Real estate investments picking up in metros: ASSOCHAM
Courtesy : India Infoline News Service / Mumbai Apr 16, 2009 15:33
ASSOCHAM President Sajjan Jindal said that the Indian metro cities continue to be the favorite destination for real estate development
Even though real estate has been the worst victim of high cost economy, especially after the meltdown set in, yet it’s share in total private sector infrastructure investments in the metros in last six months works out to be 12%, followed by 10.26% in hospitality, says an assessment of the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
However, metro rail projects accounted for maximum of 27% share in total money injected in metro cities for infrastructure development under central, state, local government including corporates. Sewerage and solid waste management investment in the Tier I cities constitute the major chunk of investments, specifically via government mode. Mumbai (Rs166.94bn), Chennai (Rs15.88bn) and Bangalore (Rs13.54bn) are the major recipients of sewerage related investment. In percentage terms, it works out to be 16.90% of total infrastructure investment.
In a statement, ASSOCHAM President Sajjan Jindal said that the Indian metro cities continue to be the favorite destination for real estate development. The real estate projects constituting residential as well as commercial projects, have pocketed investment worth Rs157.10bn. The southern twin cities of Bangalore and Hyderabad have enjoyed maximum attention of the real estate developers.
The Karnataka capital, Bangalore is the frontrunner in terms of real estate projects planned for the metros with the investment estimated to be Rs79.90bn. Hyderabad at second place among all the cities, has bagged projects worth Rs4050 in realty space. With India being placed as versatile tourist destination across the world and steep rise in tourists arrival in India in past few years, hospitality has been considered as a crucial part of a well-developed infrastructure for the metro cities.
Chennai has come into front run in terms of funds directed towards construction and renovation of hotels. Investment of Rs40bn is being planned to infuse in constructing a five star hotel by ITC Industries in Chennai. Jindal said that as the Tier I cities in India are working out hard to offset the huge pressure on their existing infrastructure, it is the metro rail projects which have been the key driver of the infrastructure investment in these cities with metro projects costing Rs340bn.
The Study is based on the ongoing projects of central and state governments and those announced by private sector in last Six months. Six metro cities taken in the study included Delhi, Mumbai, Kolkata, Chennai, Hyderabad and Bangalore. The key challenges faced in the metros include transportation and water supply.
In transportation sector, other than metro rail, Rs62.83bn are being pooled in, accounting for 5% share. Roadway projects in the Tier I cities which include bridges, ROBs, highways and expressways, have been allocated Rs58.19bn. Water Supply projects, primarily being undertaken by the central government under Jawaharlal Nehru National Urban Renewal Mission, have absorbed Rs57.57bn investment with 4.54% share.
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Thursday, April 16, 2009
Wednesday, April 15, 2009
Kolkata residential projects back in demand
The real estate sector is finally showing signs of revival, on the back of an increasing investment in the residential segment.
Property developers are of the view that there has been a significant improvement in demand in the last couple of months, and at lease one has increased prices in the last one month.
Pradeep Chopra of PS Group, said he had increased prices for one of its projects by Rs 200 per square feet to Rs 1,899 per square feet in the last one month.
Several real estate developers are also planning to launch new projects, which they have been holding for the last six months, which could be seen as a manifestation of demand revival.
"The demand for residential projects has started picking up, and the worst is probably over for the real estate sector. Property prices should look up in the coming months," said Chopra.
P S Group is planning to launch two new residential projects in Narendrapur and Rajarhat by May this year.
Harshvardhan Neotia, chairman, Ambuja Realty, also agreed that demand for housing projects had started picking up since last month.
Property prices in Kolkata and its fringes has seen a correction of almost 25 per cent in the last six months.
Santosh Rungta, president, Confederation Of Real Estate Developers Association Of India (Credai), said, "The real estate scenario is now taking a turn for the better, not only in the eastern part, but across the country. For instance, in Mumbai, there are reports that one developer could sell 700 flats in just two days."
However, the demand for commercial and retail projects are yet to see a pick-up, and the segments are still reeling under the pressure of economic meltdown. Also, rising cost of cement has been a cause of concern for the developers, though the rise has been partly set-off by falling metal prices.
Pradeep Sureka of Sureka Group said, "In the last two months, demand has significantly picked up in the property market. There is no scope for further price correction, as certain raw material prices are still on the higher side. "
Cement prices have gone up by 20 per cent in the last one year, Sureka added.
In the months of October-November last year, several property developers had started advertising freebies to attract customers. However, they are no longer pursuing the strategy.
Eden Realty, which is developing one of the largest housing project in south Kolkata, tried to woo customers by offering free car parking space with flats few months back.
However, the response to the offer was lukewarm, and the realty company was no longer in a position to offer the scheme, admitted Sachchidanand Rai, managing director, Eden Realty.
"We expected selling about 100 flats through the scheme, but could sell about only 32. Now things have started improving and customers' interest has gone up significantly, which is also translating into sales," said Rai.
Sensing the need for easier finance, rather than freebies, developers are now focusing on pragmatic tie-ups with banks.
Thus, while earlier, many developers were paying pre-equated monthly installments (EMI) to banks for the customers, under interest subvention scheme, they were now refraining from paying the entire pre-EMI.
Recently, Eden has tied-up with four banks-- State Bank of India (SBI), IDBI, Bank of Baroda and HDFC-- under its "Empowerment " scheme.
"The scheme is a refined version of the interest subvention scheme, in keeping with the concerns of the banks as well as customers," said Rai.
The scheme, though not much different from the interest subvention scheme, involves a15 per cent down payment of advance by the customer, against which Eden would receive the sanctioned home loans in tranches, based on actual completion of the project. This would reduce the burden of the pre-EMI on developers, as payments would be based on the project completion, Rai said.
Chopra of P S Group also said, "Pre-EMI was not a profitable option for developers, as pre-EMI sometimes constituted even up to 70 per cent of the EMI, which was payable only when the project is up for possession."
Courtesy : Business Standard
Property developers are of the view that there has been a significant improvement in demand in the last couple of months, and at lease one has increased prices in the last one month.
Pradeep Chopra of PS Group, said he had increased prices for one of its projects by Rs 200 per square feet to Rs 1,899 per square feet in the last one month.
Several real estate developers are also planning to launch new projects, which they have been holding for the last six months, which could be seen as a manifestation of demand revival.
"The demand for residential projects has started picking up, and the worst is probably over for the real estate sector. Property prices should look up in the coming months," said Chopra.
P S Group is planning to launch two new residential projects in Narendrapur and Rajarhat by May this year.
Harshvardhan Neotia, chairman, Ambuja Realty, also agreed that demand for housing projects had started picking up since last month.
Property prices in Kolkata and its fringes has seen a correction of almost 25 per cent in the last six months.
Santosh Rungta, president, Confederation Of Real Estate Developers Association Of India (Credai), said, "The real estate scenario is now taking a turn for the better, not only in the eastern part, but across the country. For instance, in Mumbai, there are reports that one developer could sell 700 flats in just two days."
However, the demand for commercial and retail projects are yet to see a pick-up, and the segments are still reeling under the pressure of economic meltdown. Also, rising cost of cement has been a cause of concern for the developers, though the rise has been partly set-off by falling metal prices.
Pradeep Sureka of Sureka Group said, "In the last two months, demand has significantly picked up in the property market. There is no scope for further price correction, as certain raw material prices are still on the higher side. "
Cement prices have gone up by 20 per cent in the last one year, Sureka added.
In the months of October-November last year, several property developers had started advertising freebies to attract customers. However, they are no longer pursuing the strategy.
Eden Realty, which is developing one of the largest housing project in south Kolkata, tried to woo customers by offering free car parking space with flats few months back.
However, the response to the offer was lukewarm, and the realty company was no longer in a position to offer the scheme, admitted Sachchidanand Rai, managing director, Eden Realty.
"We expected selling about 100 flats through the scheme, but could sell about only 32. Now things have started improving and customers' interest has gone up significantly, which is also translating into sales," said Rai.
Sensing the need for easier finance, rather than freebies, developers are now focusing on pragmatic tie-ups with banks.
Thus, while earlier, many developers were paying pre-equated monthly installments (EMI) to banks for the customers, under interest subvention scheme, they were now refraining from paying the entire pre-EMI.
Recently, Eden has tied-up with four banks-- State Bank of India (SBI), IDBI, Bank of Baroda and HDFC-- under its "Empowerment " scheme.
"The scheme is a refined version of the interest subvention scheme, in keeping with the concerns of the banks as well as customers," said Rai.
The scheme, though not much different from the interest subvention scheme, involves a15 per cent down payment of advance by the customer, against which Eden would receive the sanctioned home loans in tranches, based on actual completion of the project. This would reduce the burden of the pre-EMI on developers, as payments would be based on the project completion, Rai said.
Chopra of P S Group also said, "Pre-EMI was not a profitable option for developers, as pre-EMI sometimes constituted even up to 70 per cent of the EMI, which was payable only when the project is up for possession."
Courtesy : Business Standard
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