Thursday, June 14, 2007

Witnessed 30% dip in enquiries in 3 mths: Orbit Corp

30% dip in enquiries translates directly to 30% lower sales assuming that other 70% enquiries convert to sales in a proportional manner. Mr Aggarwal is also not commenting on indicative dip in prices, calling it inappropriate. Ofcourse when the market was jumping by leaps and bounds I'm sure Mr Aggawal would be happy to say prices are up 50% y-o-y. Mr Aggarwal needs to understand that money supply is finite and astronomical apt prices in Mumbai will crash to the earth. Its only a matter of time

Pujit Aggarwal, Managing Director, Orbit Corporation, that the company did witness a dip in the enquiries by about 25-30% and this trend has been there over the last two or three months.

Aggarwal said that due to the fence-sitters' decision about home buying, there is a sudden huge rush for leasing. He added that as the interest rates begin to cool off, many people will go in for purchasing.

Excerpts from CNBC – TV18’s exclusive interview with Pujit Aggarwal:

Q: Are the volumes dipping?

A: We have seen a situation where the volumes have been on the lower side. We have also witnessed a situation where the enquiries are less.

We have witnessed a dip in the enquiries by about 25-30%, which has been the trend over the last two-three months.

Q: From that point of view are developers willing to negotiate on prices?

A: We have not witnessed the trend, where the developers were willing to negotiate with prices. But there were situations when developers are more certainly offering few freebies, like payments of stamp duty, payment of free car-parking, etc. So those were being thrown in with some additional amenities.

Q: Do you see the strength continuing and how much more pressure do you see coming in on contracts or volumes going forward? As you said there has been a dip and price negotiations are getting more selective by the day. What is a trend really going forward, say for the next six months or December?

A: The trend that we have found is that many people are fence-sitters, because of the interest rates going up and prices cooling off in certain parts of the country. I feel that kind of effect percolating down to Mumbai also. So, many buyers have become fence-sitters; they are waiting and watching.

Buying a house is not a decision that one takes impulsively and on the spot. The fence-sitters think what will happen if we take the decision six months later. So, those decisions we feel are being postponed and delayed; they are waiting for the prices to come down. Once the interest rates begin to cool off, we will witness many people going in for purchasing.

Q: If the scenario continues, how much dip in prices do you reckon by December 2007?

A: There would be some developers who would be under pressure in terms of sales going down and their commitments are being hurt. So, it would depend from company to company and how robust their model is.

Q: On an average could you give us a ballpark dip?

A: It would be very inappropriate for me to give any indicative answer.

Q: Coming to demand concentration, where is it more - leasing or outright sale?

A: Lately, what we found is that because of the nature of the buyer-shifting, he has become a fence-sitter. They have chosen to lease for a year and then postpone their decision to buy. So, all of a sudden we are finding that there is a huge rush for leasing. The leasing model is looking very good and attractive. The prices in leasing are going up, but as far as the sales are concerned, the prices are stable or the freebies are being offered for that.

Q: How do you rate the DLF IPO?

A: DLF is one of the finest companies and has a super presence in the country. I highly respect Hiranandani and his group; DLF IPO certainly deserves respect. As a company and moving forward, I would certainly look at DLF issue very nicely and in a very attractive manner.

Q: Has the entry of DLF increased competition in the realty space?

A: Of course, it is most welcome. More competition, more space and more players are healthy for markets.

NRI's and locals pump money into real estate

Financial Times reports

Ashwin Vora, a junior executive at an IT company, has made a down payment for a flat in Kharghar, Mumbai’s newest residential district. He forecasts a profit of 20 per cent over the pre-selling price when the condominium is completed in two years.

N Mahesh, a doctor living in London, has invested a few years’ savings in land to be developed as an IT park. He also owns his parents’ home in India and another property there. Both have nearly doubled in value over the past three years. He is confident that his latest venture will earn at least 40 per cent profit after two years.

The two men are separated by distance and differ in wealth and way of life. But both agree on one thing: there is money to be made at home.

The number of wealthy households is expected to double to 400,000 in three years’ time and the middle class is growing equally rapidly. Similarly, the Indian diaspora has created a large, increasingly wealthy and influential ethnic community in the UK, the Middle East and the US. A major source of remittances and investment inflows, these Indians abroad who earn an average $35,000 annually are responsible for about 20 per cent of foreign direct investment into the country.

A recent HSBC study on the mass affluent in five Asian cities, including Mumbai, revealed three trends that closely mirror investment preferences of non-resident Indians sending funds back home.

Both groups are betting on property, stocks and business ventures.

Choices for the average Indian investor remain relatively limited, so it is not surprising that close to 90 per cent of respondents in the HSBC study still keep their money in rupee savings. However, more options are emerging for both local and non-resident Indians (NRIs) to grow wealth within the country’s borders.

More than 50 per cent of study respondents have bought local property. Three out of 10, perhaps enthused by recent exponential returns in equities and access to more investment instruments, are into the stock market, mutual funds and bonds. Close to a third have taken the entrepreneurial route, aspiring to be the next Ambani, Mittal or Tata.

In terms of aspiration, 27 per cent plan to buy local property and a quarter intend to invest in stocks and bonds to grow their wealth. Nearly half of respondents said they would prefer to use funds to start a business rather than to buy luxury goods, take expensive holidays or secure guaranteed school admissions.

More than $3bn of NRIs’ excess cash is parked in tax-free rupee and foreign currency accounts. These deposits are popular because the funds are freely repatriable and earn excellent deposit rates. More experienced investors are investing in shares of Indian companies through the stock exchange, domestic mutual funds and government.

Opportunities are opening up for the entrepreneurial NRI as direct investment into Indian companies are now permitted in all but a few sectors of the economy. NRIs can also invest in companies, proprietorships and partnerships on the basis they may not repatriate sale proceeds from such investments. These various investments may be made without any prior government approval.

Real estate investments in India, ranging from residential properties to big-ticket real estate projects, are popular for NRIs. New regulations have encouraged overseas Indians to forge strategic alliances with global real estate groups testing the markets.

NRIs can also acquire, by way of purchase, inheritance or gift, any immovable property in India, other than agricultural land, plantation property or farmhouse.

There is now virtually no restriction on NRIs investing in Indian property from funds received through normal banking channels. The Reserve Bank of India has recently done away with the 10-year lock-in period for remittance of sale proceeds of immovable property. Recurring rental income earned on letting out property is also freely repatriable.

Now real estate TV in India

Looks like the HGTV culture is coming to India

BANGALORE: The Rs 4,400 crore Alliance Group will invest Rs 100 crore to launch the country's first 24-hour real estate information channel next month.
"It will provide comprehensive, latest and authentic updates on all aspects of real estate, including infrastructure, to viewers all over the country, the south and south-east Asian region and Gulf states where there is a strong NRI presence," Alliance Chairman and Managing Director Manoj Namburu.
Real Estate TV, a pan-India English-language channel was being put together under the guidance of media personality Sashi Kumar by a team of media professionals led by Chief Operating Officer T K Vibhaker, Namburu said.
With news bureaus and studios in Mumbai, Delhi-NCR, Chennai, Bangalore, Hyderabad and Kolkata, a wide information- gathering network across India, and research and analysis facility in Delhi, Real Estate TV will be "the one-stop shop for anything and everything connected with this industry and the large number of other industries connected to it," said Sashi Kumar

Real estate fund Indiareit to invest in Hinjewadi - Pune

MUMBAI: Ajay Piramal-promoted real estate fund Indiareit on Wednesday said it has signed a JV with Pune-based developer Paranjape Schemes (Construction) to develop one of the largest integrated development projects at Hinjewadi in Pune.

Indiareit would invest Rs 250 crore to develop the project. Ramesh Jogani, CEO and managing director, Indiareit Fund, said, “Out of the total Rs 250 crore, part of the deployment will come from the Indiareit domestic fund and the rest from the Indiareit offshore fund. Private equity fund 3i is an investor in the offshore fund.”

The UK-based 3i had invested over $200 million in the offshore fund. Spread across 138 acres at Hinjewadi, the project envisages a development of IT/ITES special economic zone (SEZ), residential apartment and villas, a retail mall and a star hotel.

The project entails more than 9 million sq feet of development. Shashank Paranjape, managing director, Paranjape Schemes, said, the project would have a market value of more that Rs 3,200 crore.

Tuesday, June 12, 2007

Govt may curb demand in real estate

Finally Mr Chidambaram wants to reign in the bubble, after the horse has bolted out of the barn. Excessive speculation has resulted in bubbles all over the country with land prices tripling and quadrupling in period of 18-24 months. Cheap loans caused the bubble in residential prices whereas black money is the primary cause of of the surge in land values. Without enforcing strict land revenue and Income-Tax laws black money will continue to funnel the unabated rise in land, thereby forcing apartment buyers to take up loans at these lofty prices.

New Delhi: The Government on Tuesday indicated it intended to curb demand in the “overheated” housing and real estate sectors.

"Intention is to constraint demand in those sectors where there are signs of what you call overheating and example of that could be real estate and housing. I think in these sectors there is reduction in demand," Finance Minister P Chidambaram told reporters.

India’s industrial output increased 13.6 percent in April compared to 9.9 percent in the same month last year, but the Government is concerned that the economy might be overheating.

The Associated Press reports Chidambaram has warned banks against too much lending in real estate, which experts believe is drawing large amounts of speculative money that could result in a property bubble.

Chidambaram, however, said he had no intention of reducing demand in other sectors. The impact of his statement was immediate on Dalal Street, where nearly all the real estate stocks lost value, notwithstanding a modest 48-point gain in the benchmark index.

All realty stocks gained on Monday when the DLF IPO opened for subscription on a strong note. Unitech, the biggest listed real estate firm, saw its shares plummeting by 3.4 per cent or Rs 17.45 to Rs 490.

Another leading realty developer Parsvnath dropped 1.73 per cent to Rs 312.35 on the Bombay Stock Exchange, while stocks like Ansal Properties, D S Kulkarni, Sobha Developers and Atlanta Ltd also fell sharply.

Monday, June 11, 2007

Bangalore HAL airport to continue - Kumarswamy

The K'taka CM has said he will look into continuing operations at the HAL airport.
This is the final nail in the coffin of all those speculators who expected Devanhalli to be the next airport road. Now with high interest rates, strong rupee and already inflated prices, it should be interesting to see how low the prices go in an area with water and electricity woes through out the year. Ofcourse the CM has his hidden agenda to drive speculators towards Bidadi and Ramnagaram, his assembly constituency.

Eight million passengers a year. At an airport around 35 km from the City that’s already battling burgeoning traffic and poor road connectivity. The existing HAL airport is set to close down once the new greenfield airport at Devanahalli starts operations in April 2008. More importantly, with no transition period.
According to aviation industry experts and professionals, the situation warrants two airports in Bangalore, at least till the traffic and facilities are streamlined in the new airport and connectivity issue is addressed. Just 10 months ahead of the new airport, this could be a belated move. But it’s still worth a shot, according to passengers and experts.
Warwick Brady, Chief Operating Officer, Air Deccan, says the airline is for retaining the existing HAL airport for short-haul flights. “With the skyrocketing demand for air travel, the Devanahalli airport operators will more than achieve the projected growth in passenger traffic by 2010. So there is no reason for the HAL airport to be considered a competition,” he says.
BIAL agreement
According to the Union Civil Aviation Ministry’s agreement with Bangalore International Airport Limited (BIAL), no new or existing airport will be permitted to operate as a domestic or international airport within 150 kilometres. The Government is also “committed to equal treatment and non-discrimination of all international airports and to renew the bilateral agreement constantly.”
“HAL had never wanted to close its airport. But the then government decided to go by the demand of the consortium. BIAL was worried that HAL would compete with it and take away its business,” points out C G Krishnadas Nair, former Chairman, HAL.
HAL officials, however, have also maintained that the airport is not top priority in the company’s scheme and that it’s pursuing its own plans, including Maintenance, Repair and Overhauling (MRO) facilities with global players.
A group of domestic carriers had last year conveyed to the State Government the need to retain civil operations in HAL airport.
It was also pointed out that short routes within the State would be hit, when operated from an international airport that has its own stringent security system.
“Road commuters will be the first to feel the heat. It doesn’t make sense to travel for two hours to the airport to catch a 30-minute flight,” says Federation of Karnataka Chambers of Commerce and Industry President R C Purohit.
He adds that some flights should be retained at the HAL airport, at least till a rail link or a dedicated road is established between the City and Devanahalli.
* The airport is a Government of India aerodrome
* Third busiest airport, after Mumbai and Delhi
* Handles 300 movements everyday
* Handles six million passengers every year
* 266 per cent increase in traffic volume since 2000
* 11 international and 10 domestic carriers operate from here
* Civil aircraft movement accounts for 80 per cent of traffic
(Sourced from The Plane, a magazine published by HAL)
“Major cities including Mumbai and Delhi have two airports: one for domestic and the other for international flights. There is nothing new in what the IT companies have asked the Government. It goes without saying that the HAL airport has to be retained, because it makes no sense in shutting an operational airport down.
— Indru Wadhwani,
CEO, Mallya Hospital
“I won’t be travelling for two hours to Devanahalli to catch a short flight to Chennai, Kochi or Mangalore. A booming city like Bangalore needs two airports. But neither those who are making a noise against the closure of the HAL airport now nor the media had expressed apprehensions when the government signed the agreement with BIAL. Even now, the agreement could be revised if people pressurise the government. By 2010, the air traffic would not be less than 15 million (per year). The government can convince BIAL that it would get the business it wanted, but a second airport is a must considering the booming traffic.”
— C G Krishnadas Nair,
former Chairman, HAL
“Bangalore is growing at a tremendous pace and the new airport alone can’t cater to the passenger traffic in the coming years. Moreover, a huge investment has already been made into the infrastructure upgrades at the HAL airport. The prudent thing to do is let the HAL airport operate skeletal flights that don’t take more than an hour.”
— P K Mohankumar
General Manager, The Taj West End
“The HAL airport has to be retained. All big cities, including London and New York, have more than one airport. There are three advantages in having multiple airports. Firstly, there will be competition among airports and this, in turn, will ensure better services. Secondly, it helps in segregating air traffic as domestic and international. Thirdly, it gives travellers the option to go to the nearest airport.”
— Capt G R Gopinath,
MD, Deccan Aviation
“The HAL airport has to function for two years after the Devanahalli airport becomes operational, because link roads to the new airport are yet to be developed. At the same time, we need to take note that travelling to the HAL airport during peak traffic hours has become extremely stressful. Even with minimal international operations, the airport is congested. Also, BIAL has made huge investments and unless domestic flights are operated from Devanahalli, it won’t be commercially viable for the consortium. But I do agree that a growing city like ours needs two airports, one exclusively for domestic flights.”
— N R Mohanty,
former Chairman, HAL
“Since most of the IT companies are located in the southern parts of the City, the drive to Devanahalli through heavy traffic is going to be exhausting. This, in turn, will badly affect the employees’ performance. It makes sense to retain the HAL airport and use it exclusively for domestic flights of short duration. We can link the new airport with the HAL airport either through Metro or a tunnel road, so that international travellers who want to board domestic flights can travel hassle-free.”
— Nanda Kumar,
Chief Finance Officer, Honeywell Technology
“What the IT captains have said makes a lot of sense. Imagine a person living in J P Nagar having to travel one and a half hours to reach the new airport, all to take a flight to Chennai. Of course, passengers arriving on international flights to Devanahalli and wanting to take a domestic flight, say, to Mangalore will have to travel a bit to reach the HAL airport. But that’s not reason enough to close the airport down.”
““Personally, I’m of the view that the HAL airport should function till road and rail facilities are provided from the City to Devanahalli. I will discuss the issue with the Union Civil Aviation Minister. It has to be seen whether the agreement (with BIAL) could be reviewed or not. I will do my best.”
— H D Kumaraswamy,
Chief Minister

posted by The Bangalorean @ 6/10/2007 12:51:00 PM 0 comments links to this post
HAL airport: the last-ditch effort

HAL airport: the last-ditch effort
DH News Service, Bangalore:

The onus on retaining civil aviation operations at the HAL airport, even after the new international airport in Devanahalli takes off in April 2008, is back on the State government. Though Chief Minister H D Kumaraswamy has assured a look-in on the proposal, it remains to be seen whether a revision of the agreement between Bangalore International Airport Limited (BIAL) and the Union Ministry for Civil Aviation is possible at this juncture or not.
The agreement says that no airport would be permitted to operate within 150 km from the Devanahalli airport. While government sources say that the chances of a revision are remote, there is a contention that it all depends on how Bangalore’s air passengers mount pressure on the government.
With around 300 movements per day and a passenger volume of six million per year, the HAL airport is already bursting at its seams. However, what the experts point out in favour of retaining the airport — the third busiest in India — is its potential to serve as a supplementary airport, operating domestic flights.

Another issue raised by those who endorse the idea of two airports in the City, is the poor connectivity between the City and Devanahalli.
The National Highway Authority of India (NHAI) has responded to the State’s concerns and is lining up overpasses and service roads on NH 7. However, the Detailed Project Report (DPR) itself is likely to take a year.
According to aviation experts, the Bangalore market offers enough room for two airports. And they point out that two airports also ensure competition to offer better services.
However, they are also concerned about the longevity of the space-strapped HAL airport, as well as the distance international travellers have to take to board connecting domestic flights at the HAL airport, even if the two-airport concept is adopted. The debate has just started.