Real estate developers will need to cut prices sharply in the second half of the financial year to convert demand into actual sales, as potential buyers continue to wait on the sidelines, industry watchers say.
Small developers at a residential property exhibition in Mumbai last week offered customers up to 15 percent discounts, waivers in registration fees or stamp duty and free parking spaces, but they failed to excite buyers, analysts said. Cash discounts still didn't change their minds, they added. "With the writing on the wall pretty clear, developers are likely to be forced to reduce prices further and offer higher discounts to clear existing inventory and to rev up pent-up demand in the sector.
While developers are hopeful of strong demand during the next two weeks to Diwali, the biggest Hindu festival, when demand is at its peak, they acknowledge volume sales will not be as high as previous years and a price correction is on the cards.
People will abstain from buying till the interest rates correct in the long-term
Wednesday, October 15, 2008
Realty players face moment of truth
The fresh wave of liquidity crunch is set to worsen problems for the Indian real estate sector. The sector is already facing a cash
crunch on account of diminishing sales, expensive and largely unavailable credit and drying up of private equity funding. And if an economic downturn sets in as feared, many developers may go out of business and others may be forced to drastically cut prices.
The biggest challenge for realty firms today is to boost demand for property. And many of them know price cuts are perhaps the only way to do that.
crunch on account of diminishing sales, expensive and largely unavailable credit and drying up of private equity funding. And if an economic downturn sets in as feared, many developers may go out of business and others may be forced to drastically cut prices.
The biggest challenge for realty firms today is to boost demand for property. And many of them know price cuts are perhaps the only way to do that.
Financial meltdown hits underworld too
Don’s money at risk, and the economic crisis has hit the underworld too. Senior crime branch officers say several gangsters are feeling the
pinch as they keep a close watch on their benami investments in various financial instruments. “These gangsters, specially from Dawood Ibrahim and Chhota Rajan gangs, have got frontmen whom they refer to as sleeping partners,’’ said a senior officer from the anti-extortion cell. The deal is simple. The ill-gotten money is pumped in by the underworld and invested by frontmen, who get 30% of the profits on the investments. For the remaining 70%, the underworld reaps dividends every month. Said another senior crime branch officer, “With the slowdown in real estate , gangsters are also finding it difficult to extort money from builders who are already in deep crisis.” While the mafia has begun extortion in Navi Mumbai and Thane, Mumbai’s extortion graph has gone down in the past few years. This year, the police hardly have records of threats from Dawood Ibrahim and Chhota Rajan gangs, with cases pertaining only to Ravi Pujari and Hemant Pujari. “We had successfully crippled the underworld activities in the past. We will not allow anybody to raise their head and regroup in Mumbai’s badland ,’’ a top police official said, requesting anonymity. In the late ‘90s, the crime branch had taken part in maximum number of encounter killings, which had claimed lives of top-rung henchmen and extortionists. The killings combined with firearms seizure and detentions under the stringent MCOCA had nearly wiped out the underworld. But some of the gangs, with their bosses ensconced abroad, continue to exist even today and the police are keeping a vigil on their activities.
pinch as they keep a close watch on their benami investments in various financial instruments. “These gangsters, specially from Dawood Ibrahim and Chhota Rajan gangs, have got frontmen whom they refer to as sleeping partners,’’ said a senior officer from the anti-extortion cell. The deal is simple. The ill-gotten money is pumped in by the underworld and invested by frontmen, who get 30% of the profits on the investments. For the remaining 70%, the underworld reaps dividends every month. Said another senior crime branch officer, “With the slowdown in real estate , gangsters are also finding it difficult to extort money from builders who are already in deep crisis.” While the mafia has begun extortion in Navi Mumbai and Thane, Mumbai’s extortion graph has gone down in the past few years. This year, the police hardly have records of threats from Dawood Ibrahim and Chhota Rajan gangs, with cases pertaining only to Ravi Pujari and Hemant Pujari. “We had successfully crippled the underworld activities in the past. We will not allow anybody to raise their head and regroup in Mumbai’s badland ,’’ a top police official said, requesting anonymity. In the late ‘90s, the crime branch had taken part in maximum number of encounter killings, which had claimed lives of top-rung henchmen and extortionists. The killings combined with firearms seizure and detentions under the stringent MCOCA had nearly wiped out the underworld. But some of the gangs, with their bosses ensconced abroad, continue to exist even today and the police are keeping a vigil on their activities.
Saturday, October 11, 2008
Credit crisis to hit realty projects
The US financial crisis, which has seen some big Wall Street giants collapsing, is bound to have a cascading effect on the Indian realty market, especially on the commercial sector that has already slowed down considerably over the past one year. According to industry sources, there could be a softening in the values of commercial property to the tune of 10% to 15% post-US meltdown. As a result, vacancy levels in commercial space across the country is expected to touch 10% by the end of this year from 6% last June. Marketmen see prices cooling and projects being held up because of the drying up of cheap funds. In fact, now raising funds from US and Western European investors, who accounted for a bulk of FDI in the sector, will be difficult.
Lehman Brothers had picked up 50% stake in Unitech's Mumbai project for Rs 740 crore. It had also invested $ 200 million in DLF Assets Ltd, which is formed by DLF promoters. Meanwhile, tighter liquidity at home is encouraging companies to defer their property bookings. The other factor that will pull the prices down is the enormous supply lined up. By early next year, Mumbai and its suburbs will add 15.4 million sq ft of office space, more than the commercial space now available at the Bandra-Kurla Complex or seven times the office space at Nariman Point. NCR will add more than 12 million sq ft in coming months. Real estate developers, who were thinking of raising money through an IPO in the near future, would now hesitate to go to the capital market. The realty companies which have strong internal accruals would sail through, but those dependent on debts and private equity would feel the pressure.
Realty stocks hit 52-week lows :
Mumbai, Sept. 29 Realty stocks took a tumble on the bourses and many logged their 52-week low on Monday.
The BSE Realty Index closed at a 52-week low at 3,407.87, down 5.26 per cent. It had dropped 16.79 per cent over the week from 4,095.50, and 31.78 per cent over the month. In January, the index clocked a high of 13,848.09.
Over the week, almost all real estate company stocks have taken a hammering, dovetailing the Sensex’s fall with the negative market sentiment at an all-time high, which this week is compounded by the wait for the US congressional nod for the $700-billion bailout package for bankrupt investment firms there.
Delhi-based DLF Ltd stock closed at Rs 350. 60, 5.12 per cent lower than its previous close. The DLF issue was priced at Rs 525. (52-week high – Rs 1,225, low Rs 329)
Lehman Brothers had picked up 50% stake in Unitech's Mumbai project for Rs 740 crore. It had also invested $ 200 million in DLF Assets Ltd, which is formed by DLF promoters. Meanwhile, tighter liquidity at home is encouraging companies to defer their property bookings. The other factor that will pull the prices down is the enormous supply lined up. By early next year, Mumbai and its suburbs will add 15.4 million sq ft of office space, more than the commercial space now available at the Bandra-Kurla Complex or seven times the office space at Nariman Point. NCR will add more than 12 million sq ft in coming months. Real estate developers, who were thinking of raising money through an IPO in the near future, would now hesitate to go to the capital market. The realty companies which have strong internal accruals would sail through, but those dependent on debts and private equity would feel the pressure.
Realty stocks hit 52-week lows :
Mumbai, Sept. 29 Realty stocks took a tumble on the bourses and many logged their 52-week low on Monday.
The BSE Realty Index closed at a 52-week low at 3,407.87, down 5.26 per cent. It had dropped 16.79 per cent over the week from 4,095.50, and 31.78 per cent over the month. In January, the index clocked a high of 13,848.09.
Over the week, almost all real estate company stocks have taken a hammering, dovetailing the Sensex’s fall with the negative market sentiment at an all-time high, which this week is compounded by the wait for the US congressional nod for the $700-billion bailout package for bankrupt investment firms there.
Delhi-based DLF Ltd stock closed at Rs 350. 60, 5.12 per cent lower than its previous close. The DLF issue was priced at Rs 525. (52-week high – Rs 1,225, low Rs 329)
Thursday, October 9, 2008
Ten mistakes equity investors generally make
1. Guided by greed Many investors have been losing money in stock markets owing to their inability to control greed and fear. The lure of quick wealth is difficult to resist, particularly in a bull market. Greed augments when investors hear stories of fabulous returns being made in the stock market in a short period of time and, thus, lose their hard-earned money in many cases. 2. Following herd mentality Following herd mentality is another reason for the investors’ losses. “It has been witnessed that the typical buyer’s decision is heavily influenced by the actions of his acquaintances, neighbours or relatives. So, if everybody around is investing in a particular stock, the tendency for potential investors is to do the same. But this strategy may backfire in the long run,” says Ashish Kapur, CEO, Invest Shoppe India Ltd.
3. Resorting to speculationInvestors also face losses because they speculate and buy shares of unknown companies. They should, therefore, avoid relying on random tips and go for long-term gains only. 4. Lack of research Proper research should be undertaken before investing in stocks. But this is rarely done. Investors generally go by the name of a company or the industry they belong to. But this is not the right way of putting one’s money into the stock market. “Therefore, if one doesn’t have time or temperament for studying the markets, one should always take the help of a suitable financial advisor,” says Kapur.
4. Creating leveraged positions Many investors suffer from creating heavy positions in the futures segment without really understanding the risks involved. Instead of creating wealth, however, these investors burn their fingers very badly in case the sentiment in the market reverses. 6. Panic selling In a bear market, investors panic and sell their shares at rock bottom prices. Trading on the bourses was suspended on May 17, 2004, May 18, 2006 and recently on January 22, 2008. Investors who had taken speculative positions lost heavily when blood was on the street. Even investors who had the capacity to hold on to their investments, lost faith in the markets and sold their investments in a hurry, thus incurring heavy losses.
7. Timing the market Many investors try to time the market. But this has not proven to be a great strategy. Historically, in fact, it has been witnessed that even great bull runs have shown bouts of panic moments. The volatility witnessed in the markets has inevitably made investors lose money despite the great bull run. Therefore, only prudent investors who put in money systematically, in the right shares and hold on to their investments patiently, have made outstanding returns. So it’s not ‘timing the market’, but ‘time in the market’ which creates wealth. Hence, it is prudent to have patience and always keep a long-term broad picture in mind. 8. Putting all eggs in one basket Another mistake which investors generally make is non-diversification of their portfolio. They generally put all their money in limited and favourite stocks which are in momentum. So, investors should diversify their portfolio across industries and size of the companies. Also, it is important to diversify across asset classes – equities, real estate, bonds, commodities, cash etc.
9. Avoiding financial planning Investors also do not apply financial planning practices in their investment approach. They should follow an asset allocation model and invest only in long-term funds in the equity markets. They should also keep rebalancing their overall portfolio from time to time to keep their exposure to equity markets at the desired ratio of the total portfolio. 10. No monitoring of portfolio We are living in a global village. Any important event happening in any part of the world has an impact on our financial markets. Hence, we need to constantly monitor our portfolio and keep affecting the desired changes in it. If one can’t review one’s portfolio due to time-constraint or lack of knowledge, they should take the help of a financial advisor.
Sunday, October 5, 2008
Promoters and Builders Association of Pune – PBAP.
The History of Promoters and Builders Association of Pune – PBAP.
The Promoters and Builders Association of Poona was set up on 6th May 1982, under the Chairmanship of Mr. Ramkumar Rathi. In the day of the Real Estate boom. a few Developers, including Om Prakash Arora, Shantilal Mutha, PA. Inamdar and others, felt the need for Real State Developers to form a cohesive body that would provide the hitherto loosely organised group of Pune Real Estate Developer, a forum and direction. This association was formed to promote quality consciousness amongst its member and to create an awareness of Government Legislations.The PBAP believes that professionalism holds the key to the developer and upliftment of the Real Estate Industry. To achieve this objective , the association there for has a stringent procedure of accepting members. only those who have a proven track record are allowed to be member criterion precludes those to be member of the Association. This Membership criterion precludes those individuals who construct single building and whose objective are purely to maximize the returns on a single project often at a cost of not delivering what is promised to the customer.In addition to talking on professional Real Estate Developers, the PBAP has a Code of Conduct, which is mandatory on its member to follow. The Code of Conduct is wide ranging and covers almost all areas of the Real Estate business, it aims to establish fair dealings with the customer, maintain the honor and dignity of its members, and secure a sprite of friendly cooperation between members.It establishes a code beginning with the title of the property under development and has wide ranging guidelines that deal with construction quality, labor welfare, amenities, refund of money, defect liability and so on. The PBAP takes its Code of Conduct seriously and the action take against defaulting members can amount to even discontinuation of membership. The PBAP today has come to be know to represent a dependable body of Builders and Promoters. The PBAP has divided the stakeholders into 3 groups. These three groups are the Customers, The City , and the PBAP Member. in the 20 plus years of its existence the PBAP has already undertaken numerous initiative with each of the stakeholder groups.
PBAP ties up with ICICI:
To offer home loans at 10 per cent. In a bid to attract flat buyers during the heavy home-loan interest rate regime, real estate developers in Pune have decided to bear certain burden of the interest rate for first 24 months. The Promoters and Builders Association of Pune (PBAP) has tied up with ICICI Bank to offer home loans at 10 per cent rate of interest, which will be applicable for 24 months after booking.
As per this agreement, the ICICI will charge 12.5 per cent rate of interest on home loans, out of which, the flat buyer will pay for 10 per cent of interest rate while the remaining would be taken care by the respective real estate developer.
PBAP realty fund to help small builders, elevate industry standards:
The Promoters and Builders Association of Pune (PBAP) announced the launch of the first-of-its-kind Realty Fund. Created by investments from its members, the PBAP Realty Fund, it is for the first time in the country that an association has created a realty Fund. The fund is also set to enable smaller developers to access equity funds that were hitherto unavailable to them. The fund has been established with an aim to elevate the standards of the industry with the provision of equity participation to developers of small projects, who often get overlooked by other equity funds on account of scale and other eligibility criteria. The first series of the PBAP Realty Fund has a total corpus of Rs 25 crores and has been fully subscribed by around 50 of the PBAP members. The investments made by the fund will first give priority to the contributors to the fund, followed by other members of the PBAP and lastly to projects of non-PBAP members. The PBAP has also created a separate screening committee comprising professional chartered accountants, lawyers and architects who will look at the viability of the projects. The investment committee of the fund, which comprises industry stalwarts, will assess the financial feasibility of projects under consideration. The association feels that the fund will help expose smaller developers to the global reporting norms, help uplift the industry, enable greater transparency and raise the standards all round. Speaking at a press conference.
PBAP Mega Property Exhibition 3rd to 5th October '08:
From 3rd to 5th October 2008, The Promoters and Builders Association of Pune (PBAP) is organizing its annual real estate exhibition at SSPMS Ground, near Le Meriden, in Pune.The main attraction of this exhibition is the "special offer offer from ICICI Bank." According to the news PBAB, ICICI tie up to offer cheaper home loans: PBAP has tied up with ICICI Bank to offer home loans at 10 per cent rate of interest to buyers, which will be applicable for 24 months after booking.As per this agreement, the ICICI will charge 12.5 per cent rate of interest on home loans, out of which, the flat buyer will pay for 10 per cent of interest rate while the remaining would be taken care by the respective real estate developer.
The Promoters and Builders Association of Poona was set up on 6th May 1982, under the Chairmanship of Mr. Ramkumar Rathi. In the day of the Real Estate boom. a few Developers, including Om Prakash Arora, Shantilal Mutha, PA. Inamdar and others, felt the need for Real State Developers to form a cohesive body that would provide the hitherto loosely organised group of Pune Real Estate Developer, a forum and direction. This association was formed to promote quality consciousness amongst its member and to create an awareness of Government Legislations.The PBAP believes that professionalism holds the key to the developer and upliftment of the Real Estate Industry. To achieve this objective , the association there for has a stringent procedure of accepting members. only those who have a proven track record are allowed to be member criterion precludes those to be member of the Association. This Membership criterion precludes those individuals who construct single building and whose objective are purely to maximize the returns on a single project often at a cost of not delivering what is promised to the customer.In addition to talking on professional Real Estate Developers, the PBAP has a Code of Conduct, which is mandatory on its member to follow. The Code of Conduct is wide ranging and covers almost all areas of the Real Estate business, it aims to establish fair dealings with the customer, maintain the honor and dignity of its members, and secure a sprite of friendly cooperation between members.It establishes a code beginning with the title of the property under development and has wide ranging guidelines that deal with construction quality, labor welfare, amenities, refund of money, defect liability and so on. The PBAP takes its Code of Conduct seriously and the action take against defaulting members can amount to even discontinuation of membership. The PBAP today has come to be know to represent a dependable body of Builders and Promoters. The PBAP has divided the stakeholders into 3 groups. These three groups are the Customers, The City , and the PBAP Member. in the 20 plus years of its existence the PBAP has already undertaken numerous initiative with each of the stakeholder groups.
PBAP ties up with ICICI:
To offer home loans at 10 per cent. In a bid to attract flat buyers during the heavy home-loan interest rate regime, real estate developers in Pune have decided to bear certain burden of the interest rate for first 24 months. The Promoters and Builders Association of Pune (PBAP) has tied up with ICICI Bank to offer home loans at 10 per cent rate of interest, which will be applicable for 24 months after booking.
As per this agreement, the ICICI will charge 12.5 per cent rate of interest on home loans, out of which, the flat buyer will pay for 10 per cent of interest rate while the remaining would be taken care by the respective real estate developer.
PBAP realty fund to help small builders, elevate industry standards:
The Promoters and Builders Association of Pune (PBAP) announced the launch of the first-of-its-kind Realty Fund. Created by investments from its members, the PBAP Realty Fund, it is for the first time in the country that an association has created a realty Fund. The fund is also set to enable smaller developers to access equity funds that were hitherto unavailable to them. The fund has been established with an aim to elevate the standards of the industry with the provision of equity participation to developers of small projects, who often get overlooked by other equity funds on account of scale and other eligibility criteria. The first series of the PBAP Realty Fund has a total corpus of Rs 25 crores and has been fully subscribed by around 50 of the PBAP members. The investments made by the fund will first give priority to the contributors to the fund, followed by other members of the PBAP and lastly to projects of non-PBAP members. The PBAP has also created a separate screening committee comprising professional chartered accountants, lawyers and architects who will look at the viability of the projects. The investment committee of the fund, which comprises industry stalwarts, will assess the financial feasibility of projects under consideration. The association feels that the fund will help expose smaller developers to the global reporting norms, help uplift the industry, enable greater transparency and raise the standards all round. Speaking at a press conference.
PBAP Mega Property Exhibition 3rd to 5th October '08:
From 3rd to 5th October 2008, The Promoters and Builders Association of Pune (PBAP) is organizing its annual real estate exhibition at SSPMS Ground, near Le Meriden, in Pune.The main attraction of this exhibition is the "special offer offer from ICICI Bank." According to the news PBAB, ICICI tie up to offer cheaper home loans: PBAP has tied up with ICICI Bank to offer home loans at 10 per cent rate of interest to buyers, which will be applicable for 24 months after booking.As per this agreement, the ICICI will charge 12.5 per cent rate of interest on home loans, out of which, the flat buyer will pay for 10 per cent of interest rate while the remaining would be taken care by the respective real estate developer.
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