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Builders see a change in buyer sentiment

October 13th, 2009

There have been some genuine enquiries right from the second quarter of 2009, says Najeeb Zackeria, president of the Kochi branch of the Confederation of Real Estate Developers’ Association of India. The interesting part is that there are enquiries in all segments of property, be it budget, semi-luxury or luxury, Dr. Zackeria says.

There are enquiries for villas, but unfortunately, there are no stocks available at present. The builders over the last year had concentrated more on delivering the ongoing projects. It was not a good time to announce new ones.

The customers’ approach is to go in only for finished products or projects nearing completion. This approach has slightly changed, he says. However, the change in this graph has favoured only builders who have sustained through the recessionary period and have delivered their products in time. Unless progress is seen in a project, customer confidence will be lacking.

The customer confidence is just coming back, says M. Unnikrishnan of the Thripunithura-based Royal Projects. There is a release from fear. The market is very much alive, but the budgeting is small. The customer is having a studied approach, Mr. Unnikrishnan adds.

Earlier, an investor will put in an extra effort to go for a higher budget, but now the customer is looking at the builder to help them make a good buy within their fixed budget. In fact, quite a few genuine enquiries are not materialising into buys only on the aspect of cost.

Customers have had to face bad times because quite a few projects in areas such as Kakkanad have come to a standstill. These probably had come up without any USP and hence were hit by the market trend, Dr. Zackeria says. The delay in the SmartCity project may also have been playing on the customer mind. Another factor affecting Kakkanad was perhaps the mushrooming of a number of small-time builders during the boom period, some of whom were not able to sustain through the difficult times. The builders are taking the new momentum in the market with caution. “We do not expect any rapid improvement,” Dr. Zackeria says. It will take about another six to eight months for a turnaround, he adds. It will happen as a spontaneous effect of the overall economic improvement, and depending upon the absorption of the present supply of stock and end-user demand, the new supply will start trickling in.

In fact, quite a few builders are waiting for some more time to pass before they announce their new projects. The full concentration is on completing projects in time.
News Published Under:  The Hindu

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Posted in Cochin Real Estate, Kerala Real Estate, Real Estate

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Investors in property back in the hunt

September 5th, 2009

Property rates have begun to stabilise following the correction in prices in the real estate sector. Following the recovery of the economy, investors are looking for a slew of ongoing and upcoming projects in cities such as Kozhikode.

Enquiries, bookings and sales of apartments and villas have shown a spurt in the past two months. Developers of mega projects and others are elated. “Nearly 90 per cent of the apartments have been booked at the 20-storey Metromax, a residential complex on the Thondayad bypass,” says Ahmed Backer, senior manager (sales), ‘hi-lite’ Builders.

Work on Metromax, consisting of 272 luxury apartments, has been completed. “We have started focussing on the interiors and exteriors of the units categorised into four types. The apartments will be ready for occupation before July 2010,” he says. Uniform prices have been fixed for all types of apartments, including two kinds of three-bedroom ones, on all floors.

The rate is Rs.2,700 a sq.ft, Mr. Backer says. The company’s another massive project, said to be the biggest venture in Kozhikode city, is the ‘hi-lite’ Hills, also on the Thondayad bypass.

It comprises two mega projects with a total built-up area of 20 lakh sq.ft. One is exclusively for residential purpose and the other is top-notch office space.

Mr. Backer says the first towers of ‘hi-lite’ Plaza will be completed in July 2011. The rate is Rs.4,500 a sq.ft. The rates of ‘hi-lite’ Residency will be Rs.2,550 a sq.ft. The residential project will be completed within a time-frame to keep the promise made to loyal clients, he says.

Builders say that the prices of apartments have not skyrocketed during the real estate boom that started in 2006.

Kozhikode has never seen unreasonable and artificial rates unlike other parts of the country. So the correction here is minimal, whether for apartments or villas.

The rate for premium luxury villas such as Highlands of Calicut Landmark Builders at Methottuthazham Junction, 3.5 km from Arayadathupalam, is Rs.3,350 a sq.ft.

The villas will have a minimum area of 2,000 sq.ft. Together with the villas will be the budget apartments priced at Rs.1,710 a sq.ft. The rates have been kept uniform till the sixth floor. But it will be Rs.1,750 a sq.ft from the seventh floor. There will be two- and three-bedroom types having areas in the range of 614 sq.ft to 930 sq.ft., says Sonnet Sasikumar, sales representative.

The project of the Calicut Landmark Builders near Silver Hills Public School and Silver Hills Higher Secondary School has been a successful venture. A few ready-to-occupy flats is priced at Rs.1,950. Almost all the villas have been sold out, Mr. Sasikumar says.

Spring Dale Villas of ‘hi-lite’ Builders at Palazhi is priced at Rs.3,500 a sq.ft. The total area of a villa will be 2,200 sq.ft. However, clients have the option of choosing areas up to 6,000 sq.ft. Thirty-five out of 110 villas have so far been sold, Mr. Backer says. Half the luxury apartments of Horizon Properties at Chevayur have been booked. The 12-storey two- and three-bedroom flats are sold at standard rates of Rs.2,350 a sq.ft, says Pradeep Kumar, managing director.

The project will be completed within a year. The two-bedroom flats have areas of 1,151 sq.ft. each and three-bedroom ones, 1,673 sq.ft. “We have also come up with special Onam offers at attractive prices,” he says.

The 12-storey apartments of Seiken Properties at Malaparamba is priced at Rs.2,500 a sq.ft. Sixty per cent of the units have been sold.

The project will be completed in December 2010. There will be eight types of flats ranging from those with one bedroom and having areas of 657 sq.ft each to those with three bedrooms and having areas of 1,364 sq.ft each, says Nikhil C. Mohan, sales manager.

However, the three-bedroom duplex flats on the eleventh and the twelfth floors are priced at Rs.1,950 a sq.ft.

The apartment will have a fitness centre, swimming pool and broadband connectivity, Mr. Mohan says.

Raj Madan, assistant manager (marketing) of Pentium Builders, says that bookings for the Pentium Vrindavan Vertical Homes have started, although its official launch is on Saturday.

The new project will be at Eranhipalam, comprising two- and three-bedroom units.

The priced fixed at Rs.2,400 a sq.ft is negotiable, he says. Ritz Marina of Galaxy Builders is a big super-luxury apartment complex coming up on the Kozhikode beach.

The rate of each apartment is Rs.3,000 a sq.ft.

Nearly 55 per cent of the apartments in the 26-storey building have been sold out, says Janzeer Ahmed, executive director.

Mr. Ahmed says the recovery of the economy have given investors an opportunity to scout for projects. The prices have been kept in tune with the standard rates prevailing in the city. The rate of an apartment at Ellyzium Court near the C.H. Flyover is Rs.2,600 a sq.ft. A few more apartments at Leo Paradise are available, he says.
News Published Under:  The Hindu

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Posted in Kerala Real Estate, Real Estate

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Slashed rates bring cheers to borrowers

August 30th, 2009

Housing loan rates are being slashed. The aggression by banks and home finance companies is intended to capitalise on the festival season spend and hence the special offers are valid till September 30. An analysis has been done to understand how significant these differences in rates offered by the banks are to a prospective borrower.

Taking the two big players, the SBI and LIC Housing Finance Ltd. (LICHF), we assume a borrower seeking a 15-year term and a loan of Rs.20 lakh (house property valued at Rs. 30 lakh).

The difference between the SBI and the LICHF is in the first three years. While the LICHF offers an 8.9 per cent rate fixed for the first three years, the SBI is offering 8 per cent for the first year and 9 per cent for years two and three.

Our assumption is that from the fourth year onwards till the 15th year, the rate of both banks will be identical at 12 per cent. The SBI offer is cheaper by 0.9 percentage point for Year 1 and expensive by 0.1 percentage point only for years 2 and 3.

When the EMIs are compared, Rs.52 is paid additionally per month for the first year and Rs.6 saved per month for next two years by choosing LICHF. For a five-year term, the interest difference in absolute terms is Rs.7,920 and for a 15-year term, it is Rs.9, 600. On property worth Rs.30 lakh for which a loan for Rs. 20 lakh is taken, Rs.9,600 works out to 0.32 per cent of the property cost and 0.5 per cent of the loan of Rs.20 lakh.
News Published Under:  The Hindu

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Posted in Kerala Real Estate, Real Estate

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Good tidings for realty

August 8th, 2009

Builders have a reason to cheer. Compared to business conducted by them from October 2008 to April 2009, this June saw an upswing. And it continued through July, says George E. George, chairman of the Kerala Builders Forum.

“The downslide has stopped and we are hopeful that the market will start picking up soon,” he says. There is no fresh stock; so, if the demand sustains, builders will get the required momentum to start again, he adds.

Housing is a requirement and buyers have the best rates available now, says Antony Kunnel, secretary of the forum. Since the fear of job losses no longer lingers, investors are looking back to where they had left off, perhaps.

Mr. George and Mr. Antony are quick to deny that the surge in the two months is because of the NRI influx at this time of the year. Rather, they believe that it will be a new beginning. People still are earning their salaries and they continue to have some expendable income.

“The money is going to flow back here,” says Mr. George. It is because the investors have more trust in the Indian economy than any other. “It is good to hear when NRIs and the general public talk positively about India’s growth, while India-bashing was a favourite pastime some time ago,” he adds. The trust in Indian banks has increased manifold, as the country has proved to be more resilient in facing the recession.

It is not just the big builders who are feeling the cheer. Jayanthan Namboothiripad, builder from Thripunithura, says that there have been many enquiries and quite a few conversions of them to purchases in the past couple of months. The builders say that funds left for investment will be parked in the real estate and property sectors, providing the required boost to the sector, though the government has not announced any sops.

It is “advantage India,” says Mr. George. The stock markets are going up, the elections have brought in a stable government and the market is not depressing at all. The focus of the builders is on completing ongoing projects and start projects announced earlier when the going gets steady.

Mr. Kunnel says that if the government brings in more regulations in the real estate sector, people will have more faith in the transactions of construction companies.

As part of the movement started by the forum in its bid to achieve industry status, builders have been asked to have a strict valuation process. “We have come a long way from what the sector was about five-six years ago,” he says. But there is much more to be done, he adds.
News Published Under:  The Hindu

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Posted in Kerala Real Estate, Real Estate

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Real estate looking up, people start buying again

August 3rd, 2009

The booming real estate market that received a jolt during the slowdown last October-November seems to be recovering. People are slowly purchasing, but only for personal use. Not for investment purposes.

“In the last few months the real estate market has undergone major changes. The slowdown that migrated from the US has got corrected in India now. The prices have got corrected. And whatever pent up demand was there in the market has started getting converted into business,” Santosh Rungta, president Confederation of Real Estate Developer’s Associations of India (CREDAI), told IANS.

With 4,000 members, CREDAI is the apex body of the organised real estate developers and builders across India, representing pan-India associations of real estate and housing developers.

People were virtually not buying during the slowdown as the real estate price was high and insecurity gripped buyers.

“The government made an appeal to us that the prices should be brought down and we (CREDAI) made an appeal to our fellow developers that they should try and bring down prices, and they acted accordingly,” Rungta said.

The pan-India price reduction was to the tune of 15-35 percent depending on various categories and geographies, he said.

“Today flats are being sold, but the pace could be better. Generally things have reversed. In Mumbai also, rightly priced projects have been sold. The major contributor to this is the government policy to generate demand. It brought in stimulus packages, ensured availability of liquidity to the home buyers, interest rates softened,” he said.

Another real estate player Indrajit De, chairman of Eden, also said housing loan lending rates cut may attract a few more buyers into the market.

“If the lending rate falls further by 50 basis points, the sales figure will climb up,” he said, adding, “Certainly the market is looking up now. Sales have also improved.

“We are selling around 25-30 units (flats) per month. But it was much higher in the range of 55-60 units per month before the recession actually hit India.”

Harshavardhan Neotia, chairman, Ambuja Realty Group, told IANS: “Sales have picked up in the last two-three months. There is more offtake now than what it was six months back. But now the buyers are genuine users and not just investors. These are the people who really need housing. They are lot more quality conscious and they look for the right products.”

He said there was a drop of 10-15 percent in the price during the recession period. In the last two-three months the company has sold around 200 flats, he said.

Reacting to the recent announcement by union Finance Minister Pranab Mukherjee on interest subsidy on new home loans and extension of deadline in tax holidays on projects approved by March 2008 if they are completed by March 2012, Rungta said: “One must understand that extending the tax holiday under 80 I B (10) for a mere one year to projects approved by March 2008 will fail to create a significant positive impact on the real estate market. It will only benefit a few micro markets with a handful of projects.”

CREDAI has suggested the centre consider extending the dateline to March 2012 for providing tax holidays to projects irrespective of the date of approval. “This will be of greater benefit to the sector and encourage developers to take up new projects and expedite ongoing projects as well.”

Rungta further said: “Even the proposed interest subsidy of one percent to home loan borrowers for loan taken for houses costing up to Rs.20 lakh is also not justified.”

CREDAI has proposed that the centre increase the subsidy to home loan interest rates by another one percent to two percent and extend the scheme for houses costing upto Rs.30 lakh from the currently proposed valuation of Rs.20 lakh. 
News Published Under: Malayala Manorama

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Posted in India Real Estate, Real Estate

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It’s a good time to buy a house

July 31st, 2009

This is a good time for those looking at investing in property, especially a house. The two most important parameters – property prices and home loan interest rates – are favourable, and hence make a good value proposition for property buyers. There are many factors that indicate a rise in these parameters in the medium to long term. Therefore, those looking at investing in property should go for it now.
Here are some factors property investors need to take into account:
Market opening up
Property prices have corrected quite significantly in the last four quarters. As predicted by many analysts and also indicated by the various economic data points, the worst of the global economic slowdown is behind us. The developed economies have started showing signs of improvement and will come out of the recession in the next two to four quarters. The domestic economy was betterplaced during the slowdown and is also showing signs of revival.

The investor sentiment has improved over the last couple of months. There are more enquiries in the property market. Many developers have come out with aggressive plans to market their existing properties as well as launched some new projects. The property rates will move upwards as more demand builds up.
Interest rate good
Currently, the home loan interest rates are quite favourable. The rates have come down quite significantly over the last few months, thanks to the softer monetary policy adopted by the Reserve Bank of India (RBI) during the last 10 months. The RBI cut the repo rate by 4.25 percent – from nine percent to 4.75 percent, the reverse repo rate by 2.75 percent – from six percent to 3.25 percent, and the cash reserve ratio by four percent – from nine percent to five percent.
Taking the cue, commercial banks also reduced lending rates quite significantly. Many banks are offering attractive schemes for new borrowers and loan transfers.
Property – long-term plan
Usually, buying a property is a long-term financial commitment for an individual. Therefore, it is very important to think through various financial aspects around it. There have been many changes in the banking industry during the last 10 years. The interest rates are cyclical. Therefore, it is very important for people looking at taking a home loan to plan their monthly budgets well in order to avoid any defaults.
Here are some tips for borrowers:
Choosing lender: First of all, it is important to choose the right lender. Since a home loan is a long duration factor, it is important to take some time and be a little selective. You can collect feedback on various lenders.
Scheme: The concept of a fixed interest rate for the entire duration of the loan is no longer available or viable. In some schemes, the rate is fixed, but only up to a certain duration and subject to some terms and conditions. Therefore, it is important to check the track record of interest rate revisions and the exit barriers posed by the lending bank such as foreclosure penalties etc.
Budget: Since interest rates have become cyclical, borrowers should be prepared to pay a higher rate during certain periods of the loan tenure based on market conditions. Also, it is important to go through the terms and understand the various fees/charges that come with the scheme.

News Published Under: The Times of India

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Govt may Ease FDI to Help Real Estate Growth

July 16th, 2009

The government department responsible for the promotion of industry is proposing easier rules to allow overseas investors to be part of smaller real estate projects and lower capitalisation norms for those which involve facilities related to hospitality or tourism. The department of industrial policy & promotion (DIPP), which handles the FDI policy, in a note drafted for the Cabinet Committee on Economic Affairs (CCEA), has said that FDI should be allowed to flow into realty projects even if the area covered is only 10 acres.

As of now, FDI is allowed in realty projects only if the minimum area covered is 25 acres (or 10 hectares). The move will help realty projects in metros like Mumbai, Delhi, Bangalore, Chennai and Hyderabad to attract FDI. Realty players feel that it is not possible to find 25 acres of land in these cities to make their projects comply with Press Note 2 of 2005, which defines guidelines for permitting FDI in this sector. The industry is keen on business in the metros, as it attracts high-profile customers, but wants FDI to be allowed since the cost of land in these cities is high, making them expensive.
The DIPP has also proposed that the minimum capitalisation norms specified in Press Note 2 can be waived in the case of projects, which involve hospitality and tourism facilities, such as hotels, restaurants or entertainment facilities meant for tourists. Press Note 5 specifies that minimum capitalisation should be $5 million for permitting FDI in realty projects, which involve an Indian partner. In case the project is implemented by a fully-owned subsidiary of an overseas firm, the minimum capitalisation specified is $10 million.

The waiver would be available in case 50% of the built-up area in a project is devoted to hotel and tourism businesses, such as food courts, resorts, restaurants. If 20% of the total built-up area is used for hotel rooms, the waiver will be available. Veterans in the real estate business, who do not want to be identified, said the liberalisation moves were welcome changes that they have been waiting for. These steps, when implemented, will provide relief to high-value projects in metros and projects being developed for the tourism sector.

The move comes as a relief at a time when realty players are struggling to managed debt and lull in business, they added. However, the realty industry is upset that its demand for waiving off the three-year lock-in for FDI in real estate has not been accepted. Many fund houses keep off realty projects due to the three-year lock-in period, industry veterans feel.

 

News Published Under:   Foreign Direct Investment in India

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Posted in Government, Real Estate

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