Hyderabad-based real estate company Janapriya Engineers Syndicate, in partnership with Sun Apollo is launching Janapriya Nile Valley, an apartment complex spread over an extent of 44 acres at Madinaguda, about 10 km from the Hitech City. Sun Apollo, a private equity investment firm backed by the Sun Group of India and US-based Apollo Real Estate Advisors, holds a majority two-thirds stake in the project.

Courtesy:- BS dtd:- 15th Dec. 2008

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The Landmark Group, a Dubai based retail chain, has put its plans for the hospitality sector in India on indefinite hold. The group, which had plans to set up 30 mid-market hotels in India, is learnt to have asked some of the property developers it was in talks with for possible tie-ups to look for new partners.

A Landmark spokesman declined to comment on the development.

While announcing its hospitality venture Citymax Hotels India last year, Landmark had said it planned to set up over 30 mid-market hotels in 10 years, with the first four-star hotel to come up in Indore in September 2008. The company confirmed that the new hotel had not come up yet but declined to say if it was delayed or shelved.

The development reflects the prevailing sentiment in the hospitality industry. "There is uncertainty in the overall market sentiment for the hospitality sector, especially for Greenfield projects. Capital intensive projects are either put on hold or are put on a slow track," said Ernst & Young real estate and hospitality analyst Ajit Krishnan.

While the principal reason for the uncertainty in the sector is the economic slowdown, the recent terror attack in Mumbai has aggravated risk, he said.

Citymax had said last year that it would invest Rs 325 crore by 2012 to set up 12 hotels in cities including Bangalore, Pune, Gurgaon and Hyderabad. Landmark Group, owned by NRI businessman Micky Jagtiani, entered India almost a decade ago with its department store chain Lifestyle. Since then it has forayed into value retail with Max chain and tied up with Dutch retail giant SPAR for hypermarkets.

Unitech Plans    35 Hotels

Realty major Unitech plans to invest about Rs 2,500 crore to develop 35 hotels over the next seven years. "We will be developing 35 hotels in the next 6-7 years. We already have land in many cities at prime locations," said Unitech MD Sanjay Chandra. The hotels would come up in NCR, Kolkata, Chennai, Goa, Mysore, Banga-lore, Hyderabad, Chandigarh, Siliguri and Assam.

Courtesy:- ET dtd:- 10th Dec. 2008

The IL&FS real estate fund has mopped up $895 million (Rs 4,385 crore), promising overseas investors a return as high as 25%. The fund, called IL&FS India Reality Fund 2 (IIRF-2), closed on Monday.

Close to 50% of the investment in the fund has come from US investors. The money has been raised at a point when hedge funds across the globe are struggling to raise funds and investors are pulling out.

Last month, the US banking firm Merrill Lynch had raised $2.65 billion to invest in Asian real estate, especially in countries like India, Japan, China and South Korea.

"The current market situation and capital scarcity provide valuable opportunities. As investors, we continue to look at investments with cautious optimism since we believe in the underlying strength of the Indian real estate market and remain confident of the long-term prospects of this sector," IL&FS Investment Managers(IIML) vice-chairman and managing director Shahzad Dalal told ET.

Even though real estate stocks have taken a severe beating and property prices are softening across India, Mr Dalal is confident about generating the promised return. While the new fund drew investors from the US, Germany, Japan, and the Middle East, contributors to IIRFI, the institution's first fund, have also participated in the new offering.

"It's a significant endorsement of IIML's track record of investing in the Indian real estate sector. We had raised half of the funds from the United States market a few months ago while the balance has been raised from other parts of the globe," he said. "Though our target was $750 million, we have raised $895 million. This is more than the corpus of our first real estate fund, which had raised $525 million in 2006," IIML chief executive Archana Hingorani said.

Courtesy:- ET dtd:- 10th Dec. 2008

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 Banks To Revisit Status Of Real Estate Projects

India's troubled realty firms may soon get a lifeline, with the Reserve Bank of India (RBI) asking banks to consider providing support to large real estate companies.

Recently, the banking regulator wrote to select banks, asking them to assess the financial support given to builders and to finalise a workable solution, a senior banker said. The realty sector has been one of the worst-hit after RBI raised interest rates last year to combat rising inflation.

The tightening of interest rates, coupled with the economic slowdown, has resulted in a slump in housing sales and development of commercial property. Earlier, realty firms would raise money from the capital markets and also through private equity, but since the start of the downturn, their funding sources have got choked. Many banks have been reluctant to lend to this sector given the risks involved. However, considering the knock-on impact that a slump in the real estate industry has on allied sectors such as cement and steel, the government is naturally worried.

Early last month, RBI had collected data from various banks relating to their funded and non-funded exposure to various real estate firms. This was followed by letters to lead banks of select real estate companies. Although the apex bank has not told banks explicitly to provide support to real estate companies, it has asked them to revisit the status of the project.

In a letter to some banks, RBI has said "the assessment should comprehensively bring out the financial vulnerability of the company and suggest possible ways to address this issue". Justifying its stance, the central bank has said the exercise is aimed at understanding the status of major real estate companies through the medium of lead banks.

RBI has requested banks to assess the financials of the company and discuss with company officials the current and prospective position of the company. The banking regulator has said the assessment should cover the real estate company's indebtedness, exposure and commitments that are due.

Big realty cos in RBI list

More importantly, it has told banks to assess real estate companies' project funding requirements and how they can be met.

A senior banker said almost all large real estate companies are included in the RBI list, such as DLF, Unitech, Sobha, Omaxe, Parsvnath Developers and Housing Development and Infrastructure Ltd (HDIL). This is the first time the central bank has directly written to banks, asking them to assess loans given to specific companies that are facing a liquidity problem.

A number of banks have already begun discussions with real estate companies mentioned in the letter by RBI. Lenders are now in the process of submitting the report to the central bank.

According to bankers, the RBI move follows regular complaints from real estate companies that demand for homes have been sluggish due to the high interest rates charged by banks. Their grouse is that there is resistance among banks to finance the realty sector. Recently, the central bank had taken measures aimed at encouraging banks to disburse loans to this sector at a lower rate. RBI reduced the standard provisioning for real estate loans from 2% to 0.40%, thus bringing them on a par with other sectors such as cement, steel and pharma.

However, bankers say even as they have reduced interest rates on home loans in the last fortnight, they have not been witnessing any demand. They strongly feel that demand for home loans will pick up only after real estate companies slash prices. "A buyer's first consideration will be the price of the property and then only will he look at interest rates," a senior banker said.

Courtesy:- ET dtd:- 6th Dec. 2008

The government is likely to announce early next week a series of measures to boost economic activity in the country. This includes cheap credit to exporters and low-cost housing as well as making available additional funds worth Rs 50,000 crore to the infrastructure sector.

There is also a possibility of the Reserve Bank of India announcing another set of cuts in key policy rates like the cash-reserve ratio and the repo rate.

According to government sources, these measures were discussed at a meeting of an apex panel of ministers, headed by Prime Minister Manmohan Singh and formed to deal with the economic slowdown. The sources added that though the broad contours of the package have been finalised, the finer points are yet to be put in place.

The government is likely to provide cheap credit to labour-intensive export sectors including textiles, leather, handicrafts, marine products and gems and jewellery. This could be provided through a two per cent interest subvention for export related loans. The move is likely to cost the government around Rs 1,000 crore.

The government is also likely to extend the period of post-shipment export credit from 90 days at present to about 180 days. Additional export relief measures may include increased duty drawback rates used by exporters to get back duties like excise paid on producing goods for overseas sales.

The sources said the government may also provide interest subvention for low cost housing. The maximum limit for such loans is likely to be Rs 10 lakh. In its deliberations earlier, senior government officials had found that more than 70 per cent of the housing loans were below Rs 7.5 lakh. This move is likely to generate industrial activity by creating demand for cement and steel.

The Planning Commission has also proposed a Rs 50,000-crore fund for the infrastructure sector. The fund will be operated through India Infrastructure Finance Company Ltd. This will ensure that infrastructure projects like airports, roads and power plants do not get stuck due to the lack of funds.

Today's meeting was attended by RBI Governor Duvvuri Subbarao, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Home Minister P Chidambaram. Commerce Minister Kamal Nath, who is also a member, could not attend the meeting as he was in Madhya Pradesh.

Courtesy:- BS dtd:- 3rd Dec. 2008

The government is working on a proposal to subsidise housing loans below Rs 10 lakh by asking banks to give loans to individuals and builders at a lower interest rate for five years. Builders will get the loan only for housing projects that are under construction.

The government will compensate the banks by providing money from the Union Budget. The committee of secretaries working on the bailout package for domestic industry has asked the ministry of housing to prepare a detailed proposal which will be examined by the prime minister's apex committee early next week. "As much as 73% of total housing in the country is valued at Rs 7.5 lakh and below," a government official said.

The PM's apex committee — which includes the finance minister, the commerce minister, RBI governor and the Planning Commission deputy chairman — is expected to finalise an incentive package for industry. Speaking to ET, the government official said the committee of secretaries (CoS) had proposed to provide housing loans at 8% interest, a subsidy of 1-3%. Today, public sector banks give home loans at 9-11% interest rates.

The CoS will focus on ways to boost demand for housing so that steel, cement and capital goods also get a fillip. "Housing sector needs support immediately… within two months. Otherwise, it will be too late," the official said.

The meeting of CoS with the Cabinet secretary on the package scheduled for Thursday had to be postponed as the Cabinet secretary had to rush to Mumbai to review the situation in the city under terrorist attack.

Finance minister P Chidambaram would be meeting regional heads of public sector banks to push lending to industry.

He is likely to travel to all zonal headquarters in cities including Mumbai, Kolkata and Chennai between December 5-8. The move comes in the backdrop of industry complaining of unavailability of credit despite RBI's measures to ease liquidity.

"The minister is likely to discuss measures to spruce up funding for infrastructure. Increasing flow of funds to the sector is high on the government agenda," a finance ministry official said.

Another finance ministry official said while banks would be asked to ensure credit to their existing customers and honour their loan commitments, they could not be asked to take over complete burden of private banks.

"If you were taking loans from private banks earlier and now want the government banks to support you, because private banks are not honouring their commitment, it could not be possible in all the cases," the official said.

He said the government had asked the bankers that if they have given credit for a part of project, they should not stop lending for the remaining part of that project.

"In fact, much cannot be done if the borrower has defaulted on earlier obligations or if the creditworthiness has eroded," the second official said.

The finance ministry is also collating data on sectoral credit flow to find out the real areas of concern. The ministry had earlier directed all the public sector banks to submit fortnightly data on credit off take to monitor the lending pattern and better understand the problem at ground level.

Courtesy:- ET dtd:- 28th Nov. 2008

If you've bought an apartment or plot in Gurgaon in the past three years, prepare to fork out lakhs in additional development charges.

The Haryana government has decided to hike the external development charge (EDC) by almost 100 per cent for all projects developed after 2005.

Developers say existing customers will have to pay between Rs 150-200 per sq feet extra for an apartment and Rs 1,500-1,750 sq yard for a plot. For a three-bedroom apartment of about 2,000 sq. ft for instance, the buyer would now have to pay between Rs 3 lakh to Rs 4 lakh extra.

Senior Town and Country Planning officials maintain the government had to introduce the hike because of the steep appreciation in infrastructure costs. "The costs of laying infrastructure have gone up," Town and Country Planning Director SS Dhillon told Hindustan Times.

H R Bangia, who bought a 300 sq yard house in 2006 said he would move court if he was asked for more EDC. "I don't understand why developers don't include it in the total cost of the property initially."

Real estate developers, too, would have to pay hundreds of crores in arrears to the government. "The charges developing civic infrastructure for developers have been hiked from Rs 1.04 crore per acre to Rs. 2.27 crore for all projects that got licenses after 2005," said Raheja Group of companies CMD Navin Raheja.

Said N K Sehgal, senior vice president Ansal API: "Since 1991, the EDC has seen a dizzy rise of 1,300 per cent as against a 200 per cent increase in the CPWD wholesale price index in the same period."

Some developers have even threatened to withdraw applications for future projects. Haryana Chief Minister BS Hooda met DLF vice chairman Rajiv Singh, Unitech MD Sanjay Chandra and Parsavnath Developers' Pradeep Goyal on November 19.

Courtesy:- HT dtd:- 27th Nov. 2008