How will the housing sector perform in 2007?
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 |  | Property Headlines : January 03,'07 |  |
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FDI To Enter Retail The government may open up foreign direct investment (FDI) in retail to areas where small domestic players do not operate. The department of industrial policy and promotion (DIPP) is preparing a detailed policy for further liberalisation of FDI in the country, which is likely to be announced before the Union Budget. As part of the proposed move, the ministry has marked out sports goods, electronics and building equipment as some of the sectors that may be opened up with a cap of 51pct FDI. Since there are hardly any small manufacturers and retailers which will be affected in these areas, the government is likely to allow FDI at both the front-end and back-end. The government is also considering permitting multi-brand retail in such areas. There is a need for production activity in areas such as building equipment, where only some domestic companies like Tisco and L&T are active. Most of the other equipment is imported. The demand for sports goods is also likely to go up with! the country readying for the Commonwealth Games. So far, the government permits 51pct FDI in single-brand retail through FIPB. As far as multi-brand products are concerned, the government allows 100pct FDI in cash-and-carry through the automatic route. A number of companies have entered the country in single-brand retail, but most of these are luxury brands like Louis Vuitton and Chanel. The Economic Times New Delhi Edition December 27 How Will The Housing Sector Perform In 2007? The year 2006 has ended. How will the housing sector perform in the year 2007? Will it continue the way as in the past or would it be different? As was evident during the year 2006, the interest rates kept climbing slowly and steadily and housing loan interest rates on the contrary kept falling down from 16-17 pct to 7-10 pct though they have now started moving up and are ruling at the double digit mark. Will the upward trend continue or will they stabilise at these levels. RBI itself increased its repo rates. 2005 saw a hardening of interest rates and 2006 saw a further hardening effect. There have been increases in the interest rates by banks and Housing Finance Companies (HFCs). The property prices have been rising in fact so much so, that properties are again becoming out of reach of the common man. Whether the price rise is justified or is it just a manipulated bubble remains to be seen. The RBI has cautioned the banks to be extra careful while going all out to fund and! finance the real estate sector. Further, substantial increases in 2007 may not be possible. As it is, with the present interest rates, only genuine buyers would remain in the market in the long run. The speculators and investors would have to exit. Why? Well because the property prices are so high that selling properties would be difficult. It would be difficult to buy at the present rates. As per the HDFC annual report, in many parts of the country, the housing demand is investment driven. Further, with increase in interest rates, the returns on this investment would fall. RBI on the other hand is trying its best to prevent increase in inflation. So the floating loan buyers need not despair. The hard times may be a temporary phase. And hopefully it should not harden any further. The Times Of India New Delhi Edition December 29 Panoramic Universal Forays Into Realty Mumbai-based Panoramic Universal, which has lined up investments to enhance its hospitality business, plans to enter the realty sector too. âThereâs huge synergy between real estate and the hospitality sectors. We are in the process of executing greenfield hotel projects in India, which gave us the expertise to venture into realty,â said Mr Sudhir Moravekar, chairman, Panoramic group. Over the next 3 years, the company is looking at realty projects totalling roughly Rs 1,000 cr. Panoramic Universal owns and operates five hotels in US, one in New Zealand and three in India and has lined up two five-star hotels one each in Pune and Goa, he further added. The Economic Times New Delhi Edition January 2 2007 NRI Divas 2007 On 9th and 10th January 2007 At New Delhi NRI Institute is celebrating NRI Divas 2007- âTo Strengthen The Bonds Between Indians and Non-Resident Indiansâ on 9th and 10th January 2007 at Hotel Inter Continental The Grand, at Barakhamba Avenue New Delhi. The Event is expected to be attended by more than 400 Global Indians. Honâble Union Minister of State for Industry Shri Ashwani Kumar, the British High Commissioner to India, H.E. Sir Michael Arthur KCMG, Trinidad & Tobago High Commissioner to India H.E. Pt. Maniedeo Persad, Lord Karan Bilimoria CBE DL, Dr Sam Pitroda, Lord Bill Lall and a number of Chief Ministers, Secretaries of the Ministries, NRIs and Captains of the Indian Business World will address the various sessions. To know more click here Company Sources January 2 2006 Advertising By Realtors Grows By Leaps & Bounds Advertising by real estate players has taken a quantum jump in volume terms with the boom in the sector. Realtors advertised 180 pct more on television and 72 pct more in print during the January-September period of 2006 compared to 2005, as per a recent study by AdEx (a division of TAM Media Research). The increase in print medium has been registered on volume (column centimetre) basis, while that in the television medium has been calculated on the basis of second. "A lot of new players have come into the sector and they need to advertise for visibility and to establish credibility. Many real estate players have also broken the whole advertising exercise into many segments: pre-launches (of the property), product advertisement and corporate advertisement, that has also led to growth in advertising," said Mr Sunit Sachar, Head-Publicity, Parsvnath Developers Ltd. The study also mentions that real estate advertising is skewed towards North-India based newspapers with 41 pct s! hare, South and West-based newspapers had 29 pct and 25 pct share. Share of real estate's advertisements in newspapers and magazines stood at a ratio of 98:2. Interestingly, in magazines, "apart from general interest genre, a high share of advertising in women's magazines" was witnessed during the period. On the television front, Hindi news channels had 42 pct share, Business channels had an 18 pct share. From January to December, the peak in number of real estate ads was witnessed during the July-September period in 2005. The Hindu Business line New Delhi Edition December 30 Indian Realty Cos More Successful Overseas The Indian realty sector was able to raise more equity money overseas than in the domestic market in 2006 i.e over $2 bn. As per a release, 11 companies with op erations in India have been listed so far on the AIM (Alternative Investment Market) of the London Stock Exchange. The total amount raised by them was $1.25 bn. However, most of the India-based companies listed on the AIM are trading below their issue prices. The last traded price of Hirco Plc was 428 pence, while the issue price was 500 pence. Similarly, Unitech is also down to 93 pence against an issue price of 100 pence. Shares of Ishaan Real Estate closed at 100.50 pence, perilously close to its issue price of 100 pence. An exception to the trend has been West Pioneer, which was last traded at 101 pence, compared with its issue price of 81.5 pence. However, it seems unlikely that the popularity of AIM is going to go down in the near future. Firstly, there is a tremendous demand for exposure to Indian real estate as seen from the response to recent public issues of Parsvnath and Sobha Developers. Hirco had raised $753 mn on the AIM making it the largest real estate issue ! in India in 2006. Unitech Corporate Parks was the second largest at $725 mn. Another factor in favour of AIM is the depth it offers. Real estate is one of the big sectors for AIM - it accounts for a little over 7pct of the total market-cap of AIM. The Economic Times New Delhi Edition December 27 Unauthorised Buildings In Bengalooru To Face More Notices Owners and residents of unauthorised buildings may have to face more than notices about the violations from the civic authorities in the near future. Bengalooru Mahanagara Palike, while awaiting its larger role, may go in for some tough steps to tackle the increasing instances of building law violations and illegal constructions carried out without sanction. The "action plan" that may involve besides the BMP, Bengalooru Development Authority and Bengalooru Metropolitan Task Force officials, will constantly monitor all new buildings under construction to check if they conform to sanctioned plans and keep strictly to the building bylaws. The proposal is also to seek the cooperation of utility agencies such as Bengalooru Electricity Supply Company and Bengalooru Water Supply and Sewerage Board to disconnect power and water supply to the building involved in serious violations. This is expected to work as a deterrent for those who think they can get away with violations by payin! g "compounding fees" or penalties. Meanwhile, detailed surveys of all types of constructions are being carried out in revenue sites, privately promoted layouts and other lands, including those coming within the BDA's jurisdiction. In recent weeks, action has been taken against unauthorised structures and additions to buildings in areas such as Nandini Layout and Vrishabhavathi Layout. The Hindu New Delhi Edition December 27 No More Development Problems In Hyderabad When the Telangana issue gathered momentum after Mr K Chandrasekhara Rao quit, it seemed that the real estate lobby was very upset. Fuelling the boom in Hyderabad, the realtors were upset that talk of a separate Telangana would apply brakes to runaway realty prices. The thinking was that the Telangana issue would affect development and land prices in Hyderabad. Their apprehensions were not misplaced because in the past when ever the Telangana issue rose, the first casualty has been the escalating real estate prices. But two months later, this was not the case. Let there be Telangana, and let this new state also have Hyderabad, is the latest refrain from the real estate lobby. Andhra can have a new capital, they say. And this capital should be built in the region of Vijayawada is the contention. To sell their idea, the state government has also spawned the idea of a mega capital for Andhra rivaling and in fact, beating Chennai in size. The Times of India New Delhi Edit! ion January 2 2007 Bharti To Set Up 200 Hypermarkets Unravelling the details of its retail foray for the first time, the Bharti group said it planned to set up 200 hypermarkets and large format stores across the country and invest around $7 bn by 2010. In addition, the group also expects to earn a revenue of over $1-2 bn from its retail business, which would constitute over 10-20 pct of the groupâs targeted turnover of $10 bn by 2010. Bharti has entered into a joint venture with Wal-Mart, which will get into the cash and carry business, while the front end business of running the stores will be undertaken by Bharti. Bharti is also tying up with Axa, its financial services and insurance service partner, to float a realty fund. The group will undertake a mixed strategy in acquiring real estate for its retail foray by leasing space in metros and by buying it in Tier II and Tier III cities. The groupâs realty company, Bharti Realty, is expected to be a key mover in identifying real estate for its proposed foray. Business Standard New Delhi Edition December 27 Alliance Infra Joins Chennai Realty Boom Bengalooru-based real estate developer Alliance Infrastructure Projects has announced its foray into the booming real estate market in Chennai with the launch of a Rs 200-cr villa project in the city. The company will focus on developing properties in Coimbatore and Mysore, besides Chennai and Bengalooru. Alliance Infrastructure now joins the growing list of property developers entering Chennai with an eye on the huge demand in the commercial and residential segments in the city and its suburbs. The company will develop an upmarket 300-villa project called "Bougainvillea" at Porur junction off Mount Poonamalle Road. The project will have 150 villas in the fist phase, and will be completed in 24 months. Mr Manoj Namburu, CMD, Alliance Group, said the company would fund the Rs 200-cr project through internal accruals and project loans from banks. Mr Namburu said that "Bougainvillea" was one of the many projects that Alliance had lined up in Chennai. It would shortly launch a R! s 500-cr integrated township project called Orchid Springs, at Padi near Chennai on a 20-acre plot which will have 1,100 ultra luxury apartments, a 2.5-lakhs ft IT park, a mall and a multiplex. In Coimbatore, it will be acquiring 13.5 acres of land in joint venture with a Lakshmi Group company to build a high-rise apartment project and is also in the process of acquiring more land in Coimbatore. Business Standard New Delhi Edition December 27 3.5 Lakh New Houses In 31 Days, Says Govt Call it heights of confidence, the government says it will construct 3.5 lakh houses in just 31 days. Chief minister Mr H D Kumaraswamy said the target will be reached on time without realising that the departmentâs construction speed is only around 1,000 houses per month. The government, in the current budget, announced that it would construct six lakh houses for below poverty line (BPL) families across the state by the end of March 2007. But till November-end, it constructed only 91,036 houses. Mr Kumaraswamy, when asked about the housing departmentâs tardy pace of work, said, âConstruction activity is under way, we will complete it as per scheduleâ. The Times Of India New Delhi Edition December 29 DVS Plans To Sign Deals With 400 Retail Stores Integrated IT solutions provider, DVS has said it plans to sign deals with about 400 retail stores in the next three months, taking the total number of its clients to 1,000. "We hope to cross the 1,000 stores mark by March next year as we are the only integrated solutions provider in the Indian market and we have already signed deals with 600 stores," Dynamic Vertical Solutions (DVS) Managing Director, Ms Rakhee Nagpal said. DVS' present client list includes US Pizzas, Linc Retail, Eicher Good Earth, Fabmall and Seasons Furnishings among others. The company, which offers integrated solutions for financial planning, CRM and supply chain management, is also looking at the possibility of providing IT solutions to other sectors including hospitality and real-estate. The Gurgaon-based solutions provider works in partnership with LS retail of Iceland to provide integrated solutions to end users based on the Microsoft Dynamics software. The Economic Times New Delhi Edition D! ecember 29 Constructions, RE Sectors Receives FDI Worth Rs 1,252 cr Realty and construction sectors have received foreign direct investment (FDI) of Rs 1,252 cr in the first half of the current fiscal, with most of the inflows coming through the popular Mauritius route. Three realty and construction firms received foreign capital through the tax-haven of Mauritius, while one received it from the US. Companies that received FDI were Orange Realty, Mantri Developers, Alpha Corp and Jaipur Mahua Tollway. Orange Realty tied up with IREO Investment Mauritius for 2 projects, involving total inflows of about Rs 543 cr. Mantri Developers found a partner in GSS III Rose Investment again of Mauritius for an FDI of Rs 300 cr. Alpha Corp tied up with SS III Indian Investment of Mauritius for Rs 263 cr, while Jaipur Mahua forged an alliance with US-based IJM Rajasthan (Mauritius) involving foreign capital of Rs 145 cr. Most of the firms would deploy foreign capital for various real estate activities, while Jaipur Mahua would use the funds for constructio! n and maintenance of roads, railways, bridges, tunnels, pipelines, rope-ways and ports. Industry body Assocham in its latest study has projected that the share of real estate sector in Indiaâs total FDI would increase by at least 10pct to reach 26pct by the end of the current fiscal. The Economic Times New Delhi Edition January 2 2007 Ganesh Housing To Raise Rs 200 cr For Upcoming Projects Ganesh Housing Corporation plans to raise about Rs 200 cr from foreign and domestic institutional investors to fund its upcoming new projects. The company is proposing to invest Rs 3,500 cr in various new projects like hotels, IT SEZs, malls and townships. Apart from coming up with an IT SEZ in Ahmedabad with an investment of over Rs 700 cr, Ganesh also plans to come up with a unique golf township spread over a huge area of 400 acres on the outskirts of the city. It is also coming up with mall projects in the city with an investment of over Rs 100 cr. It plans to set up a 25 storey hotel in the city for which it has been in talks with an international hotel chain which will be managing it. The company is in talks with a leading national IT company which will set up base at its IT SEZ. The company has already launched residential schemes: "Shangri La bungalows", "Mahalyala" and others. The IT SEZ and the integrated township project will house multiplexes, hospital, malls and ! business towers. The company also plans to build a helipad at its 400-acre township. The company also plans to come up with a unique entertainment park there. The Economic Times New Delhi Edition January 2 2007
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