Mr. Mathews said there was compelling market demand for apartments in the mid-segment residential market. The Avenues (phase II of Esplanade) was targeted at the growing mid-segment market with a price tag of Rs. 29 lakh a unit. The apartments comprise six towers and 200 plus apartments with two and three bedrooms, range from 975 sq. ft to 1,450 sq. ft. He said The Avenues was the only project in north Chennai that has a club house of about 6,000 sq. ft. with a gym, swimming pool and other facilities. It was scheduled to be completed by 2012.

Source – Economic Times

The world and especially India has created history in a manner of speaking by creating the quickest turnaround and reviving markets. Equity, Gold, Silver, and Oil all of which with exception of Gold were at a low around the same time last year are at a new high or managed to sustain at higher levels today. Property rates too after correction witnessed a mini plunge and managed to revive and making a comeback with levels higher than last year’s peak in certain locations.

The second quarter results of this financial year posted by most companies have been encouraging. Insecure non-resident Indians seemed to have been the biggest buyers/ investors. I say insecure because of uncertainties in their current location of economy and their business or job status. Plus panic of some sort that prices are on the rise again and this would be a an opportunity to buy, drove many to conclude deals. A lot of local buying for actual use also took place. All of this mainly happened in new construction or under construction projects

The resale market seems to be stagnating and the seller’s expectation versus buyers offer seems to be a mis-match in almost negotiations. Rental markets too seem sluggish due to oversupply and lack of demand. The mid level expat or executive housing segment seems to have almost disappeared.With signs of revival in economy one can only hope expansion plans bring about hiring in the missing ‘segment’ and in turn revival in rental markets.

The rush to create affordable housing projects seemed to have been the flavour of the last three quarters. What remains to be seen who and how many ‘walk the talk’.With the UPA government having got a second term and talking about slum eradication, slum projects would make better business sense for land acquisition and development. I am no ‘town planner’ but in my opinion priority should be allotted to slum rehab and re-development over society type redevelopment over the next five to seven years.

I think alongside development and redevelopment one needs to stay focussed on the big picture of sustainability, given our ever growing, existing and migrating population and traffic congestion. As for future, a lot would depend on how equity markets fare the remaining two quarters and how liquidity flows. There seems to be no immediate threat to property prices and market, but a lot would depend on how the rental markets fare.

Source – Times Of India.

Housing demand in the Chennai Metropolitan Area (CMA) is projected to touch 1.23 million units by 2026 due to natural growth in population. However, current supply is only 60,000 units per annum, Chennai Metropolitan Development Authority (CMDA) member secretary Vikram Kapur said at a CII-Confederation of Real Estate Developers’ Association of India (CREDAI) seminar on housing here on Saturday.

Chennai alone is estimated to have a demand for 30,000 units from the economically weaker section (EWS) or low income group (LIG) dwellers, he said.

The BoP market in housing is huge and untapped, he said, pegging demand for slum rehabilitation dwelling units at 55,000 in three years. Pavement dwellers would need 15,000 units in a year.

At a construction cost of Rs 10,000/sq m, total investment of Rs 2,500 crore per annum is required, he said, noting that annual land requirement is around 70 hectare (assuming multi-storied buildings with floor space index of 3.75 and 1,500 dwelling units/ha).

Assuming TN Housing Board and TN Slum Clearance Board delivers 20% of the projected EWS/LIG housing needs, private developers would still be able to tap the demand for the balance 80,000 units. The state is prepared to provide the land, dovetailing subsidy for civic services under the Central government scheme with interest subsidy for loan, Mr Kapur said, highlighting the scope for private sector participation.

Citing the National Urban Housing and Habitat Policy, 2007, he said it lays special emphasis on the provision of social housing for EWS/LIG categories so that they are fully integrated into the mainstream of ecologically well-balanced urban development.

According to 2001 census, the country’s urban population is 286.1 million, constituting 27.8% of the total, in 55.8 million households, whereas slum population in urban areas, at 61.8 million, is 23.1% of the urban population. It is estimated that Rs 3,61,318 crore investment is required to meet the total housing needs — 26.53 million units for 75 million households, Mr Kapur said.

Earlier, TN housing and urban development department principal secretary Surjit K Chaudhary came down heavily on the builders for running after profits. In the last three decades, they have been catering only to high-end segment and always keen to develop MSB structures. By not developing small properties, they were not attuned to meet the demand that was actually coming from the lower level.

Chennai realty scene has changed a lot since the 70’s and the 80’s While high land cost deterred builders from addressing demand from this section, the additional FSI in the second master plan is aimed at bringing prices down, Mr Chaudhary pointd out.

“The government is willing to do much more but it has to be a practical proposition,” he said, noting that the onus is on the developers to reverse the slump that the sector witnessed every three to four years.

Credai TN president Prakash Challa shared the view the builders were targeting the top-end of the pyramid. But this was due to demand arising from a certain section. The CMDA continues to be busy sanctioning plans but ignoring urban planning. Though infrastructure follows development, it is high time, stakeholders work together to revive the real estate sector.

Source – Economic Times

Though the land-owner and the developer did not divulge on the deal details as far as price is concerned, industry trackers ET spoke to peg the 30-ground Kotturpuram property at Rs 60-crore and that of Pallikarnai (80 grounds) at Rs 40-crore.

Rakindo Group is making its debut in India with its $1.5 billion integrated township project in Coimbatore. Construction activity has been on for a while now. According to a senior Rakindo official, integrated township is its forte.

But as development in central business districts is not its core competence, the group decided to partner with Appaswamy Real Estates, its MD Prasad Koneru told ET.

Incidentally, both the properties were purchased recently after long drawn negotiations but it is gleaned from the market that the deal between Appaswamy Real Estates and Rakindo Group was struck last month. The Kotturpuram property was purchased from a Christian association, while the other land parcel in Pallikarnai was bought from an individual.

It is learnt that the Locke Road Kotturpuram property is located next to Kottur Villa, a property developed by Appaswamy Real Estates, and is in the vicinity of Adyar villa area, belonging to Spic CMD A C Muthiah. The Pallikarnai land parcel is situated a kilometre away from Kamakoti hospital on the Medavakkam-Velachery road.

When contacted, Appaswamy COO T S S Krishnan confirmed that the deal was concluded about a month ago. There is a proposal to develop multi-storied buildings over 5.30 lakh sq ft in Pallikarnai and 1.25 lakh sq ft in Kotturpuram. Of the total 6.55 lakh sq ft built area, Rakindo is to get a share of 2.6 lakh sq ft built up area.

Two special purpose vehicles would be floated to execute the projects, he said.

Rakindo Group is a joint venture between Rakeen, a joint stock company promoted by the government of Ras-Al-Khaimah, UAE and the Trimex Group, India. The property development and master planning company has been designing and developing properties and resorts in the Middle East, China, India and Europe.

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Says R.K. Nikra, chief manager, “The offer will be effective from September 1 September till October 31.” A few days before the UBI offer, ICICI Bank launched a special offer for all new home loans. As per the new offer, the bank will charge an interest rate of 8.75 per cent for loans up to Rs 20 lakh. For loans of Rs 20 lakh-50 lakh, the new interest rate is 9.25 per cent. Borrowing above Rs 50 lakh will attract 9.75 per cent interest rate. Effective from August 20, the scheme is available only for a limited period of time, said an ICICI spokesperson. Apart from the special offer, ICICI Bank’s home loan interest rates are in the range of 9.25-11 per cent.

Both theses offers came within weeks of the State Bank of India (SBI) cutting rates by 50-75 bps on high-value home loans. Earlier, SBI had launched a new home loan scheme offering 8 per cent for 1-5 years, depending on the amount, with zero processing fees, as against an average of about 10 per cent charged by others. Among other players who have cut home loan rates are Punjab National Bank housing finance majors LIC Housing Finance and HDFC.

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Aimed at promoting low-cost housing, the subsidy will be available for loans up to Rs 10 lakh, provided the cost of the dwelling unit does not exceed Rs 20 lakhs, minister of information and broadcasting affairs Ambika Soni said after a meeting of the union cabinet which cleared the proposal of the finance ministry.

“It is expected that cut in interest rates
should reduce Equated Monthly Installments (EMIs) of borrowers and create additional demand for housing, particularly in the low cost category”, she said, adding the scheme would cost the exchequer Rs 1,000 crore and benefit about 10 lakh borrowers.

Besides, she added, the move “in turn should stimulate demand in the construction industry as well as industries such as steel and cement having employment and income multiplier effect.”

The cabinet approved the scheme for providing interest rate subsidy on houses in pursuance to an announcement made by finance minister Pranab Mukherjee while replying to the debate on the budget for 2009-10 in July.

Though the scheme would help loan borrowers in small cities, it would not be of much benefit to those looking for houses in metropolises like Delhi, Mumbai and Bangalore as the cost mostly exceed the threshold of Rs 20 lakh.

Source – TOI News

Not only SBI, only two weeks back, HDFC also retooled its interest rates which saw the slash down of 50 basis points resulting in a loan of Rs. 30-50 lakhs being made available for 9 percent. That is not all, LIC Housing Finance also effected a slash down of 50 basis points, taking 9.25 percent interest rate on Rs. 30-75 lakh loan to 8.75 percent.

Incidentally, despite having observed some high losses in its unsecured loans portfolio, ICICI is willing to continue with its growth of mortgage program and auto loan portfolios. Interestingly, the bank’s outstanding housing loan portfolio stands at staggering Rs. 53, 472 crores (as per the figures on June 30, 2009).

Today as much as 80% of the buyers in top cities such as Mumbai, New Delhi NCR, Bangalore, Chennai and Ahmedabad are salaried, whereas businessmen and speculative investors dominated the market just a year ago when the real estate boom was at its pinnacle, say industry experts. This has forced sellers to either accept white money or lose the buyer in a market where demand still trails supply. While almost all newly developed residential properties can be bought through 100% white money, now many resale properties too are available without the black component.

According to a prominent Mumbaibased developer, the black portion in payment has tremendously gone down in all properties that are below Rs 1 crore. “But for properties over Rs 1-1.5 crore buyers themselves demand that we take payments in black, as they cannot declare the total price of the whole transaction otherwise they could get in to trouble,” said the developer requesting anonymity. Over the last one year, property prices dipped 30-45% and there were few buyers. Those coming into the market are salaried people who can support a loan but can’t afford black money. According to industry experts, some sellers in Delhi and Mumbai still demand black component, especially where the selling price is steep compared to the price of the plot and development costs. But now buyers are snubbing them.

“Recently a seller of a resale apartment was asking for around 30% of the payment in cash (black) for a Rs 55 lakh apartment, but I told him straight away that it was not possible, I can pay little more but arranging for black is a big problem,” said Shravan Desai, a professional working in a multinational in Mumbai. In several places in Mumbai including the western suburbs, New Mumbai and Thane the percentage of the black component has come down from 40% a year back to 15% or even nil in many cases. “If the buyer wants, he can bargain even for full white payment,” says Praful Joshi, a real estate broker based at Borivali . Also, many sellers now accept payment in cheque and are willing to absorb the capital gain tax. The increase in the white component is also a result of some income tax laws that brought more transparency into the property market, say analysts.

“According to Section 50 (C) of the Income Tax Act, one had to pay tax according to ready reckoner prices. If anyone pays below the current market price, he still has to pay tax as per the market rate,” says Vinod Sampat, a tax lawyer and consultant. An individual reinvesting the net proceeds from the sale of a house in another residential house is exempted from capital gains tax. This has given a big relief to many sellers who reinvest in real estate.

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Its affordable entry-level housing ranges between 452 sq ft and 818 sq ft in size and its middle-income apartments are typically 818-1,851 sq ft. Homex has operations in 32 cities located in 20 Mexican states as of December 2008. Homex integrates aluminum moulds into its construction process. With this method, the shell of an entire home can be constructed from concrete poured into as many as 1,000 interconnected pieces of aluminium moulding for an affordable entry-level home. Once the concrete hardens, the moulds are disassembled for use on another home. Each mould can be used as many as 2,000 times. The method also generates less waste, reducing materials cost. Most importantly, the mould system reduces the average time of construction.

Provident Housing has roped in SBI Capital and Housing and Urban Development Corp to raise funds for it affordable venture. The firm is currently at an advanced stage of talks with private equity investors for diluting stake on a project level and hopes to close the deal soon. It has already launched two projects in Bangalore and Chennai and is in the process of launching its second project totalling 6 million sq ft in size in Bangalore with an investment of around Rs 900 crore. The project is expected to have 6,000 apartments. It is currently waiting for sanction to kick start the project. The real estate player will invest Rs 1,900 crore by 2010 on three affordable housing projects in Bangalore and Chennai. The three projects, slated to be ready by 2010-11, will house 15,000 units. The one, two and three bedroom flats will be priced at Rs 10 lakh, Rs 15 lakh and Rs 20 lakh respectively spanning from 750 sq ft to 1,100 sq ft. Provident Housing will also roll out the concept to other cities like Hyderabad, Coimbatore and Mysore in the Phase I. In Phase II it will set up properties in Delhi, Kolkata, Kochi, Jaipur, Pune and Nagpur.

Source – Indianrealtynews.

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