Mumbai seems to be the next destination for realty giants DLF and Unitech. Both companies are trying to restart some of their projects in Mumbai which were on hold.
Unitech, said, “We have a number of slum redevelopment projects in Mumbai. We also have a focus on affordable housing and some projects will be announced by the end of 2009.” A company official said that the focus would now be on residential projects and prices would be lower than the current market rates.
Residential property prices are expected to fall by about 10% this year. Residential property rates declined by 18% to 20% in this March. Despite this drop, buyers are watching market scenario with ‘wait and watch’ policy. This trend is likely to continue through 2009. Mr. Sudhir Nair, Head, CRISIL Research says, “Demand in the commercial and retail segment is likely to remain under stress for the next two years owing to excess supply and weak off take.”
It is believed that lower home loan interest rates would help to revive demand in the residential segment. Hence, capital values are likely to stabilise in the first half of 2010, and increase during the second half of the year.
Diversified equity mutual funds are betting big on realty, the best performing category in the past one month. The construction segment has shown the highest growth in exposure in value terms in May spurting 95.53% to Rs 7565.76 crore.
Construction has now emerged as one of the most favoured sectors for mutual funds and now ranks behind refinery and banking stocks in overall exposure. Realty companies have been able to raise money through QIPs and stake sale. Their financial position has changed and leverage has now come down. DLF, Unitech and Indiabulls Real Estate are among the top additions to the portfolios of equity mutual funds in May. While DLF saw the biggest addition in quantity terms with mutual funds adding nearly 50 lakh shares, a 493.5% jump, Indiabulls saw a 151.3% increase in shares added followed by Unitech that recorded a 52.7% growth in additions.
It is known that demand for housing has increased in last one month, but this growth is restricted towards new projects. Buyers are rejecting resale properties. Major reason behind is, project developers are offering discounts and many more to woo the buyers. On the other side, resale properties come with a larger unaccountable component. This means seller demands for 20% to 30% more than the price mentioned on paper. Banks provide loan on behalf of the price mentioned on paper. That is why, resale properties are out of reach for a salaried employee. This is the scenario of tier-I cities.
A well known real estate private equity fund, Fire capital is interested in investing three hundred million dollars in real estate projects. Fire capital will invest it in country wide in next 3 years. Major investment market will be in tier-II and tier-III cities for residential projects. Fire capital CEO Om Chaudhary said,”We would invest $100 million each in the next three years as valuations are very attractive for us going forward. We have already invested close to $100 million in realty projects and would take a more than 50% stake in a project so as to provide our technical expertise and best practices”. Fire capital will start giving results in next 2 years and the whole project will take about 6-7 years to complete.
After successful completion of cheapest car project, Tata group is now working on cheapest hosing solution through its two realty subsidiaries, Tata housing and Tata Realty. Tata group has discussed about the land requirement for the project and they have decided to develop land in 3 major ways. First one is Tata housing working with the company that owns the land. Second one is, Tata housing can also take the SPV route and then decide on the profit sharing ratio and the third one is the option of purchasing the land. After completion of project, the property could either be sold or leased. Managing committee refused to share any kind of details by saying that it would be premature to comment.
Real estate industry has started showing the signs of recovery. Effect of recovery will be shown in coming quarter. These are not baseless talks. Launching of new projects at low interest rates is the main reason behind the increase of sales inquiries. Specially, the term ‘affordable housing’ is attracting middle class families to fulfill their dreams. After the huge gap of about one and half year, real estate market has stepped towards recovery. Even foreign investments was reduced in that time. Real estate market is getting its position back in market.Various banks are coming forward to provide loans for housing sector. With the reduction in interest rates, banks are adding a bulk of names in their happy customer list daily.
“There is a definite a rise in interest among home buyers and an attractive pricing has led to bookings,” Anshul Jain, CEO of international property consultancy firm DTZ India, said. It was the cement-to-hotels conglomerate Jaypee Group that started the affordable house bandwagon in the capital region, by targeting frills and reducing apartment sizes.
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Posted in Property News
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Tagged Affordable Housing, Apartment, Bandwagon, Banks, Bookings, Cement, Ceo, Conglomerate, Dreams, Foreign Investments, Gap, Happy Customer, Home Buyers, Jaypee Group, Low Interest Rates, Middle Class Families, New Projects, Property Consultancy Firm, Sales Inquiries
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