Realty brand positioning not connecting with home buyers-III

Track2Realty Survey: Is a buyer ready to pay premium for the brand reputation of the developer?

Majority of the brand conscious buyers’ say ‘NO’ unless the big brand has offering to match the high price and differentiate the product. In the high-end category, 40 per cent of the buyers are ready to pay a premium.

In the mid segment not more than one fourth, 26 per cent of the buyers are ready to pay a premium for the brand. 70 per cent of the buyers who are brand conscious and can name the reputed developers in the given city and other parts of the country say a ‘brand’ has to be ‘synonymous’ with better offering, failing which paying a premium is a pain.

How much should be the premium over the brand. Here again it depends on the product segment and it ranges from 20-40 per cent in the high end to 10-15 per cent in the mid segment housing.

However, Pranay Vakil, Chairman of Praron Consultancy maintains that brand reputation does give a premium if the branding has been scientifically done over a period of time, and not just selling the project.

“A classic example would be the name of K Raheja where three companies are operating with the same name and one that has invested wisely in branding is today commanding a premium of about 40 per cent,” says Vakil.

As a surprise finding, the survey noted that the first time home buyers are more brand conscious than the second-time or seasoned buyers who have tasted the water. They are also more matured in picking the project on its merit than going for the ‘big name’.

While nearly seven out of ten, 68 per cent of the first time home buyers go for a ‘brand’, this figure is not even touching the half-way mark, 46 per cent, when it comes to second time home buyers.

This indicates that the perception of just having a roof over the head drives the buyers to unbranded or less reputed builders is not based on merit.

Brand positioning for a developer is more important in retail where the success or the failure depends on the kind of brands that open their outlets. But here also survey respondents have a fractured mandate.

40 per cent say there can be no premium also even after footfall, if the footfall is not translating into the sales. While 42 per cent assert footfall definitely adds to premium, rest 18 per cent believe it is a result of a number of factors.

Food and grocery is sill the demand drivers of the retail as majority of Indians go to malls for outings, as many as 68 per cent, followed by grocery purchase by 56 per cent.

Exclusive brands do drive the footfalls but hardly translate into sells. For other branded stuff like clothing or other expensive items Indians, as many as nearly eight out of ten, 78 per cent, prefer high street. Despite of all its branding to attract brands into the malls, Indian retail real estate has thus far failed to translate footfalls into sales.

This dynamics changes in residential real estate but gone are the days of paying premium for the top developers’ projects vis-à-vis same offering by the lesser known developer in the same location.

For many of the home buyers it is difficult to differentiate the product offering as more than seven out of ten, 72 per cent say all the advertisements appear to be offering the same amenities and services in their advertisements, with project elevation being the only difference between various advertisements. For majority of them, 80 per cent, location is the brand, and not the developer, to show off in their peer group.

“Brand is important because I am not ready to invest with a company which has not delivered the promised houses in the past. I won’t compromise on a lakh or two to end up repenting my life’s biggest purchase being a nightmare. But if you ask me whether I will pay a couple of lakhs more to the developer just because he has a slight edge as a brand name, then the answer would be no. It does not matter how much they advertise. I am happy with a lesser known brand so long construction and other promises have not been compromised with,” says Raman Prasad in Bangalore who is on a house hunt.

But yes, brand matters in a sense that most real estate developers and their brand strategists have failed to acknowledge the psychograph of the target buyers. While branding is positioned only selectively with investors or the IPO in mind, the project branding (rather plain advertising) is done to attract the buyers.

…to be continued

source:- http://www.track2realty.com/realty-brand-positioning-not-connecting-with-home-buyers-iii/

India Inc’s prescription to turn gloom into boom

The government and RBI first need to decide is there a line on the sand for the rupee? If they believe the rupee has overshot, then they need to push it back. They need to ensure that CAD is adequately funded and for that they need to show that there is another $15-20 bn in portfolio inflows this year — that too because of structural reasons, not one-off ad hoc measures
Win trust with policy |

Why aren't portfolio investments coming to India? Is it because growth has been damaged or simply there is lack of confidence in the macroeconomic policy-making framework? It is likely that investors are concerned about both. The government needs to address these issues

Push structural reforms |

Put in the long-delayed structural reforms and approve the pending
investment projects

Open debt mkt |

Open debt market, which is the only real source of large inflows that India has not tapped. Investors are overweight on Indian equities, so expecting a large inflow from equity investors is being over optimistic. The banking sector reforms proposed by RBI are steps in the right direction

RBI must intervene |

To create space for these measures to work, RBI also needs to back them up with interest rate and reserve interventions

Act fast |

September is likely to be a very volatile month from the global perspective. There are questions over QE tapering in the US, results of German elections, the debt ceiling in the US and the Middle East geo-political situation. Any action that the Indian authorities are thinking of needs to be taken now before the global uncertainties become reality


R C Bhargava Chairman, Maruti Suzuki

Boost manufacturing |

The focus should be on creating growth through competitive manufacturing. Manufacturing should be a priority and not be used to subsidize other areas. While the industry is all for social welfare measures and inclusive growth, these need to be sustained by growth of manufacturing in the country

Fast-track clearances |

To promote manufacturers, clearances should be given within a prescribed period, say three or five or six months. If the rest of the world can do it, why can't we? This will help create thousands of jobs

Adopt farm reforms |

Agriculture requires a lot of liberalization, more so as far as the state governments are concerned. There are many restrictions and it is one of the most regulated sectors. Areas where focus is required are land holdings, transfer of land, mandis, etc. Also, why do we need to subsidize everything in agriculture?


Puneet Bhatia MD, TPG Capital

Boost FDI in insurance |

We need some short term measures like opening sectors such as insurance to FDI (49%). This itself will bring $10 billion in one shot

Clear projects, resolve disputes |

The government needs to give out a message to the world that India is open for business. It can be done by clearing the Posco project, getting back L N Mittal and resolving the Vodafone tax issue. Selling majority stakes in PSU banks or getting in a big multi-brand retailer will also send out the message to investors

Empower banks |

Banks need to be empowered so that they can enforce selling of collaterals, this will help in the medium term, else NPAs will become a big issue going forward

Privatize assets |

Privatize strategic assets like coal, ports

Look for more revenue |

Before the government finds new expenditure through announcing populist measures, the finance minister needs to prove that there is a new source of revenue. What can also help is the formation of interministerial committees so that the government can create a window for projects which have been stuck to be proactively cleared


Kris Gopalakrishnan President, CII

Consider sovereign bond |

Carefully consider the issue of sovereign guaranteed bonds. The amount has to be large to deter speculators from dragging the rupee down

Exempt FIIs from tax |

The government should study the merit of exempting FIIs from short-term capital gains tax. This would ensure greater inflows in the capital markets.


source:- http://timesofindia.indiatimes.com/business/india-business/India-Incs-prescription-to-turn-gloom-into-boom/articleshow/22131221.cms?

Will the new land acquisition law help?

tary Panel | Ficci | The Financial Express
We have stressed on two points while preparing the Parliamentary Standing Committee Report on the Land Acquisition, Resettlement and Rehabilitation Bill.

First, the government should not buy land even for private public partnership (PPP) projects or even when there is ‘public interest’ involved and, second, as far as possible, agricultural land should not be used for industrial purposes.

However, the draft law asks for 80% consent for acquisition for private projects, 70% consent for PPP projects and no consent for infrastructure projects fully owned and executed by the government. Although the rural development ministry (which is anchoring the Land Acquisition Bill) has not agreed to our opposition to land purchase for PPP projects, the government has accepted our proposal to exempt all agricultural land from acquisition.

In the Bill submitted to the Parliamentary Panel, the government has included the clause that ‘multi-cropped, irrigated’ land is to be acquired only as a last resort. With large-scale diversion of agricultural land for industry purposes, providing food security to such a huge number of people will become difficult as food cannot remain limited to rice and wheat only. Using agricultural land for industrial use should remain the state’s prerogative. The states can demarcate the areas in their master plan for industrial use.

We have also made a case against the creation of a ‘land bank’, proposed in the draft legislation, with the lands acquired from farmers for industrial use which are not put to use within 5 years of purchase. All the members of the Parliamentary Panel had expressed their reservation against the concept of a ‘land bank’ as land is a scarce resource in our country. We had proposed that the unused land be returned to the original owners in case the land is not put to use within 5 years of purchase. The government has agreed to this proposal.

The government has also agreed to our proposal of making gram sabha consent mandatory for acquisition of land in scheduled areas for industry purposes. This is in line with the demands of the civil society organisations. Under a separate provision—the ‘Special Provisions for Scheduled Castes and Scheduled Tribes’—the Bill says, “In case of acquisition or alienation of any land in scheduled areas, the prior consent of the gram sabha concerned or the panchayats or the autonomous district councils, at the appropriate level in scheduled areas under the fifth schedule of the Constitution, is mandatory.”

We have also pushed for changes in the definition of the term ‘project affected people’. It now includes those who have been working in agricultural lands set to be acquired for industrial use. The government has also agreed to include a new clause in the Bill to encourage states to lease land for projects instead of acquiring it. The new clause leaves it to the states to decide on whether they would be exercising the option to lease land for any project.

However, the government has not supported the panel’s suggestion of having a multi-member committee at the district level to decide on the marketvalue of the land. The Bill empowers the district collector to decide the market value of land in his/her district. The Bill now stipulates a compensation of four times the market value of the land being acquired, payable to landowner while the earlier version proposed a compensation of six times the market value.

We have agreed to support the Land Acquisition Bill as it is long overdue. The proposed law would replace the 117-year-old Land Acquisition Act of 1894. It will also integrate acquisition and resettlement & rehabilitation (R&R) in one policy for the first time ever. The new law is the need of the hour.

The author, a Lok Sabha member, was chairperson, Parliamentary Panel on Land Acquisition Bill

(As told to Sandip Das)

It is ironical that, on the one hand, the government is trying to resolve and speed up the land acquisition process for large projects through the Project Monitoring Group set up to assist Cabinet Committee on Investments while, on the other, it is trying to bring a Bill that will further protract the process of land acquisition. One of the commonest reasons for delay faced by large projects is land acquisition.

The Right to Fair Compensation & Transparency in Land Acquisition, Rehabilitation and Resettlement Bill 2012, prescribes a 10-stage process for land acquisition. Starting with the social impact assessment (SIA) study followed by the evaluation of SIA by independent expert group, publication of preliminary notification, hearing of objections, publication of declaration, etc, it would take not less than four years

source:- http://www.financialexpress.com/news/will-the-new-land-acquisition-law-help-/1160593/3

Affordable housing scheme gets maximum response from Gurgaon

Of the 56 applications the Haryana government recieved from builders for the construction of housing projects under its Affordable Housing Policy, 48 are from Gurgaon.

The state government notified the policy on Monday and invited developers to apply for the scheme, which aims at providing affordable housing units to persons belonging to economically weaker sections.

On the very first day, 56 realtors submitted their applications. The huge response from Gurgaon builders indicates that there’s a huge demand for affordable houses in the city.

Of the rest, six applications were received from developers in Faridabad and one from Jhajjar and Karnal each.

According to experts, the policy would help checking illegal constructions and also act as a breather for the otherwise sluggish real estate market.

“The policy will rekindle hope for the common man, as it has a provision for higher population density norms of 850-900 people per acre as against the prevalent figure of 300,” said National Real Estate Development Council (NAREDCO) president Navin Raheja.

The policy was cleared by the Haryana cabinet on August 6 during a meeting held by chief minister Bhupinder Singh Hooda in Chandigarh.

For a city like Gurgaon where a two-bedroom apartment sells for anywhere between Rs. 75 lakh and Rs. 1 crore, the new policy has brought a ray of hope for people of low income groups as they would be able to buy a 300 sqft house for as low as Rs. 12 lakh through draw of lots. The price for a 645 sqft flat would come to about Rs. 25 lakh.

As per its terms and conditions, the policy allows developers to construct and sell small housing units — measuring between 300 sqft and 645 sqft — in the economically weaker section (EWS) and low income group (LIG) category.

The maximum allotment rate for the apartment units approved under such projects will be — Rs. 4,000 per sqft of carpet area in Gurgaon, Fairdabad, Panchkula and Pinjore-Kalka; Rs. 3,600 per sqft for other high and medium potential towns and Rs. 3,000 per sqft for the remaining low potential towns.

source:- http://www.hindustantimes.com/India-news/Gurgaon/Affordable-housing-scheme-gets-maximum-response-from-Gurgaon/Article1-1110615.aspx

Gurgaon, Noida property markets gain, Delhi loses ground

Suburban Delhi property market is seeing a lot of action, while the South Delhi market is reeling under pressure. Demand for projects in Gurgaon and Noida has risen on the back of better specifications and overall amenities, and often at the cost of central and south Delhi properties.

Delhi's posh Defence Colony, Vasant Vihar, New Friends Colony and Safdarjung are witnessing a slowdown in demand, with many new floors remaining vacant. To beat the blues, builders are attempting new initiatives like throwing in maintenance and facility management services. Despite all this, builders are wary of cutting prices just yet, fearing a crash. The correction is assumed to be largely on account of an increase in supply and general slowdown in the market.

The National Capital Region (NCR) is often called India's most speculative real estate market. Delhi's suburbs Noida and Gurgaon are seeing plenty of action, but at the cost of premium real estate in the capital. The focus is on the South Delhi property market that is reeling under immense pressure.

Also Read: Middle class chase elusive dream of buying affordable homes

Manish Aggarwal, ED, Cushman and Wakefield India, says, "Though the prices being quoted are stable, which is at par with what we had seen around a year back. However, because of low investor activity and the market being completely end-user driven right now, there is a discount on the offering should somebody want to negotiate."

There is demand for projects in Gurgaon and Noida as their specifications and overall amenities are much better. Rohan Sharma, senior manager research, Jones Lang LaSalle India, says,"Most of the investor money is now being driven towards Gurgaon and Noida, as these suburbs are offering much better projects in terms of specifications and overall amenities. So, there are a lot of luxury projects being launched in these parts."

Businessmen, High Networth Individual (HNIs) and expatriates are going slightly slow because the prices have become unviable for them in the long run in terms of the overall cost that they are coming at to them.

The property market is made up primarily of builder flats, which till sometime ago were trading north of Rs 7-10 crore a piece. This space is occupied not so much by established pan-India players, but more by local builders like Salcon, Uppal and Saluja.

What typically happens is a family or landowner enters into an agreement with one of these developers to develop what are commonly known as builder floors. The number of flats depends on the plot size.

Delhi's posh Defence Colony has seen a surge in builder floors. Brokers say flats on a smallish 217 square yard plot are being quoted for more than Rs 6 crore and in excess of Rs 7.5 crore for a ground floor apartment or the top floor with a terrace. Starting price of a flat on bigger plot size of 325 square yard is Rs 9-11 crore. However, dozens of these new floors are currently lying vacant for want of buyers.

The story is the same in Vasant Vihar where a recent deal saw prices touch Rs 20 crore for a floor on 600 square yard plot. However, that was after heavy bargaining. Brokers say the situation is tough. Even other South Delhi colonies like New Friends Colony and Safdarjung are seeing the pain.

However, builders are wary of cutting prices just yet, fearing a crash. The correction is largely on account of an increase in supply and general slowdown in the market. So if you're in the market, this is your chance to negotiate a better deal.

Aggarwal says, "There has been no price reduction in the offering. However, there are good discounts to be taken from the developers. This is the right time to do so. The discount would be in the range of 10-15 percent, depending on the property size and the location. This can be even further, however, one needs to negotiate."

To beat the blues, builders are attempting new initiatives like throwing in maintenance and facility management services. Earlier the maintenance wasn't a part of the package developers used to throw in. Aggarwal says, "Now, some of the more reputable developers are offering that as a package and at a price which does not have too much of profit margins for developers. However, because of the slowdown, they are offering this as a package along with a price which they are offering. It is an extra cost and usually the kind of service offerings are facility management, which include common area cleaning, maintenance of your power backup, if the developer is providing central air conditioning then he would also maintain that and sometimes even provide you with basic services of a plumber and electrician."

Prices have not budged in the last one year and Delhi's loss has been Gurgaon's and Noida's gain. Cushman & Wakefield notes Gurgaon has recorded a much higher price appreciation with prices in the luxury residential segment rising almost 29 percent year-on-year (YoY).

Aggarwal says, "The South Delhi areas, these apartments or builder flats can be compared to the likes of super premium developments that developers like DLF are offering and which are pretty much in the same price range, however, offering far better amenities and the finishing's are probably comparable or even better."

The property market in the commercial capital Mumbai at best can be called subdued. High unsold inventory and low deal activity has kept the prices stable. To drive up sales, developers are launching apartments with smaller configurations. The 80:20 payment scheme is also becoming more popular in the city. Mumbai-based Lodha Developers is attempting yet another initiative.

The company has pre-launched the third tower of its Grande Project in Thane. It is priced at Rs 8,883 per square foot or Rs 1.08 crore for a two BHK spread across 1,134 square feet. The catch, the price is only for the first 27 residences and the offer is open only for two days, the weekend of 22nd and 23rd June. There is no information on what the prices would be post the special offer, but details were not forthcoming.

Lodha is following a similar strategy for its other project Lodha Golf Links in Navi Mumbai's Kalyan-Shil Road. It is pre-launching a seven storey tower called the Ramana at its 30 acre 9-hole golf course.

This offer is only for the first 18 units the company sells and the booking amount is the same as Lodha's Grande project at Rs 1.08 crore. The project can be previewed only by invitation and if someone manages to make the cut, then Lodha is throwing in a three-year free membership with the purchase of a unit.

Other Mumbai developers too are coming out with similar schemes for soft launches. A few are even reducing prices of unsold inventory for a limited period of two to three days.

Interestingly, Saudi Arabia's Prince Al Waleed Bin Talal is giving a second shot to his dream of building the world's tallest tower at one mile or 1.6 kilometers. The Prince said he's in talks with Dubai's largest realty firm Emaar Properties to team up with his investment firm Kingdom Holdings for this project. However, there's nothing concrete on the table yet, including the location of the project.

The prince is inviting offers from all major cities from New York to London to Shanghai and is clear countries interested in hosting the world's tallest one mile high tower would have to offer tax breaks, financial incentives and all other necessary government support.

If this tower is indeed built, it will stand at double the height of the world's current tallest skyscraper, that's the Burj Khalifa at 828 meters in Dubai. If built, the skyscraper will also dwarf the one kilometer tall Kingdom Tower currently under construction in Saudi Arabia. The Kingdom Tower was initially conceptualized at 1.6 kilometer or one mile high, but plans had to be scaled back as the soil was not strong enough to support the prince's towering ambition.

source:- http://www.moneycontrol.com/news/real-estate/gurgaon-noida-property-markets-gain-delhi-loses-ground_905331.html

1.3 lakh families in Gurgaon to benefit from Antyodaya Anna Yojana

GURGAON: The district administration has finally come out with a formula to differentiate between urban and rural BPL population to benefit eligible families under Food Security Ordinance Act.

According to the statistics provided by the district administration, 59.31% families in urban and 47.22% families in rural Gurgaon are categorized under the low income or Below Poverty Line in the district.

In Gurgaon, out of 1,01,619 households in rural set up, 47,988 households are under the BPL category while out of 2,22,495 families in urban Gurgaon, 1,31,953 families will fall under the category to benefit from the Antyodaya Anna Yojana under the Act under the scheme for BPL families. Of 5,21,666 people in urban Gurgaon and 2,24, 966 people in rural areas would benefit from this scheme, according to deputy commissioner, Shekhar Vidyarthi.

The scheme would be implemented starting from August 20, a move to gain mileage well before the state goes for elections next year.

As part of the scheme, beneficiaries would receive 35 kg of wheat for the family listed in the Antyodaya Anna Yojana list and 5 kg of wheat at Rs 2 per kg to be given per family member for a month under the BPL category.

The beneficiaries under this Food Safety Act will be entitled to subsidized cereals. These would include the homeless families living in rural areas, those households where the head of the family is disabled, agricultural labourers, small and marginal farmers with land less than 5 acres, the widow or a single woman.

"In urban Gurgaon, beggars, part-time and full-time maids, would be benefited from the scheme. Families living in urban areas in kuchha homes, homeless families, staff employed on contract, cobblers, hawker, workers engaged in construction work, painters, security guards, porters, sweeper, individuals involved in sanitation, gardeners, drivers, conductors, helpers, shop laborers, waiters will get the benefit of this scheme," said the DC.

Those exempted from benefits of this scheme include taxpayers, registered under the Haryana VAT Act 2003 owners of over 5 acres of land owners in rural those owning over 250 sq-yards or 1,500 sq-ft and above in urban areas and families owning a four-wheeler, etc.

source:- http://timesofindia.indiatimes.com/city/gurgaon/1-3-lakh-families-in-Gurgaon-to-benefit-from-Antyodaya-Anna-Yojana/articleshow/21872271.cms

Gurgaon’s long-term prospects grim: Harvard Business Review

GURGAON: The sheen is off our Millennium City, if an article in the reputable 'Harvard Business Review' is anything to go by. A piece in the magazine's July-August 2013 issue compares Gurgaon with a Vietnamese (satellite) city with a similar background and finds the former lacking in many respects. 

In his paper on "Building Sustainable Cities", John D Macomber, a faculty member of Harvard Business School, highlights how development of Gurgaon has largely been promoted by speculative real estate developers, with little attention to master planning and little investment on roads, water and electricity. "As a result, its landscape today is a mishmash of spectacular office buildings, large vacant areas populated by stray cows and goats, decrepit low-rise buildings, and slums," writes Macomber. 

The author also mentions how major users draw water from the ground through individual wells and traffic jams and smog are commonplace — "Power is so sketchy that virtually every commercial building regularly relies on costly and polluting diesel generators; and the water table is receding by up to one metre a year. The developers got their capital back quickly, but the long-term prospects are grim: Traffic, power, water and pollution problems seem intractable. It's very difficult to install roads and water infrastructure. This is business as usual at the city scale, with no particular financial engineering plan and no use of technology to extend resources," Macomber observes. 

If that wasn't enough, Macomber draws a parallel between the failing infrastructure of Gurgaon and the sustainable model developed by the Vietnamese city of Phu My Hung, an urban industrial hub near Ho Chi Minh City, the capital of Vietnam. Both the cities have roughly the same area (about 20,000 acres) and population (1.5 million). However, in contrast with 'speculative real estate development', Macomber writes, in Phu My Hung industrialists took a long-term "build and hold" approach and had an infrastructure-first master plan that included a privately financed and operated electrical generation plant, which powers much of Ho Chi Minh City and all the activity within Phu My Hung. 

"The district depends on central water extraction, purification, distribution, and wastewater treatment and a central highway that was designed to allow mass transit to grow with the district. The developers had a nation-building agenda and a long-term orientation towards creating value... Today, the city is clean and green and orderly; its real estate values are among the highest in emerging Asia; and its parks and waterways are weekend destinations for people from surrounding towns," writes Macomber. 

Finally, Macomber worries about the future. "It is difficult to imagine the next urban billion living in 500 or more new cities built on the Gurgaon model," he writes, and votes for Phu My Hung, where thoughtful, long-term-oriented, private-sector actors help the world create efficient water, power, and transit solutions... the necessary demand, capital, and technologies exist. What is now required is farsighted investors and businesses to organize the players..." 


source:- http://timesofindia.indiatimes.com/city/gurgaon/Gurgaons-long-term-prospects-grim-Harvard-Business-Review/articleshow/21968286.cms

Easier exit window for foreign investors in infrastructure projects

NEW DELHI: The government is planning to a give easier exit window to foreign investors in construction, housing and township projects, hoping to spur greater equity inflow into the debt burdened sector and help faster completion of delayed projects.


The measures are continuation of the government's ongoing drive to make FDIpolicy more attractive. Under the current rules, 100% FDI is allowed in the construction, housing and township but subject to a threeyear lock-in, a condition that was imposed to ensure speculative money does not flow into real estate but has also had the unintended consequence of stifling genuine investments. 

The sector attracted $1.3 billion FDI in 2012-13, down 58% from $3.1 billion in 2011-12. The department of Industrial policy and promotion (DIPP) is now mulling allowing foreign investor to exit after completion of the project or three years, whichever is earlier, as proposed by the ministry of housing and urban poverty alleviation (MHUPA). 

Most housing projects are running one to two years late because of slowdown and shortage of funds because of elevated debt levels. 

"Though DIPP is yet to finalise on the relaxation in FDI conditions, but the exit window to developers after project completion seems suitable. However, greater clarity would be needed on the definition of completion," said a government official in privy of the matter. 

"Providing an exit door to the foreign investor on project completion before 3 years will be a good sign. This would make entry and exit simpler like it is in other countries. But I am doubtful if it will lead to an immediate dollar inflow", said Anshuman 

Magazine, CMD, CBRE, an international real estate consultancy firm. However, industry feels there should not be any exit clause. "Most townships or housing projects take more than 3 years to construct anyways. What difference will the exit on completion make? A foreign investor should be allowed to exit whenever it wants, as per the agreement between him and the Indian player", said RR Singh, director general, National real estate development council. 

The other changes under consideration include reducing the minimum capitalization of the eligible construction project in which FDI can come in to $ 5 million against $ 10 million presently for wholly owned subsidiaries and from $5 million to $2.5 million for joint ventures with Indian partners. 

MHUPA has also asked for a reduction in the minimum built up area from 50,000 sq mt to 20,000 sq mt. However in case of serviced housing plots, minimum land area may remain the same at 10 hectares. 

DIPP is looking into all these but is opposed some of the more liberal proposals like the urban development ministry's suggestion foreign investors be allowed to purchase land and other immovable assets for construction purpose. "This is nearly the same as saying allowing FDI in real estate business, which is not permitted", said the official. 

Urban development ministry has also recommended that foreign investment up to 49% be free from any entry condition to attract foreign capital providers that do not have long-term interest in construction assets.

source:- http://economictimes.indiatimes.com/markets/real-estate/realty-trends/easier-exit-window-for-foreign-investors-in-infrastructure-projects/articleshow/22058270.cms

A slowing realty market spells opportunities

It may be time to go bargain hunting for end-users and investors as developers offer attractive rates, but focus on quality and exercise due diligence before buying

Sanjay Kumar Singh 

Aslowdown in the real estate sector can spell opportunity for the prepared. Delhi-based publishers Umraopati Ray, 30, and his wife Priyanka Saxena, also 30, own an apartment at Paschim Vihar. As the slowdown in the National Capital Region (NCR) intensified, the young couple went hunting for good deals. Recently, their efforts were rewarded when they managed to buy a flat at Vasant Vihar at a price 15% lower than the peak rate witnessed in the area in the past.

Pan-India slowdown
Real estate markets across the country are currently witnessing a slowdown. In Mumbai, it has lasted for about a year now. Down south, it began about six months ago. The Delhi/NCR market was the last to be impacted by the slowdown, but here, too, the signs have been apparent over the past three months.

    While developers have not slashed their prices overtly, the slowdown is visible in the drastic fall in the number of transactions. According to a Gurgaon-based broker, this figure has dwindled to 30% of last year's level. Speculators who had booked a large number of properties in the hope of exiting profitably in a rising market are now jettisoning surplus holdings, often at a discount. In the primary market (where you buy from a developer), the slowdown is evident in the large number of subvention schemes and discounts (ranging from 5-20%) being offered by cash-strapped developers. Another signal is the widening gap between prices in the primary and the secondary market (where you purchase from another buyer).

    The downturn is most pronounced in markets where speculation over the past couple of years had driven prices high, though infrastructure is not yet in place. The Dwarka Expressway area in the NCR, where the highway providing connectivity to the region has not seen much progress over the last one year, is an example.

    Prices are also correcting more steeply in projects where barely 20-30% payment has been made and possession is a couple of years away. Says Rajan Ahuja, executive director, Realty & Verticals, a Gurgaon-based real estate consultancy: "In such projects, buyers have begun to feel the pinch. If these get delayed amid the slowdown, there could be a lot of exits and prices could see a further correction."

What's causing the slowdown?
The slowdown in the real estate market is only mirroring the sluggishness within the economy at large. According to Anshul Jain, chief executive officer, DTZ India, "The weak economy has affected the demand for residential units. Inflationary pressures and lack of increments have left buyers with no surpluses."

    India's real estate sector, much like other sectors, is subject to cyclical downturns. Says Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield: "A lot of projects have been launched, so inventory levels are running high. Prices have also gone up a lot. Meanwhile, sentiment is not so bullish." A negaive feedback loop has set in. With quick gains becoming hard to come by, new investors are staying away from the market.

    Real estate consultants lay the blame for the slowdown on speculative excesses. Says Ahuja: "In markets like Dwarka Expressway, speculative buying and selling had pushed prices to unsustainably high levels. A period of price correction was bound to follow."

Opportunity for buyers
In the popular imagination, the word 'slowdown' carries negative connotations. However, it spells opportunity for buyers who had found prices moving beyond their grasp when the markets were rising. Those who had deferred the decision to buy may now go in for the kill, as Rai and Saxena have done. Vishal Dhawan, chief financial planner at Mumbai-based financial planning firm, Plan Ahead Wealth Advisors, says you are likely to get good deals in the secondary market, since the individuals who had invested in multiple apartments and are in desperate need of cash will readily sell at a discount.

    Jain of DTZ believes that the current slowdown will continue until a new government is in place after the general election in May 2014. Hence, buyers have time on their side. Sanjay Sharma, managing director, Qubrex, a Gurgaonbased real estate consultancy, advises patience. "This will gradually turn into a buyer's market. Even if it takes three to four months to strike a deal, be patient," he says.

    Schemes galore: To push sales, developers are coming up with all kinds of offers. Subvention schemes like 80:20 have become the market benchmark. In Noida Extension, buyback schemes have become popular-buy at 100 today and re-sell to the developer at 118-124 a year later.

    While at first glance these schemes appear attractive, buyers must watch out for hidden costs. Says Ahuja: "Cut through the intricacies of the scheme and calculate the final cost to you." A popular trick is to price the apartment being sold via a subvention scheme higher than that via a construction-linked payment plan.

    Compare the price that you are being charged with the rates prevailing in that area. Currently avoid expensive projects (with rich specifications), especially in remote locations.

    Exercise due diligence: Stay focused on quality. As in all real estate purchases, give primacy to location. Does the area offer proper infrastructure and connectivity? In areas where the infrastructure is yet to be developed, prices may remain depressed longer.

    The quality of the developer, especially his financial strength and ability to deliver the project on time, should be a prime consideration. The developer should have title of the land on which he is developing the project and also all the necessary approvals.

    Have a long investment horizon: Real estate cycles tend to be longer than those in equity. According to Dhawan, if you invest now with a horizon of 7-15 years, you would be insulated from the slowdown.

    Understand supply dynamics: Dutt of C&W warns that a lot of projects have been launched, but fewer are being delivered. If the slowdown deepens, many may not be delivered at all. Avoid areas facing a supply glut.

Should you hold on?
If you have already invested in a couple of projects, don't let distress sales by a few investors scare you into bailing out. Dutt says that if your investment enjoys sound fundamentals, you should stay put. In a slowdown, investors seek refuge in quality, so such investments could appreciate even in this environment.

    Moreover, the market will stabilise in due course. "If prices in the secondary market correct by 25-30%, end-users will find value in it and return," says Ahuja.

Should you exit?
Those who have over-invested in realty (those who bought a number of apartments in the hope of making a quick buck) should trim their portfolios by selling their excess holdings and retaining only those for which they can afford the payments. You may also sell if you are offered a good valuation, or if better investment opportunities beckon.

Watch out for
Curb your risks: According to financial planners, real estate is a risky investment and should be clubbed with equities and commodities in the high-risk basket. Make sure that cumulatively you are not too heavily exposed to these three asset classes.

    However, there are no rules of thumb regarding exposure to real estate. If you are investing in it for both self-use and investment, you may have a higher exposure than if it is purely for investment. If it's for the latter, do not over-commit. A slowdown in realty often coincides with one in the economy. So even as your realty investment becomes less valuable, you are also at a high risk of losing your job. Dhawan suggests that if both the partners work, the EMI on home loan should not exceed 40% of the net salary of one partner, so that you don't experience difficulty even if one partner loses his job.

    Liquidity risk: People claim that if they can't pay EMIs, they will sell and exit, but they forget how illiquid the realty market becomes during a slowdown. "If you are going to depend on this strategy, at least build an illiquidity discount into your calculations," says Dhawan.

    While a slowdown means the end of quick profits, it could also throw up opportunities. So keep scouting till you come by a good deal. 







source:- http://epaper.timesofindia.com/Repository/ml.asp?Ref=VE9JQkcvMjAxMy8wNy8wMSNBcjAxNjAw&Mode=HTML&Locale=english-skin-custom

Realtors ready to explore untapped market

KOLKATA: Though the demand for studio apartments in the city cannot be compared with that in Mumbai or Delhi, there has been a steady upswing over the last few years. The changing trend has caught the attention of realtors and they are going all out to tap the potential.

Siddha Group, developer of studio apartment complex 'Xanadu', has finished the last phase of construction. "We have created 340 such flats in Xanadu. We have already sold 220 flats priced between Rs 25-40 lakh," said Sanjay Jain, managing director of Siddha Group. The group might look at adding studio apartments in forthcoming projects as well.

With an increase in the number of young working professionals in the city with high aspiration levels and a growing demand for second home at affordable price points, many realtors have started converting 1 BHK flats into studio apartments. Some of such properties are also available fully or semi furnished.

"It is a home away from home. While the demand is limited so far, we have seen a good response for our property on Diamond Harbour Road," said Sushil Mohta, managing director of the Merlin Group. His studio apartment project Nirvana has 104 units, priced between Rs 20 and Rs 30 lakh each.

Pioneer Property Management Ltd, one of the leading real estate and property consultant in the city, will start marketing 156 studio apartment units near Vedic Village soon. "Such apartments are more useful for single persons or a newly married couple. These are not very big and affordable as well. It is a good format, especially in areas where there is a lot of movement of young professionals," Jitendra Khaitan, CMD of the company, said. Pioneer's furnished studio apartments, over an area of 610 sq ft, will be priced at Rs 18 lakh.

According to NK Realtors director Pawan Agarwal, the studio apartment market in Kolkata has a potential to grow in next five to six years. "In the short term, there may not be a spurt in demand as Kolkata does not have much of migratory population among young professionals. But in the long run, studio apartments are likely to catch up," he said.

But what happens to users when they try to sell it off? Are there enough buyers for such properties? "Once I decided to sell off one of the studio apartments I own and posted advertisements. I received a very good response," said Harsh Bajaj, owner of a studio apartment.

"Kolkata is gradually waking up to studio apartments. Everyone who has bought a studio apartment had a particular need. Five-six years down the line the city will have more young professionals looking for a decent and luxurious unit to move into," Sambit Kundu, a buyer of a studio apartment said.

source:- http://timesofindia.indiatimes.com/city/kolkata/Realtors-ready-to-explore-untapped-market/articleshow/22084272.cms

Builder told to pay Rs 3L for delaying handing over flat

CHENNAI: A real estate firm that delayed giving possession of an apartment to its buyer has been directed by the State Consumer Dispute Redressal Commission to pay 3 lakh as compensation. 


In December 2012, Vijaya Padmanaban , an employee of Chaitanya Builders and Leasing Pvt Ltd, made an advance payment and booked an apartment in the project being built by her employer . She received the confirmation in the same month, after which she carried out interior furnishing work in the flat. Two years later, she resigned her job with Chaitanya Builders. The company sent her a note saying the flat was allotted to her "at less than (the actual) cost on an understanding of a long-term productive participation in the growth of the company." 

The company also returned her cheques saying that her "attitude to the company's assignments resulted in a loss of 2 crore in a project." Vijaya filed a complaint with the commission seeking a compensation of 20 lakh for deficiency in service, harassment, mental agony, and 15,000 for loss of funds . 

Chaitanya , in its reply , said the complaint was time-barred and fell outside the purview of the commission . It said Vijaya's negligence resulted in huge losses to the company and claimed she was trying to unlawfully take possession of the flat . Further, Chaitanya filed a civil suit and obtained an injunction order too. 
The commission's bench said: "It is well settled that all subjects relating to housing construction are within the purview of the Consumer Protection Act. As there is continuing cause of action in not handing over possession of the flat in complete shape , it cannot be barred by time ." 

The bench said further evidence regarding the civil suit was not produced and the employment issue was irrelevant to the case. 

The commission said: "The failure on the part of the company to hand over possession ofthe flat to Vijaya in time amounts to deficiency in service." It directed Chaitanya to "hand over possession of the flat to Vijaya and pay an amount of 3 lakh for deficiency in service, harassment, loss and sufferings undergone by her, besides 5,000 as costs." Vijaya has also agreed to pay the revised price quoted by the builder. She has been directed to submit the balance amount over and above the initial payments.

source:- http://timesofindia.indiatimes.com/city/chennai/Builder-told-to-pay-rS-3L-for-delaying-handing-over-flat/articleshow/22084865.cms

Class action suit against iGate, Murthy dismissed

Bangalore: The class action lawsuit filed against iGate and its former CEO, Phaneesh Murthy, by a shareholder of the company on June 14 in a California district court has been dismissed by the shareholder plaintiff. 
    iGate said no payment or consideration of any kind was made by any of the defendants in connection with the dismissal. The lawsuit was filed for iGate’s alleged failure to disclose that its former CEO Phaneesh Murthy was in a relationship with a subordinate employee. It was filed on behalf of those who acquired shares of iGate between March 14, 2012, and May 21, 2013, and sought to recover damages against the company and some of its officers and directors as a result of what it called “alleged violations of the federal securities laws”. 
    “We are pleased to put this matter behind us,” said Gerhard Watzinger, interim CEO of iGate. TNN

source:- http://epaper.timesofindia.com

New Gurgaon, Greater Noida emerge as real estate hot spots

Experts say investors are investing in residential units in Greater Noida, hoping for significant returns through the next few years.

For investors, New Gurgaon and many parts of Greater Noida are fast emerging as new real estate hot spots. In the past year, New Gurgaon has recorded property price appreciation of 66 per cent. While property prices have risen about 21 per cent in Greater Noida, the area isn't limited to being an end user market; investors were investing in residential units in Greater Noida, hoping for significant returns through the next few years, said experts.

However, real estate analysts make a distinction between the two regions, in terms of investment - while New Gurgaon is referred to as a high investor market, Greater Noida is termed a market for low-ticket investors.

As of March-end, the average residential property price in New Gurgaon stood at Rs 7,068 a sq ft, against Rs 2,528 a sq ft at the end of March 2009, a rise of 180 per cent, according to data by real estate research firm PropEquity. In Noida Extension, part of Greater Noida, prices have risen 49 per cent through the last five years. In the last year, prices have appreciated 16 per cent, compared with Rs 2,818 a sq ft at the end of March 2012.

In Yamuna Expressway, part of Greater Noida, prices rose from Rs 3,500 a sq ft at the end of March 2009 to Rs 3,664 a sq ft at the end of March this year. In the last year, prices rose 21 per cent.

Sumit Jain, chief executive of commonfloor.com, said, "While the rest of the National Capital Region has seen muted growth, the markets of Greater Noida and New Gurgaon have seen significant appreciation. Investors have a limited risk appetite, due to a slow-moving economy, changing regulations and tight liquidity conditions. Both these markets provide low entry points, with a significant upside to investors."

Samir Jasuja, founder and chief executive, PropEquity, said Greater Noida saw a healthy price appreciation due to availability of affordable options, while New Gurgaon had emerged as the next best location because of good infrastructure, attractive pricing and good-quality projects. Besides, the profiles of developers had also aided growth in New Gurgaon. "New Gurgaon is already attracting a lot of investor interest. And, looking at the trends, this active investor interest would only accentuate. The region is fast emerging as Gurgaon's luxury destination and we expect developers would continue to launch good premium projects," he added.

Apart from these two areas, Dwarka Expressway is also attracting investor interest. Other areas that have grown consistently are Golf Course Extension Road, Sohna Road and Noida Expressway, experts say. Dwarka Expressway and Noida Expressway recorded price appreciation of 206 per cent and 158 per cent in the last five years, respectively. As of March-end, prices stood at Rs 7,121 a sq ft in Dwarka Expressway, while in Noida Expressway, they stood at Rs 9,435 a sq ft. In the last year, property prices in both the areas rose 45 per cent.

Last year, absorption of units in New Gurgaon stood at 3,058 in the mid-level (Rs 40 lakh-1 crore) segment, against 1,649 in 2011. So far this year, absorption stands at 854 units. Absorption in the luxury (above Rs 1 crore) segment so far this year stands at 57 units, against 227 in 2012 and 232 in 2011.

In the luxury segment, new launches picked up pace in New Gurgaon. A total of 509 units have been launched so far this year, against 3,610 in 2012 and 810 in 2011. In the mid-level segment, 169 units have been launched so far this year, against 3,886 in 2012 and 4,992 in 2011.

In Noida Extension and Dwarka Expressway, absorption, as well as new launches, was primarily recorded in the affordable segment (up to Rs 40 lakh).

source:- http://www.business-standard.com/article/companies/new-gurgaon-greater-noida-emerge-as-real-estate-hot-spots-113061500825_1.html

MOVES-KKR, Annaly Capital Management, U.S. Bank Wealth Management

Aug 20 (Reuters) - The following financial services industry appointments were announced on Tuesday. To inform us of other job changes, email to moves@thomsonreuters.com.

BNY MELLON

The investment manager appointed Gesa Benda as global collateral services product segment manager for clearing houses, based in Frankfurt.

KKR & CO LP

The investment company appointed Joseph Plumeri as a senior adviser. Plumeri was the chairman and chief executive of the Willis Group. KKR said Plumeri is also joining the board of First Data, a KKR portfolio company.

ANNALY CAPITAL MANAGEMENT INC

The company, which owns, manages, and finances mortgage-backed securities and a portfolio of investment securities, named Glenn Votek its chief financial officer. Votek will also be a member of the company's operating committee. He was previously the company's chief administrative officer.

U.S. BANK WEALTH MANAGEMENT

The wealth manager appointed Christopher Kurimay as wealth management adviser for its Private Client Reserve division. Kurimay was previously with UBS Private Wealth Management.

STORMHARBOUR

The global markets and financial advisory firm appointed Sandeep Gill, Barry Dick, Martin Otway and Nicholas Loh in Singapore to strengthen its presence in Asia Pacific. StormHarbour said it has acquired the team from the OPVS Group. Gill and Dick both join as principal and managing director. Otway and Loh join the firm as directors.

EAST CAPITAL

The asset manager said Karine Hirn, partner and co-founder of the company and chair of its Asia advisory committee, together with senior advisers Dmitriy Vlasov and Adrian Pop has recently relocated to Hong Kong to maintain and deepen the firm's coverage of China and other emerging markets in Asia.

MACQUARIE CAPITAL

The company, which provides advisory and capital raising services, said Wannawut Apinanratanakul has been appointed head of Macquarie Capital Thailand, based in Bangkok. Apinanratanakul was previously with Minor Food Group.

SL-X GROUP

The capital markets electronic trading company appointed Richard Dellabarca as chief financial officer. Dellabarca Was formerly the chief financial officer of Chi-X Global Holdings. The company also named Dr Marc Gerstein its strategy director and Nancy Gardner its general counsel. Gerstein was previously with Instinet Corp. Gardner previously worked at Thomson Reuters' Markets division.

PRAMERICA REAL ESTATE INVESTORS

The real estate investment and management business of Prudential Financial Inc appointed Frank Garcia a managing director and portfolio manager for its core open-ended equity commingled real estate strategy. Garcia is based in PREI's San Francisco office. He was previously with RREEF, Deutsche Bank AG's core real estate strategy.

source:- http://www.reuters.com/article/2013/08/20/financial-moves-idUSL4N0GL1XD20130820