Dubai Real Estate And Property

Well first up is the news that Dubai real estate developers are now starting to openly admit that all is not well in the real estate market! What really! I know a shocking revelation, but it was only 6 months ago developers were trying to paint a picture of a rosy property market, that would recover in the 1st quarter of 2009, and than no job cuts would be necessary etc. You get the general idea. But now, they seem to have actually come around to the fact the fact the market is in a bad state. Whereas previously developers would dart around questions to do with development progress and property demand, now they are responding more honestly to questions, and are giving more information on project problems and setbacks. This enhanced communication can only be a good thing for the market where we are seeing a lof of Dubai distress villas sales and apartments.Also this week, one of the parties involved in the construction of the Burj Al Alam, the Fortune Group, has come out and said the project is on course for a 2012 completion date. Once completed, the tower will be a rather substantial 510 meters tall, with some 108 floors, making it the tallest commercial tower in Dubai. It will also feature 27 floors of serviced apartments and a high end hotel. Completion was originally planned for 2010, but construction work has currently been places on temporary hold. Hopefully come 2012 Dubai can enjoy the towers beautiful architecture.And finally it seems land costs in Dubai have decreased substantially recently. With land prices typically accounting for 25% of a projects total costs, this should see large savings made by developers. The Dubai Real Estate Regulatory Agency (RERA) has recently introduced changes when it comes to purchasing land, with developers now forced to own and pay for 100% of the land if they want to sell of plan property. Add to this legislation that has curbed speculative land purchases, and the result is falling land costs, in many areas to 2005 prices, and in some areas prices have even fallen below the original asking price. With prices still expected to fall yet further, now looks like a prime time to invest in Dubai land plots.

Buy Sell Rent Properties in India

Real estate developers in India should lower prices given the general slowdown in the economy, the Confederation of Real Estate Developers’ Associations of India (CREDAI). “Some developers across the country have already reduced prices, CREDAI now requests all its members to do the same,” the real estate body, which counts over 3,500 developers as members. No fixed percentage in price reductions could be recommended due to the vast diversity of prices of real estate across India. The continuing economic slowdown has led to a fall in growth rates and potential loss of employment to many of the 10 million skilled and semi-skilled workers in the real estate sector.

Property prices in India need to decline further before demand picks up, said Adi Godrej, who heads the Godrej group of companies that has interests in property, consumer goods, and electrical and office equipment. There has already been a correction in property prices, he told reporters at the World Economic Forum’s India Economic Summit in New Delhi , without elaborating. The group has real estate projects in Mumbai, Kolkata, Bangalore and Pune, according to its Web site. Property prices are dropping across India as a slowing economy erodes demand for homes and office space. House prices in smaller towns such as Agra, Ludhiana and Kochi dropped an average 15 percent to 20 percent, according to Jones Lang LaSalle Meghraj Property Consultants (India) Pvt. Read More »

Sluggish Growth in Real Estate Coimbatore

Laxity in promoting Coimbatore as next IT destination after Chennai,time-consuming approval process, speculative land prices, conservative nature of people and lack of political clout are some of the key reasons identified behind the sluggish growth in real estate in the techcity. Speakers at a forum organised by Confederation of Indian Industry (Coimbatore) and Jones Lang LaSalle Meghraj (JLLM) here on Tuesday. However, believed the realty sector has enough potential and it is poised to pick up growth in about six months to one-year.

In his presentation on Coimbatore Edge, Ramesh Nair, managing director of JLLM, Chennai and Hyderabad regions said branding Coimbatore, as a single entity is very important for the growth of the city. Also, the city has the capabilities to be promoted as a highly promising alternative IT/ ITES and a biotech destination. “There is a huge potential for local, national as well as international developers in the real estate sector in Coimbatore,” Abhishek Kiran Gupta, Head – Research, JLLM said. He cited high literacy rate, more number of people graduating out of many renowned colleges and the city’s contribution to the growth in the per capita income of the country.

“Coimbatore is a self-made city and we haven’t had a trigger point yet. If only the city had got an IT park five years ago when Chennai got it in 2000, it would have propelled a greater growth today,” said Ashok Bakthavathsalam, managing director, KG Information Systems. D R Sekar, chairman, Builders Association of India (BAI), Coimbatore Chapter added that getting approvals for land and buildings have been a difficult and laborious process in Coimbatore and whole of Tamil Nadu.

“Compared to other neighbouring states, the approval process takes a long time in TN and therefore all promoters are shying away from investing in the state,” he said, adding a single window system is the need of the hour. Rajesh B Lund, vice president of Confederation of Real Estate Developers Association of India (TN) said, apart from the delay in approvals, the market fell when the new projects were about to take-off. “It led to a lull in the construction industry,” he added.

Of the proposed seven SEZs in Coimbatore, only three including Tidel Park are under construction now. Likewise, many companies evinced interest to build malls in the city but today only two projects – Brooke Fields and Fun Republic are getting ready. “The lack of night life in Coimbatore and the delay in IT infrastructure has led to slowdown among retail mall developers,” said A Sridharan, managing director, Covai Propery Centre. “Coimbatore is not a modern city and it is also conservative and not used to mall culture. But, after these two malls start operations, people will get used to it,” added Mr Sekar. Also, with the new generation starting to work, the city is bound to catch up with experiencing a new culture”, he said.

On land values, Mr Rajesh Lund said though prices have dropped drastically compared to the all-time high in 2007-08, the landowners still stick to the high prices and are not willing to sell lands. About the city attracting big investments, he added, once infrastructure falls in place investments would automatically flow in. He also hoped that non-resident Coimbatoreans would return to the city and invest here. Mr Ashok added that with the opening of the Tidel Park and the IT-SEZ in Keerenatham village, nearly 16,000 seats would be created in another 1 to 1.5 years time. “If these new professionals are to come to the city, then there would be huge demand for affordable housing and also serviced apartments,” he added. Already leading promoters in the city have planned to construct budget houses costing Rs 15 lakh to Rs 20 lakh each.

HDFC branch head S Ramesh Kumar expected the market to pick up since the costs have come down. “Also with the fall in interest rates, a large number of people would be attracted to real estate now,” he said, adding the future trend also points to a reduction in interest rates.

Fund Allocation to Asian real estate sector can benefit India

india may benefit from the increased fund allocation to Asian real estate sector by global investors. Even as total amount raised by Real Estate private equity real estate funds between January and November 2008 fell by a third to $57 billion from a year ago, the allocation towards Asian markets increased to 28% from 19%. As a result, the funds available for investment in Asia has increased marginally from $15.9 billion last year to $16.2 billion.

• But dealmakers say this need not necessarily mean immediate deployment of such funds in India as the property prices have still not corrected enough and demand remains weak.
• As per the data collected by New York-based Private Equity Real Estate magazine, Asia and rest of the world (28%) edged ahead of Americas (25%)
• Global (24%) and Europe (23%) in terms of geographical allocation by investors for all new real estate funds closed in 2008.
• India and China are top two contenders for Asia-focused funds, says Cushman & Wakefield director (capital markets) Sandeep Singh.
  
• “Funds with short-term horizon may not come to India as downside risks remain. Property prices have fallen, but not enough.
  
• Besides, demand is still weak,” he said.After having seen a five year bull run ending in 2007,
• the Indian real estate sector is now faced with a tough market with sales flagging and debt unavailable. Several developers have been seeking private equity funds, but deals have been few and far between over the last six months. “
• There are a number of foreign and domestic funds sitting on cash, but no one is willing to invest immediately. All funds have slipped into wait and watch mode as global economic situation worsens,” says DTZ investment advisory director Ambar Maheshwari.

PE players are seeking higher returns and are willing to wait for valuations to come down. Some of them are even exploring distressed assets.Lately, fund raising has become a big challenge for private equity players as limited partners or actual investors seek more time following the global economic turmoil which has eroded their wealth and made them cautious of investing. This has delayed the final closure of some major funds, including $12 billion Morgan Stanley Real Estate.

Much of the funds this year were closed by August, after which the global economic scenario deteriorated sharply. Only two funds totalling $533 million were closed in September, while just one $2.7 billion Merrill Lynch Asia fund was closed in October.

Real Estate Prices may Fall in Maharashtra

indicative property rates, based on which Maharashtra levies its stamp duty in Mumbai and other key cities of the state, may fall marginally for the first time in about a decade as real estate transactions drop, according to sources in the revenue ministry.The property rates in the ready reckoner for Mahrashtra may drop marginally reflecting the subdued sentiments, sources said. A final decision may be taken tomorrow. The property ready reckoner is prepared by the office of the inspector general of registration and stamp duties (IGR) on the basis of transactions in real estate sector in respective areas.

Property prices across key cities of the state have witnessed a decline owing to an economic slowdown that has forced companies to curb expansion plans. Reflecting depressed sentiments property, transactions have also dipped as buyers anticipate a further softening of prices. Still, the assurance given by Minister of State for Revenue Rana Jagjit Singh in the state legislature to maintain status quo has created a piquant situation. Pune-based Maharashtra Lawyers Association’s President M P Bendre this week filed a petition in the Bombay High Court requesting the court to direct the state government to publish rates that reflect the market sentiments. The petition pointed out that the assurance given by Singh amounts to injustice to consumers.

Hyderabad Based Real Estate Company Bags Green Platinum Pre-Certification

Aliens Group, leading Real Estate Company in Hyderabad, just added another feather to its cap. It has become the only Real Estate Company in Andhra Pradesh to be pre-certified with a Platinum Rating by Indian Green Building Council (IGBC) in the Residential Townships category. This makes it one of the most Eco-Friendly Properties to live in and the First Platinum pre-certified Green Township in Hyderabad. This comes after Aliens Group being the only Real Estate Company to get the HUDA approval for a 30 Storied High Rise in Hyderabad.

IGBC is a not-for-profit organization and also the certifying body for Green Buildings in India. It follows a series of studies and does extensive review after which these ratings are given to the developments. There are very few developments that are accredited with these ratings in India and Aliens Group is one of them. Speaking on the occasion Mr. Hari Challa, MD Aliens Group said, “It is a matter of great pride that the award recognizes our Eco- Friendly initiatives. We believe in self governance and are aware about our responsibility towards the society and environment. What makes me proud is - what we are building today is not at the cost of tomorrow.” Read More »

3 Year Lock-in for Foreign Investment in Real Estate

Foreign investors in Indian real estate cannot sell their stakes to another foreign investor before three years, the Foreign Investment Promotion Board (FIPB), the body that clears such proposals, has said. With this, FIPB has overruled a provision in FDI policy that exempts foreign players from the rule in cases where fund transfer is from one non-resident to another. Till now, this three-year lock-in was applicable only on foreign investment in real estate and not on investors.

The FIPB view is contrary to the stand taken by the department of industrial policy and promotion (Dipp), the nodal agency that formulates FDI rules in the country. Dipp’s view is that a foreign investor can repatriate funds if it offloads its stake to another foreign investor as the actual investment in a project would remain intact and only its ownership would change. “Though Press Note 2 of 2005 has an enabling clause to permit sale of investment between two non-residents before the end of lock in, it has not been allowed so far,” an official in the commerce & industry ministry said.

The issue came up in the last FIPB meeting, when the board took up private equity fund 2I Capital’s request to sell its investment in Delhi-based real estate firm Uppal Housing to Mauritius-based fund ICP Investments. The company had sought approval for transferring 1.9 crore shares in the Indian real estate company to the Mauritian company. According to the company’s proposal, the fund transfer involved no repatriation of funds but physical transfer of shares from one investor to another.

Though Dipp had recommended giving permission for sale of 2I Capital’s shares to ICP Investments, FIPB rejected it. Dipp argued the sale of shares was permissible between two non-residents within the lock-in period , but FIPB rejected it. In a missive to FIPB, ICP Investments said it has already invested $45 million in Uppal Housing and has plans to make substantial investments. However, if 2I Capital is not permitted to transfer its shares to ICP, Uppal Housing’s projects may be jeopardised, the company has stated. The joint venture between Uppal Housing and 2I Capital has been terminated and the company still holds its shares, given the policy logjam.

Revival in Real Estate Possible in another 3 Months

A survey report by the industry lobby said 88 percent of chief executives of real estate firms see a quick revival within the next three months as developers shift towards affordable housing and property prices undergo significant correction. The Assocham Business Barometer report is based on a survey of 25 real estate firms conducted between May 15 and May 25. The survey report said a whopping 92 percent of chief executives considered affordable housing to kindle demand in the real estate sector, with about 84 percent saying this segment had been least impacted by falling demand. It said while the luxury housing segment witnessed a demand contraction of over 50 percent, special economic zones (SEZs) by about 40-50 percent, retail space between 30-40 percent and commercial space by 20-30 percent, affordable housing was the most resilient segment seeing a contraction of 10 percent or less.

The chief executives called for sought single-window clearances for all schemes under affordable housing, as is done with SEZ proposals, to bridge the shortfall of about 2.6 crore dwelling units at the earliest. About 76 percent of the respondents said the stimulus given to the sector through fiscal and monetary measures was inadequate. Of all policy measures, 64 percent of respondents were of the view that the central bank’s move to allow banks to restructure loans to developers has been the most successful in improving liquidity for the real estate sector. Additionally, 60 percent said a resurgent stock market would be the most prominent source of finance for the sector, while 28 percent thought bank credit was the most viable option. Hefty funds raised through the qualified institutional placement route in the stock market (exceeding Rs.8,000 crore) along with debt restructuring would allow the developers to address their liquidity concerns. Mumbai has been ranked as the most saturated in terms of real estate assets followed by Delhi, Bangalore, Chennai, Kolkata and Hyderabad.

Tata Real Estate and Infrastructure Limited Plans 20,000 Crore Investment

TRIL has hired Sanjay G. Ubale, a former IAS officer to head its real estate and infrastructure foray. Tata Realty & Infrastructure Limited (TRIL), a wholly-owned subsidiary of Tata Sons, has unleashed it mega investment plans for the sector. The company, part of a $62.5 billion Tata group, has said that it plans to develop real estate and infrastructure projects of around Rs 20,000 crore in next three years. It has raised a $700 million offshore fund to invest in its real estate project for the same. TRIL has hired a former IAS officer to head its real estate and infrastructure foray. Sanjay G. Ubale, MD & CEO of TRIL, was till recently Secretary, Special Projects with Government of Maharashtra, where he was responsible for redevelopment and transformation of Mumbai. The projects are being developed with various strategic partners. The $700 million fund is based out of Mauritius, and 18-20% of the capital has already been deployed.

The company has also announced several real estate projects it’s developing, which include IT/ITES SEZs at Chennai, Ahmedabad and in Hinjewadi. TRIL is also developing a 7 lakh sq. ft. retail complex in Amritsar, adjacent to which Taj hotels would also open a property. It is also evaluating a residential and mixed use development on a 35 acre plot at Gurgaon. For its infrastructure push, TRIL has partnered with a number of overseas companies. Its focus areas in infrastructure are roads and bridges, urban infrastructure (comprising metro/monorail projects), airports and logistic parks. Some of the projects it is considering are Metro projects (in partnership with Mitsubishi Corporation), New Delhi Railway Station redevelopment (with Grandi Stazioni), Amritsar & Udaipur Airports (with Changi Airports India), and roads & highways (with Atlantia S.p.A).

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