Demand for office space rises by 19 pc in Q2: C and W

NEW DELHI: Vacant office spaces have seen demand for them rise by 19 per cent during the last quarter amid signs of economic recovery, although the same weakened in the National Capital Region on hopes of a further drop in rentals, a report has said. According to a latest report by global realty consultant Cushman & Wakefield (C&W), the average demand in India's eight major cities rose by 19 per cent at 6.7 million sq ft during July-September period over the previous quarter. "Bangalore witnessed the highest demand in the quarter with 2.3 million sq ft followed by Mumbai at 1.2 million sq ft and Chennai at 0.98 million sq ft," C&W said. However, demand in the NCR region was down by 30 per cent at 0.66 million sq ft from the previous quarter, it added. C&W attributed the decline in demand to "subdued interest from the corporate sector in anticipation of further decline in values along with shelving of their expansion plans". The report said the total supply during the last quarter was much more than demand and was estimated at about 15.9 million sq ft, which was led by Mumbai with 3.73 million sq ft. NCR and Kolkata followed with 2.26 million sq ft and 1.7 million sq ft, respectively. "The gap between supply and demand increased to over 130 per cent (from 50 per cent) in the last quarter, increasing the average vacancy across major cities in India to 17 per cent from the previous quarter's 13-18," the report said.

Funds just got costlier for builders

The RBI’s credit policy announced on Tuesday appears intended to rein in an incipient bubble in the real estate sector. The provisioning requirement for loans to commercial real estate has been increased from 0.40% to 1%, implying costlier bank loans for the sector.

As most of the realty companies rely on bank funding, especially in times of financial crisis, this move could have an impact on the sector.

“As banks often keep a cushion for any regulatory changes in provisioning, this measure is more for bringing moderation in the realty sector. Since necessary reduction in prices has still not taken place and there is fair amount of money available for the sector, this step is to avoid creation of another asset bubble,” says M Narendra, executive director of Bank of India.

Not unexpectedly, industry officials differ. According to Rajeev Talwar, executive director of DLF, “Stability in major parameters is a good sign, but increasing the risk weightage for commercial real estate is a negative signal, which is perhaps not required so early in the economic revival process.”

It remains to be seen whether this latest measure has the desired impact of curbing any further rise in property prices. Since there is a huge latent demand to be fulfiled, some builders are confident of sales being unaffected by any increase in prices. Indeed, in some cities property prices have gone up by 5-15% in past 2-3 months.

But other industry officials doubt whether any price increase can be passed on. “Property prices are a function of demand and supply and it will not be easy for developers to pass on this extra cost to buyers as many places, especially in central Mumbai and parts of Delhi, have already seen a significant price run-up,” says Keki Mistry, vice-chairman and managing director of HDFC.

Sudhir Reddy, managing director of IVR Prime, a south-based builder, says: “It is easier said than done that companies will pass on the incremental cost of funds to homebuyers. One must not forget that increase in market price will result in additional construction costs for builders. This will not be possible when places like Hyderabad, Chennai and Pune are still facing a glut in demand.” Sunil Malhotra, CFO of Delhi-based Omaxe, says: “As demand is still price-sensitive, it will not be easy for developers to pass on that extra cost to consumers.”

In short, the current measures may not have significant impact on the financials of real estate companies or prices. Tuesday’s policy pronouncements show that the apex bank has become vigilant. Hari Pandey, VP-finance, HDIL, says the increased provisioning will not cost more than 30-50 bps at present.

India Land's flagship seeks to alter Ambattur facade

CHENNAI: India Land properties (ILP), part of the Madrid-based Americorp group, is betting big on its flagship technology park at Ambattur to give a fresh impetus to the fast changing industrial landscape of the suburb in north Chennai.

By September, the 2.6 million sq ft ILP tech park on 10-acre would be commissioned with marquee clients like the Royal Bank of Scotland (RBS), Kone and Etilsalat. Total office area will be two million sq ft — Tower A (4.2 lakh sq ft) and Tower B (6.3 lakh sq ft) are completed and ready. Tower C (9.5 lakh sq ft) is coming up.The 100% FDI-backed project of the global realty player is in the last leg of completion.

The Rs 450 crore project has a potential to generate over 20,000 jobs in the IT, ITES, retail and support services. It is expected to play a major role in transforming Ambattur, which is one of the oldest industrial hubs in Chennai.
ILP has emerged as the largest player with its plug-and-play tech park by building IT space which is double the size of Tidel (1.3 million sq ft) and Olympia Tech Park (1.2 million sq ft) in the city.

ILP director, S Salai Kumaran told ET Ambattur is witnessing a sea change. From an industrial belt, it is transforming into a catchment area for companies, including MNCs, in diverse fields. It has the potential to become a central business district (CBD) and another OMR given its proximity to leading hospitals, schools and the entire eco-system.

It also has the advantage of a strong road and rail connectivity linking centres like Tiruvallur, Perumbur, Anna Nagar and Vadapalani which have a high concentration of workforce from diverse sectors, he added. "Our development work is progressing well. We expect to become fully operational by September," ILP country head C S Ilangovan alias Umesh told ET, noting that office premises would absorb a space of 2 million sq ft, while the balance would be used for parking, retail (multi-cuisine food courts) and landscaping infrastructure.

Is buying real estate a profitable idea?

“Improvement in the overall economic sentiment coupled with liquidity due to a recent upswing in the equity markets have renewed consumer confidence in real estate,” says Sukhraj Nahar, chairman, Nahar Group. “Residential real estate in particular has always been a safe investment option. It holds true even today,” he adds.

Developer Vijay Wadhwa advises parents to opt for real estate as long-term planning for their child's future. “Especially for parents of the girl child,” he says.

“Real estate is probably the best long-term investment one can make. It remains in your child's name, and the appreciation in value over the years makes it a safe and secure option. Or even while planning for your old age, real estate is always an asset,” he adds.

Realty: Diwali 2009 offers are meant more for end users

It’s that time of the year when you can feel the festive buzz all around you. And real estate developers are cashing in on the festive mood. They have realised that the consumer is not interested in a drop in basic sale price but more in the total outflow that is incurred towards purchase of the property.

Ravi Saund, marketing head of Sare, a real estate-backed private equity fund developing residential properties, says there is a qualitative shift in Diwali offers across years. “The year 2007 was the height of the real estate boom and developers were riding the crest of the boom. Diwali 2008 saw developers struggling with cash flows and global recession and Diwali offers too were highly watered down. This year the offers are structured to be of more use to the end user.” Sare took advantage of the positive buyer sentiment to launch its Chennai and Gurgaon projects. In addition, it offered a Rs 25,000 festival discount.

According to Raminder Grover, CEO, Homebay Residential, Jones Lang LaSalle Meghraj (JLLM), demand this festive season has been 25% higher than it was last year, when the sector was already in the grip of the slowdown.

Whether this demand is on the back of varied offers or an improvement in the overall sentiment, the fact is that many developers are launching special incentives to appease buyers.

Supertech is offering free LCD screens to customers in some of their projects such as 34 Pavilion in Noida, Emerald Court at Expressway Noida, Czar Suits in Greater Noida and Green Village in Meerut. R K Arora, chairman & MD, Supertech, says they have received a good response from buyers. “In the first phase during the Navratras, we had offered ACs per BHK in some of our projects. The response to the previous festival offer and the current offer (AC+ LCD) has been quite welcoming. Around 70-75 units were sold for all the projects put together.”

Delhi-based real estate developer Omaxe too has announced a special offer where customers can win an LCD TV on every on-the-spot booking of flat in their newly-launched group housing project in Bahadurgarh and Rohtak projects. Both the group housing projects offer a 3BHK house for around Rs 35 lakh.

Vijay Jindal, CMD, SVP Group claims that they have seen a 35% growth in booking with the launch of their festive offers. “We are offering 10-55-35 (30+5). Booking amount is 10%, 55% will be financed by bank whose EMI will be paid by SVP. Then on possession 5% will be paid by the customer and rest 30% will be financed by the bank or financial institution. The response for our scheme has been quite encouraging.”

NRIs to get immediate property possession in Chandigarh

CHANDIGARH: Non Resident Indians (NRIs) having property in the union territory of Chandigarh can now gain immediate possession of both residential and non-residential property, officials said here Monday.

"We have received a notification from the union government regarding the extension of the East Punjab Urban Rent Restriction (Amendment) Act 2001 in the city. Now NRIs can have immediate possession of their property by just applying to the relevant authority," said the official spokesperson of the union territory here Monday.

He added: "Chandigarh administration had been for long urging the centre to make provisions or to devise a mechanism for safeguarding the properties of the NRIs having roots in Chandigarh."

Chandigarh already has an NRI cell, which was established Aug 15, to deal expeditiously with various representations and complaints received from NRIs

Home buyers stay off as builders hike rates

MUmbai's residential property prices are on the rise even as the buyer is not in a hurry to finish a deal. According to the city’s property registration data, there has been a 13% month-on-month drop in the number of apartments registered in August 2009 this year as compared with the previous month. This trend was holding out in September as well.

“As prices increase, customers shy away and this is evident from the registration data,” said Ram Yadav, CFO, Orbit Corporation. The slowdown in demand comes after an average month-on-month increase of 6% since March 2009. “The drop in sales is clearly visible in Mumbai as compared to other parts of the country. It is more visible in projects that cost over Rs 3,000 per sq ft,” said Pankaj Kapoor, CEO, Liases Foras, a real estate research agency.

On the back of the global crisis, property prices were affected quite seriously and fell 15-30% starting April last year. This trend continued till the end of 2008 and prices showed a semblance of stability early this year.

As the economy started to pick up, a change was being felt from March this year. “A lot of pent up demand found its way into the market beginning March this year. However, with a 10-15% price hike, projects are not so attractive now,” said Hari Krishna, director, Kotak Realty.

Real estate agents profess a similar view. “Builders have increased prices faster than expected. This has forced buyers to defer their purchase decision,” said Vipul Shah, a property consultant. Builders have merely reacted to the sentiment which revolves around the demand picking up in the residential segment.

“An increase in prices has directly affected the demand for secondary homes. This shows demand is elastic enough to weather any increase in price,” said Ambar Maheswari, director, Investment Advisory for international real estate consultancy, DTZ India.

Office rentals in Mumbai, Delhi slip on oversupply

MUMBAI | NEW DELHI: Excess supply has made office rentals in key commercial centres in Mumbai and Delhi come down by half over last year, and realty analysts fear that with business houses waiting for economic activity to pick up speed and a raft of new commercial facilities nearing completion, the rates could head further southwards. Residential prices have firmed up after the lows they hit late last year, but the recent uptick in macro economic activity is yet to trickle down to sectors such as retail. Realty consultants said in Mumbai there are vacant commercial properties in Malad, Thane, LBS Marg and Andheri MIDC despite the fall in rentals. Rentals have crashed from Rs 400 per sq ft in December last year to around Rs 250 per sq ft now in Mumbai’s commercial hub, the Bandra Kurla Complex (BKC). ET has learnt that an FMCG company is asking for rentals at 35% lower rates than what it was a year ago for its 1.5 lakh sq ft office space in south Mumbai. Samsung recently took 90,000 square feet on rent on Gurgaon’s Golf Course Road for Rs 58 per sq feet against the asking price of Rs 80 a sq feet. In another deal, a tenant has leased out 50,000 sq ft at DLF Cybercity in Gurgaon for Rs 45-50 per sq ft while the quoted rent was Rs 60-65 per sq ft. “Since there is a downward pressure on many developers and building owners, one may witness even bigger deals at further lower rates,” said Kaustuv Roy, executive director, Cushman & Wakefield. In Mumbai, supply of the commercial space has gone up with constructions of new buildings and shifting of offices to the cheaper complexes giving the buyers a chance to bargain. For example, JP Morgan is shifting its office from Mafatlal Centre at Nariman point in South Mumbai to Kalina near BKC. This will free up close to one lakh sq ft of space in Nariman Point, further suppressing rentals. Vacancy — the difference between demand and supply — at Lower Parel is estimated to be around 22%. The number is as high as 35% in North Mumbai and 25% in BKC. Many developers prefer to hold on to their vacant properties rather than leasing them out on lower rentals just to keep the premium tag of the properties intact, said real estate consultant Anckur Srivasttava. However, the capital value of commercial properties is not falling despite the fall in rentals. New Delhi, in particular, has seen a strange anomaly between rental and capital values. While rentals are still in the Rs 50-70 per sq ft range, capital values are in the Rs 11,000-13,000 per sq ft range.

Gold imports may touch 40 tonnes in September

NEW DELHI: Gold imports are likely to increase two-fold in September at 40 tonnes compared to last month due to spike in demand ahead of Diwali and the ongoing marriage season.

"The imports are likely to be around 35-40 tonnes in September," preliminary data given by the Bombay Bullion Association said. The import was 54 tonnes during September 2008.

The rise in imports has been due to festival season demand, starting with 'Durga Puja' and 'Navratras' and will be followed by 'Dhanteras', 'Diwali' and the marriage season, Bombay Bullion Association Director Suresh Hundia said.

He said the is more for gold coins than for retail jewellery.

"This year the investment demand went up even as gold crossed the Rs 16,000-per 10 grams level twice, as people expected the prices to go up further," he pointed out.

Gold imports have been sluggish so far this year and were at 81.2 tonnes during January-August 2009, compared to 261 tonnes in the same period last year, according to the Bombay Bullion Association data.

In January, only 1.8 tonnes of gold was imported followed by no imports during February and March due to lack of demand on high prices following recessionary pressures.

Gold imports had touched 20 tonnes in April, on account of 'Akshaya Tritiya', a festival considered auspicious for buying gold.

Gold breaches 16,000 mark for first time, silver at new peak

MUMBAI: Gold prices on Wednesday breached the Rs 16,000-mark for the first time in the bullion market here on persistent festive demand amid rise in the overseas markets, while silver continued to hit new highs.

Stockists and retailers continued to buy the precious metals amid the ongoing festivals, boosting their demand.

Silver rallied to an all-time peak on sustained industrial demand on the back of higher international advices.

Gold for October delivery, the front-month contract, rose to $1,064.20 an ounce on the Comex division of the New York Mercantile Exchange. The contract earlier touched a high of $1,068.40 an ounce. December silver futures ended at $17.84 an ounce from $17.82.

In Tokyo today, gold hovered just below the record high levels as dollar declined to fresh 14-month lows against its major rivals.

In the local market, standard gold (99.5 purity) rose by Rs 105 per 10 grams to resume at Rs 16,035 from Monday's closing level of Rs 15,930.

Silver futures extend gains on global cues, spot demand

NEW DELHI: Supported by firming overseas trend, silver continued its winning streak and prices rose up to 0.91 per cent on Wednesday.

Strong demand in spot markets ahead of diwali also supported the rise in prices.

At the MCX counter, silver for far-month May contract gained 0.91 per cent to Rs 27,894 per kg with business turnover in 3 lots.

Similarly, silver for delivery in March rose by 0.31 per cent to Rs 27,756 per kg in 241 lots, while December contract edged up by 0.36 per cent to Rs 27,596 per kg in 8,502 lots.

Market analysts said apart from firming trend in global markets where the metal traded at almost 18 dollar an ounce, strong domestic demand in spot markets also boosted trading sentiments in silver at futures market.

"People generally buy precious metals - gold and silver - on account of diwali, giving push to rising prices" said analyst Shree Bhagwan.

Meanwhile, silver at Mumbai bullion market traded higher at Rs 28,150 per kg.

Union Bank sees 2009 gold imports at 600T

MUMBAI: State-run Union Bank of India hopes to maintain its gold imports at 40 tonnes this fiscal driven by an expanding client base, even as domestic prices hit a record high in late trade on Tuesday, an official said. "We hope to maintain last year's level of 40 tonnes," S. Rajendren, general manager-international banking division, told Reuters in an interview on Wednesday. "We have done 40 percent of last year till September and hope to do the remaining in the remainder of the year," said Rajendren. "We have been expanding our client base including that of exporters." The bank, one the country's major importers, expects India's total gold imports to fall 16 percent to 600 tonnes in the calendar year, hit by rising prices of the yellow metal and slowdown in the economy. "Certainly resistance is there because of the economic slowdown," said Rajendren. "Next three months will be busy season, it could likely be at 600 tonnes with prices being right," added Rajendren. India, the world's largest consumer of gold, is in the midst of the festival season, with Dhanteras and Diwali, due later this week, when gold buying picks up for auspicious reasons. India imported around 712.6 tonnes of gold last calendar year, data from World Gold Council showed. On the demand scenario for Union Bank, which has 200 branches doing gold coins business, Rajendren said, "sales are happening, but the quantity is not that great. We may have done about an average of 50-60 kgs of coins in the preceeding nine months." Indian banks sell around 8 tonnes of gold coins per year. According to latest data from the World Gold Council, India imported 211 tonnes in 2008 for gold bought as investment, while jewellery was at 501.6 tonnes. "If prices moderate then there could be more festival sales," said Rajendren. Union Bank hopes that a 7 percent drop in prices could revive sagging demand. "The comfort level now is 1,500 rupees (per gram)," said Rajendren. The most-traded gold December contract on the Multi Commodity Exchange (MCX) was 0.20 percent lower at 16,004 rupees per 10 grams at 12:23 p.m., after hitting a record high of 16,048 rupees on late Tuesday.

How to invest in gold and key price drivers

Gold prices surged to a record high above $1,070 an ounce as dollar weakness sparked buying of the precious metal as an alternative asset.

Following are key facts about the market and different ways to invest in the precious metal.






Want to buy gold? Here are a few tips

Diwali is next week. The world is going crazy about gold. You want to buy gold too. Easy peasy. Not really.

Every purchase of gold will not part-finance your retirement years. Like all the other important ones (and god knows this one won’t come cheap), your relationship with gold needs a lot of self-awareness. The best way to make gold work hard for you is think a bit hard why you want it and how you will use it.

Is gold fund for you?

The traditional way of investing in gold is holding on to the yellow metal physically. You would buy gold ornaments, coins and bars from the jeweler and keep it away in a bank locker.

According to the World Gold Council, an estimated 15,000 tonnes of gold is held by households here.

Most of it is in the form of jewelry. India imports between 700 and 800 tonnes of gold a year. Holding gold in the physical form is not without problems. The most crucial issue being verification of the quality of gold sold to you.

Storage and safekeeping of this asset is another important issue to reckon with. Traditionally, gold is purchased on festive occasions.

Gold seen as safe investment but bear in mind few tips!

The world seems to be reinforcing our magnetic affinity to gold.

Global demand for gold coins and bars is reportedly sharply higher today and unlikely to ebb in the near future.

Prices are at the kind of high that most of us hoped to see in our retirement years.

Not surprising , as gold is seen as a safe investment parking slot in a bear market, and tends to move in the opposite direction of stocks.

Gold futures drop from record high

MUMBAI: The gold futures eased on Wednesday after hitting a record high late on Tuesday, as a stronger rupee made dollar-denominated gold cheaper in local currency but demand was sluggish despite big festivals this week.

Gold futures on the Multi Commodity Exchange of India Ltd (MCX), opened down 0.2 per cent at Rs 16,010 ($347) per 10 grams around 0430 GMT.

On Tuesday, the contract had closed up 0.7 per cent at Rs 16,036 after scaling a record Rs 16,048 during late trade. The previous all-time high was Rs 16,040 on February 20.

Traders said the high prices dented demand just as India celebrates the Dhanteras festival on Thursday, which is the single biggest day for gold purchases in the tradition-bound country.

"People are not buying," said a dealer in a large bank in Mumbai.

The high price will also curb buying for the Diwali festival on Saturday when Hindus worship the goddess of wealth Lakshmi, offering her newly purchased gold items.

India is the world's biggest market for gold, but demand has remained down through most of the year as prices struck record highs and an economic slowdown dampened sentiment.

Gold imports during January to September fell 59 per cent to

around 130 tonnes from 315 tonnes in the same period last year, data from the Bombay Bullion Association showed.

Gold futures hit record high late Tue

MUMBAI: Gold futures struck a record high on the Multi Commodity Exchange of India Ltd (MCX) late on Tuesday tracking firm overseas markets.

Gold futures on MCX touched 16,048 rupees ($347) per 10 grams in late evening trade from 5 p.m. to 11:30 p.m. (1130-1800 GMT) on Tuesday, erasing the previous high of 16,040 rupees on Feb. 20.

The contract closed at 16,036 rupees, up 0.7 percent. ($1=46.2 rupees)

Gold scales a new peak of $1068/oz as dollar dives

MUMBAI: Tracking overseas gold, whose price has been catapulted by dollar weakness and fears of inflation, the precious metal in local markets shattered previous records on Tuesday. The prices jumped by Rs 130 to touch a historic high of Rs 16,385 per 10 gm in Kolkata, while Delhi saw a gain of Rs 25 to Rs 16,120, the metal rose by Rs 150 before ending the business at Rs 16,070 per 10 gm in Chennai.

Mumbai, the largest market for gold in India, however, stayed away from the party as the market remained closed for the Maharashtra assembly elections. In European market, gold scaled a new peak of $1,068.30 an ounce on Tuesday as the dollar’s tumble to 13-month lows against the euro fuelled buying of the precious metals. At the time of going to press, gold eased back slightly to $1,059.20 an ounce, still higher from Monday’s New York close of $1,055.25. It has rallied 12% since the beginning of September.
However, demand for gold jewellery has reduced substantially as the current prices are unaffordable to consumers. “The high price has taken a toll on demand, which at the peak of the current festive season is 60% below last year’s level,” claimed Rajesh Mehta, chairman of Bangalore-based Rajesh Exports, the country’s largest wholesaler and exporter of gold jewellery. “We know that the demand is that much lower because we are the largest wholesalers of gold jewellery. I have been proved wrong on the price front for one month now but I think prices ought to correct to between Rs 14,000-15,000 for demand to pick up.”

Says Mehul Choksi, MD, Gitanjali Gems, “In terms of value rupee gold prices will catch up (with international prices), but I expect volumes in this year’s festive season to be 15% lower from last year’s level.” Choksi feels that overseas gold is headed to the $1,200-an ounce level. “We have seen a weak dollar providing momentum to gold prices but we still have to witness gold catching up with the inflation story...and that is just beginning to pan out as highlighted by high oil prices,” he added.

On the futures market too, gold tested an all-time high with the near-month contract touching Rs 16,040 for 10 gm after gold for December delivery made an intraday high of $1068.40 an ounce. Futures market participants like Nitesh Kothari of VDC Jewellery in Zaveri Bazaar that were it not for the rupee’s rise MCX gold should have hit Rs 16,400. But he expects MCX gold to trade between Rs 16,220 and Rs 16,240 range in the short run should the rupee fall below 47 to the dollar and Comex to $1,053.

Deccan floods may drown household budgets, India Inc

NEW DELHI: The ripples from the destruction and disruption caused by unseasonal rain and floods in the Deccan peninsula, particularly the economically important states of Andhra Pradesh and Karnataka, are expected be felt across India, impacting household budgets and companies over the coming weeks.

In the two southern states, which are major producers of rice, spices, pulses, cotton, sugarcane, corn and sunflower, farmers are seeing over 3 lakh hectares of crop drown and rot after struggling to keep them alive through the harsh summer of a failed monsoon. Andhra Pradesh has put the value of the loss at Rs 1,000 crore.

Fresh vegetables have been the first to react to the disruption. In Hyderabad’s vegetable mandis, arrivals are down by half. In Bangalore, onions are selling for an eye-watering Rs 50 per kg. Prices have started climbing in Maharashtra and parts of north India.

Soon prices of sunflower oil, processed spices, corn and peanuts will also begin to spiral as traders pass on higher procurement and freight costs to retailers. The damage to paddy will make it hard for the Food Corporation of India to meet its procurement target. Tur prices are expected to rise 15% ahead of Diwali as almost a fifth of the ready-to-harvest crop has been washed away in Karnataka.

In Maharashtra, India’s top producer of sugar, rains have turned sugarcane fields to slush. Local sugar factories may be forced to postpone operations till mid-November.

“If this current spell of unseasonal rain carries on for another five-six days, it may improve sugarcane availability but negatively impact recovery from the cane. But sugar prices are likely to remain high till mid-December, when earlier we had expected them to start easing by end of this month,” said Indrajit Mohite, chairman, Yeshwantrao Mohite Krishna Sahakari Sakhar Karkhana, a sugar cooperative mill near Satara.

For companies it is a double whammy as the disruption in freight movement through sea, road and rail threatens to jeopardise operations. Andhra Pradesh’s ports such as Visakhapatnam, Kakinada, Krishnapatnam and Gangavaram are an important gateway for critical supplies of iron ore, coal, fertilisers and palm oil.

Ships bearing Australian and Indonesian coal can’t unload due to heavy rain, disrupting supply to the Jindal Steel Works plant in Vizianagaram, the Vijayawada thermal power station, and Vizag Steel plant at Gangavaram. The loss incurred by AP Genco, the state power generating company, is estimated at Rs 237 crore.

But port authorities plead helplessness. “Although we can handle vessels of all sizes, we are unable to unload coal from the due to the heavy downpour. Supplies have been delayed for almost a week now and it will remain so till movements are regularised,” said Sanjay Gupta, director (Operation), at Gangavaram Port.

Exporters, too, are in a fix. Roads connecting major ports have been closed due to breaches stretching over many kilometres and the rail link between the iron-ore producing area of Bellary in Karnataka and Kakinada has been snapped.

Expectedly, the disaster has poured cold water on the festive spirit in southern India, as rural incomes and urban wage-earners take a hit. Top consumer electronics brand Samsung says floods have affected sales in Vijaywada, Hubli, Vizag and Tirupati.

Buyers realise homes still out of reach

aago. Yeh hi hai right time! screams a property exhibition advertisement in newspapers. But Shravan Desai and GV Rao are not buying it.

Property prices across the country are 10-25% lower than their peak in early 2008. Bank rates are about 4 percentage points lower. Still, the vast majority of the exploding middle class, which aspires to own a home, is not taking the plunge. Homes are still not affordable. Those described as 'affordable homes' are hardly homes.

"The rates may have come down, but even today, the prices quoted by sellers are too high," said Shravan Desai, an employee at an MNC in Mumbai. "The developers have reduced the price, but have started charging more for the parking space, which one has to compulsorily buy and that too pay black money for that," fumes Mr Desai, who has been hunting for a home for the past two years.

Many builders who might have collapsed last year but for the Reserve Bank of India's intervention, are raising prices on the back of the feel-good factor following the record rally in stocks, waning fear of job losses and the return of bonuses, though isolated.

DLF, the country's largest builder, has raised the price at its Capital Greens project by 25% to Rs 5,677 per sq ft. In Madhapur, Hyderabad, a 2,000 sq ft flat, which cost Rs 30 lakh in 2008, has doubled to Rs 60 lakh. A not-so-comforting rise for millions of aspirants.

"Properties and loans are still expensive for us," says Mrinalini, an employee at a technology company in the Capital.

Some builders also think that price hikes could destroy demand. "It is not very wise to increase prices drastically now," said Niranjan Hiranandani, managing director, Hiranandani Group, recently. "The market has just recovered and the buyers are returning."

For all the hype about the revival of the real estate market, the government's treasury is giving a different picture.

For instance, in North Chennai, between January and August, property registrations dropped to 19,834 from 39,331, compared to the same period last year, and so is the case with many regions.

"We have delayed our purchase in anticipation of a further fall in prices," said GV Rao, an ex-employee of Andhra Bank, in Hyderabad.

The lack of trust on the builders' ability to deliver homes on time and the fear that low interest rates could be a trap are keeping many buyers away.

Thousands of aspirants remain trapped with money sunk, as developers could not complete projects on time and in some cases where construction has been suspended, buyers do not know whether they would ever get their dream homes, or whether it will remain a dream.

"I couldn't sleep for days," says Dinesh Verma, a Delhi-based chartered accountant who booked a Rs 50-lakh house at DLF's New Town Heights project in Gurgaon. "After having taken 42% of the payment, DLF came back to tell us that it didn't have necessary licences to start construction." DLF assured Mr Verma and a thousand others that they would get their money back without interest within six months. Mr Verma is yet to receive his money.

Raheja bags 500 cr Delhi slum project

NEW DELHI: DELHI Development Authority (DDA) has awarded Delhi’s first slum redevelopment project, worth Rs 500 crore, to a local builder, Raheja Developers, in a move that may see more such projects in the national capital resulting in better living conditions for urban poor and thousands of crores of businesses for builders.

DDA has awarded 5.22-hectare , or 13-acre , project at Kathputli Colony near Shadipur Depot in west Delhi to Raheja Developers for Rs 6.11 crore, a DDA spokesperson said. Under the scheme, the builder pays only Rs 6.11 crore—the bid amount—for the land, but has to build 2,800 homes, of 30 sq metre size each, for existing slum dwellers of Kathputli Colony named after its majority residents of puppeteers and craftsmen.

In the bargain, the builder gets for commercial exploitation 10% of the total space slated for 2800 homes and also close to a hectare for high-end residential development. Therefore, the cost incurred in building 2800 homes for slum-dwellers will be offset by the sale of commercial space (office, shops) and high-end houses in the project, while land would come dirt cheap at Rs 6 crore.

DLF has recently sold 1,250 apartments in its Capital Greens project, just 3-4 kilometres from Shadipur Depot at a rate of Rs 5,677 a sq ft. Raheja Developers will have to create temporary accommodation for the slum dwellers at a piece of land close to the project site that will be given by the DDA in a month or two.

The builder will be expected to build homes for slum-dwellers within two years of the allotment of the land for temporary accommodation. Usually, slum redevelopment projects offer a very high margin of 70-75 % to the developers, mainly because land comes cheap even as projects are fraught with political risks. In Mumbai, developers have to get the consent of 70% of the slum-dwellers and many a time face opposition from political interests as well as voluntary organisations.

In Delhi’s Kathputli Colony project, the government has already got slum-dwellers on board. And Navin Raheja, CMD of Raheja Developers, said the project is a ‘loss-making proposition’ , but he has taken this up because he is engaged in a social ‘mission’ to help urban poor get homes. He estimates this project to be worth Rs 500 crore.

DDA had invited technical bids for the project over a year ago. Eight developers , including Unitech, HDIL and Raheja, met the technical qualification criteria, but only one of them submitted financial bid early this year amid cash crunch faced by most realty firms.

Unitech, country’s second largest realty firm, declined to comment on why it didn’t submit a bid.

HDFC AMC acquires 10% in Nitesh Estates for Rs 100 crore

BANGALORE | MUMBAI: HDFC Asset Management Company has picked up 10% in Bangalore-headquartered real estate firm Nitesh Estates for Rs 100 crore, said banking sources privy to the development. The transaction comes at a time when Nitesh Estates is working towards an IPO in the last quarter of the current fiscal.

Sources said the transaction at discounted price was a pre-IPO placement, with the HDFC arm planning to offload shares at the time of the issue or anytime in the next one year. The deal, clinched over the weekend, may have come at 15-20% discount. KPMG and J Sagar Associates were advisors to the transaction.

The company executive director LS Vaidyanathan declined to comment.

As reported earlier, the decade-old Nitesh Estates is expected file draft red herring prospectus for Rs 550-crore IPO this month-end or in early-November. Kotak, Enam, JM Financial and Morgan Stanley are advisors to the proposed IPO, sources added.

The 32-year-old promoter Nitesh Shetty, a first generation entrepreneur, and private equity giant Och-Ziff will see their holdings drop up to 57% and 9%, respectively, after the public offering, which will involve fresh issue of shares. Mr Shetty holds 75% and Och-Ziff has 15% in the firm currently. Nitesh is among the 4-5 realty firms that are actively working towards a public issue in the next six months, others being Godrej Properties, Emaar MGF, Lodha Properties and Sahara India.

Nitesh Estates has over 8 million sq ft of ongoing projects in Bangalore, Kochi, Chennai and Goa. Besides 19 residential projects in the pipeline, the company is also developing India’s first Ritz Carlton property in Bangalore and two large mixed use projects in Chennai and Kochi. While the IPO proceeds will be deployed into projects under development, the company is also in the midst of roping in private equity partners for some specific projects.

Last year, HDFC Property Ventures, a real estate fund, had invested $20 million in the company’s upcoming mall project at Indiranagar in Bangalore.

Constructing houses creates jobs

Investment from any source in the housing sector is an appreciated aspect in today's indian real estate scenario, from an industry perspective. Let it be Resident Indians, NRIs or even companies, constructing houses creates jobs for a lot of people. A back of the napkin calculation shows that for a 1000 sq feet house, 100 direct employment (architect, building engineer, masons, helpers, electricians, plumbers, painters, carpenters, etc) and over 1000 indirect employment (people working in cement plant, brick kilns, tiles kilns, electrical fittings companies, saw mills, steel plants, paint companies, etc) opportunities are created. Of course the duration of the employment will depend on a number of factors like nearness to a supply sources for material and labour, access to high tech equipment, architecture, etc.

But to construct a house is not all that easy. It is not without substance that a Tamil saying goes, "Veetai Katti Par, Kalyanathai Panni Par" (Basically the saying rates constructing a house and having a child's marriage done among the toughest).