The city, divided between Ambala Cantt and Ambala City, is bringing up a few group housing schemes and commercial projects.The transit city between Chandigarh and Delhi caught the eye of realtors after the six-lane project was initiated.

The city is destined to shorten the travelling distance by around an hour after the road-widening project is completed.

The real estate scene here is expected to heat up further as companies such as Unitech, Reliance Industries and DLF are believed to be acquiring land for their SEZ in Naraingarh.

For the time being, Vatika Group is coming up with its group housing scheme that will be followed by commercial properties. The group has one of the largest land banks of over 170 acres in the city. The group is also into plotting with a rate of Rs 7,500 per square yard.

The plots are available in 240 yards, 300, 500 and 1,000 categories. The Vatika Group is likely to open its group housing project for booking by next month. The residential project, coming up on 10 acres, consists of around 500-700 apartments of three and two bedrooms. As much as 45% of land is to be kept as green space. The group is also planning to set up a multiplex.

A few other realtors are also mulling to set up malls. Colonies are also being developed in areas bordering Dera Bassi of Punjab, which have an approach road towards Ambala district, to cater to the residents in Haryana.

Projects such as Dreamland Colony, Defence City and Omaxe Greens have come up in Punjab even though they are practically an extension of Ambala and accessible from both Ambala Cantt and Ambala City. The new projects have proper wide roads, sewerage, water and street light facilities.

The Centre recently released over 11,00 acres of land falling in the Ambala cantonment to the Haryana government. Over the decades, a major part of the Cantt area remained out of bounds for not just realty players but also for residents who could not undertake new construction as the building structures belonged to residents whereas land was possessed by the Centre.

Haryana Urban Development Authority’s sectors 9, 10, 11 in Ambala city are fetching a price of Rs 8,000 to Rs 11,000 per square yard. The houses are six marla, 10 marlas and one kanal. In Ambala Cantt, private colonies such as Agrasen Nagar, Ekta Vihar and Rani Vihar are being sold at Rs 12,000 per yard. The plots ranges from four marlas (100 square yards) to one kanal (600 square yard).

Between the Cantt and City, HUDA has set up three new sectors — 32, 33 and 34. HUDA has plans to add 30 more sectors as part of its expansion. The going rates of government plot ranges from Rs 8,000 to Rs 10,000 per square yard.

Commercial activities such as shopping malls, arcades, entertainment and fun zones, food courts and restaurants, that have already started cropping up in the city, are likely mushroom in times to come.

This would suggest that the ongoing sell-off in real estate stocks is a good opportunity for bargain hunting. Yet, most brokerage houses are advising their clients against doing so, as they foresee testing times for the sector in the near term. In fact, many of them are recommending that existing investors cut their losses right away as they could be in for a long wait for share prices to come anywhere near their lofty highs.

The sharp rise in real estate prices, coupled with high borrowing costs has let to softening of demand. The slump in the stock market, too, has contributed to the trend as many investors were earlier routing their gains in share trading into real estate.
Industry experts feel that companies that have managed to buy land in Mumbai at reasonable rates could be good bets even in these turbulent times.

The flagbearers of the industry like DLF and Unitech have fallen around 50% from their peaks, while other names like Ansal Housing and Construction, Ajmera Realty & Infra India, Omaxe, Lok Housing and Construction, Parsvnath Developers have fallen nearly 60%. With outlook on the market as a whole being bearish, brokers expect realty stocks to slip further.
Most property developers in India were riding the wave of an unprecedented demand due to a combination of rising affluence, tax benefits for home owners and low interest rates. But, this fuelled speculative buying in the sector, causing property prices to soar to exorbitant levels.

Mr. Nitesh Shetty, chairman of Nitesh Estates, said, “Our customers typically belong to the top management in various corporate firms while some are overseas Indians”. Mr. Shetty has priced its luxury home products in Goa, Bangalore and Chennai in the range between Rs 5 crore and Rs 8 crore. Like Nitesh Estates, many real estate firms have started marketing their projects in the overseas market by organizing property exhibitions and floating sales offices in the countries like the UK and US and UAE.

The Bangalore-based firm is marketing its projects in the overseas market by hiring sales executives and participating in property exhibitions. While it has been there for some time now, the luxury home segment in India is estimated at Rs 2,000 crore with around 30 million potential buyers.

Such homes are typically located on private roads that are fenced off with an exclusive private gate and state-of-the-art security systems including cameras. The amenities could also include a spa, multi purpose court, climate controlled swimming pool, gymnasium and a business lounge.

This follows Unitech’s decision to put on hold $1.5-billion qualified institutional placement (QIP), and Emaar MGF’s initial public offer (IPO), which was withdrawn midway. Industry insiders say the delay in fund-raising plans is unlikely to have any immediate impact on earnings.

Mr. Vipin Aggarwal, Executive director, Omaxe, said “We are waiting for the market to stabilize before we go in for private placement. We may not get the right valuation in the present situation”. Omaxe had originally planned to raise Rs 1,500 crore by issuing fresh equity to institutional investors.

The company intended to use the sale proceeds to buy land. On that issue, Mr. Aggarwal said, “The stake sold through this process could have been close to 15%”. At this rate, the transactions could have given Omaxe a valuation of Rs 10,000 crore, close to the company’s market capitalization during mid-December.

The Omaxe stock price had touched a high of Rs 613 on December 13, 2007, on BSE. It has lost almost two-thirds of its market cap since then. Omaxe scrip closed at Rs 221.60 on Wednesday on BSE, 5% down from the previous day’s close.

The promoters, Rohtas Goel and family, hold 89.3% stake in the company. Last December, the promoters pledged their 15% stake to Indiabulls for Rs 300 crore.

The company is engaged in developing several group housing, integrated townships, shopping malls, multi-product SEZ and hotels. It has recently won the bid to develop 393-acre township at Naya Raipur, Chhattisgarh, at a cost of Rs 1,800 crore.

The Bombay Stock Exchange’s Sensex recorded the 3rd highest single-day gain of 817.49 points for the duration of the current calendar year, taking the index from 16,949.14 on Wednesday to 17,766.63 points on Thursday.

The power index was the top gainer in percentage terms, appreciating by 8.14 % in a single day. Power Finance Corporation was the top gainer, up by 22.5 % from Rs 150.80 to Rs 184.75 on BSE.

Neyveli Lignite (13.13 %), BHEL (12.63 %), GMR Infrastructure (12.42 %) and Crompton Greaves (10 %) were among the chief gainers, rising by more than 10 % each.

The realty index, which was the 2nd biggest gainer, appreciated by 7.58 % to 10,143.55 (9,428.89).

Unitech, Indiabulls Real Estate, Omaxe and Mahindra Lifespace achieved over 8 % each on BSE. DLF, which won the heading sponsorship rights for the Indian Premier League (IPL), gained 6.12 % to close at Rs 864.85 (Rs 815).

”High interest rates are a serious concern as far as property market is concerned. There was some hope that the rates would be lowered today. However, the impact will depend upon the section and the demand-supply scenario there. The effect on Mumbai where the supply is limited will be minor,” Godrej Properties managing director Milind Korde said.

Buyer fighting and a sequence of interest rates hikes previous year put the brakes on home sales last year. Middle-class family put off purchases after considering prices break all records in most important metros. ET’s report, on Tuesday, cited RBI data to illustrate that home loan sales fell 39% in April-November 2007 while loans to developers eased by a fourth to Rs 12,563 cr.

Real estate shares fell after the policy. Lower rates help the real estate industry by spurring consumers into buying houses. Realty stocks like DLF, Puravankara Projects, Indiabulls Real Estate fell slightly at about 1%. The hardest hit were companies such as Unitech, HDIL and Omaxe whose shares fell down 5.59%, 5.47% and 2.12% respectively. Sobha Developers on the other side, closed at Rs 772.75, up 2.02% from the previous close.

“We were expecting at least a 25 basis point rate cut on Tuesday so that the feeling of possible home buyers turn positive, which in turn will help the developers to sell more residential units. The home sales are currently down now, but it doesn’t indicate that the developers will slash the prices,” said Director, Runwal group, Sandeep Runwal.

Jones Lang Lasalle Meghraj, chairman & country head, Anuj Puri said as the rate remain sluggish, high levels in interest rates will carry on and the impact will be felt mostly in the residential sector. This may also compel developers in some regions to sell their products at lower rates.

“Because of the subprime disaster in the US, US Fed (the Federal Open Market Committee) reduced the interest rates by 75 basis points. This naturally has created a wide gap between US and Indian interest rates, leading to arbitrage chances in the economy. US investors not only get the currency approval returns, but also higher interest income,” he said.

He added that if it occurs, there will be considerable addition to liquidity in the Indian economy. This may in turn fuel further currency approval, hurting exports. Thus, this was a strong case in favour of limiting
interest rates.