Tag: India Real Estate

Environment Ministry limits ambit of clearances for realty projects

NEW DELHI: The environment ministry, under pressure from real estate and builder lobbies, and state governments, has limited the ambit of clearances for projects in this sector. Now, local civic authorities will lay down the norms relating to building control and safety in line with the relevant master plan.

The real estate sector has consistently demanded that environmental clearance procedures be simplified and shortened. The urban development ministry too has been advocating single window clearance for real estate and housing projects, arguing that this would help contain escalating housing costs. Given its function as a regulator, the environment ministry had made it clear that it could not be part of a single window clearance system.

However, in response to the overwhelming demands, the environment ministry set up a committee headed by Planning Commission member K Kasturirangan to review the environment clearance process for the sector. The committee recommended that the local authorities decide on the norms, and the environment clearance authorities focus on environmental impact, waste water treatment, air quality and such issues.

Source: The Economic Times

Home prices inflated; aggressive lending dangerous: Deepak Parekh

NEW DELHI: Terming the home prices as highly inflated in the country, including in smaller cities, industry leader Deepak Parekh on Friday asked builders to focus on affordable housing, rather than luxury homes, and said it is a dangerous thing to lend aggressively to developers.

Parekh, Chairman of the country’s largest housing finance company HDFC, also asked the home buyers to be cautious of ‘too-good-to-be-true’ offers from the property developers and warned them against schemes where builders claim of paying interest on the borrowers’ loans.

The eminent banker also asked the financing companies to stay away from innovative and aggressive loans, including teaser rates where the interest rates rise gradually and lending money to developers at the same rate as being offered on individual home loans.

While lauding the growth in the home finance market over the years, Parekh in his annual letter to shareholders of HDFCBSE 0.67 % said: “As a basic tenet, construction finance entails higher risks and, therefore, such risks have to be built into the pricing.

“Construction finance should not, through any innovative structuring be available to developers at the rate of interest being offered on individual home loans. Further, complete up-fronting of construction finance to developers, even before the ground is broken is dangerous,” he said.

Parekh also said the country continues to face an acute housing shortage, but prices continue to remain high.

“Having spent so many years in this business, one recognises that one’s voice can never be loud enough when so many vested interests exist as far as land markets are concerned. Nonetheless, I am of the firm belief that one must not give up or be beaten down to silence.

“At the cost of perhaps now sounding like a broken record, I continue to hold the stance that increasing supply is the only way home prices can come down in India. Even in Tier II and Tier III cities, home prices are inflated,” he said.

Parekh, however, lauded the role of a new breed of entrepreneurs and first-time developers who have ventured into the affordable housing space.

“Such projects may be few and far between, but the trend is encouraging because this is where the real demand lies. Most of these affordable housing projects have been sold out immediately. Hopefully, the more established and larger developers will take a cue and focus on the affordable housing segment, rather than high-end luxury homes that they currently cater to,” he said.

Talking about the interest rates where banks offer a low rate at the beginning and later increase them for the home loan borrowers, Parekh said such products were risky and should be avoided.

“To my mind, teaser products, of any nature entail risks. Customers need to be cautious of ‘too-good-to-be-true’ type of products. Borrowers must not be blinkered into believing that there are no risks when developers offer to pay interest on a borrower’s loan for a specified period.

“Borrowers have to be cautious because in the event of a developer delaying payment, the credit bureau reports will reflect this in the borrower’s records, thereby impacting his or her creditworthiness.

“Ultimately, developers need to recognise that in the long-run, it is to their advantage to allow a correction in prices which will help their cash flows,” he said.

Source: The Economic Times

Housing Prices Rise by Around 1 Percent in 20 Major Cities: NHB

New Delhi: Housing prices have increased marginally by an average 1.1 per cent in 20 major cities, including Delhi and Mumbai, in January-March 2013 over the previous quarter due to slowdown in demand, National Housing Bank said.

Residential housing prices in 12 cities have shown increase in prices in this quarter ended March, 2013 over the previous quarter (October-December, 2012), quarterly update of NHB Residex said.

On the contrary, eight cities have shown decline in prices over the previous quarter with maximum fall observed in Guwahati (-7.84 per cent) followed by Ludhiana (-6.71 per cent), Surat (-6.67 per cent).

Besides, price correction was witnessed in Kolkata by 5.75 per cent, Lucknow by 3.18 per cent, Hyderabad 2.23 per cent and Chennai 1.28 per cent.

“Property prices in majority of the cities are witnessing marginal upward trend,” NHB said in a statement.

Price increase was witnessed in Jaipur (28.74 per cent) followed by Bhubneshwar (14.54 per cent), Pune (7.81 per cent), Bhopal (6.49 per cent), Delhi (3.59 per cent), Bengaluru (2.83 per cent), Mumbai (2.31 per cent), Kochi (2.30 per cent) and Faridabad (0.98 per cent).

NHB RESIDEX tracks the movement in prices of residential properties on a quarterly basis since 2007. The index for Delhi includes property transactions in Gurgaon, Noida, Greater Noida and Ghaziabad.

NHB RESIDEX has been expanded to include six new cities namely Chandigarh, Coimbatore, Dehradun, Meerut, Nagpur and Raipur from this quarter, it said.

Source: Press Trust of India

All land-related info of Bengal will now be a click away

Banglar Bhumi, a portal on land records of West Bengal, is ready to provide all land related information to people, particularly entrepreneurs, sources in the Land and Land Reforms department said.

The land have been divided into various zones like agricultural zone, industrial zone and tourism zone for easy spotting of target lands.

“The basic idea behind marking the zones is that industrial and other big projects of the state government and the Centre will be located in the appropriate zones without disturbing food security in the state,” sources said.

The block-wise land use maps show single, double and multi crops land, dry and barren land, forest land, metal roads, national highway, state highway, railway network, industrial area, area under infrastructural development and water bodies etc.

“This will help the entrepreneurs intending to set up industries know the actual infrastructure available at the proposed sites,” sources said.

However, the concept of zoning in block-wise maps of the districts was introduced in May 2011 to identify agricultural zone, industrial zone and tourism zone, townships and wetlands.

The block-wise land use maps of five districts — West Midnapore, Bankura, Purulia, Burdwan and Birbhum — have been prepared and formally published in March 2010.

Source: The Indian Express

India realty space to see $4-5 billion foreign inflows in 2 years

India’s realty sector is set for robust inflows of USD 4-5 billion from overseas investors in the next couple of years, with Bangalore, Delhi and Mumbai emerging as the favourites, global real estate consultancy giant Jones Lang LaSalle has said.

“The early foreign investors in India, who came in around 2006-07, did not have very good experience, partly because of their inexperience in doing business in India and partly because of global financial crisis,” JLL Asia Pacific CEO Alastair Hughes said here.

“However, foreign investors are now looking with a renewed interest at India, given its still robust economic growth rate as that bodes well for good returns to their investments,” Hughes told PTI in an interview here.

Hughes, who was here to participate in the World Economic Forum Annual Meeting, said foreign fund inflows were expected to pick up in the Indian realty sector going forward.

He added: “They (investors) are now looking much more closely at India to put in their funds into Indian real estate sector. They had come in between 2006-2007 and first half of 2008, but they completely went away in 2009 and have been mostly away since then.

“The overseas investors are now looking to come back and what they are looking for right now is good partners in India, because it is a difficult place to do real estate business because of various reasons.”

Right now, many Indian developers and fund managers are seeking to get international money and that is much more likely to come in, Hughes said, adding that there is more international money today waiting to be invested in India than any of the last five years.

Overseas investors have invested USD 14 billion into the Indian real estate sector over the period from 2006 to 2012. In the last two years, foreign investment into Indian real estate has been around USD 1.2 billion per annum.

Around half of all transactions were invested in residential property, a quarter in the offices sector and the remaining quarter was split among the other sectors. Regionally, half these investment come from US with rest coming from the Middle East, Singapore, the UK, Hong Kong and Germany, Hughes said.

Terming the next two years as much more promising, Hughes said that 2013 and 2014 will have a total of USD 4-5 billion come into the sector, mainly to buy income yielding SEZ assets at a capitalisation rate of 10.75 per cent.

“We expect interest from global and US investors to maintain. Favourite location foreigners will be Bangalore, New Delhi and Mumbai,” he added.

Globally, Hughes said, there was a big boom in 2007 and then a big bust in 2008 for the realty sector, while there has been a gradual recovery since the end of 2009.

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As per a report released by JLL here at Davos, global investment capital is leaning towards real estate and the commercial real estate direct investment volume is expected to more than double to USD 1 trillion by 2030 and Asia Pacific region is leading the investment growth since crisis.

Hughes said investments into Asia Pacific commercial real estate market fell by around 10 per cent in 2012, from USD 98 billion to about USD 92 billion.

“That was because of a sense of caution prevailing in different countries. But now we are seeing a change in the sentiments.

“One of the reasons for that is people looking to divert their investments from bonds to equities and other asset classes and that include real estate. Therefore more money is coming to real estate and a bigger proportion of that we see coming to Asia Pacific,” he added.

Hughes further said: “We believe that the volume of real estate investment deals would go up in 2013 to something close to USD 105 billion, from USD 92 billion last year.

“This would make 2013 the biggest investment year for real estate market since the global financial crisis hit the world, although it would still be below USD 120 billion figure recorded by Asia Pacific in 2007. We are not back to where we were in 2007, but the scenario is getting better and closer to that level.”

Hughes said that 2012 was very bad for the Indian real estate sector, as there were difficult market conditions and India was probably the only country in the world where conditions were even worse than 2009.

Going forward, he said, the growth in Indian office sector would depend on the economic growth.

In the retail sector, a very high growth is expected with the entry of foreign retailers, as they would need large space to set up shop in the country and most of the current developments are not designed for the international retailers.

Besides, manufacturing and industrial sector would also benefit a lot as these companies would need to set up logistics and other facilities.

Hughes said that robust activities are expected in residential space also.

Source: The Economic Times