Invest In India

Ansal API’s 2,500-acre township Megapolis in Dadri, Greater Noida, might see another round of stake dilution in the very first month of the project’s launch. According to sources, State General Reserve Fund (SGRF) of Oman is planning to pick a 24.5% stake in the upcoming township, which pegs the total value of the project at Rs 26,500 crore.

The total investment in the project was reported at Rs 13,000 crore of which 8.5% was picked up by HDFC AMC for Rs 1,105 crore recently.

Fearing a crash in local real estate prices, many well-heeled Indians are buying properties in Singapore. While such purchases could be pure investments, the lure of permanent residentship offered to certain investors under the Singapore law may have also influenced the decision. Many are drawn by the sheer ease in buying a house in Singapore.

The Far East Organization, one of Asia’s largest real estate groups, is among the real estate developers looking to pull in Indians to invest in the Southeast Asian country.

Office rentals in key markets of the country witnessed a decline of up to 14 per cent during July-September period in the current year owing to supply outpassing demand by almost double, say a latest report.

“Third quarter saw a total supply of 18.41 million sq ft across major cities in India
while the total absorption was registered at 9.21 million sq ft.

However, marginal corrections in values were recorded in peripheral locations with high concentration of IT and ITeS office space,” global real estate consultant Cushman & Wakefield (C&W) said in its quarterly report on Indian office space.

The rentals, primarily IT spaces, in Noida in National Capital Region (NCR) during Q3 dipped by 14 per cent compared to the previous quarter, it said.

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High cost of borrowing from alternative channels and soaring interest rates have had a major impact on the bottom lines of real estate firms.

The interest expense incurred by India’s leading property firms has shot up as high as 400% on year-on-year basis while their borrowings have gone up on an average by 100%.

With the ongoing slowdown in real estate industry and correction in secondary markets, some of the country’s major cities have witnessed up to 5 per cent fall in capital values in residential properties, a Cushman & Wakefield (C&W) report said.

According to the global realty consultant C&W, the high -end residential market of Pune has seen a decrease of 5 per cent in capital values during July-September period, while it fell by 1 per cent in the mid-range category.

Other prominent markets, like Mumbai and Bangalore, witnessed a fall of 4 and 3 per cent respectively in the mid-range housing sector, it added.

However, few locations in Chennai witnessed appreciation in capital values up to 8 per cent.

“Most markets are predicted to continue to have stable capital values with a softening bias in the last quarter of 2008, with the exception of Chennai which may see some further strengthening in key micro markets. A lacklustre festive season, along with sharp drop in the stock markets have further aggravated the situation for the developers, who are also battling conditions such as high rates of servicing debt and liquidity issues,” C&W India Director (Residential Services) Aditi Vijayakar said.

Such conditions have led many developers to re-align their strategies and several developers may be now looking at targeting the middle-income groups, where the demand is high and mostly driven by end-users, she said.

“Correction in value in the secondary sales market has impacted the overall values of residential properties in certain micro-markets and is expected to further affect the capital values in the next quarter,” the report stated.

Property Investment News, November 2008

DLF Vice President, Rajiv Singh said Monday that correction in real estate prices and volume in realty sector is largely done and he expects stability to return in prices and volume in next eight months.

DLF scrip gained near about 10 percent early Monday.

Real trouble? Not really! Although real estate developers acknowledge that there have been some bumps on India’s real estate ride, most of them feel this is “the best time to buy your dream house and you should go out to look for value deals”.

Speaking at the SundayET CEO Real Estate Roundtable, held in association with Le Meridien hotel on Thursday, the panelists also underscored the need for a national regulator for the real estate sector and said the government should promote private-public partnership to make housing affordable for Indians.

The event brought together property developers, government officials and bankers for a no-holds-barred discussion on the current financial crisis and its impact on India’s real estate sector.

And the takeaway was not all bad news for those Indians dreaming of becoming home-owners.