No new skyscrapers in Mumbai till water project is completed

The Mumbai real estate market, which is just about getting back on track after the economic slowdown, is now headed for a bigger crisis.

With the city facing acute water scarcity, the Maharashtra Chief Minister, Mr Ashok Chavan, told the winter session of the Assembly at Nagpur that no new skyscrapers will be permitted in Mumbai till the Middle Vaitarna Project is completed in 2012.

This is the largest water supply project being built to meet the city's ever-increasing demand for drinking water. However, real estate projects that have been accorded permission would be given water. The city gets about 2,900 million litres a day against a demand for 3,500 MLD.

The Government move would mean that revenues from stamp duty and development charges would take a hit. Besides, the move would also hurt the finances of developers who had invested considerable sums to acquire land and begin construction. It would also adversely impact home-buyers who had got loans to purchase property. And, in an already skewed demand-supply scenario, the Government action could further fuel demand and raise property prices as well.

Mr Sunil Mantri, President-elect, Maharashtra Chamber of Housing Industry, said it would be utter chaos if such an order were implemented. Apart from the commercial and residential projects, there were slum redevelopment projects as well. Development should not be halted and in case there was no option, one should consider total dependence on water tankers and borewells.

As it stands, 25-30 per cent of the city depended on tanker supplies. Mr Mantri said the chamber would appeal to the chief Minister to rescind the order in the larger public interest.

“We have to learn how to manage the crisis. Recycling and water harvesting could help at such times,” said Mr Abhisheck Lodha, Director, Lodha Group.

Mr Lodha said since the Government intention was to curb new constructions, residents might not require more than six-nine months' supply from alternative sources, given the construction period of around two years for projects. “In any case, a good monsoon next year could change the entire scenario,” he added.

Mr Mayur Shah, Managing Director, Marathon Group, said there was hope as the Government was working on a lot of water projects. Any impact of the proposal would be temporary and a good monsoon could change the tide.

Water storage and distribution are key issues that needed to be managed better, said Mr Anand Gupta, General Secretary, Builders' Association of India.

Mr Gupta said since the 15 per cent water cut came into force construction work in Mumbai was being done with tanker supply and borewells. However, the Government stood to lose revenue in terms of development charges and allied income associated with construction activity. It could also create financial tangles as both developer and home buyer would have availed bank loans. Moreover, it could leave thousands of construction labourers jobless after the existing projects got over.

Charging that storage and distribution were major bottlenecks in the current water supply system, Mr Gupta said the Government should look to entrust the job to private players if it is unable to manage it effectively on its own.

Telangana effect on Hyderbad real estate

After the Satyam/Maytas fiasco, the crisis surrounding the bifurcation of AP and the creation of the state of Telanagana could be nail in the coffin for speculators in the Hyderabad real estate market. It is interesting that speculators will now swing towards Vizag, Vijayawada and Warangal as they exit the bubbling Hyderbad market. Land prices in Hyderbad have quadupled over the past 4 years but it appears that the T-factor has pricked the balloon faster then expected. Investment is never without risk and this has been proven yet again by the surprise events which can bankrupt even the savviest investor.

Here is a Times of India article which reports 20000 crores been invested in Hyderbad real estate by Rayalseema/Coastal Andhra politicians. I wonder where do they get these numbers from. Is there a survey carried out by Times which queries each politician and then adds up the figures ? So from the looks of this article it appears that politicians only care about real estate in Hyderbad, Telangana or AP doesn't matter.

Hyderabad Blues
A question of a Telangana without Hyderabad, those from Andhra and Rayalaseema declared the current state capital was common property and should be declared an Union Territory. The demands are based on a complex mix of political, emotional and material logic. Many politicians from the other two regions have invested heavily in property in and around Hyderabad including the ritzy Jubilee Hills, Hi-tec City and Shamshabad, areas where the outer Ring Road and new international airport
have come up and jacked up realty. Of the 23 AP districts, 10 are in Telangana, nine in Andhra and four in Rayalaseema. For the Telangana supporters, Hyderabad is the heart of the region and can never be given UT status. "By right, Hyderabad deserves to be the capital of the new Telangana state. Historically, all the Telangana districts have actually been part of the erstwhile Nizam-ruled state of Hyderabad of which the current city was the epicentre. If Hyderabad is shared with people of the other region, then the heart of Telangana is will be taken away," said one Congress leader from the region. Another reason for the Telanganites' opposition to Hyderabad being made a UT is lack of contiguity with other regions. "The state capital is surrounded completely by the Telangana districts. Therefore, for the people of Andhra and Rayalaseema regions, Hyderabad can never function as an administrative capital," said the leader. Those clamouring for UT status for Hyderabad base it on the cosmopolitan nature of the city. "To preserve its cosmopolitan character and accelerate its growth as an hub of IT, biotech, pharma and other emerging technologies, it has to be made union territory....The demographic profile of the city has changed tremendously over the years and today the native inhabitants constitute only a modest percentage with those from the other two regions, different states of India and abroad forming the majority," said BC welfare minister M Mukesh Goud in a letter to Congress president Sonia Gandhi on Wednesday, in which he urged her to declare Hyderabad as UT. But there are more material reasons for seeking UT status. Goud, who wrote the letter, is from Hyderabad. Health minister Danam Nagender, who also is an advocate of Hyderabad as Union Territory, is also from Hyderabad. According to sources, several ministers from the Andhra and Rayalaseema regions have invested in property worth crores of rupees over the last decade or so in and around Hyderabad. "They stand to lose heavily in case Hyderabad is retained with Telangana as property values are bound to fall," said an observer. Interestingly, when the Telangana issue was raging three years ago after TRS president K Chandrasekhar Rao parted ways with the Congress and launched an agitation, there was not much of a demand for Hyderabad as Union Territory. "That was because the real estate business was booming in the state and efforts were on to build a new capital for the divided Andhra state in the Mangalagiri-Guntur-Vijayawada region. Therefore, leaders of these regions had no objection to Hyderabad remaining part of Telangana. But after the real estate bust, the Andhra and Rayalaseema leaders re-invested heavily in and around Hyderabad. Their total investments here would be more than Rs 20,000 crore," said one politician in the know. As a result, the fight for Hyderabad is set to be fiercely contested. But with the Andhra regions up in arms a day after the Congress gave the green signal for Telangana, the Rosaiah regime tottering and the possibility of the assembly passing the resolution on Telangana becoming difficult, the fight for Hyderabad may just recede into the background for the time being. But it is sure to be raked up when Telangana inches towards becoming a reality.

Hindu reports

IT professionals worried over Telangana developments

Hyderabad, Dec. 10
The Chidambaram statement on the formation of Telangana State on Wednesday night created ripples in the IT industry in Andhra Pradesh.
The subject turned into intense discussion in most IT companies, with the employees discussing the pros and cons of division of the State. The industry employs about 2.5 lakh people, mostly from outside of Telangana region.
“It (the Telangana factor) would have a very bad impact on the IT industry. We won't get new companies here and the existing companies might cut down their operations here,” Mr K. Kunal, a HR consultant for a leading IT company, told Business Line.
A Managing Director of another IT company echoes this view. “I am neither pro- nor anti-Telangana. But what I would like to have is serenity which is the hallmark of the city. Customers are postponing their visits on hearing the news of violence,” he pointed out.
"The issue is not whether Telangana happens or not. The real concern is the loss of productive time in the last few weeks. We need to restore normalcy," Mr J. A .Chowdhary, Chairman of The Indus Entrepreneurs (TiE), said.
Mr C. Bhaskar, working for a telcom services company, has a different view. “This is just a temporary phase. Companies invest in places where they find the right eco system. The city could establish an eco system with good IT infrastructure and skilled manpower,” he argued.
“Now that there is clarity (on the issue), there will be no trouble for work and logistics. The worst is over,” he observed.
Mr T. Navin, working for a multi-national firm, said that some people were not bothered at all. “We have bought houses here and the status of the city is not going to change. Why should we bother?”
Exports
The IT exports from State were put at Rs 12,000 crore in the first half ended September, 2009, reflecting a flat growth rate as a result of the economic slowdown. It expected to reach Rs 35,000 crore in 2009-10 as against Rs 32,500 crore in the last fiscal.
There, however, is a silver lining for the IT industry. A real-estate developer admitted that the costs of properties would come down drastically. “For those, who wanted to expand their facilities, it is a good time as prices of realty have already crashed in the IT investment triangle being planned by the Government,” he said.

Emaar shares plunge as UAE markets tumble

Looks like all the High net investors (HNI's) investors are going to soon be HNS (High net suckers). Emaar tried hard to raise funds in early 2008 but due to the US market crash, the Indian market went soft. Now the sand shifted under their own feet. I wonder how Indian regulators like SEBI and all the Indian stock brokering underwriters didn't flinch a bit examining the Emaar books. It goes to show rigged the Indian stock market is. The Reliance power script is still trading at 145, far from the peak it reached from the IPO. Investors in India have to be super careful. Trust no one should be the Ekam Sat when it comes to Indian markets. As far as Shah Rukh goes, he can entertain the Sheiks this new year and make up for his losses in the Dubai market. What happens to the poor suckers who lost their shirt and cannot shake a leg ?


Emaar shares plunge as UAE markets tumble AFP/File – A view of Dubai's Marina area shows high-rise buildings being built by Emaar. Shares in Dubai's …


by W.G. Dunlop W.g. Dunlop – 2 hrs 33 mins ago

DUBAI (AFP) – Shares in Dubai's giant property developer Emaar dropped the maximum-allowed 10 percent on Monday as stocks in the United Arab Emirates took a fresh tumble over Dubai's debt woes.

The Dubai exchange slumped 5.84 percent and Abu Dhabi's market dropped 1.68 percent, after both on Sunday had recovered some of the heavy losses they sustained last week.

Emaar, developer of the world's tallest building, Burj Dubai, led the downward charge on the Dubai Financial Market. Emaar shares dropped the maximum 10 percent.

The company's shares had closed 3.55 percent up on Sunday, following heavy losses last week.

By its close the DFM had settled at 1,744.83 points, a day after a rise of 1.18 percent, to 1,853.13 points.

The Abu Dhabi Securities Exchange dropped to 2,628.24 points at the close of trading on Monday, a day after having closed up a hefty 3.89 percent at 2,673.12 points.

Wadah Taha, chief investment officer at the Dubai-based Zarooni Group, attributed the continued troubles in the two exchanges to the lack of information on developments regarding the debt-laden Dubai World conglomerate.

"I think the fear is still there, the fear which affects the market sentiment and investor psychology," Taha said.

"The main fear today is due to the meeting between Nakheel and its creditors," he said. Nakheel, which is part of Dubai World, is reportedly to meet with its creditors this week to discuss rescheduling its debts.

There is also a lack of clarity regarding which banks and companies are exposed to Dubai World, Taha said.

"The picture needs to be more clear, more transparency is required," he said. "The volatility of both markets will remain high unless we deal with the issue of transparency."

Meanwhile, Saudi Arabia's exchange fell slightly on Monday, closing down 0.99 percent. Its TASI index closed 0.33 percent up on Sunday at 6,309.05 points, but fell to 6,246.50 points by its close on Monday.

The Kuwaiti stock market was likewise down, closing 0.79-percent lower, at 6,678.9 points, while Bahrain's small exchange dropped slightly, closing at minus 0.07 percent.

Bucking the trend, Qatar and Oman's stock markets were up on Monday.

Qatar's exchange rose 1.06 percent, closing at 7,132.26 points, while Oman's market went up 0.32 percent, to close at 6,302.170 points.

Both the Dubai and Abu Dhabi markets suffered heavy losses last week over Dubai's debt troubles. The Dubai index plunged 12.5 percent over a two-day trading period, while Abu Dhabi's slumped 11.6 percent.

The sharp falls came after Dubai on November 25 requested a freeze of payments on the debt of its largest conglomerate, Dubai World, which is liable for 59 billion dollars.

The request raised fears of a debt default by Dubai and sent jitters through global financial markets. The emirate's debts are estimated to total at least 80 billion dollars, with some estimates as high as 120 billion dollars.

On Monday, Dubai department of finance head Abdulrahman al-Saleh said Dubai World could sell some of its assets in the United Arab Emirates and abroad to strengthen its financial situation.

"The sale of assets is a normal measure to strengthen the group's financial situation in these circumstances," Saleh said in an interview with Al-Jazeera television.

He also reiterated the Dubai government does not guarantee Dubai World's debts, but said the "Dubai Financial Support Fund," which he chairs, "has helped companies affected by the financial crisis, including Dubai World."

Dubai links with Indian real estate developers are closer then they appear

It appears that some Indian real estate developers are funded by black money from India which is illegally taken out of India through hawala channels and then subsequently bought back into the country thru legal FDI investments.

This process of whitewashing leaves no stains and by that virtue seems to be the model method of black money conversion. If Koda as the enforecment directorate claims funnelled 700 crores back, how many smaller transactions are waiting to be uncovered, only if the ED has time and funds to investigate. India is plagued by a gazillion scams and this one is just beginning to unfold. Its no surprise that Dubai which houses the infamous Don is at the epicenter of this investigation.

Pioneer reports

Koda routed loot through Emaar

Ex-CM diverted money for tribal welfare to Dubai real estate giant The money that was supposed to be used for the welfare of tribals of Jharkhand has been ‘diverted’ to the Commonwealth Games projects by former State Chief Minister Madhu Koda. The investigating agencies finally got a lead on the hawala transactions made by Koda, currently under arrest for scam of over Rs 4,000 crore.Koda aides are alleged to have siphoned huge money from the State coffers to Dubai, which has been channeled back ironically to propel a major Commonwealth Games project — the Games Village — through the Dubai-based real estate developer Emaar MGF, which started operations in India just about four years ago and has become one of the ‘leading’ real estate developers.Well-placed sources in the Enforcement Directorate told The Pioneer that the directorate has clues about monetary transactions between Koda and Emaar MGF, which is building projects for the 2010 Games also besides several other investments. Emaar MGF is developing the residential complex for the participants of the Games on the banks of Yamuna. After a protracted and not-free-from-controversy tendering process, the Delhi Development Authority (DDA) awarded the project of Games Villages behind the Akshardham Temple to the Emaar MGF last year. The ED on Thursday raided the offices of Emaar MGF and homes of several board members in and around Delhi in connection with the multi-crore money laundering scam involving the former Jharkhand Chief Minister.

Builder of IT group housing project succumbs to bullet wounds

Cross posted from Ravi Karandeekars Blog.

Nikhil Rane (42), builder of Vanshaj InSignia at Baner - Sus, group housing project of IT professionals working in Hinjewadi, who was shot at by unidentified assailants in broad daylight at his office on Jungli Maharaj Road on November 23, passed away at 10.45 am on Monday at the Sancheti Hospital due to spinal shock complications.

Insignia group in Pune tried to form a group of IT pros to build their own housing complex. Unfortunately the builder who undertook their order, was shot at by unknown assailants a while back outside his Pune JM Road office.

While the primary motive seems to be a dispute in the purchase of land, it is indeed sad that crime, politics and the construction industry are so intertwined.

http://ravikarandeekarsblog.blogspot.com/2009/12/nikhil-rane-succumbs-to-bullet-injury.html

http://epaper.dnaindia.com/newsview.aspx?eddate=12/1/2009&pageno=3&edition=40&prntid=105516&bxid=30689294&pgno=3

http://bit.ly/86QwLp

Infosys labor lawsuit over overtime pay

Dept of Labor should not find it hard to litigate against Infosys, now that Promila Awasthi has opened a can of works. Time for Infosys managers to take training in US labor laws, business ethics, cultural sensitivity and common-sense. I wonder how much will they settle for this time. The last employee to successfully sue Infosys walked away with a handsome settlement. This case is now going to cast wide aspersions on every Indian manager. If these morons do not know how to do business in the US, they need to get their asses fired. Any local Silicon Valley employees know who was Promila Awasthi's manager ?

NBCBayarea news reports.

Who says you can't celebrate Thanksgiving?

Promila Awasthi, a Silicon Valley computer consultant, says her bosses at Infosys did.

In a lawsuit filed Monday in Alameda County Superior Court, Awasthi, an India-born American citizen, says her bosses at Infosys's Fremont ,Calif. office mocked her for observing American holidays like Thanksgiving and Christmas and refused to pay her overtime according to California law.

The lawsuit is potentially explosive for Infosys, one of a host of India-based information-technology outsourcing firms which take over computing tasks from other companies.

Infosys has been pushing to expand its presence in the United States, both to blunt the political backlash from moving jobs overseas and to gain a commercial advantage by hiring local sales and marketing executives better equipped to take business from the slick sales forces of HP and IBM.

Contrast Infosys's global ambitions with the allegations in Awasthi's lawsuit. She hardly paints a culturally sensitive picture of her former company, where she worked from February to November 2008, at which point she claims "intolerable" working conditions forced her to quit. Here are highlights from the lawsuit:

Infosys management routinely disparaged Americans, including Mrs. Awasthi, as not having "family values," and stated that layoffs in America are good because the jobs will be outsourced.

Infosys management ridiculed Mrs. Awasthi for celebrating the American holiday of Thanksgiving, telling her that she should not celebrate Thanksgiving because she is Indian, and that therefore she must work on Thanksgiving Day.

Infosys management ridiculed Mrs. Awasthi’s children for celebrating Thanksgiving, and called them "ABCD" short for "American-Born Confused Desi," and "IBCD" short for "Indian-Born Confused Desi," insulting terms used to criticize people of Indian ancestry who are Americanized.

Infosys management ridiculed Mrs. Awasthi for celebrating Christmas, saying that "we" do not celebrate Christmas, and that she should not celebrate Christmas. Infosys management repeatedly discussed the quality of Mrs. Awasthi's work by explicitly commenting on their expectations for “a woman your age."

A spokesman for Infosys, Patrick McLaughlin, did not respond to an emailed request for comment on the lawsuit.

Dubai World Crisis Vs US Housing Crisis - Layman's Analysis

(Image courtesy - Wikimedia foundation )

I think this is the following layman's assessment

US Crisis Model -

1) Government Pushes Expansion of Housing as it sits on huge surplus/potential surplus. Keeps interest rates low for borrowers

2) Lenders fresh with bulk funds from investors and low interests push both consumers and constructors. (initially follow all regulations) Steady growth in prices of property

3) Once responsible borrowers have bought houses/property - Greedy Investors, Greedier Realtors push prices higher - and entice borrowers with poor credit history to buy houses. Investments Banks bet on these borrowers defaulting through Credit Default Swaps and Collateralize Debt obligations

4) At the tip of the bubble (mid 2006), the frenzy of buying starts faltering with the irresponsible borrowers (who bought in the 90s) start defaulting. As homeowner defaults increase, demand slumps due to lack of growth in economy, flood of cheap foreclosures in the market push down prices.

5) Even good houses and responsible borrowers start feeling pain as bad borrowers brought down all real estate asset prices. (with many of them also either forsaking the house or short selling for a loss)
- this results in IBs and insurance cos to forcefully pay the CDS and CDO - making them insolvent.- BAIL OUT BAIL OUT


BOTTOM LINE for US market
Borrowers (end users who bought houses) started defaulting because they owed banks more money than the value of the house.


Dubai Crisis Model -

1) Government of Dubai entity/organizations plan grandiose development for the city.
They evaluate the scope and possible returns and borrow money from investors to construct projects via contractors. The entity backs it up saying never decreasing oil prices will make Dubai a productive hub. So the valuation of property is based on increasing oil prices.
Update1 - Someone corrected me saying Dubai does not have oil, but the other emirates do! So Dubai just projected its potential based on the neighbors riches :)

2) Initially some sales of these projects pick up due to marketing etc. But once the credit crunch hits western world potential buyers start declining. Oil prices tumble to a point where Dubai can no longer fund projects with oil money (which it does not have - but was promised by neighboring emirates), so it steps up borrowing hoping for recovery.

3) With no buyers, and stagnant prices, there is no scope of paying back the borrowed investment money to the lenders by the Dubai world, etc entity. Dubai asks for 6 months moratorium on payments.
Companies are worried that even after 6 months, the huge amount of unoccupied real estate in Dubai will simply remain in present stagnant state. (Dubai govt/Dubai World cannot reduce prices as it will cause a downward spiral just like USA and cause present occupiers to forsake their places as nearby locations will become dirt cheap - at the same time, tight money supply is not bringing in new investors to buy Dubai property at current prices)

4) Renegotiation of Debt fails - and the Entity cries default ...


BOTTOMLINE - Dubai
In this type of crisis, there is no end user or home occupier/office lessee involved - the Debt of the constructing entity itself causes the default mess.

There are fears that Malaysia, Shanghai and of course Mumbai are having exact same models of construction - where some entity entices investors and promises huge returns and later finds out no one wants to buy whatever was built.

I am not an expert at all this but is my assessment correct?
Where is India's bubble position wrt these 2 scenarios - all thoughts appreciated

- Outcomes -
1. Global Commercial Real Estate crash - Ruled out - Emerging market Commercial Crash ??
2. Gulf Government Bailout on Oil Bonds - Abu Dhabi is unwilling as the UAE is not really United :P
3. Collapse in oil prices due to surplus from Russia, Nigeria, Venezuela and Iran - Keep checking oil futures
4. Definite yes - cost of insuring against default by High debt nations like Ireland, Bulgaria, Greece, skyrockets

दुबई = डूब-गई

Dubai Crisis Hitting Indian Real Estate

Dubai the much touted "financial" and "commercial" destination has become a desert bust.

MSM is trying to hide the crisis but they are not going to get away ... Will India's Housing Bubble should follow similar traits as what happened in Dubai?



http://www.youtube.com/watch?v=lfe89m8qqoI&feature=player_embedded

http://economictimes.indiatimes.com/markets/analysis/Dubai-Crisis-Caught-in-deserted-storm/articleshow/5277408.cms

http://economictimes.indiatimes.com/markets/analysis/Dalal-Street-likely-to-sail-through-the-Dubai-crisis/articleshow/5277181.cms

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8RD8uqjoLCQ&pos=2

http://www.moneycontrol.com/video/udayans-comments/indian-mkts-rattleddubai-default-impact_427590.html

Increase in prices sours revival in demand for real estate

Article Link

Mumbai: The much-heralded revival in home-building could come to nothing as property developers may have raised prices too much too soon, data from realty research company Liases Foras shows.

“Average prices in Mumbai corrected 34% after the downturn until March, following which we saw the maximum sales in two-and-a-half years between March and June,” Kapoor said. “However, realtors have increased prices since then (June), pulling down sales as of the quarter ended September.”

“This market is very price sensitive and not all locations have touched a fair price level,” Kapoor said. “For example, Andheri has seen no major drop in prices. Thane has seen the largest drop from Rs5,000 per sq. ft to Rs3,000 per sq. ft in March, now prices have again increased to Rs3,800 per sq. ft, affecting demand.”

“Sales have dropped 14% till September, affecting the efficiency of these companies. In January 2005, realtors had an inventory to sales ratio of 2:1, that worsened to 12:1 in November 2008, and improved only to 5:1 lately,” Kapoor said. “This means that prices have been increased and inventory has been allowed to build up, a clear sign of an asset bubble.”

Mahindra offers premium homes in Chennai -GST

Mahindra Lifespaces has recently launched a marketing campaign to sell their new development inside Mahindra World City. Investors and end-users have to do their homework before jumping in on the Mahindra brand-name. There is no doubt that Mahindra's have the vision and they started work on MWC before anybody else and their success is a testimony to their vision and execution. There are a large number of companies and MNC's within MWC and the number will increase as time goes by.

However the pricing of Aqualiy is what should be of interest to the buyer. As per their press release a 2200 sq ft twin home si priced at 90L, a 4000 sq ft villa at 1.7cr and a 1800 sq ft apt at 45 L.

Now if one goes to look for plots around MWC, one can easily get a ground (60x40) 2400 sq ft at 600 rs per sqft, within 2-3 kms of MWC. Now given a construction cost of 1200 per sq/ ft for premium construction one can easily get a 2400 house for 1800 x 2400 = 43 L. Why should anyone spend 3 times more for land on a 99 year lease. Yes, the Mahindra World City land is on a 99 year lease from the government of Tamil Nadu.

Mahindra World City is a landmark and will continue to do so, however investors/end-users should look to land around this area rather then pay a premium to Mahindra for living in this area. Ofcourse the community aspect of Lifespaces cannot be replicated by an individual house on a plot, however does it a warrant a premium of 45L ? That is the million dollar question.

Mahindra Group, has launched a premium residential project — Aqualily — that would be developed within Mahindra World City near Chennai.

“Aqualily is being developed as a gated community spread over 55 acres and will involve construction of 1.5 million sq ft of living space, comprising around 760 residential units. The project is being implemented at a cost of Rs 400 crore,” said Anita Arjundas, managing director & chief executive officer, Mahindra Lifespace Developers. The project will have about 10 acres of green lawns.

Aqualily will offer a mix of villas, twin homes and luxury apartments, with a built-up space up to 4,000 sq ft. The company has now launched the villas and twin-homes in the first phase, apartments will be launched a couple of months later.

While twin-homes, starting with 2,200 sq ft, will cost Rs 90 lakh, 4,000 sq ft large villas could cost up to Rs 1.7 crore.

The apartments will vary from 1,200 sq ft to 1,600 sq ft and priced at Rs 45 lakh, said Rajendra Joshi, vice-president (marketing) of Mahindra Lifespace Developers.

According to Joshi, about 150 units will be villas and twin-homes, while 610 units will be apartments. While villas and twin homes are likely to be completed by the end of 2011, the apartments will be ready for occupation six-eight months thereafter. Four banks, including HDFC, ICICI Bank and Axis Bank have already approved the project for home loans.

The project offers two clubhouses equipped with all modern amenities and several play areas.

“We envisioned Mahindra World City as a complete ecosystem where work, living and learning spaces would coexist to offer an enhanced quality of life to its residents. We have achieved significant milestones in this pursuit by creating work spaces for companies like BMW, Infosys, Wipro and lifestyle amenities and facilities like Mahindra World School, Apollo Clinic, as well as enhanced bus and train facilities,” said Arun Nanda, executive director, Mahindra and Mahindra, and vice-chairman, Ma­hindra Lifespace Developers.

“Aqualily represents a significant endeavour in offering international living in a picturesque environment and will ensure a nature-friendly living environment,” Nanda added. The project is being executed by Mahindra Residential Developers, a joint venture between Mahindra Lifespace and Arch Capital, the real estate fund of the Philippines-based Ayala Group.

RIL mulls entry into low-cost housing

After successfully dabbling in organised retail in 2006, Mukesh Ambani, chairman of India’s largest private sector company, Reliance Industries (RIL), has now set his eyes on no-frills, low-cost housing.

RIL holds a land bank of 5,000 hectares in Haryana through Reliance Ventures, a subsidiary of RIL created by forming a joint venture with Haryana State Industrial Investment Development Corporation and over 4,840 hectares through the Navi Mumbai SEZ, in association with Cidco (the Maharashtra government’s industrial and township development arm).

“RIL is sitting on a huge land bank with regard to its special economic zones (SEZs) in various locations. It could be putting that to commercial use for mega housing projects in the no-frills category,” said an analyst from a Mumbai-based broking firm who tracks RIL closely.

“Entry of corporate houses like RIL will be good for the market, as it will uplift the real estate sector into an industry. Every business house that enters the sector, be it Godrej, Mahindra, Piramal, Tata and now RIL, will help in making the procedures in the sector more transparent,” said Rajeev Talwar, Group Executive Director, DLF.

Article link

MSM is now Expert. Sharp rise in TDR prices leads to recovery in realty sector

Barclays, Bank of America, JPMorgan Vie for India Stock Sales

Bloomberg reports on government run PSU's being put on the block. MBA students should look to India for jobs as these companies should keep hiring for a while. This stock sale is going to suck the liquidity from the system, similar to what the Reliance Power IPO did in Jan 2008. Now unless you are an institutional investor, chances on getting onto the IPO bandwagon are almost zero, unless you open gazilion demat accounts under ficticious names as done in Gujarat and Rajasthan. Soon we will see real estate shrills pumping the Mumbai market that I-Bankers have returned to claim their piece of the most expensive land in the India.

By Subramaniam Sharma

Nov. 10 (Bloomberg) -- Bank of America Merrill Lynch, Barclays Plc and JPMorgan Chase & Co. are competing to sell shares for state-run companies in India as the government plans the biggest sell-off in at least five years.

Robert Morrice, Barclays Capital’s Asia-Pacific chairman, plans to double the London-based firm’s investment banking team in India as it vies to sell stock. JPMorgan hopes for a “slew of disinvestment” by state-run companies, said Kalpana Morparia, the New York-based bank’s chief executive officer in India.

Prime Minister Manmohan Singh’s government pledged last week to reduce its holdings in profitable state-owned companies to 90 percent, accelerating a fund-raising program that languished for five years. While government offers present a “big opportunity,” they typically pay lower fees than private- sector sales, according to Bank of America.

“The competition for this business is always extremely fierce,” Kevan Watts, country head for Bank of America, said in an interview. “It is prestigious business. It is not a very profitable business because the government, understandably, is not prepared to pay very high fees.”

Indian share sales will add to an IPO rebound in Asia as record-low interest rates and economic stimulus packages fuel a revival in demand for new equities. China Minsheng Banking Corp., Sands China Ltd., Malaysia’s Maxis Bhd. and India’s Emaar MGF Land Ltd. will lead more than $14 billion of sales in the region.

More

Home prices up in 15 cities, shows Residex

The new index of residential price movement – Residex, released by the National Housing
Bank (NHB), shows a mixed trend among 15 major cities.

As many as nine out of 15 cities, covered by Residex across the country, have witnessed hardening of residential property prices. Prices of homes have recorded a decline in cities such as Delhi, Bangalore and Bhopal, between December last year and June, but the same went up in cities such as Mumbai, Kolkata and Chennai, among others.

Prices of residential property in Mumbai have increased by 5.98 per cent between December and June, and by 26 per cent and 13 per cent in Chennai and Kolkata respectively. Prices of residential property in Ahmedabad increased by 27 per cent in the same period and during the same time, Faridabad, the neighbouring city of Delhi, reported price hardening to the extent of a whopping 36

Article Link here

The big bank bailout?

Why property prices did not fall enough in 2008

The real estate industry may have run into fresh trouble. Having emerged fresh from a crisis that threatened to take a few companies belly up, the worst was perceived to be over for the industry. However, data that emerged from a recent Reserve Bank of India (RBI) document shows that just when the industry was in the throes of the downturn in 2008, banks stepped in to lend generously when they needed capital to survive, saving developers the trouble of cutting prices to stay afloat.

here’s the hard data: as per the RBI document, loans to the real estate industry grew as much as 41% last year even as loans to homebuyers grew about 5% in the same period, confirming the trend that demand for property was indeed down.
In fact, in the monetary policy review that the central bank came out with earlier this week, it made loans to the realty industry stricter and ordered banks to arrange for coverage should any of their loans default and get classified as non-performing assets (NPAs).

Chetan Ahya of Morgan Stanley says that the real estate industry got easy lending from banks, due to which they were able to hold back sales and not cut property prices too much. “The RBI governor, post the monetary policy, was clear the RBI would like to see more adjustment in the property sector on the pricing front and that there should not be aggressive price increases,” he said.

Developers, though, were not pleased and on the contrary said the RBI move could result in project delays and make property costlier or impact their margins.
“Property prices are a function of the market, supply and demand. Therefore it at all the hit has to be taken and the prices cannot be increased it would obviously impact the margin,” said Pujit Aggarwal, Managing Director of Orbit Developers.
With the RBI turning on the heat on real estate companies, what will the outcome be on the industry and property prices? Time will tell.

Realtors make a cautious comeback

Flush with funds raised through QIPs and PE deals, builders are eager to cash in on the return of demand


The affordable housing concept too has pushed developers out of familiar territories. Unitech, which bought land nationally in the last five-six years, has launched projects in Lucknow, Mumbai, Kolkata, Chennai, Bhopal, Rewari and Mohali in the past six months, several under its affordable housing brand Uni Homes.

Even for its recently launched premium project in Worli, south Mumbai, Unitech slashed rates by at least 30%. In a pre-launch aimed at investors, it sold nearly 150 out of about 300 apartments in the project within a month, analysts said. Unitech is focusing on developing its existing land parcels, said R. Nagaraju, general manager, corporate planning and strategy. But the risk in expanding into other cities is in setting up a large team in each region to undertake the projects with enough freedom to operate, he said.

Bangalore-based Puravankara Projects Ltd plans to go pan-India through its affordable housing subsidiary Provident Housing Ltd. Encouraged by recent project launches in Chennai and Bangalore, it’s now aiming for Kochi, Hyderabad and Coimbatore.

Murthy to be venture capitalist and I wonder why now

Economic Times reports that NRN Murthy has sold 180 crore of Infosys shares to start a VC firm in India which will invest in startups focussed on basic healthcare, education and nutrition.

The cynic in me says that this is a cooked up headline to justify the selling of Infosys shares which I believe is poised to plummet to depths not seen before.

There are two fallacies to this story propagated by NRN. Firstly the goal of VC is to generate returns in the excess of those which could be possible by the stock or bond markets, at the expense of taking a higher risk then normal. Any Silicon Valley VC will tell you that 99% of all startups fail but the 1% which succeed generate 1000% returns to compensate for all the failures. In the period 1999-2009 a VC study showed that more funds went bust then which made a profit for their investors.

Now given the risk profile for a VC, is NRN trying to become a silicon valley type VC or is he trying to become a "philanthropic venture capitalist". These three words are put together sound more ironic then "Sweet Tata Namak". The goals of each of these professions is different and do not intersect even on elliptical curve on a infinite plane.

Is NRN trying to downplay the share sales since he doesn't want investors to think that an insider is bailing out without attracting attention. As an investment decision NRN has made the right decision by slowly selling all his shares and hopefully diversifying his assets into index funds. As per the article he has now jus 0.4% shares of Infosys remaining so that speaks about the confidence he has in the company he has founded.

There was an article in Reuters the other day which spoke about how Accenture, HP and IBM consulting services have expanded in India to cut their overheads and now each employ more then three quarters of the workforce of Infosys or Wipro or TCS. Infosys trades at 20 times forward earnings versus 14 for IBM and similar disparities exist for Wipro and TCS. What more opportune time to sell the stock then when the Indian market has hit its cyclical bear market high!!

Good job NRN but sorry that you cannot pull the wool over our eyes. Full article here

BANGALORE: One of India's most successful entrepreneurs is turning into a venture capitalist (VC). Infosys Technologies' co-founder and chief mentor N R Narayana Murthy, on Thursday, sold shares worth Rs 180 crore to start a venture capital firm that would fund start-ups mainly in India. The idea is to encourage young entrepreneurs with brilliant ideas. The VC will invest in start-ups operating in the areas of basic healthcare, education and nutrition.

In a reversal of roles, in deciding to become a VC, Murthy is following in the footsteps of his daughter Akshata who was until recently a VC based out of Bay Area in Silicon Valley operating in the clean tech space. Until her marriage to Rishi Sunak in August, she was a senior associate at Siderian Ventures.

Murthy on Wednesday and Thursday sold a combined eight lakh shares of Infy to raise money to fund VC firm. The number of shares owned by him in the company now stands reduced to 23.8 lakh valued at Rs 526 crore at Thursday's closing price of Rs 2,211. The Murthy family's combined holding is around 5% with his wife Sudha owning the largest chunk. Murthy's individual holding in Infy which has been less than 1% for a while now stands reduced to 0.4%.

Happy Diwali and the bear

I hope everyone is having a Shubh Deepawali with their family and friends and may Godness Laxmi smile on everyone with wealth and prosperity in the time to come.

However if you are Rakesh Jhunjunwala the way to earning your bounty is to go short on the Indian stock market. He is on the record now saying that Indian markets will crash. So if the big bull is now a big bad bear, no points for guess whether he is long or short on the. Like they say Bulls make money, bears make money, pigs get slaughtered. If the market tanks this week, it will be fantastic time to go short on the market.

In Samvat 2066 it appears the path to Laxmi Road is via Bear Street. Here is the rediff article

Wake up Mumbai

Taking a cue from his wife Sagarika, Rajdeep seems to have woken up to the reality of the India. Im my opinion I have observed that he has sugar coated his words when speaking or intervewing policticans on televsion but here he is direct and at his eloquent best.

As the megapolis one grew up in, there is an obvious emotional attachment to Mumbai. Which is why, at a studio discussion this week, when a panelist referred to the maximum city registering minimum voting as a sign of Mumbai's "resident non-Indian" mentality, I felt a little aggrieved.

Surely, a city with the energy and enterprise of Mumbai, a city which literally never sleeps, cannot be seen through such a cynical worldview.
And yet, as voting day for the Maharashtra assembly elections wore on, it became increasingly apparent that Mumbai was struggling to pass Pappu's electoral test.


Maybe, it's the same mindset which has chosen to watch the city being reduced to a giant slum by a political class which sees slum-dwellers as one large vote bank and little else.

Perhaps, that is also why year after depressing year, the city routinely goes under water in the monsoons.

It might also explain why no one has been able to challenge the builder-babu-neta nexus which has allowed the mangroves and green areas to be concretized.

You commute for eons in a creaking railway system, flyovers don't get built on time, a sealink takes years to come up, no additional power is generated for a decade, old, dilapidated buildings remain hostage to antiquated laws: nothing seems to change, and worse, no one seems to care enough to force change.

Take a look at the morning papers in Mumbai and you get a sense of just how much the city lives in a bubble of its own.

In no other city has page three merged as effortlessly into page one as in Mumbai. Shah Rukh's trousseau, Salman's antics, Priyanka's twittering, the city seems to have magnified all things trivial and made Bollywood its ultimate temple of worship. Read more

Rich behaving poorly

Sagarika Ghose seems to have hit the nail right on the head. When we see the likes of Bindas Bhai and others gloating over their riches when the average Indian is trying to make ends meet, it reminds me of Marie Antonette who said "If you don't have bread, eat cake". The liberalization of India has attracted legitimate capital as well as shady money. It is this shady money which is fuelling all the demand for real estate. Last January, at the mere mention of the abolition of P-Notes, the market crashed 20% from 21k to 17k. The money moving in Indian stock market is highly speculative leverage capital and part of those profits are ploughed back into Mumbai real estate. Folks who make money should be careful in how they invest it. We have seen how the mighty have fallen. I know of folks working on Wall Street earing $500k + bonus and those folks cannot find a job paying them 1/5 of their salary. Indian housing bubble is a subset of the Indian money supply bubble and both will unwind viciously when it become unsustainable. Manmohan, Montek and company are doing little to curb its appeal. They act like ostriches when the wolves are out in full play. The real money has to spent in building infrastructure, agriculture and basic necessities. The Naxals are not reading Sagarika's blog before striking back. They are rising against the unfair trade practices. If the poor don't become a participant in India's growth, the rich wont be able to enjoy their riches for long. Her blog is below.

Two seemingly unconnected events point to our most urgent contemporary dilemma: how should the rich behave in a country of the poor? Just a week after Corporate Affairs minister Salman Khurshid asked CEOs not to take "vulgar" salaries, Naxals beheaded police officer Francis Induvar in Jharkhand and as many as 200 Naxals attacked a police station in Gadchiroli. Four Indian CEOs recently made it to the Forbes list of 10 wealthiest CEOs in the world, yet almost half of India lives on less than a dollar a day. Today, many rich Indians are indeed vulgar and arrogant, and the poor are no longer content in their 'god given' lowliness and have taken up the gun. India and Bharat are on a collision course as never before. The government's response of a crackdown on Naxals is only a treatment of the symptom rather than the disease. If Naxalism is defined as a violent response against perceived inequality, then its not just occurring in the Red Corridor. There are versions of it going on all over India. Read more at IBNlive.com