Indian Road-Building Hits Record Pace

http://mobile.bloomberg.com/news/2012-02-26/india-highway-building-hits-record-pace-as-contactors-pay-to-work-freight.html

Indian Road-Building Hits Record Pace as Contractors Pay to Work: Freight- Bloomberg
Indian Road-Building Hits Record Pace as Contractors Pay to Work: Freight
By Karthikeyan Sundaram February 27, 2012 12:50 AM EST

India is awarding highway- construction contracts at a record pace, and saving taxpayers money, as builders stop asking for subsidies and instead offer fees to lay and operate new toll roads.

Competition among builders such as GMR Infrastructure Ltd. (GMRI), Larsen & Toubro Ltd. and IRB Infrastructure Developers Ltd. (IRB) has helped the National Highways Authority of India win payments, or premiums, for at least 23 of the 35 projects it has offered since April 1, said G. Suresh, its chief general manager for finance. He didn’t elaborate. The body will award tenders for 7,300 kilometer-lanes of highways this fiscal year, worth about 570 billion rupees ($12 billion), and 9,000 kilometers next year.

“Many of the projects where we thought we’ll have to pay subsidies, we actually got premiums,” said B.K. Chaturvedi, who headed a government committee on highway development and a member of the state Planning Commission. “It’s a good thing there’s competition.”

Construction companies have stepped up bids for highways as growing vehicle ownership is spurring traffic and because of a slowdown in other sectors such as building power plants. The work will improve roads (LT) ranked worse than Botswana’s by the World Economic Forum and ease congestion that contributes to about 440 billion rupees of harvested foods going to waste each year, according to government estimates.

“India’s road network is barely adequate to maintain its current growth trajectory,” said Shailesh Kanani, an analyst with Angel Broking Ltd. in Mumbai. “Positively, the political will to acknowledge and address this issue is now visible.”

$1 Trillion Spending

India’s investments in roads could rise to $145 billion in the five years to 2017 from about $69.8 billion in the previous five years, according to a PricewaterhouseCoopers LLP. study. The country plans to spend a total of $1 trillion on roads, railways, airports and other infrastructure in the period.

The national highway system, a predominately two-lane network linking major cities, carries 65 percent of India’s freight and 80 percent of passenger traffic. In about six years through October 2011, the highway agency oversaw 5,182 kilometers of construction, including new highways and improvements.

Prime Minister Manmohan Singh in August 2009 set a goal of building 20 kilometers of highways a day. The nation has added 823 kilometers, or about 2 kilometers a day, since then as construction slowed, Tushar A. Chaudhary, junior road transport and highways minister, told lawmakers in parliament Dec. 12.

Tenders Online

Construction is now speeding up, partly because the agency has made it easier for builders to compete for projects by accepting tenders online and by creating a list of prequalified bidders. Winning bidders get to collect tolls for as long as 30 years before transferring the highways to the state, Suresh said. Toll fees are decided by the National Highways Authority.

The highways have become more lucrative for builders and the government as the rising number of cars and trucks boosts traffic and tolls. India’s car sales in the year ended in March jumped 30 percent, the biggest gain in at least nine years, according to Society of Indian Automobile Manufacturers. Sales may triple to more than six million by 2018, Rothschild forecast in a December report.

“Traffic risk is something to be taken on by the developer,” said Virendra Mhaiskar, chairman of IRB Infrastructure, which has constructed roads including the Mumbai-Pune highway. If the builder is confident of generating enough tolls to cover costs and make a profit, it can offer the extra anticipated funds to the government as premiums to secure the contract, he said.

Overestimating Traffic

Builders run the risk of overestimating future traffic and tolls, which could cause them to pledge unprofitable levels of fees, said Parvesh Minocha, managing director, transport division at Feedback Infrastructure Services Pvt., which advises clients on construction projects.

“The premium bids are increasingly becoming a cause for worry,” he said. “The worry will start manifesting a couple of years down the line when you have to give the NHAI what you promised and also put in money to build the roads.”

L&T, the nation’s biggest engineering company, decides to make premium bids for projects based on factors including traffic expectations, competition from other roads, the type of traffic the highway will attract and the ease of construction, said S.N. Subrahmanyan, director and senior executive vice president of its construction division. He didn’t say how much premiums the company has so far paid.

The builder changed hands at 1,298.60 rupees, down 3.7 percent, as of 11:14 a.m. in Mumbai trading, after declining as much as 4.4 percent. It’s fallen 14 percent in the past year. IRB Infrastructure fell as much as 2.9 percent and GMR Infrastructure dropped as much as 3.7 percent today.

Reliance, Adani

Builders may also be chasing road projects to help replenish orderbooks amid a slowdown in power-plant orders, said Manish Agarwal, an executive director at the Indian unit of PwC. Reliance Power Ltd. (RPWR), Adani Power Ltd. and other electricity generators have delayed building $36 billion of power stations because of concerns about coal supply.

L&T, based in Mumbai, has orders to build 100 billion rupees of roads, Subrahmanyan said. The builder boosted the number of road projects to 7,171 lane-kilometers in the first nine months of this fiscal year from 5,701 lane-kilometers a year ago, according to company presentations on its website. The number of power projects remained unchanged at 5 during this period.

Power Plants

That means power plants now account for 29 percent of L&T’s orderbook, compared with 37 percent a year ago. Roads and other building projects’ share has jumped to 40 percent from 32 percent.

“For investors, a company’s valuation seems to be driven by its orderbook,” said Agarwal. “If a company wins a bid, they see it as fantastic.”

Welspun Infratech Ltd., a unit of JPMorgan Chase & Co.- backed Welspun Corp. (WLCO), has won road projects worth 10 billion rupees since 1999, including a 185-kilometer stretch in the central Indian state of Madhya Pradesh, without offering premiums, said Assistant Vice President Rajeev Kumar. Still, the company is willing to offer fees.

“We aren’t averse to offering a premium to win a deal,” he said. “If the deal is good, why not?”

To contact the reporter on this story: Karthikeyan Sundaram in New Delhi at kmeenakshisu@bloomberg.net To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net Arun Gupta

Realty prices to stay high as demand rises-News

http://m.economictimes.com/markets/real-estate/news-/prices-to-stay-high-as-realty-demands-rise/articleshow/12011521.cms

Realty prices to stay high as demand rises-News -Real Estate-Markets-The Economic Times on Mobile

Realty prices to stay high as demand rises
24 Feb, 2012, 1326 hrs IST, Sobia Khan & Ravi Teja Sharma, ET Bureau


BANGALORE | NEW DELHI: Home prices are unlikely to fall this year as sales have picked up across most metros in the past few months, according to bankers and realtors.

Property sales across major cities, such as Bangalore, Chennai, Gurgaon and Noida, rose on increased buyer interest, Bank of America Merrill Lynch said in its report for the fourth quarter of 2011. While sales in Gurgaon averaged 5,200 units over the last eight quarters against an average of 6,100 units on offer in the same period, Noida saw a marginal rise in home purchases. Quarter-on-quarter home sales in Mumbai, however, fell 25%.

"Sales volumes across cities (Mumbai being an exception) surprised us positively. Mumbai is headed for a sharp correction by another quarter or two while other property markets may remain stagnant due to rising unsold stock," the report said.

The Confederation of Real Estate Developers" Associations of India (CREDAI) also said sales have picked up despite builders continuing to hold on to prices. "Sales have picked up in the last few months and developers have not reduced prices as input costs have gone up. At first chance, they will increase rates by 10-30% across markets," said Lalit Kumar Jain, president of the 6000-member association.

"With inflation easing and chances of the cash reserve ratio coming down, builders are not so desperate (to cut prices) anymore as they have been able to generate sales," said Renu Sud Karnad, managing director of HDFC Ltd, one of India"s biggest housing finance companies. Besides, builders are unlikely to reduce prices as they are managing to break even with 40-50% sales.

Prestige Estates Projects has sold 30% stock in its newly launched property in Chennai in just a month. "We have clocked total sales of 1,464 crore in the last nine month as compared to 1,385 crore in financial year 2011," said Venkat K Narayana, CFO.

Mumbai-based property firm Lodha Developers said it has seen an uptick in sales since January. "People have been waiting for a price correction but chances of that happening are very slim," R Kartik, chief marketing officer, Lodha Developers.

"Properties in the range of 25-30 lakh are moving faster but the chances of NPAs in that segment is more. Our experience shows property prices have always been on the upside. A correction, if any, would be too small," said SP Singh, general manager (retail), Punjab National Bank.

Since last two quarters some 125 million sq ft has been added in new launches in the country"s top six markets. Bangalore and NCR saw the highest number of new launches at 48 m sq ft and 31 m sq ft each followed by the Mumbai Metropolitan region with 16 m sq ft, Pune 16 m sq ft and Chennai 12 m sq ft. Continued Arun Gupta

Practical savings opportunities

http://m.economictimes.com/opinion/comments-analysis/no-need-to-go-physical-simple-financial-products-backed-by-gold-or-real-estate-assets-to-deepen-savings/articleshow/11998812.cms


Practical savings opportunities: Consumers should be offe

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Alok Kshirsagar & Naveen Tahilyani

Indian households have had high savings, but put more than half into physical assets such as gold and real estate - a significantly higher amount than most other countries. This is understandable as investment returns on physical assets in the past decade have outpaced equity markets.

But there is often a 15-20% gap between perceived and actual rate of return on these assets, given commissions, bid-ask spreads and illiquidity. What"s more, future investments will require very large, lumpy commitments: 3-5 times the levels of a decade ago. The existing preference for physical assets also drives higher trade deficits (via gold imports), and lowers funds available for capital creation.
What are the ways to meet the consumer"s desire to invest in gold and real estate while mitigating the disadvantages of investing in physical assets? A recent McKinsey study, conducted pro bono with the ministry of finance and the Indian Banks" Association to identify practical solutions to these issues, researched over 1,200 consumers across India, assessed different banks, NBFCs and informal sector models such casino nederland as jewellers and builders" savings schemes, and reviewed relevant international practices.

Our findings indicate a substantial opportunity to deepen savings through financial alternatives with lower-ticket sizes, greater liquidity and potential to generate new capital for the country. This could lead to annual flows twice the size of the mutual fund industry and, in the next five years, add more than 1,20,000 crore for infrastructure and priority sector lending. Beyond deepening existing products like mutual funds, there are two types of innovations worth prioritising for financial services firms and policymakers:

Capture new savings flows with simple financial products backed by gold or real estate assets.
Gold ETFs and mutual funds have only tapped a relatively small, trading-oriented customer segment rather than the larger savings-oriented base. New alternatives such as gold accumulation products and gold bonds would work similar to a monthly recurring deposit scheme, with customers ultimately obtaining certificates to purchase gold or receive cash.

If manufacturers (e.g., banks and asset managers) are allowed to back 80% of the assets under management with physical gold and hedge the remainder, this would unlock significant productive capital.

McKinsey"s research showed high willingness among middle- and upper-middle-income customers to consider real estate investment vehicles that delivered stable rental yields from reputed asset managers (rather than current schemes that are designed for wealthy investors interested in capital appreciation on new construction). Both types of products have been successful in markets such as China, Japan, and Singapore, and can be adapted to India.
Arun Gupta

India companies may dole out 12% salary hike this year: Study - The Times of India on Mobile

http://m.timesofindia.com/business/india-business/India-companies-may-dole-out-12-salary-hike-this-year-Study/articleshow/11982944.cms

India companies may dole out 12% salary hike this year: Study - The Times of India on Mobile

NEW DELHI/ MUMBAI: Despite talk of a slowing economy, improved sentiments of late have warmed India Inc to the prospects of another year of double digit salary hikes. Indian companies plan to dole out an average of 11.9% salary hike this year, compared to 12.6% last year, according to a survey conducted by human-resource consulting firm Aon Hewitt.

Despite the moderation in hikes, salary increments in India will remain the highest in the Asia-Pacific region. While salaries in China are expected to go up by 9.5%, in Philippines employees will get a 7% hike. Globally, India ranks among the top five countries with maximum salary hikes.

"The year 2012 will be a growth oriented year for most companies and salary increases are more probable this year. While the projections for the increase are marginally less, the situation is much better than it was during 2007-2008 crisis," said Sandeep Chaudhary, practice leader, Compensation Consulting for Asia Pacific, Aon Hewitt.

With the rupee appreciating considerably over the past one month and consumer spending on better lifestyle on the upside, the survey shows that companies are concentrating on allocating the surplus cash to reward employees, who contribute significantly to their organisations" growth.

Even as the average salary hike is expected to be in the 12% range, the survey pointed out that the hikes given to critical talents will be 2%-3% more than the overall increments in an organization, a trend which has been witnessed across organizations in the last three years.
The trend continues for 2012, with a projected increase of 15.1% for this employee group.

Moreover, the salary increase for employees rated as "far exceeding expectations" is almost two times the salary increase compared to those "meeting slots online spielen expectations".

B S Murthy, CEO Leadership Capital, a boutique executive search firm, said that while the IT industry may see muted growth this year, growth across industries like FMCG, real estate, finance and others will be relatively better leading to good salary hikes. "For IT industry, hike in salary will be around 7%-10%, slightly lower than last year. Other industries, however, will see increase in the range of 8%-12%."
As far as sectors go, this year"s salary increase will be the highest for the Indian pharmaceutical industry, with a projection of 13.3% hike. The engineering design/services ranked the second highest on the salary hike table with a projected increase of 13%, which is 1.1% higher than the India average. The lowest hikes are expected to come in for the telecom and financial services sectors with an11% and 10% increase respectively.

Another big trend across India Inc has been the increasing focus on variable pay as part of total compensation. Top and senior management see 23% of their total compensation as variable (up from 16% in 2001) and even the lowest-rung entry staff get approximately 13% of their total compensation (up from 10% in 2001) as variable pay, said Aon.

However, high attrition rates are expected to plague companies owing to high inflation rates. "Companies are adopting different strategies to boost growth and rationalizing manpower is an option they may look at," Chaudhary said. Overall attrition rate is projected to be at 19.8%, with financial sector to top the charts at 29.3%.
Arun Gupta

Realtors hope Budget to make business briskier

http://www.business-standard.com/india/news/realtors-hope-budget-to-make-business-briskier/465343/

Realtors hope Budget to make business briskier

Realtors hope Budget to make business briskier
Want green development, end to hardening of interest rates
Vikas Sharma / New Delhi/ Chandigarh 

Feb 22, 2012, 00:26 IST

The real estate players are all ears to the upcoming union budget, as all of them are anticipating measures that would trigger a growth in the sector.

They also foresee an end to hardening of interest rates, as the developers are looking for the union budget to feature measures that would help ease the monetary policy.

The players are also seeking incentives for the promotion of green development, which would help reduce carbon footprints.
The third quarterly result reflects the concerns on sales and profits, while retiring debts remain a significant challenge for the real estate players.

While the net profit for Parsvnath Developers Limited had declined by 28 per cent in the third quarter, DLF continues to struggle with a debt which is still above Rs 22,000 crore.

Looking ahead, most of the real estate players are anticipating a benign interest rate regime that would ease some pressure.
High costs of funds is one of reason that Pradeep Jain, as chairman of Parsvnath developers, says has put pressure on the margins for the company.

Jain, who also heads the Confederation of Real Estate Developers’ Association of India (Credai), says the palyers were anticipating the forthcoming Union Budget to leave room for the RBI to address the issue of easing the country’s monetary policy. “Besides a benign interest-rate regime,” he said, “the Credai has also sought an extension of tax holidays for housing projects under Section 80IB (10) of the I-T Act, enhancement of the benefit to individual home buyers and extending I-T benefit to affordable housing projects.”

As for DLF expectations from the budget, its executive director (north) Rahul Mehta notes that the construction sector is among the largest employers.

The growth in the sector has a direct impact on ancillary industries such as steel and cement, thus creating a ripple effect in the market. Hence, as the budget needs to provide the requisite stability to the economy, it now needs to focus on strengthening the real estate sector. Brotin Banerjee, managing director and CEO of Tata Housing Development Com-pany Ltd (THDCL) says it is time the government started announcing sops for green projects that could lead to increase in the green projects.

The sector contributes to 5 per cent of global carbon emission. Also, consumers opting for green developments should be incentivised by reducing stamp duty, Banjeree added.

In the case of houses raised under a budget of Rs 35 lakh from the current cap of Rs 20 lakh. This is considering the rising property prices, Banerjee said.

The realtors believe more customers could be incentivised by an upward revision in the interest on the deduction limit of home loans -- under Section 24 of the Income Tax Act: from Rs 1.5 lakh to Rs 2.5 lakh.

Lowering the I-T rate on rental income on residential units from current rates as per tax slabs to a special rate of flat 15 per cent or increasing the standard deduction from the rental income under Section 24 of the I-T Act from the currently 30 per cent to 50 per cent, he added, would “encourage rental housing and thereby help overcoming the situation of un-affordable housing”, he added.
Arun Gupta

NRIs seek stability in real estate

http://postnoon.com/2012/02/21/nris-seek-stability-in-real-estate/30814

NRIs seek stability in real estate
Om Ahuja

Recently an acquaintance – a fund manager by profession – relocated to India to set-up a domestic private equity (PE) fund here. He had invested in a Mumbai residential property strategically located close to the primary business district and an international school for his kid. This investment, done a few years back, helped him crystallize his plans for relocation to India and start his venture without spending time in finding the right location, house and school.

What I found most interesting was that he had not even considered eventually relocating to India when he bought this apartment. He had simply done it for investment five years previously.

To date, I have not met a single non-resident Indian (NRI) who is not keen to buy real estate in India. Home ownership in this country is one of the most satisfying means available to them to stay connected to their motherland. Very often, such investments in their country of origin help them to maintain their relationships back home while they make their fortunes abroad.

A few weeks back, I met another NRI businessman – earlier based out of Madrid and now relocating to NCR on the heels of the Euro crisis – who was seeking to build a local business base here. Achieving this while resettling family on all fronts has not been an easy task for him. He is on the lookout for the ‘best’ location for a residential property in NCR and naturally finds the cost of properties in the prime areas staggering and beyond belief.

He had not considered investing in a property earlier. Completely out of synch with the market dynamics back home, he blithely assumed that his foreign-earned savings would make finding a luxurious home a breeze. He was ill prepared for the astronomical ticket sizes that now prevail.

Own a home here

Over the past few years, we have noted that NRIs are investing into residential real estate specifically in large Indian cities to build a back-up base in the country. This particularly applies to NRIs with professional/entrepreneurial ambitions who intend to set up businesses in these cities in the future.

Post the 2008-2009 global financial crisis (GFC), India has stood out as a showcase example of financial stability, specifically in terms of its conservative banking sector. More than anything else in the past, the GFC caused NRIs to seriously contemplate owning homes in India as their rattled confidence in all things foreign gave way to a yearning for familiarity and stability on both on the personal and professional fronts.

No one can exactly predict the fate of any currency, or the stability of any economy. Economies are notoriously ‘subject to market risk’ – for instance, no one had expected that west Asia would see political uncertainty a few years back. However, when it comes to personal and career stability, there must be no margin for error. The trends suggest that more NRIs are taking important decisions with regard to owning real estate in India.

Rules of engagement

NRIs have no restrictions limiting them with regards to how many commercial or residential properties they can own in India. However, there are restrictions on the repatriation of sale proceeds, which is limited to two units. Effectively, this means that NRI face no restriction while investing into commercial or residential real estate in India. However, when a NRI decides to sell and take the money back to the country of residence, he can do so with the sale proceeds of only two units.

NRIs can invest into real estate by remitting funds to India through normal banking channels, or by invest through funds in a Non-resident external (NRE)/ Foreign currency non resident (FCNR)/ Non- resident ordinary rupee (NRO) accounts maintained in India. They cannot make payment via travellers’ cheque or foreign currency notes. They are also restricted from making any payments outside India or settling payments through exchange of funds outside the country.

NRIs can avail home loan from Indian institution approved by the National Housing Bank (NHB), and loan repayment can be done either through inward remittances, debit to a NRE/FCNR/NRO account, via rental income earned in India or by borrowing from close relatives residing in India. NRIs can also avail of home loans from the employer in India, provided specific terms and conditions listed by RBI are met.

NRIs can mortgage residential property in India with an Indian financial institution without any approval from RBI. They can also mortgage it with a foreign financial institution with prior approval from RBI.

NRIs can rent out their residential property without the approval of the RBI in India. Rent received can be credited to NRO/NRE account or remitted abroad. Authorised dealers have been empowered to allow repatriation of current income like rent, dividend, pension, interest, etc. of NRIs/ a person of Indian origin (PIOs) who do not maintain an NRO account in India, based on appropriate certification by a chartered accountant confirming that the funds proposed are eligible for remittance and that applicable taxes have been paid or provided for.

RICS launches best practice standards for realty

RICS launches best practice standards for realty

by CW India Staff on Feb 20, 2012

In an effort to enhance professionalism in the industry, RICS has launched its Red Book of Valuation Standards and Global real estate agency and brokerage standards at the recently concluded real estate conference in Mumbai.

The RICS standards, which have already been adopted in a number of countries, look to provide an overarching international framework for all property brokers worldwide. Based on 12 high level principals towards fairness and transparency; the purpose of these standards is to ensure that clients receive objective advice, delivered in a professional manner that is consistent with internationally recognized standards. Four international property consulting firms– CBRE South Asia, DTZ India, Colliers International and Re-MAX– having their operations in India, have decided to adopt RICS real estate standards.

Sachin Sandhir, MD, RICS South Asia said, “RICS has been a strong advocate of change and professionalism, in an otherwise non transparent and fragmented Indian real estate market.

I am happy to note that leading IPC firms, which have been at the forefront of professionalism, have decided to adopt the RICS Global real estate agency and brokerage standards.”

RICS Red Book of Valuation Standards (India edition), which was also launched during the conference, set out six principle based IVS-compliant valuation standards that provide professional benchmark (or an effective ethical and practice framework) for Indian valuers to undertake reliable valuations.
“One of our guiding principles at CBRE has been to maintain the highest standards of service and ethical conduct while working with clients. It is the cornerstone of our business and what we believe sets us apart from the others. We are therefore happy to work with RICS to further adopt the RICS Real Estate and Agency brokerage standards for all our brokerage departments across India,” said casino netherlands Anshuman Magazine, Chairman & MD, CBRE South Asia.

Anuj Puri of Jones Lang LaSalle feels it’s a good move from RICS whose ‘contribution as a global standard setting professional by way of globally consistent yet locally relevant standards is significant. “RICS Real estate Agency and Brokerage standards, which provide the first ever international framework for best practice in execution and delivery of real estate agency services, are to be encouraged, as they demonstrate a culture of fairness and transparency, leading to higher investor and consumer confidence. JLL welcomes this important initiative,” he added.
The day-long conference saw some of the stalwarts of the real estate industry taking part in panel discussions on a number of key issues concerning the industry.

Arun Nanda of Mahindra and Mahindra spoke about the significance of instilling trust as well as the importance of timely project delivery to win trust and confidence of consumers.

Speaking about policy reforms for urban growth and mission transparency, Lalit Kumar Jain, president, CREDAI voiced his concerns for proposed real estate regulatory authority as well as long delays in the project approval processes and advocated the need for a single window clearance process to avoid delays in execution.

Talking about his vision for Indian Real Estate 2020, Niranjan Hiranandani, CMD, Hiranandani Constructions gave examples of the rapid transformation India has undergone over the last few years. Given this, he shared encouraging words about the potential of the sector to build enormous quantum of housing required to meet housing shortfall in the country.

Cement prices in India up by 15pct in 11 months - CRISIL - 25096

http://www.steelguru.com/indian_news/Cement_prices_in_India_up_by_15pct_in_11_months_CRISIL/250965.html

Cement prices in India up by 15pct in 11 months - CRISIL - 25096

CRISIL Research said that lower demand for residential real estate and slower pace of execution of infrastructure projects weighed down demand for cement in the April 2011 to January 2012 period. Demand for cement grew at a subdued pace of 6.3% YoY.

With huge capacity additions during casino pokies games the same period, operating rates declined to 73% as compared to 77% in the previous year. Despite this fall in operating rates, cement prices rose by 15% YoY. This was mainly due to production cuts by cement manufacturers in the South, the region which witnessed the maximum price increase.

In January 2012, the average pan-India retail cement price marginally corrected by around 1 per cent on a month on month basis to INR 283 per bag. Mr Ajay D"Souza head of CRISIL Research said that “We believe that the pan-India cement price is likely to remain firm in February 2012, despite the rollback of the hike in coal price by Coal India.”

Arun Gupta

Brace for 10-30% price rise, delivery delays: real estate players

http://www.thehindubusinessline.com/industry-and-economy/article2907505.ece?homepage=true

Brace for 10-30% price rise, delivery delays: real estate players

Real estate players have said housing customers should brace for a 10-30 per cent rise in property prices in 2012-13. Also, delivery delays and speculative price spirals could further pinch the customers" pocket in the forthcoming fiscal, they warn.

Mr Navin M. Raheja, Chairman, Raheja Developers, said, “In all likelihood, prices will rise in the medium-term. The cost of land is going up. Funds are restrictive and material cost is also steadily rising. Speculative prices have slowed sales. People with disposable income are also driving up the prices so there is a huge demand-supply issue.”

Residential property

Residential property accounts for 80 per cent of real estate market in terms of volume, growing at about 35 per cent annually.

Mr R. R. Singh, Director-General, National Real Estate Development Council (NAREDCO), said that the Government needs to unlock land value to help end consumers. “There is a huge land bank. Government should sell it at cost price to bidders. This will help ease the demand supply issue.”
Also, he said the Reserve Bank of India"s latest notification to banks to exclude stamp duty, registration and like charges while calculating the value of a property they intend to finance, will lead to defaults and also higher price at the consumer end.

“The notification effectively means home buyers would have to arrange for more funds on their own, as banks will not lend for these charges any more. This could lead to a further decline in home sales in the lower and medium segments and also put additional burden on consumers,” he said.

Asked whether the draft Real Estate (Regulation & Development) Bill, 2011 would help in making the sector transparent, Mr Raheja said the draft was highly disappointing and against developers. “We believe that the regulator could be just another authority apart from local and State authorities, which could lead to delay in sanctioning of projects and be a source of corruption.”

Projects delayed

Meanwhile, Mr Santhosh Kumar, CEO – Operations, Jones Lang LaSalle India, said, as many as 63 large residential projects in NCR (accounting for almost 40,000 units) are delayed by over four years.

“Out of these, around 10 projects with 9,000 units have been delayed by over six years. This includes projects wherein possession of a small percentage of units has been handed over, while most of the whole project remains incomplete,” he added.

Keywords: Real estate, housing customers, Residential property

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Arun Gupta

Realty sector holds many options to suit every investor segment - The Economic Times

http://economictimes.indiatimes.com/markets/real-estate/realty-trends/realty-sector-holds-many-options-to-suit-every-investor-segment/articleshow/11930649.cms

Realty sector holds many options to suit every investor segment - The Economic T

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imes

The population of cities in India will increase to 590 million by 2030. The scale and speed of urban transformation here over the next 18 years will beat any development that has happened anywhere in the world, except in China, according to a McKinsey Global Institute survey.
Urbanisation will spread out across the country, impacting almost every State. Five large States, Tamil Nadu, Gujarat, Maharashtra, Karnataka and Punjab, will have more of their population living in cities than in villages.

In a nutshell, 700-900 million sq mts of commercial and residential space needs to be built, or in other words, a Chicago has to be added on every year. The ensuing investment opportunities in different areas, particularly in real estate, need not be stressed any further.
The capacity to invest and the need vary depending on the individual, but there is an opportunity for every investor in real estate. For small investors who do not need housing immediately, investments in plotted developments are suggested, as land appreciates much faster than built spaces.

This is because of the simultaneous development in transport, connectivity and other infrastructure around. Areas close to industrial corridors, housing colonies and proposed transport corridors will be good for such investors in the long run, say industry experts monitoring investment trends in real estate.

Plot loans are now available from a number of housing finance companies and banks though at a higher lending rate than home loans. But it is still beneficial for investors parking money in plotted development projects to source funds through site loans as the due diligence process will also be done by the financial institution.

A number of layouts in north Bangalore in the price range of Rs 2,000-3,000 per sqft with a online casinos no download site loan option can be considered for a medium to long-term investment, according to property consultants. Further, improved connectivity to Electronic City and Bidadi along Mysore Road offers potential avenues for investments in plotted developments. Yet another belt is Hosur Road where industrial development is picking up and a number of plotted developments are under various stages of implementation.

Investment options in residential property in and around the city abound. The yield begins at four percent and depending on the location, specification, type of development and amenities offered in the project, goes up. The capital appreciation and fiscal sops add to the investment value.

There are row houses and villas coming up in the suburban and peripheral areas of the city. A distinct advantage of such options is they come with larger site areas that enhance the returns from the investment. There are pre-launch offers made during soft launches by some developers for investments in residential projects. The average yield can range between 18 and 25 percent during the project implementation stage.
Arun Gupta

KfW earmarks 800 mn euros for India renewable energy projects

MUMBAI: German government-owned development bank KfW plans to lend 800 million euros in the 2011-12 calender year to finance various renewable energy projects in India.

"We have already financed around 1.5 billion euros in the energy secto

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r in India. In addition to this, we plan to earmark another 800 million euros to fund the green initiatives of India this year (CY"11)," KfW Director Oskar von Maltzan told PTI on the sidelines of the "Renewtech India Summit" here.

The German government is keen to promote investment in energy-efficiency and renewable energy projects in India by providing sustainable financing through various agencies, he said.

"We finance those government agencies which either implement renewable energy projects or lend funds to private or public investors," he said.

KfW has provided funds to state-run power online casino reviews generating companies such as North Eastern Electric Power Corporation (NEEPCO) and NTPC for undertaking hydro and solar-based projects.

Power Finance Corp, SIDBI, the Indian Renewable Energy Development Agency (IREDA), REC and India Infrastructure Finance Company (IIFCL) are some of the entities being funded by the German bank.

KfW recently signed a loan agreement of around 52 million euros with National Housing Bank (NHB) to promote energy efficiency projects in the residential space, Maltzan said.

The foreign lender has also funded Energy Efficiency Services Ltd (EESL), which provides consultancy services on energy-saving appliances, buildings and turnkey projects.

KfW Bank is in the process of signing a 200 million euro line of credit with IREDA next month, Maltzan said, adding that so far, it has provided 140 million euros to the state-run lender.

KfW will also sign a loan agreement worth 100 million euros with NTPC for a 15-MW solar plant in Rajasthan in the next few months, he said.
In addition, it plans to lend 100 million euros to REC to enable the company to invest in various energy-efficiency and renewable energy projects, Maltzan said.

Furthermore, the bank is looking at funding different programmes that are being implemented by NABARD and the Maharashtra State Electricity Generation Company (MAHAGENCO), he added.

NDTV Profit launches a new real estate show

http://www.afaqs.com/media/media_newslets/?id=53009_NDTV+Profit+launches+a+new+real+estate+show

NDTV Profit launches a new real estate show

View other Media Briefs

Section: TV Briefs Category: Media

Media News
New Delhi, February 14, 2012

NDTV Profit will broadcast a new real estate show called The Property Show, which will offer expert advice to viewers on all property related matters. The show will explain the intricacies of buying, selling and investing in property through live call-ins, debates and discussion.
Anchored by Manisha Natarajan, the show will also have a segment featuring legal, financial and construction advice from architects and designers on how to upgrade homes and offices.

For the first time in India, NDTV Profit and PropEquity, a premier Business Intelligence product, will guide viewers where to buy, when to sell and how to invest in property.

Backed by a scientifically researched database, NDTV Profit, together with their Knowledge Partner, PropEquity, will provide research transparency and intelligence in the opaque and fragmented real estate market to the consumer, casino spiele online to make the most informed decisions on their investments in property. This data and analytics platform was earlier only available through PropEquity to large institutions and banks to make multi-million dollar decisions. PropEquity, has a real estate data and analytics platform covering over 39,000 projects of 7,500 developers in over 40 cities in India.

Tune-in to NDTV Profit Monday to Friday at 7:00pm for everything you need to know about your property.

For further information, please contact:
PR Pundit
Parul Suri
Mobile: 919899973280
E-mail: parul.b@prpundit.com
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Arun Gupta

India’s Housing Loan Tax Ceiling May Go Up

http://www.loansafe.org/indias-housing-loan-tax-ceiling-may-go-up

India’s Housing Loan Tax Ceiling May Go Up

(Source: The Statesman/ANN) - In a bid to boost housing sector credit, the Indian government is contemplating to enhance t

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he income-tax exemption for up to Rs 3 lakh(US$6,071) paid as interest on housing loans in a year, from the existing limit of Rs 1.5 lakh.

The government is considering to raise the tax deduction limit for housing loan in the coming Budget, sources said.
The Budget is scheduled to be tabled on March 16.

At present, a deduction of up to Rs 1.5 lakh is available from taxable income towards interest on loan taken for house. Besides, borrowers can enjoy exemption on payment of principal amount. However, it is part of exemption to savings capped at Rs 1 lakh per annum.

With the property prices and interest rates rising with each passing year, there is need to revise the limit, sources said.

In order to arrest the declining growth rate, the industry associations have demanded raising the tax limit ceiling for the housing loan. According to Ficci Secretary General Rajiv Kumar the exemption should be harmonised with the rising interest rates and increased to at least Rs 2.5 lakh. “We recommended that the existing tax deduction limit on income tax of an individual should be increased from the current level of Rs 2.5 lakh to at least Rs 5 lakh,” said CII Director General Chandrajit Banerjee. Of this, Rs 3 lakh should be towards interest payment to offset the impact of high interest rates, he said, adding the remaining Rs 2 lakh should be exclusively towards principal loan repayment as the present limit of Rs 1 lakh is already overcrowded with several other items.

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Echoing views, Assocham and PHD chamber said that exemption limit need to be raised both for interest and principal.
As per the Direct Taxes Code, which would replace the decades old Income Tax Act, there is income tax exemption for up to Rs 1.5 lakh paid as interest on housing loans in a year.
___
©2012 the Asia News Network (Hamburg, Germany)
Visit the Asia News Network (Hamburg, Germany) at www.asianewsnet.net/home/
Distributed by MCT Information Services
Arun Gupta

Global real-estate markets continue promising trend

Global real-estate markets continue promising trend

The Nation February 13, 2012 1:00 am

While economic uncertainty still affects the main commercial real-estate centres around the world, global real-estate

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markets are showing steady improvements, according to Jones Lang LaSalle"s new suite of global forecasting reports.

The firm"s Global Office Index reveals the fourth quarter of 2011 marked the eighth consecutive quarter where prime office rents have risen, up a further 0.8 per cent over the previous quarter and representing 6-per-cent growth over the fourth quarter of 2010. Global vacancy is edging down to the lowest point for the past two years at 13.6 per cent.

"The majority of global leasing markets are holding firm, and many are showing remarkable resilience, especially among the BRIC countries [Brazil, Russia, India and China], as well as robust showings from Canada, Australia, Germany and the Nordics," said Jeremy Kelly, director of Jones Lang LaSalle"s Global Research team and author of the firm"s Global Market Perspective. "While leasing markets in the major financial centres are softening, the limited supply pipeline should ensure that they do not move significantly out of balance."

Jones Lang LaSalle"s Global Office Index tracks the rental performance of prime office space across 81 major markets in the Americas, Asia Pacific and Europe. Key findings of the Jones Lang LaSalle"s Fourth Quarter 2011 Global Office Index include:

_ Rental growth rose the most in the Americas at 1.2 per cent in the fourth quarter over the third quarter of 2011, as landlord leverage gradually increased in the majority of markets.

_ Asia-Pacific markets saw rental growth decelerate from 2.5 per cent in the third quarter to just 0.9 per cent in the fourth quarter as corporate demand began to slow.

_ Despite the negative economic backdrop, Europe"s office markets showed some improvement over the fourth quarter with growth picking up to 0.4 per cent from a virtual halt in third quarter 2011.

_ Leasing volumes will be steady in 2012 with positive rental growth expected in most major office markets. Beijing, Toronto and San Francisco are expected to top the charts with potential double-digit increases.

Investors, already wise to the resilient fundamentals in the commercial real-estate sector,

continue to choose real estate given its attractive investment status compared with alternative investments.

The Global Market Perspective shows robust capital market investment volumes in the fourth quarter 2011. A total of US$411 billion (Bt12.68 trillion) was transacted in full-year 2011, up 28 per cent on 2010. 2012 transaction levels are set to match 2011, with upside potential in the Americas.

Arthur de Haast, lead director of the International Capital Group at Jones Lang LaSalle, added that the markets are witnessing a "flight-to-quality", traditional in times of uncertainty, as investors pivot towards core assets in those major cities with strong economic fundamentals and/or with "safe-haven" characteristics. While there is capital available for commercial real estate, debt financing around the global will be more constrained in 2012. We"re seeing capital appreciation slowing as yields flatten, and spreads between core and secondary assets widen.
While commercial real-estate expectations for 2012 have been tempered, barring significant financial system shocks, commercial real estate investment and leasing volumes are likely to be maintained at 2011 levels.

High Street back with a vengeance

http://www.dnaindia.com/money/report_high-street-back-with-a-vengeance_1647217

High Street back with a vengeance

As consumers grab shopping carts and fill store aisles after a long recession, mall building is back.
About 15 million square feet (msf) of retail space was added last year, which, according to some estimates, is 130% of what was added in 2009 and 2010 put together.

Of these, about nine msf were added in the last six months. And more than 90% came up in bigger cities like Mumbai, Pune, Bangalore and Chennai, finds a study by real estate consultant CB Richards Ellis (CBRE).

Anshuman Magazine, chairman and managing director, CBRE South Asia, said, “On the back of growing urbanisation and an increase in the acceptance of organised retail, retailers have been expanding their operations across the country.”

All is, however, not hunky dory. While rentals are stable in most top cities, they have fallen at a few developments in Pune, Chennai and Hyderabad. Analysts say a huge supply pipeline is depressing rentals.

The recently launched Phoenix Market City at Kurla faced challenges in leasing out multiplex space. Sources said that film exhibitor PVR which turned down the offer citing high rentals, later settled for lower rentals.

With pressure on, the industry feels rental renegotiations are inevitable from the first quarter of the next fiscal. Pankaj Ahuja, proprietor, Rapid Deals, a real estate consultancy, said rate negotiations are not happening in the roulette established malls of Mumbai. “But some developments that are not fully operational are facing challenges. I wouldn’t be surprised if some of them cut rentals.”

The quality of malls is another concern worrying retailers. A recent report by Jones Lang LaSalle India said half of the upcoming malls are not worth a second glance as they are built in wrong locations and would not draw enough footfalls and high spenders.
Ashutosh Limaye, head-research and real estate intelligence service, Jones Lang LaSalle India, said, “We are stuck with the mistakes we made 3-4 years ago — creating too many malls. Few understood that building and running malls is a science, and that factors like catchment viability, location, supply benchmarking and mall management matter in their success.”

Also, retailers have started scouting standalone properties like old mansions, mixed-use buildings and small office blocks in established and emerging locations. “Big-format chains are mandating realty firms to broker deals for them,” said Limaye.

Expats flock to India !

http://india.blogs.nytimes.com/2012/02/08/expats-flock-to-india-seeking-jobs-opportunity/

Expats Flock to India Seeking Jobs, Excitement

Sruthi Gottipati/The New York TimesA L’Opéra’s outlet in Khan Market, Delhi, one of the prefer

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red hangout spots for expatriates living in the capital.

It’s movie night at Thomas Mehwald’s house in the Indian capital of Delhi and he’s showing a Rainer Werner Fassbinder flick to his eclectic group of friends. The film is perhaps the only German import at his Gulmohar Park house – besides Mr. Mehwald and his family. The 33-year-old economist, who’s been living in India for the last two years with his wife and son, has embraced the country since he first set eyes on it.

‘‘You discover in this chaos there’s order, which I still haven’t understood,’’ said Mr. Mehwald, 33, with a laugh and a swig of his Kingfisher beer, a ubiquitous brand in India. Although the chaos contrasts starkly to his life in Germany, he’s been able to find his footing here; he recently negotiated with wily brokers to rent a new apartment without getting ripped off — a surefire sign he’s acclimatized.
Mr. Mehwald is an advisor at Sa-Dhan, a nonprofit that works to build community development finance, which is at a critical stage in India. He said his job is a terrific learning opportunity he didn’t want to miss.

‘‘The future is here,’’ said Mr. Mehwald, who talks with a strong Indian cadence in his voice when he speaks in English. ‘‘I know they’ll be many innovations coming out of this country.’’

Mr. Mehwald is part of a growing number of expats flocking to India in the last few years eager to tap into the opportunities the country has to offer, witness its rich transformation and sample a way of life often very different from their native countries. Foreigners, of course, have flocked to India for centuries, as colonizers, missionaries, volunteers and escapees from persecution in other countries. This new wave is made up mostly of well-educated migrants from wealthier, more developed countries, leaving behind slow economies in search of job prospects and opportunities they can’t find at home.

‘‘I thought it would be a good adventure,’’ said Shannon Lee Zirkle-Prabhakar, 27, an American photojournalist who moved to Chennai last April with her husband. She said she had visited India once before, in 2005, but doesn’t remember seeing as many expats then. ‘‘I notice more now.’’
Although government agencies weren’t able to provide figures for the total number of foreigners in India, the Ministry of Home Affairs offered numbers that paint a stark portrait.

At the Indian consulate in San Francisco alone, the number of visas granted to Americans to work in India almost doubled, from 23,085 in 2009 to 47,929 in 2010. And those numbers don’t include Americans of Indian origin who have applied for special visas. In the same period in Beijing, there was a 51 percent jump to 32,932 Indian work visas granted. In the southern Chinese city of Guangzhou, that increase was 27 percent to 20,550; in Shanghai, a 30 percent rise to 24,382.

Other countries across the globe reflected the same trend. The number of Indian work visas issued in Singapore soared by 33 percent from 21588 in 2009 to 28650 in 2010. In Europe, the Indian visa office in Paris doled out 41 percent more work authorizations in the same period, while Berlin saw 48 percent more Germans clamor to work in India, granting 49,104 visas.

Analysts attribute the relative strength of India’s economy and foreign companies continued interest in India, for some of this rise.
‘‘There’s been a lot of development in the last three years. India was one of the very few countries insulated from the economic crisis,’’ said Dr. Soumya Kanti Ghosh, director, economics and research, at the Federation of Indian Chambers of Commerce and Industry, the nation’s premier business lobbying group. He credits strong external demand and robust growth for investors to see potential in the market.
Not all who come to India intend to stay for long periods of time. For instance, in Seoul, where the number of visas granted to South Koreans to work in India tripled from 10,030 in 2009 to 31,440 in 2010, officials say that many only make short trips just to manage their business interests.

Still, most expats are here to stay – at least for a while.

Those who plan to live in India for more than six months need to register themselves in the country with the Foreigners Regional Registration Officers. While 35,973 U.S. citizens (not including those eligible for special visas available for Americans of Indian origin) registered in 2008, 41,938 did so the following year, according to the latest figures available with the Ministry of Home Affairs. Expats from Britain, France, Germany and Korea contributed to a similar rise.

‘‘There’s a definite change,’’ said Francis Wacziarg, 69, a Frenchman who moved to India in 1970 and has been living here since, and who’s seen a surge of foreigners over the last few years who aren’t all tourists. ‘‘Now it’s more people who want to settle down and work either for a company or set up their own business.’’

When Mr. Wacziarg first came to India as the commercial attaché of the French embassy, he said there were hardly any foreigners living here. When he tried to set up a consultancy firm advising foreign companies on buying exports from India in 1978, he approached government officials in Mumbai and Delhi to make a case for himself because foreigners weren’t allowed to work in many fields or set up business in the country at that time. That changed with the liberalization of the Indian economy in 1991 and India gradually warmed up to foreigners.

Mr. Wacziarg today owns an export agency, a nonprofit music foundation and is co-chairman of the Neemrana hotel chain.

One of the other areas that has seen an influx of expats is the media world. In journalism schools in the US, graduates are encouraged to come to India because of mushrooming media organizations, vigorous newspaper circulations and a relatively free press. Many professionals with a nose for adventure looking to leave saturated Western markets are attracted to India.

‘‘There’s really been a sense of limitless horizons. There’s very little to restrain you. People’s ambitions are set very high and rightly so,’’ said Rodrigo Davies, 29, who moved to Mumbai two years ago to work as GQ’s online editor after seven years as a journalist in London.
‘‘In terms of opportunities, London is always innovating. But the number of businesses, publications opening there is a fraction of what’s opening here. A lot of companies here are going digital straight away.’’

With the soaring number of foreigners, Mr. Davies describes what seems almost like a thriving expat subculture in India. He said there’s a new restaurant or high-end boutique opening every other week in Mumbai and once a group of expats start talking about it, word spreads through the community quickly.

Belgian chain Le Pain Quotidien, The Table, which serves international cuisine, and French crêperie Suzette, are some of the eateries in Mumbai that are familiar to expats, said Mr. Davies.

‘‘You would see a disproportionate number of expats in these places.’’
Last year, French Tuesdays, an international club, reportedly drew scores of expats when it held its first event in Mumbai.
Meanwhile in Delhi, a moderated Yahoo group used by expats called Yuni-Net is rife with postings on topics ranging from available apartments to pleas to figure out India’s notorious bureaucracy.

It has yet to be seen whether the number of expats pouring into India will continue. The slowing economic expansion in the country this year, as well as new rules introduced by the government could serve as dampeners.
Foreigners must now earn the equivalent of $25,000 per year in order to be considered for employment visas, which they say is often an unrealistic figure, particularly if they don’t have much work experience or have a job in low-paying fields like India’s huge non-profit “industry.” Some, as a result, have to work for free, which limits their ability to stay in India.

The earning requirement is perhaps also a reason why recent immigration to the country has been mostly from the educated, higher economic bracket. India also has poorer immigrants, mostly undocumented, from countries that border it such as Bangladesh and Myanmar.
Expats might stick on though, irrespective of the new regulations. Real estate prices have shot up in Delhi neighborhoods widely considered magnets for expats. In Defence Colony, a South Delhi locality, multi-storey apartments cost 26,884 rupees per square foot in 2010, compared to 19,222 rupees in the same period in 2009, according to the property Web site magicbricks.com.

In the more exclusive area of Jor Bagh, that number rose from 37,541 rupees to 48,561. And apartments which cost 22,978 rupees per square foot commanded a 20 percent higher price tag in Vasant Vihar in just the span of a year.

This may be because there are still many factors that keep India an attractive destination including the prevalence of English and a culture where most people on the streets are willing to be helpful to the bumbling expat.

Mr. Mehwald, the German economist, said he’s even found himself becoming more gregarious than he was back in Berlin.
The trick to live in India, he said, is to ‘‘take things as they are.’’ That and not to trust brokers too quickly.