Good times ahead for realty in Kozhikode city

August 22nd, 2009 No comments »

The lull in the construction sector has disappeared. After a hiatus, the sector has picked up in a moderate way in Kozhikode city. The slowdown in the real estate sector has had its drastic impact on the construction sector for some time, leaving builders to face the music.

Now, property developers are in high spirits in the wake of the revival of the industry. New projects have taken off. Ongoing projects are getting ready for occupancy. Then, there has been an encouraging response to the three-day Calicut Property Show held at the Marine Grounds last week.

“Approximately 1,500 serious customers had registered for the event. The walk-ins were over 4,000. That is a good trend compared to other cities of the country,” says M.A. Mehaboob, secretary, Confederation of the Real Estate Developers Association of India (CREDAI) Kozhikode chapter.

Wide variety

Projects of 16 Kozhikode-based builders were on display at the show. Villas, apartments, studio homes, townships and commercial space were among them. The builders had also displayed their ongoing projects in Malappuram, Thalassery, Kannur and Kochi. Customers had been provided the option of booking an apartment or villa at the venue.

Most of them were genuine buyers keenly interested in investing in a project on a long-term basis. Short-term investment had been a temporary phenomenon. In fact, property transaction has been on between real buyers and sellers. The demand for housing in the city and its suburbs has not declined in the past two years, Mr. Mehaboob says.

Builders say that several mega information technology (IT) projects are being mooted in the city in the next few years. Some of them have also launched new projects. Infrastructure development is also going on at a fast pace. The flyover at the Arayadathupalam junction will be completed this year and the Malaparamba-Vengalam stretch of the Vengalam-Ramanattukara bypass will be ready in 2010. These two projects, once completed, will spur construction activities specifically related to the real estate sector on the bypass stretch.

New projects are expected on the beach, in the medical college area and around the civil station and Thondayad.

Already, builders at the State and national levels have evinced interest in launching housing projects in Kozhikode.

After all, the realty business last fiscal was not bad in the city in spite of the downturn in the industry. Business estimated at Rs.500 crore would have taken place in the housing sector in the city in the last financial year. The average annual business will be in the range of Rs.500 crore to Rs.600 crore. The big boom was during the 2006-07 period when the business crossed Rs.1,000 crore.

The rate of an apartment or villa is in the range of Rs 2,600-3,000 a sq.ft. Units have also been sold at Rs.2,400 a sq.ft. The rationalisation of prices in Kozhikode, unlike elsewhere in the country, has caught the attention of serious buyers.

“Kozhikode has not witnessed an artificial demand for housing. Buyers also respond positively to the offers,” says K.V. Haseeb Ahamed, State treasurer of CREDAI.

This recovery is good for the industry. The housing sector is going to witness a boom in the outer fringes of the city. Small towns will see greater development activities with the growth in urban population. Remittance from non-resident Indians (NRIs) will contribute to the growing income. Over 70 per cent of the construction sector in the city directly or indirectly involves the NRI segment.

Adequate funds

Mr. Ahamed says that the banking sector has been munificently helping the real estate sector.

There is no paucity of funds for builders. Loan applicants have increased in recent times.

Banks will be competing with one another to offer loans in the coming months.

Nationalised banks have proposed to offer home loans up to Rs.30 lakh at the rate of 8.5 per cent for the first three consecutive years. As of now, the State Bank of India has the steepest reduction in interest rate on home loans between Rs.30 lakh and Rs.50 lakh. The interest rate will remain 8 per cent for the first year. It will be 8.5 in the second year from 9.5 in the third.

If this trend continues, more banks will be forced to take a cue from the big players.

The draft Direct Tax Code released on Wednesday gives an indication that growth in several sectors, especially the housing industry, will get a stimulus.
News Published Under:  The Hindu

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Builders seek tax concessions

August 14th, 2009 No comments »

The Kerala Builders’ Association has suggested exempting flats with areas less than 100 sq.m (about 1,000 sq.ft) in rural areas from within the purview of the value-added tax regime.

The association has suggested tax holidays for a limited period for the building and real estate sector in view of the hard times it faces. The concession will help it come out better from the lull.

M.D. Jairaj, president of the association, says that giving incentives to builders in rural areas can help then offer affordable houses in rural areas to the common man. Besides, he says, this can help people in search of affordable homes move from urban to rural areas.

The association, representing nearly 150 builder members in the State, sees signs of a revival in the housing market in Kerala.

However, Dr. Jairaj alleges that the government is looking at builders as enemies and acting in a way that will render futile their efforts to survive these times of economic recession.

There is, he says, a widespread allegation that tax collection from the sector is low.

This has led the government and the taxes department to treat them from this perspective. The association demands that the government and the department do something to protect the sector, which provides lakhs of jobs in the organised sector.

The sector is straddled with taxes. It pays around 33 per cent, including tax on inputs, he adds.

The sector has been the worst hit in the economic recession. Added to this is a fear psychosis over the recession that scared away potential investors.

The government has admitted to a dip in revenue from registrations in the recent past. However, the association feels that the actual revenue fall may have been more than what is claimed. But the situation may have been helped by the ongoing drive opened by the Registration Department to settle cases related to undervaluation of property.

The association, says T. Padmajan, its general secretary, has been demanding remedial measures for several problems facing the sector. These demands and appeals have fallen on deaf ears.

One of the demands is reduction in stamp duty. The stamp duty in Kerala is one of the highest in the country and scares away buyers. A cut in this can create a more robust property market.

Taking into consideration the present financial crisis faced by the builders, the government should consider allowing them to defer the payment of labour welfare cess.

Individual structural plans for each panchayat is another demand. According to them, each panchayat should have land-use rules to make planning easier.

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Good tidings for realty

August 8th, 2009 No comments »

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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Real estate looking up, people start buying again

August 3rd, 2009 No comments »

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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It’s a good time to buy a house

July 31st, 2009 No comments »

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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Home buyers in no-comfort zone

July 27th, 2009 No comments »

Developers and consumers are concerned that the interest rates will go up further. 

For all the expectations that preceded its presentation, the Union Budget 2009-10 is a huge disappointment for the real estate sector.

In fact, it has turned out to be a ‘non-event’ for the housing industry. Budget is an income-expenditure statement of the government.

“A single budget speech cannot solve all our problems, nor is the Union Budget the only instrument to do so,” said Union Finance Minister Pranab Mukherjee while presenting his Budget. This statement gives a window of hope to all aggrieved segments of the industry.

The corporate borrowers and others will vie with the over-spending government for the money in the system. This competition is bound to push up interest rates.

Will the government go back to former times and regulate the interest rates? This looks farfetched at the moment.

Home loans these days are linked to the variable interest rates. By moving over to the variable-interest rate-based home loans, housing mortgage providers often justify their asset-liability mismatch (where they lend for long-term while themselves borrowing for medium-term).

In a situation like this where there is a slowdown and a lurking danger of a rising interest rate, any housing loan firm will not sit in a comfort zone just because it has lent at variable interest rates. It is likely that the interest rates will have to be raised.

Borrowers, perhaps, will manage if the rise in interest rates lies within a reasonable band.

What if the rates rise faster and go beyond a band? Like the proverbial sword, an ever uncertain interest regime is holding the borrowers on edge.

What really is the remedy? It lies in opening up the long-term debt market. Insurance firms, pension funds and the like are the right candidates with resources to be led into the long-term debt market.

A robust long-term debt market will rid the sellers and buyers of the home mortgage products of the persistent worry over the oscillating interest rates.

The Finance Minister has haltingly moved to woo the salaried class with marginal sweeteners in the form of a small increase in personal income-tax exemption limit. Any savings made through this would be offset by range of things from rising petrol prices to possible increase in EMI.

There were widespread expectations that Mr. Mukherjee would increase the interest limit for tax concession on home loans. But he did not do that.

The Finance Minister did, however, bring some limited cheers to home loan providers by announcing an allocation of Rs.2,000 crore to the rural housing fund of the National Housing Bank (NHB).

In the absence of a long-term debt market, the Finance Minister could have at least let the NHB issue tax-free bonds to step up re-finance to banks and housing loan companies.

 

News Published Under: The Hindu

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The metro rail will ease traffic congestion that plagues Kochi now

July 24th, 2009 No comments »

Cochin: As the prospects for metro rail in Kochi have brightened with the Planning Commission giving the green signal, people of the city want the work on the project to begin soon without further delay so that they can escape the traffic congestion being experienced now.

Their apprehensions on these issues are not unfounded, as many infrastructure projects have been in limbo in the city.

While the Delhi Metro Corporation has earned a good reputation for getting work done in record time, work in Kerala will be a different game altogether, believe some of the major builders.

Most builders have welcomed the green signal for the metro rail as the project is expected to provide a good momentum to the overall development of infrastructure. This, in turn, will provide a necessary recharge to the property outlook in the city, they say.

All the same, the work will pose difficulties to people if the government, in association with local bodies, does not develop some of the connecting roads to the arterial roads of Kochi to help ease the traffic flow.

While Sahodaran Ayyappan Road requires repair, parallel roads on either side need to be developed. Similarly, other roads to Thripunithura, entry from the Maradu side and the Vyttila-Kaniyampuzha roads need to be strengthened to lessen the traffic on the main road.

If the work on Pulleppady overbridge gets done, one of the major roads connecting the city to the highway will become open, lessening the traffic on the metro route that will ring the city from north to south.

The construction of metro rail will be a challenge as the size of the existing roads, already congested, will be further reduced. Hence, it is important that the government does the spadework to prepare for a bigger project such as the metro.
News Published Under: The Hindu

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Meet to lay road map for Kerala’s infrastructure

July 22nd, 2009 No comments »

KOCHI: The Confederation of Indian Industry (CII), in partnership with the State government, is organising a one-day conference on ‘Infrastructure in the time of economic crisis’ on Thursday 23 in the city. This conference is to lay a roadmap for improving the infrastructure in Kerala.

The conference will focus on improving physical infrastructure — roads, metros, railways, mobility hubs, ports, city development, low cost housing, funding options overcoming implementation challenges, policy prescriptions to create a five-point infrastructure agenda, creating world-class urban infrastructure and achieving inclusive growth and need for innovation.

Experts from the infrastructure space at the national level will initiate a dialogue at the conference and throw light on the implementation elsewhere in the country.

The government of Kerala will also exhibit the plans and proposals for project implementation, which will subsequently be taken up for discussion for furtherance.

In India, 28 per cent or 285 million people live in urban areas.

This will go up to 40 per cent by 2021. According to the Planning Commission, India needs an investment of $500 billion in the infrastructure sector from 2007 to 2012.

The Jawaharlal Nehru National Urban Renewal Mission envisages an investment of $20 billion in urban infrastructure by 2012.

The government of India has identified a public-private partnership approach as the cornerstone of its policy and has been actively encouraging foreign direct investment in India’s infrastructure sector.

 

News Published Under: The Hindu

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Real estate sector plans new initiatives in Chennai

July 21st, 2009 No comments »

Real estate sector plans new initiatives in Chennai

CHENNAI: Several stakeholders in the real estate sector are planning new initiatives in various localities on the fringes of the city with a mix of hope and caution. Perungudi is one such locality.

“Most of the leading retail brands are planning to have showrooms in Perungudi,” says L.Dhayanidhi, vice-president, Chennai Real Estate Agents’ Association.

As some of the recently established retail outlets in the locality have reported relatively better sales, it has given rise to enthusiasm among others planning similar venture, he says.

Interestingly, the toll gate on Rajiv Gandhi Salai has emerged as one of the factors that determine the rentals, particularly commercial space.

Recently, three new companies opted for a commercial space located before the toll gate, he says. According to real estate agents, the commercial rentals beyond the toll gate have a reduced value of around Rs.5 per sq.ft.
 
Many builders agree that they expected the toll way to serve as a catalyst for real estate development, particularly of residential construction projects.

The construction of houses for earning rental income is a lucrative business in Perungudi.
News Published Under: The Hindu

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Housing Board to develop township projects on PPP basis

July 20th, 2009 No comments »

The Kerala State Housing Board (KSHB) plans to team up with various agencies to develop three township projects totally worth Rs 2,000 crore in Thiruvananthapuram, Kochi and Kozhikode on a Public-Private Partnership, Housing Commissioner Noyal Thomas said.
The projects are to come up in 17.6 acres in Marine Drive in Kochi, worth about Rs 1500 crore; Akkulum in the state capital in 14.5 acres and in 12.5 acres in Kozhikode medical college campus. The Thiruvananthapuram and Kozhikode projects are worth Rs 250 crore each, Thomas told reporters here.
The projects would be notified for selection of developers by this year, Thomas, who is also the Ex-officio secretary of KSHB, said.The projects are expected to take off by this year.
The Board was also in the process of shortlisting consultants for the same which would be finalised after an International competitive bidding process, he said.
The consultants will prepare a detailed project report, help identifying suitable experienced developers and market the buildings once the projects are completed, he said.
“We are also in discussions with various agencies,including Kerala State Industrial Development Corporation (KSIDC) and Kerala Infrastructure Development Authority (KINFRA), who can act as a consortium to participate in the bidding process.”
Thomas said the Board was in talks with New Delhi based National Building Development Corporation (NBDC) as they are interested in the Kochi project.
There are also plans to team up with private builders to develop housing projects.
News Published Under: The Hindu

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Posted in Kerala Real Estate

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