New Rates not for old Home loans

 

Source:HT


Central bank proposes. Commercial bank disposes.
While the Reserve Bank of India (RBI) is frowning at
“teaser” home loan rates that come cheaper to new
customers, banks say they cannot honour old loans
with the same rate as it could hurt their profitability.


RBI had raised serious concerns over teaser rates
saying that these lack transparency and may lead to
unviable loans – called bad assets.
It also wrote a letter to the Indian Banks Association
seeking explanation on teaser rates and asking banks
to extend the same benefits to existing and old customers.

Keki Mistry, vice-chairman & CEO, HDFC told Hindustan
Times that his firm had not received any letter but added that
interest rates were a function of the overall cost of funds for
banks. Some bankers said the cost depended on fixed
deposit rates that cannot be altered easily.

“When the cost of funds come down the benefits are
transferred to both old and new customers.

However, the cost of fund has to come down in the
existing balance sheet. It is so that one raises
Rs 100 crore or Rs 500 crore and give out loans
of that amount. But when the cost of fund changes,
it changes only for the new money that comes in and
so the existing customers continue to be at the same rate.
These are the complexities,” Mistry said.

Last week, RBI deputy governor K C Chakrabarty
said that banks should not exclude one customer
segment from a benefit extended to another. Banksers squirm at this.

“Such rates have been offered to new customers based on their
repayment capacity and whether they would be able to increase
their monthly payment. It cannot be extended to the old
borrowers whose credit repayment analysis have
been based on other criteria,” a senior official at a
public sector bank said on condition of anonymity.

However, J.M. Garg, chairman and managing director,
Corporation Bank said that the contours of interest rates
may change after the implementation of the proposed
referential base rates slated to be in effect from April 1.

Indian Banks Assocaition’s chairman MV Nair did not
respond to calls made by HT.

Mahindra’s green project

Posted: 16 Feb 2010 01:56 AM PST

Mahindra Lifespaces, the real estate and infrastructure
development arm of the Mahindra Group, has launched
the second phase of Mahindra Splendour at Bhandup
(West), Mumbai. It is a five-minute drive from the
Jogeshwari-Vikhroli Link Road. Two new towers in this phase
will offer 2- and 3- BHK apartments of 1,464-1,641 sq.ft.

It is a green residential property with an annual energy consumption
for an apartment estimated to be 25-30 per cent lower than that
of a conventional flat of the same area.

The project provides 24×7 electronic surveillance and security,
jogging track, play area for children and club house.

It also provides remote home access to the residents via SMS,
phone or Yahoo Messenger, to turn off gas supply,
locking/unlocking front door, etc.

Mahindra Lifespaces’ current projects include Mahindra Eminente at Goregaon, Mumbai; Mahindra Splendour at Bhandup, Mumbai; Mahindra Royale, Pune; Mahindra Chloris, Faridabad; Mahindra Aura, Gurgaon, Aqualily at Mahindra World City, Chennai.

E-Homes at Noida

DESIGNARCH is all set to launch the go-green residential
venture E-Homes at Greater Noida. According to a press
release from the company, eco-homes is a service- and quality
-driven project, promoting the construction of homes and real
estate using eco-friendly technology, leading to sustainable
development and conservation of natural resources.

As part of the consortium, DESIGNARCH is investing Rs 600 crore on this
E-Homes project, which includes clustered construction of 2-3 bedroom,
studio apartments spread over five acres with houses ranging between
550 and 2,175 sq.ft at a cost of Rs 11.88-60 lakh.

High energy efficiency and low maintenance are key
features with electronically-operated lights and air-conditioners
that can be controlled using mobile phone, remote control or touch screen Wi-Fi.
Lotus Panache from 3C Company

The 3C Company, a leading developer of commercial and
residential space in Noida, has launched “Lotus Panache,” a
green residential project of 41 acres and with an outlay of
Rs 2,400 crore. It has been jointly funded by Red Fort Capital,
an international private equity real estate fund.

Lotus Panache is located in Sector 110 of Noida, and is
well connected with key locations in Noida, including the
DND Flyway, Sector 18 Market, upcoming metro station,
schools, hospitals and other world class amenities, says a
press release.

The company’s recently launched green residential Project,
Lotus Boulevard, has sold over 2,200 units in less than six months.
Red Fort Capital, a private equity real estate firm focused on India,
has invested in both Lotus Panache and Lotus Boulevard.

Lotus Panache will have a mix of 2, 3 and 4 bedroom apartments
and will house Asia’s first `Net Zero Energy and Geo Thermal’
Lotus Valley Pre-Nursery School. The project’s hub of sports and
leisure, the 135,000 sq.ft `Le Panache Club at Lotus Panache,
will be Asia’s first green club built with geo thermal technology.

Net zero energy technology means the building will not only
have low energy demand through energy-efficient design, but
also satisfy its own electricity demand through clean renewable sources, including solar.

Geo thermal technology will balance outside temperature fluctuations to
automatically provide comfortable conditions inside.

Geo-exchange systems will transfer energy from the ground
into the building’s air-conditioning system using the ground as
a heat sink. Lotus Panache will be earthquake resistant and
compliant to Zone-4 specifications.

The 3C Company has applied for a green certification
from the Indian Green Building Council.

Real estate players line up demands from Budget ‘10

14 Feb 2010, 0416 hrs
  Pallavee Dhaundiyal Panthry,

Developers are re-calculating the upwards swing in the real
 estate industry, especially housing, provided Government
 pays special attention the
sector. Various developers voice their expectations
from Budget 2010.

AVNISH AGRAWAL, DIRECTOR, MERITON GROUP

Talking from common man's perspective, the bank interest
rates should be stabilised. Most importantly, stamp duty
 should be reduced as it puts financial burden on the buyers;
it would be a real relief for the common man who has to bear
the burden. Besides, for the new projects many clearances are
required; if they can be done through a single window,
 it will be a major breakthrough.

VIJAY JINDAL, CMD, SVP GROUP

Expectations from the budget are very high. We
need something that will help the real estate sector
 to grow leaps and bounds. Government should take steps
 to bring more transparency and simplicity to the processes
 involved in the real estate. Affordable housing must get
maximum support from the government. The authorities must
understand that the demand is for affordable housing and
 we need to bridge gap between demand and supply.

ABHISHECK LODHA, MANAGING DIRECTOR, 
LODHA DEVELOPERS LIMITED

We expect the finance minister to provide specific tax incentive
and rationalise stamp duty registration charges, which will
lead to further investment in affordable housing projects,
which would in turn drive urban development. The budget
 should make high-priority provisions for the laying down
 of the necessary infrastructure so that new areas can be
opened up. This should result in creating and linking up
satellite settlements to main cities that will help tackle
 the demand-supply mismatch.

Further, we look forward to flexibility in FDI norms.
 Additionally, the budget should offer clarity on the
introduction of a real estate regulator, which may not
necessarily decide on rates, but should put down firm
 principles in terms of property dealings and also
quality parameters in terms of rating of constructions.

RAJIV SINGLA, MANAGING DIRECTOR, MAPSKO GROUP

Indian real estate sector is passing through a transition
 phase, where every eye is lying on budget 2010 as the tool
 to heal the loss. The finance minister needs to focus on
offering easy interest rates with more flexible EMIs so that
 middle class people can come forward to buy their dream house.
 We should also target foreign investors or NRIs to invest their
 money in India.

Ashwini Prakash, executive director, Paramount Builders

I expect a lot from the budget 2010-11 as it can be used as an
important step by our government to bring real estate market back
on the track. I strongly feel that finance minister would certainly
 work on promoting real estate investment through various
 fiscal tools like, continuing income tax rebate on home loans.

And at the same time interest rate on home loans should be
made more affordable to bring it up to the reach of a common man.
 In the last two years IT sector and the real estate sector
have been the most affected areas and in order to reconcile
the earning capacity and to build a sense of security for
 citizens the government should offer some aid packages to
these sectors in Budget 2010 like the US government did.

J K JAIN, CHAIRMAN, DESIGNARCH

The budget must think seriously on decreasing the excise duty
 to decrease the costs of infrastructural projects.
The current economic situation requires the sector to be
 revived so that the demand for the housing industry increases.
To achieve this, the government must look at reducing the
property and related taxes along with the taxes on cement and
steel, which together contribute to the growing infrastructure
needs.

Realtors want govt to continue with reforms

Devesh Chandra Srivastava

FEB14,2010

Real estate players have called upon the government to continue with its reform agenda in Budget 2010. Cash-starved realtors are also looking for more sops to be able to roll out new affordable housing projects and integrated townships. Developers under the aegis of the Confederation of Real Estate Developers Association of India (CREDAI) have already met finance minister Pranab Mukherjee and put forward their demands. Pradeep Jain, chairman of Parsvnath Ltd, and president of CREDAI- NCR, said, "In order to support developers' efforts to promote LIG/ MIG housing projects, there is an immediate need for a tax holiday under section 80- IB (10)." Realtors also feel that easing the burden on buyers' pockets will help increase the sales in the upcoming affordable projects. As Rajeev Talwar, group executive director, DLF Ltd, said, "My demand would be to empower the buyers through more sops on housing loans. Lowering of home loan rates could be one of the measures. The government should continue the reforms." Apart from LIG/MIG housing projects, developers have been demanding tax holiday for industrial parks under Section 80-IA (4) (iii). Growth in the commercial space during 2007 and 2008 was primarily driven by IT and ITeS sectors. But because of the slump over the past two years, IT spending, particularly in the banking, financial services and insurance (BFSI) sector has been hit. This resulted in reduced offtake of space and increased vacancy. The tax holiday would give the much- needed support to the commercial sector. Some others believe that funding options for the real estate sector should be opened to beyond institutional investors. Anuj Puri, chairman and country head, Jones Lang LaSalle-Meghraj, said, "With the investment climate once again turning favourable in India, the Budget will also have to address the long-pending issue of real estate mutual funds (REMFs). Also we'll welcome a budget that finally and decisively enables the entry of foreign direct investments ( FDIs) into the real estate sector." According to the existing rules, FDI in real estate sector has a three- year lock- in period. Recently, the finance ministry rejected a proposal by the department of industrial policy and promotion (DIPP) to drop the three- year lock- in. Responding to a draft Cabinet note circulated by DIPP in November, 2009, the ministry said the lock- in acted as a deterrent, checking speculation and shielding the sector from sudden flight of capital during times of crises, such as the global meltdown in 2008 when foreign institutional investors pulled out $ 5 billion from equity investments between September and October. REMFs could prove beneficial for the commercial real estate sector. Indirect property owners, who own small shares of buildings through structured investment products or real estate investment trusts (REITs) can be direct beneficiaries. Abhishek Lodha, MD, Lodha Developers Ltd, said, "We look forward to flexibility in FDI norms as well as forward momentum for REMFs/REITs as good alternatives to address the issue of capital funding requirements for high- end projects."