Godrej Properties to enter Chennai’s property market

Source :FC :D Govardan: Sep 15 2010
Tags:Godrej Properties


Godrej Properties is all set to enter the Chennai property market. It will develop about 12.5 acres — belonging to Amgalgamations Group company, Addison Paints and Chemicals — as a residential apartment complex through a joint development.


The property is located close to Chembarambakkam on the Che nnai-Bangalore national highway, just after Poonamallee, a western suburb, whose surroundings have seen the launch of a slew of new residential projects.


“The firm plans to develop 1,500 residential apartments in the property. Area of most of the 2 BHK and 3 BHK apartments will range between 1,200 sq ft and 1,400 sq ft. The company will also have 1BHK studio apartments on offer,” a property consultant said.


The project, which will be launched soon, plans to target em ployees of several multinationals in the Sriperumbudur Industrial belt. Officials of Godrej Properties as well as Addison Paints could not be re ached for comments.


“Some of these established traditional industrial groups are finding out ways to hedge their risks and make use of the boom in the residential segment of the property market,” Narayanan Ramaswamy, executive director, advisory services, KPMG said.


For Godrej Properties, which has already marked its entry in the south by developing a residential property near the Hebbal-Kem papura area in Bangalore, the joint development with Addison will pave its way into the growing residential market in Chennai.


With more than 40 companies and over 15,000 employees, the Ch ennai-headquartered closely held Amalgamations Group, one of the oldest industrial houses in southern India, is a billion dollar enterprise.


One of the largest light engineering groups in the country, Am algamations’ operations include manufacturing of automotive components and paints, trading and distribution, services and plantations.

Bad realty loans threaten to nibble at banks’ pre-tax profit

Source :MUMBAI:21 SEP, 2010, 03.36AM IST,ET BUREAU 




 State-owned banks stand to lose a large chunk of their pre-tax profits in the next fiscal because of bad loans in the real estate sector if property transactions do not pick up. Paradoxically, transactions are thinning out because of high real estate prices. 


According to a report by HDFC Securities, Indian banks have been aggressive in lending to commercial real estate sector, especially during FY06-10. 


During this period, lending to the real estate sector saw a 40% CAGR, increasing bank exposure to this sector to 3.2% from 1.9% in FY06. Net disbursals during March ’06-May ’10 from the banking system to real estate was close to $15 billion. 


Of the total commercial real estate exposure of Rs 95,700 crore, only 22% of the funds have gone to listed companies which implies the remaining 78% went to unorganised, small and medium developers. 


These companies do not have multiple avenues to raise capital, and hence, their high reliance on bank funding. 


“Sensitivity suggests that 10% slippages in loans would impact the estimated FY12 pre-tax profits by up to 18% and networth by 2%,” the HDFC Securities report said. 


Although there is no centralised data on real estate transactions, one indicator for the same is the trend in home loans.


 Despite dominant lenders like State Bank of India continuing to offer special home loan schemes, growth in mortgage has remained sluggish at 10.8%. 


Nine companies have proposed to raise funds amounting to Rs 15,300 crore through the issue of equity shares. 


The draft offer document for the proposed equity issues of most companies show that the funds will be used to complete the ongoing project or to repay loans to banks. 


Clearly, if these companies fail to raise funds, their loans run the risk of turning into non-performing assets. 


Home prices have shot up as developers keen to cash-in on the booming economy have bid land prices to new highs in land-scarce cities like Mumbai.


 For instance, last month, city-based Neepa Real Estate paid Rs 830 crore for an 18-acre plot in Andheri, Mumbai. Earlier, Indiabulls Real Estate successfully bid over Rs 1,900 crore for two NTC mill plots — the 2.39-acre Poddar Mills and the 8.37-acre Bharat Textile Mills property. 


Sanjay Dutt of Jones Lang LaSalle, in his blog, has raised the prospects of a real estate bubble in pockets like Mumbai, pointing out that some properties in central Mumbai peaked at Rs 30,000/sq.ft in 2008 and today stand at 38,000/sq.ft. 


“There is yet another reason for the concern over a bubble building on the market. All developers who had ventured to buy land overseas or across India are now buying only in their primary cities. 


In other words, Mumbai developers are concentrating on acquiring land solely in Mumbai, and the same is happening in Gurgaon. Investments are now chasing these Tier-I markets, and if this continues, there is certainly the probability of a bubble in residential property by the end of the year,” he said. 


According to RBI, the price increase is of 25-40% in large metros, back to the pre-crisis peaks. Further, despite offering attractive rates on loan products by banks, the home loan growth for the system remained sluggish at 10.8% YoY and 2.7% QoQ.


 “Going forward, fresh transactions in the housing segment could remain under pressure due to high interest rates environment and spike in property prices,” HDFC securities said.

1,200 house owners get sealing notice

Source :CHANDIGARH:Manveer Saini, TNN, Sep 21, 2010, 02.25am IST






 Around 1,200 owners of houses built by private colonisers in Gurgaon have got sealing notices from Haryana's Town and Country Planning department for failing to procure occupancy certificates (OC). 


The owners are now stuck in a limbo. On Monday, many of them were seen running around with papers to get the formalities completed. 


Alleging lack of monitoring on government's part, the owners accused the builders of harassment by not informing them about the occupancy certificates. 


We just fail to understand as to what stops the government in giving a time-frame for the builders to get the OCs for the housing units carved out by them. Now, since builder has already sold out his units and has made profit, they dont have any interest. 


Had they issued the guidelines on time, we would not have faced such problems, said R S Rathee, President of Gurgaon Citizen Council (GCC). 


Let somebody from the government come forward and narrate even a single policy favoring the allotees, said Rathee. 


T C Gupta, director of Town and Country Planning department, denied any favors being done to licensees while framing the policies. 


The policies are framed while keeping in view the requirements of common man. We know the allotees will be harassed by the colonizers so we have asked them to apply directly to us. Gupta said.


And if they have any problem, allotees are free to approach us at headquarters here, added Gupta. Gurgaon has 70,000 occupants of house made by 150 private colonisers.

NHB mulls early refinance to housing finance cos

Source : http://bankfinanceindia.blogspot.com/ Low and lower middle income segments to benefit.

---

Normally, housing finance companies can tap NHB for refinance at concessional interest rates in respect of home loans, given by them only after their business stabilises i.e. two to three years after kicking off operations.

---

To encourage flow of housing finance to low-income households, the National Housing Bank is examining the possibility of giving concessional refinance to housing finance companies, set up exclusively to fund the home ownership dream of these households, within a year of commencement of operations.

Normally, HFCs can tap NHB for refinance at concessional interest rates in respect of home loans, given by them only after their business stabilises i.e. two to three years after kicking off operations.

The proposal to offer refinance to HFCs, catering solely to the home loan needs of those in the low and lower middle income segments, early on is expected to have a beneficial ripple effect. For one, HFCs, based on refinance backing, will lend more.

 For another, knowing that home loan is available to those in the low income bracket, builders will be encouraged to construct affordable dwelling units.

Low and lower middle income households are those with a monthly income of Rs 3,000-20,000. A low-income housing unit is one whose maximum selling price does not exceed Rs 15 lakh.

Concessional refinance, according Mr R.V.Verma, Chairman and Manging Director, NHB, will galvanise all key players in the housing ecosystem — lenders as well as builders — to do more for low income housing.

“Since low and lower middle income households are not able to get home loans, builders are not creating affordable dwelling units.

 However, this situation is expected to reverse as housing finance companies focused on giving home loans to these households are coming up. Availability of early refinance to these companies will encourage flow of housing finance,” said Mr Verma.

Low and lower middle income households are a good credit bet for lenders, emphasised the NHB chief. Unlike the well-heeled, most of these households, subject to finance being available, will be able to buy a house only once in a lifetime. So, they will do their utmost to diligently service the home loan.

Credit delivery network

NHB regulates HFCs, extends refinance in respect of the home loans extended by primary lending institutions, and promotes housing finance institutions to improve/strengthen the credit delivery network for housing finance in the country.

The provision of affordable housing is one of the most formidable challenges that the country faces, according to the report of the high-level committee on affordable housing for all. Approximately 42.8 million persons or about 15.2 per cent of India's urban population live in slum settlements.

According to the Census of India, 35 per cent of urban households live in single room dwelling units and 68 per cent of such households have four members or more. 

The 11th Five-Year Plan has estimated an urban housing shortage of 24.7 million units with 99 per cent of the shortage pertaining to the economically weaker sections and the lower income groups.