India Real Estate Monitor » Residential Units

Residential Complex At AIIMS Patna

rajani — Fri, 08 Aug 2008 10:58:44 +0000

Kolkata-based RDB Industries Limited, one of the foremost real estate company has informed that the Ministry of Health & Family Welfare, Government of India, have granted a tender in favor of the Company for setting up Residential Complex at AIIMS Patna, the projected value of which is thirty crore rupees.

RDB Industries Limited works in the real estate. Its real estate business includes the development and construction of residential units and commercial complexes.

The company also makes and sells cigarettes and other tobacco products.

Inflation Affecting Real Estate Prices

rajani — Thu, 07 Aug 2008 07:22:32 +0000

With inflation touching 12.98%, realtors here are finding it difficult to hold their price line and plan to increase rates for residential units by Rs 100-500 per sq ft later this month.
According to Confederation of Real Estate Developer’s Associations of India (Credai) Bengal, there has been a 25% increase in the construction cost of residential buildings over the last one year, almost double the increase during last year over 2006.
“Construction cost has increased from Rs 1,265 per sq ft in 2006 to Rs 1,811 per sq ft in July 2008, or by 43%,” said Pradeep Sureka, president of Credai Bengal. The city has added almost 10 million sqft of real estate space in last one year.
While steel prices have gone up by 107% in the last two years to Rs 45,500 per tone, cement has become dearer by 39% at Rs 4,900 per tone. “Even cost of bricks has doubled in the last two years to Rs 4.40 per piece,” Sureka said.
In April this year, Prime Minister Manmohan Singh had asked steel companies not to increase prices and the big steel makers had responded by holding the price line for three months.
“If the steel companies start increasing prices after August, prices could go up by Rs 500 per sq ft,” said S. Rungta, VP of Credai.
According to Credai estimates, direct and indirect taxes add nearly 27% to the cost of a six-lakh sq ft residential project with 30-40-metre high buildings. For a property selling at Rs 2,600 per sq ft, a buyer has to shell out Rs 211 as stamp duty and registration charges. Indirect taxes have already added around Rs 483 per sq ft.
Realtors said their sales have come down by more than 30% in the first quarter of 2008-09. Many of them will be gauging the customer mood at a property fair scheduled to open on August 11.
“We have requested Credai members to hold prices till Home Front-2008,” said Sushil Mohta, executive body member of Credai India, referring to the annual event.
However, banks said housing spends in West Bengal pick up after the second quarter, after people have done their festival spending.
According to SK Goel, chairman and managing director of Kolkata-based Uco Bank, the demand for housing in Kolkata and West Bengal starts picking up after the festive season.

Red Fort Plans Investment Of 2700crs

rajani — Sat, 02 Feb 2008 05:58:57 +0000

Private equity firm Red Fort Capital preparing to spend about Rs 2,700 crores in real estate by 2009, including acquisition of 2,500 acres of land in over 20 cities all over the country.
“By 2009 we would have empowered about Rs 2,700 crores in expansion of projects in Indian real estate. Out of which, about 70% will be invested in acquiring 2,000-2,500 acrs of land in outer edge of metros and tier II cities,” Red Fort India Real Estate Fund’s managing director Parry Singh said. The company will grow properties worth Rs 12,000 crores, he said adding “ the individual developers will also invest their share of the remaining equity amount on a project-by-project basis.”
Red Fort Capital (RFC) has already purchased over 1,000 acres of land in different parts of the country, he said, while adding “We are aggressively looking at 21 cities, with a strong interest in Mumbai, Pune, Chennai, Hyderabad, Bangalore, Kolkata and Vishakhapatnam markets.” Having dedicated a important segment of the first fund of $425 million, Red Fort is now in the process of utilizing the freshly initiated Rs 1,000 crores domestic fund.
“About Rs 800 crore of the domestic funds will be put in land purchase,” he added. The company is in the process of acquiring about 200 acrs of “relatively cheap” land in the border of Mumbai, he said. The company would build up residential, commercial, hotels, hospitals and retail spaces in these lands. “The fresh arguments have made us further gun-shy of developing Special Economic Zones,” Singh said.
On bind with developers, Singh said, “We tend to focus on mid-size developers, given our capability to add financial power as well as technical ability in project development and execution.”
The company would develop about 10,000 residential units in Bangalore over the next eight years, where as it would generate about 2,000 residence units in three years in Hyderabad, Singh informed. Besides, RFC is also presently developing properties in Chennai. On its possible raising capital from the public markets, he said: “The domestic fund has potential to be listed in the next three years.”
He, however, refused to disclose any details. Asked whether the existing floor area ratio (FAR) in the country should be enhanced, Singh said, “If infrastructure is poor, then FAR shouldn’t be increased. Developers should be allowed to build infrastructure and then increase the FAR.”

RBI’s judgment has spooked real estate cos

rajani — Wed, 30 Jan 2008 07:10:21 +0000

MUMBAI: The Reserve Bank of India’s (RBI) assessment not to slash interest rates has spooked real estate business facing the brunt of a housing business slowdown caused by the high cost of mortgage financing. RBI, on Tuesday, decided to keep interest rates unchanged in its third-quarter monetary policy review. Real estate companies were expecting a cut, especially in the background of slowing home sales in most important cities in the past few months.

”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.