Real Estate Newsletter - 29 April to 03 May, 2013

India Infoline News Service/ Mumbai 17:11 , May 03, 2013

Lodha Group and Indiabulls Real Estate has reduced luxury apartments prices by up to 15% in Mumbai, according to reports. Lodha and Indiabulls launched their premium offerings at around Rs 25,000 per sq ft, against earlier prices of Rs 28,000-30,000 per sq ft

Top Stories 

SC breather for Campa Cola residents

In a major reprieve for 140 families of Campa Cola Compound at Worli spending sleepless nights over the sword of demolitions hanging over their head, the Supreme Court posted a special leave petition by a group of residents for hearing on Thursday.

The petitioners moved the Supreme Court against a Bombay High order dismissing their plea seeking stay on the 48-hour notice served by BMC to demolish the 140 flats.

Senior advocate Fali Nariman moved the apex court. The Bench that heard the Campa Cola residents’ case had passed its verdict on February 27, 2013 directing BMC to demolish the apartments. BMC on its part served a notice to the residents to vacate the premises within a short time of 48 hours as the civic body planned to carry on demolitions Monday onward. Subsequently, the BMC action was put off till tomorrow for inadequate ability of police protection.

With the Supreme Court’s decision to hear the residents’ petition tomorrow, advocates representing them have sent letters to BMC and the concerned assistant engineer in charge of building proposal, Parel, Mumbai  at G/South Ward drawing their attention to the latest developments. The advocates have also requested the authorities not to resort to any coercive action against the residents as the petition is slated to be heard at 2 PM tomorrow. Read more...

NR Narayana Murthy buys 14-acre land

Infosys chairman emeritus N R Narayana Murthy's family has acquired a 14-acre land parcel close to Narayana Hurdayalaya on Hosur Road, according to reports.

Murthy has acquired the land for a possible foray into the educational sector and is believed to have paid approximately Rs 700mn for the 14-acre parcel or roughly Rs 5 crore per acre, reports said.

Infocus Stories

Bengaluru property market performed better than Mumbai and Delhi:Knight Frank

Knight Frank India launched their Economic & Realty Glance Research report for the month of April 2013. At a 1.3% price increase in 2012, the Bengaluru prime property market performed better than Mumbai and Delhi which increased to about 0.5% and 0.7% respectively.

Amidst this see saw of economic position, asset classes have fared differently. Yielding 74%, investment in property fared better than equity but lost to gold during the last five years.

With just 5% appreciation during last 5 years, prime property lagged behind the general property market during the last five years. Notwithstanding this underperformance, prime property continues to evince strong interest from the wealthy. Clearly there are stronger attributes than just returns when it comes to prime property investment. Read more...

Domestic News

Lodha Group, Indiabulls reduces luxury apartments prices by up to 15%: Reports

Lodha Group and Indiabulls Real Estate has reduced luxury apartments prices by up to 15% in Mumbai, according to reports. Lodha and Indiabulls launched their premium offerings at around Rs 25,000 per sq ft, against earlier prices of Rs 28,000-30,000 per sq ft.

According to Indiabulls Real Estate, an all-inclusive price at Sky Forest is Rs 25,000 per sq ft, including floor rise and charges for preferred view, report said.

Lower Parel, Mumbai's central-most part, earlier known for its textile mills, is now transforming into a district of malls and commercial complexes along with most ambitious high-rise residential projects.

RMZ Ecoworld leases office space to HTS: Report

Honeywell Technology Solutions is planning to acquire a million sq ft of office space in Bangalore, says a media report.At 48 per sq ft, Honeywell Technology Solutions will pay annual rental of close to Rs 580mn for the office space in RMZ's special economic zone, RMZ Ecoworld.

Bangalore-headquartered HTS is the captive technology and engineering facility of the $37bn US firm Honeywell International. HTS will use close to 5 lakh sq ft of the space for consolidating existing offices in the city, while the rest will be used for business expansion, the report said.

Kolte-Patil Developers Q4 PAT at Rs. 450.6mn

Kolte-Patil Developers, a real estate developer with operations in Pune, Bengaluru and Mumbai has released outstanding audited financial results for the quarter and year ended March 2013.

Sujay Kalele, Group CEO, Kolte-Patil Developers. said, “The dominance of our residential asset class has resulted in a strong performance in FY13. We have been able to achieve a balanced growth with 2.6mn sq ft. of new sales and 3.0mn sq ft of constructed property delivered in FY 12-13. The results are just a reflection of the same.” Read more... launches new project search option

An increasing trend in Indian real estate market is that home buyers are looking for property options among new launch projects. Following this trend, Makaan.comhas launched ‘new project search’ which is fast and convenient way to search new property projects. This feature has been incorporated within the main search module and is available for all key real estate markets.

 The main benefits for home buyers are:-

a) Make it easier to discover and search new projects in key real estate markets in India.

b) Search a new project by submitting project name or builder name or city name.

c) Get relevant project results in auto suggestion list.

CREDAI welcomes consistency in rate reduction

Hailing the repo rate cut by 25 basis points, realtors’ apex body CREDAI called for continuing the trend by the Reserve Bank of India to pave way for easy financing of the housing industry.

“We sincerely hope that the RBI will keep up the trend of repo rate cut and facilitate a fall in interest rates so that the EMI burden on common house buyer gets reduced considerably,” said Lalit Kumar Jain Chairman of CREDAI & CMD Kumar Urban Development.

CREDAI – Confederation of Real Estate Developers’ Associations of India – has over 10,000 members across 20 cities, pan-India. Jain also stressed the need for the RBI formulating a special policy for the housing industry with focus on affordable housing and quick and equally affordable financing of such projects.

Pointing out that governments at the Centre as well the states have all been proclaiming that they are committed to affordable housing, Jain said RBI should also play its part by scrapping the negative weightage given to the real estate industry so that the commercial banks take a pragmatic and practical view of the housing sector.

International News

Fitch assigns 'B' rating to Golden Wheel Tiandi's notes

Fitch Ratings has assigned China-based homebuilder Golden Wheel Tiandi Holdings Company's 600m yuan 11.25% senior unsecured notes due 2016 a final 'B' rating. This final rating follows the receipt of documents conforming to information already received, and is in line with the expected rating assigned on April 17.

Key Rating Drivers

Small scale: GWTH's business scale is smaller than B-rated peers, as reflected by recognised sales of only CNY863m in 2012. Cash flow and sales performance can be volatile, due to concentration on only five to six major projects at any one time. In addition, the company's focus on small commercial projects linked to metro stations may also curb the speed of expansion of its business scale.

Limited diversification: GWTH has not diversified meaningfully outside of its home base in Nanjing. In 2012, projects in Nanjing accounted for 65% of its land bank. This, together with its small scale, exposes GWTH to potential competition from larger regional or national players which may affect margins, and, eventually, liquidity. Read more...

Moody's: Ascott REIT's leverage rises slightly on acquistions

Moody's Investors Service says while Ascott Residence Trust's (Ascott REIT, Baa3 stable) proposed acquisition of interests in three serviced residence properties in China and 11 rental housing properties in Japan, will enhance the quality of the trust's property portfolio, its leverage is expected to increase.

"Because Ascott REIT's leverage is expected to increase only marginally, its rating is unaffected by its planned acquisitions in China and Japan," says Poh.

According to Ascott REIT's announcement on 2 May, the trust has entered into various conditional sale and purchase agreements, to acquire shareholding interests in Citadines Biyun Shanghai for SGD53.8 million, Somerset Heping Shenyang for SGD59.4mn, Citadines Xinghai Suzhou for SGD14.7mn and 11 rental housing properties across six cities in Japan for SGD37.1mn.

The acquisitions are expected to increase the trust's asset base by 11% to SGD3.1 billion from SGD2.8bn as at 31 December 2012, while its property portfolio is expected to increase by 1,576 apartments units to 8,632 units in over 32 cities, from 25 cities previously.