Developers, says they have noticed a surge of over 50% in enquiries whenever any such scheme is launched. “During the validity of any of our schemes, we are able to sell a majority of properties in a project. The percentage is as high as 80% in such cases. Such schemes should be offered as they can help the buyer in closing the deal.” The developer introduced a special scheme last month, called the double benefit plan, under which, prospective customers can avail themselves of a waive off on the external and infrastructure development charges on buying plots in Chandigarh city and Karnal, which added up to a massive discount of Rs 13,20,000.

Agrees Vijay Jindal, CMD, SVP Builders. He feels that the present scenario has forced developers to come up with lucrative schemes for buyers. “All these schemes are aimed at making the buyer come forward. Customers have now started asking about special schemes as that keeps them interested in the market. The response for our scheme too has been quite positive.” The realtor is offering a special time linked plan for projects in Mohan Nagar, Ghaziabad — Gulmohur Greens. Under this plan, the customer has to initially pay 35% of the amount — 10% down payment and the rest 25 % financed wherein the EMI will be paid by SVP till the time of possession. The customer will pay another 30% in the 11th-12th month, which will also be financed and the developer will pay the EMI till possession. The remaining 35% will be taken from the customer at the time of possession.

Such schemes and offers have gained momentum as a marketing tool during the last few months, due to the economic slump. How profitable then is it for builders to offer these schemes right now, considering that their bottom lines have been hit? Says Mr Swamy of JLLM, “The question is not of profitability but of loss-cutting. While the primary objective is always to turn a profit, this consideration takes a back-seat in the current slowdown scenario, when projects are not moving fast enough on the market to enable builders to meet their own financial obligations. Whether or not the builder is making an actual loss, there is certainly a loss on previously anticipated margins involved.”

Courtesy:- ET dt:- 26-04-09