Tuesday, April 14, 2009

Satyam - A real estate company

Here is an interview snippet with the board members of of Satyam Computer.

Q. What is the current headcount and assets of Satyam?
Manoharan: When the government-appointed board took over, the headcount at Satyam was 51,000. At the end of the fourth quarter, it has come down to 48,000.

Satyam has 450 acres of land -- 50 per cent of which is freehold and the remaining is leasehold. Of the 50 per cent that is owned, they have 125 acres in Hyderabad, encompassing two campuses. Both these campuses are valued at Rs 1,700 crore (Rs 17 billion).

There is no mention of the work Satyam does, the technology competency, domain expertise or project execution.

Now imagine the same question posed to Bill Gates

Q. What is the current headcount and assets of Microsoft ?

Bill Gates: We have currently 92,000 employees and 1000 acres of land in Redmond , another 400 acres in Hyderabad with 10 acres in Silicon Valley.

Goes to show, how real estate prices are influencing market valuations. Morons don't realise without projects or customers, the real estate is nothing more then rocks and sand.

20 comments:

Anonymous said...

NCR price trend:

http://www.qubrex.com/story/2009/4/14/1616/92658

Anonymous said...

Great link Anon @6.29 pm.

I wonder if this data is available for all major cities.

Vik, the above link can be possibly on the front page.

Anonymous said...

Bleak job outlook to keep property demand subdued

“A bleak job outlook due to the sluggish economic climate is likely to keep property demand subdued for at least next three months”.

http://economictimes.indiatimes.com/Markets/
Real-Estate/Bleak-job-outlook-to-keep-property-demand-subdued/articleshow/4399211.cms

Anonymous said...

A great article (by Ila Patnaik & Ajay Shah) that read about india and recession
http://www.mayin.org/ajayshah/MEDIA/2009/iigr.html

Anonymous said...

Atul,

I think you have a very valid point.

Can someone pls. let us know if the stock market goes to 15k by June what will be the implication of this on properties particularly for Mumbai?

Thanks,

Ramesh Babu.

Anonymous said...

It is well known that any project (really any damn project) has long been just a cover to grab land ownership. I never believed that chip fabrication was ever viable to be setup in Hyderabad that suffers from chronic water & power shortage. Can anybody compete with Taiwan? I don't blame them too as both the govt & RBI unleash massive pumping the moment property sector sees slight correction. The fact is that both govt & RBI work for the welfare of rich people, and rich get rick via land ownership and now thru ownership of commercial enterprises. We already moved to 19th century feudal era. Just accept it and move on.

Anonymous said...

Beggers no longer have cheap funds available

DLF mulls apartment resale to refund buyers“We are not sure at what price the re-selling of the apartments will take place. It may happen at the current price. It is also likely that we will have to reduce our prices further,” said the official.

DLF, in a recent letter to its New Town Heights customers, said, “Refunds to the members will be available only after DLF is able to ‘retrade’ the property, or earliest by six months if the company fails to sell the property.”

Over 550 customers at the two projects have asked the company to return their money. Most customers have paid 40 per cent of the total cost of their apartments.

The company official said many of the people looking for refunds were investors, not end-users. “It is not the delay in start of the construction work that is troubling these customers.They want their money back as the lock-in period of one year in the project is over,” he added.

The company expects the total number of customers looking for refunds to come down to 100-125. It will charge a penalty for returning the money. “The customers had entered into a three-year contract with us. If we have to sell the apartments at a discounted rate, the customers who are backing out should make up for it,” the official added.

“If the company tries to re-sell its apartments in the open market, it will have to reduce prices by a further 10-15 per cent. The new buyers know the expected supply is more than demand,” said Rupesh Sankhe, equity analyst, Centrum Broking.

Anonymous said...

Wait until the elections are overReal Estate on a Rise… but…
April 14th, 2009 Praveen Bose


Bangalore’s real estate sector had practically crashed over the past few months. But, now there is talk of a revival, by the experts. They seem to have the most unbelievable of reasons, at least from the point of view of a student of Economics.

Hoardings have been put up by real estate brokers, including the biggest one in the city, and builders practically chiding Bangalore’s denizens to buy and screaming “Don’t miss this opportunity. Buy now”. Hence, it is not rare to find many people asking: “Will I miss out on the opportunity, again?”

Then, there is a trend to the real estate sector in Bangalore which has been seen and can be traced back to the last few elections that we have seen. Politics seems inextricably inter-twined with the real estate sector in the sector.

Those in the know of the working of the real estate sector say it can be understood better if we understand how much of a role real estate money plays in politics.

Those in the real estate business, say some, end up having to pay the political leaders, moreover, to protect the interests of the real estate sector.

The interest in the real estate sector of the city has been party agnostic. No matter which party, everyone is interested.

This is not necessarily at the time of the Lok Sabha polls alone. Even civic polls have the knack of pushing up the prices, though to a lesser extent.

It is just that the incidence of the burden borne by the builder is wholly transferred to the buyer. The realtors just pass on the burden of higher costs brought on by the election.

Anonymous said...

MCHI’s Housing Expo Fails to Lure Buyers

“The common refrain was that developers were holding on to unrealistic prices. Around 70% of buyers said they would wait for another correction of 20% before buying.”

http://www.indianrealtynews.com/real-estate-india/
mumbai/mchi%e2%80%99s-housing-expo-fails-to-lure-buyers.html

Anonymous said...

Ramesh,

No implication as of now atleast because the investors are out, but if the interest rates comes down to 7% then there could be significant movement during Diwali.

All depends on New Govt, Stock market and interest rates. We will then come to know all the talks about economy slowing down, job loss etc current flavour will melt or still hold good.

Market is highly unpredictable and timing is very dangerous. Play safe buy only if you can afford instead of 2BHK buy 1 BHK at least you can hedge.

Play safe and dont gamble, have a long term view and then take a call.


BIndas Bhai

Anonymous said...

TCS laying off 3000.
Close to 75,000 IT people have lost jobs. A lot of people related to construction, RE, loans banking etc. have also lost jobs.

I think the RE sector cannot improve unless the job situation is stable. Moreover, not just jobs but good paying jobs.

Anonymous said...

The Shape of Things to Come for Indian real estate companies..

Mall operator files for bankruptcy protectionLOS ANGELES (AP) -- The nation's second-largest shopping mall owner, General Growth Properties, filed for Chapter 11 bankruptcy protection Thursday in a tough bargaining move to restructure it's $27 billion in debt.

The Chicago-based company, which owns Jordan Creek Town Center in West Des Moines, Coral Ridge Mall in Coralville, Mall of the Bluffs in Council Bluffs, and Westdale Mall in Cedar Rapids, is paying the price for its aggressive expansion at the height of the real estate boom.

General Growth, like many homeowners during the frenzy, bought several properties at top dollar and now is finding lenders unwilling to refinance

Anonymous said...

Is stock market rally the sign of economic reversals & RE market improvement?
Definitely it’s not a sign of RE market recovery.
The simple analysis is,
--RE prices are not as transparent as stock prices.
--Stock market is liquid, RE market is illiquid.
--Stock market has healthy correction of 50%, which created opportunities to invest in oversold stocks, whereas RE is still expensive.
--Stock transaction can settle in 3 days, RE transaction takes at least 3 months.
REs have very high co-relation with unemployment rate. Higher employment & good paying jobs fuel the market. As unemployment situation is not going to improve in a year, RE recovery is still far away. To retain the profit level corporate cuts on expansion so there is less need of commercial space & labors. Badly hurt US & European economies are cutting on IT expenditure, which is spreading ripple effect in Indian IT industry.
For investors, RE is still unattractive, it’s an illiquid asset. For profit objective one has to keep a very long term horizon. Another aspect to look at pricing, will the economic activities return to same level as 2007? Then who will support the price level? It means to pick up the market the price level has to fall at rational level.
Though Indian banks have extended the loan tenure for RE but Global companies haven’t yet started new IT expenditure.
End of economic gloom?
“As a result, stock markets have started to rally in the US and around the world. Markets seem to believe that there is light at the end of the tunnel for the economy and for the battered profits of corporations and financial firms”.
“Economists usually joke that the stock market has predicted 12 out of the last nine recessions, as markets often fall sharply without an ensuing recession”.

http://business.rediff.com/column/2009/
apr/15/bcrisis-end-of-economic-gloom.htm

So guys let it fall then only pick up, minimum 50% price cut is guarantee.

Vulture.

Anonymous said...

Oversupply may bring down Mumbai office rentals


“Rentals are set to go down a further 20-25% in Mumbai owing to the mismatch in supply and demand. BFSI, which generated the most demand for the Mumbai market, has been hit the most in the recent times”.

http://economictimes.indiatimes.com/Markets/
Real-Estate/Oversupply-may-bring-down-Mumbai-office-rentals/articleshow/4411981.cms

Anonymous said...

I still feel that if the market moves to 15k and interest rates come around 7%, property business will pick up. I agree with Vulture that Investors will not get in now but very few anticipated the boom in property last time and bust in stock market.

As mentioned it is very difficult to time the market. Buy 1 BHK if you have a requirement of 2BHK, bargain hard and look for value. Be sensible and don’t even dream of timing the market.

Bindas Bhai

Anonymous said...

Metro rail, realty attracting maximum investment: Assocham
New Delhi (PTI): Metro rail, sewerage and real estate are the top areas attracting maximum investment in the infrastructure sector in metros across the country in the last six months, industry body Assocham said.

In the last six months metro rail attracted investment worth Rs 34,038 crore followed by sewerage (Rs 21,434 crore), real estates (Rs 15,170 crore), hospitality (Rs 13,010 crore), SEZs (Rs 10, 500 crore), transport (Rs 6,283 crore ), roadways (Rs 5,819 crore) and water supply (Rs 5,757 crore), it said.

Construction of metro rail is being carried on three cities including Bangalore (Rs 6,395 crore), Delhi (Rs 8,118 crore) and Mumbai (Rs 19,525 crore), it said.

Mumbai has attracted the highest amount of investment of Rs 16,694.67 crore in the sewerage segment followed by Chennai (Rs 1,588 crore) and Bangalore (Rs 1,354 crore), the chamber said.

Assocham President Sajjan Jindal said the Indian metros continue to be the favourite destination for real estate development.

Bangalore is the frontrunner in terms of real estate projects planned for the metros with the investment estimated at Rs 7,990 crore, it said, adding that Hyderabad with projects worth Rs 4,050 in the realty space in the second spot
http://www.hindu.com/thehindu/holnus/006200904162031.htm

Anonymous said...

Kolkata residential projects back in demand

Namrata Acharya / Kolkata April 16, 2009, 0:50 IST



The real estate sector is finally showing signs of revival, on the back of an increasing investment in the residential segment.


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Property developers are of the view that there has been a significant improvement in demand in the last couple of months, and at lease one has increased prices in the last one month.

Pradeep Chopra of PS Group, said he had increased prices for one of its projects by Rs 200 per square feet to Rs 1,899 per square feet in the last one month.

Several real estate developers are also planning to launch new projects, which they have been holding for the last six months, which could be seen as a manifestation of demand revival.

"The demand for residential projects has started picking up, and the worst is probably over for the real estate sector. Property prices should look up in the coming months," said Chopra.

P S Group is planning to launch two new residential projects in Narendrapur and Rajarhat by May this year.

Harshvardhan Neotia, chairman, Ambuja Realty, also agreed that demand for housing projects had started picking up since last month.

Property prices in Kolkata and its fringes has seen a correction of almost 25 per cent in the last six months.

Santosh Rungta, president, Confederation Of Real Estate Developers Association Of India (Credai), said, "The real estate scenario is now taking a turn for the better, not only in the eastern part, but across the country. For instance, in Mumbai, there are reports that one developer could sell 700 flats in just two days."

However, the demand for commercial and retail projects are yet to see a pick-up, and the segments are still reeling under the pressure of economic meltdown. Also, rising cost of cement has been a cause of concern for the developers, though the rise has been partly set-off by falling metal prices.

Pradeep Sureka of Sureka Group said, "In the last two months, demand has significantly picked up in the property market. There is no scope for further price correction, as certain raw material prices are still on the higher side. "

Cement prices have gone up by 20 per cent in the last one year, Sureka added.

In the months of October-November last year, several property developers had started advertising freebies to attract customers. However, they are no longer pursuing the strategy.

Eden Realty, which is developing one of the largest housing project in south Kolkata, tried to woo customers by offering free car parking space with flats few months back.

However, the response to the offer was lukewarm, and the realty company was no longer in a position to offer the scheme, admitted Sachchidanand Rai, managing director, Eden Realty.

"We expected selling about 100 flats through the scheme, but could sell about only 32. Now things have started improving and customers' interest has gone up significantly, which is also translating into sales," said Rai.

Sensing the need for easier finance, rather than freebies, developers are now focusing on pragmatic tie-ups with banks.

Thus, while earlier, many developers were paying pre-equated monthly installments (EMI) to banks for the customers, under interest subvention scheme, they were now refraining from paying the entire pre-EMI.

Recently, Eden has tied-up with four banks-- State Bank of India (SBI), IDBI, Bank of Baroda and HDFC-- under its "Empowerment " scheme.

"The scheme is a refined version of the interest subvention scheme, in keeping with the concerns of the banks as well as customers," said Rai.

The scheme, though not much different from the interest subvention scheme, involves a15 per cent down payment of advance by the customer, against which Eden would receive the sanctioned home loans in tranches, based on actual completion of the project. This would reduce the burden of the pre-EMI on developers, as payments would be based on the project completion, Rai said.

Chopra of P S Group also said, "Pre-EMI was not a profitable option for developers, as pre-EMI sometimes constituted even up to 70 per cent of the EMI, which was payable only when the project is up for possession."

Anonymous said...

Why all auto makers shouldn’t conclude that there is a huge demand for cars?
Yes they can if there is a 6 -12 months waiting list for Tata-Nano car. Oooops that’s
the difference in thinking between builders & auto makers.

When RE prices was on its peak, GDP was 9%. If 9% GDP didn’t supported the
price level how can 5.6% GDP growth will support same price level?

“Green Shoots and Glimmers in US economy”
1. Things are still getting worse.
2. Some of the good news isn’t convincing.
3. There may be other shoes yet to drop. Even in the Great Depression, things
didn’t head straight down
4. Even when it’s over, it won’t be over.

http://www.nytimes.com/2009/04/17/
opinion/17krugman.html?_r=1


“Crisis Damage Likely to Be Long Lasting” : Bernanke( Federal Reserve Chairman, 17th Apr)


So guys let it fall then only pick up, minimum 50% price cut is guarantee.

Vulture.

Anonymous said...

India's GDP to fall to 3.4% in 2009

Anonymous said...

Bargaining OR Auction?

Bargaining - “One buyer; one seller; one deal.”

Auctions - are used when we have: “One seller; many
(potential) buyers; one deal”, OR “One buyer, many (potential) sellers; one deal.”
The “one” (buyer or seller) usually gets to set the rules.

English (“Ascending”) - Open outcry by bidders until only one bidder is left.

Dutch - Auctioneer calls out a high price and methodically drops it until someone says “mine”.

“Banks though less recognized option from a traditional source sell home loan defaulter’s property usually at a low price tag than market price. Experts say the public and private sector banks sell home-loan defaulters’ property usually at a price tag much lower than market price. According to banks estimation there are several hundred houses in the market for the taking”.
“Auction makes sense for Non performing asset”.

http://banksnews.blogspot.com/2008/
05/banks-auction-old-houses-taken-over.html

ICICI Debt counseling
http://dishafc.org/aboutus.html

ICICI distressed sale arm.
http://www.icicibank.com/Pfsuser/
loans/home_search/hloc.htm
Banks recast home loans to ease layoff victims' worries
"Logically, banks do not stand to lose if they have to wait for even six months because the process of seizing the mortgaged asset, putting it up on sale and realising the proceeds would be equally time-consuming," pointed out VN Kulkarni of the Bank of India-backed Abhay Credit Counselling centre.

http://economictimes.indiatimes.com/Personal-
Finance/Banks-recast-loans-to-ease-layoff/articleshow/4416398.cms


So guys let it fall then only pick up, minimum 50% price cut is guarantee.


Vulture.