Real estate developers continue to restrict the launch of latest residential project.

Real estate developers in all over the country including top six cities such as; Chennai, Hyderabad, Mumbai, NCR,, Pune and Bengaluru are continue to restrict the launch of latest residential project because of oversupply and much more inventory from last 8 quarters, as per the statement of Samantak Das, who is the Chief Economist as well as Director research of Knight Frank India, which is property advisory firm. Most of the launches are from the January to March 2015 quarter however; in the same period last year the sales volume was remain same. According to the Index of Real Estate Sentiment for the duration of January to March in 2015, the new launches record the marginal improves in last six months.

The same report suggested that the majority of the real estate developers and financial institutions foresee the prices remain in the coming six months. Real estate stakeholders were bullish for the residential sales before the general election in the year 2014. The real estate sentiments have dropped in last one year and so the sales volume as well. Only about 15 per cent of the respondents are expecting the residential sales will get the better move in upcoming months. It is expected that the increase in prices will reduced to less than half in the third quarter of 214.  In present only 33 per cent respondents believe that the property prices will increase the coming months.

It is expected that soon real estate market will witness the fresh supply as we have seen in 2014 and the same trend will continue in 2015.Whereas; there will be drop in the transaction volumes in the first quarter of 2105 and it was approx. 15 per cent drop in the absorption of office and commercial spaces, in short we can say that it was due to the lack of quality supply of office space supply however; some big ticket transactions are still pending. With the reports its clear that real estate market will see the fresh supply in coming years and the majority of the supply will be by stakeholders who had inventories. They have also expressed their positive look towards the rental appreciation for the duration of next six months.

The real fact is that its looks like that economy is revving up with REITs as it has led 68 per cent of the respondents to believe that the latest supply in the office and commercial supply will witness the uptake in the upcoming months. The real estate sentiments in reference to the office space and rental appreciation are the highest price from last six quarters. With significant it’s clear that 85 per cent of the respondents want the rentals to see them as increase going forward.

The stakeholders from all over the country are continue to be optimistic about the future of real estate market in the country as west and north zones are experiencing the dip in the real estate sentiment levels during the first quarter of 2015 compared to the last quarter, whereas; the east and south zones are expecting the revival in real estate sentiment.

Home sales are down by 8 per cent

As per the latest reports of firm Liases Foras, the sales of Home are down by 8 per cent in top six cities of the country over the year-ago quarter, but India rose 2 per cent sequentially in the last quarter.

After the recent reports it’s clear that year-on year basis the sales of home are fell by 37 per cent in the NCR region while the sales of home was up by 8 per cent in the Mumbai. Whereas; Hyderabad was emerged as the best performing real estate market with more than 46 per cent year-on–year jump in the sales of home and it was followed by the Pune where sales was up by 22 per cent, in Bengaluru the home sales was increased by more than 5 per cent and in Chennai the home sales was up by 40 per cent.

In the report of quarter-on-quarter basis it is recorded that the sales in Chennai and Mumbai were up by 24 per cent and 25 per cent respectively and the sales was up by 31 per cent in Bengaluru whereas; the sales were down by 27 per cent in NCR region. The price of properties in Hyderabad, the Mumbai Metropolitan Area, NCR, Pune, Bengaluru and Chennai remained stable in the last two years on the year-on-year and quarter-on-quarter basis.

After analyzing the latest property trends it’s clear that unsold housing inventory level is so much up in the top six cities and it’s of about 853.09 million sq ft or about 650,000 apartments between the period of January to March quarter however; in the previous quarter it was about 832.09 million sq ft. Among all the real estate market, NCR had the highest unsold inventory with the 321.68 million sq ft area and it is expected it will take more than 71 months to sell these unsold inventories. However; Mumbai Metropolitan Region has the 192.27 million sq. ft as the inventory which will take about 46 months to be sold these spaces. And Bengaluru is among the best performing real estate market among the larger ones which have more than 152.43 million sq ft area and it is expected that it will take more than 27 months to sell them.

As per the reports of Liases Foras, the new supply in the current quarter rose about 21 per cent over the previous quarter which was about 36 per cent because the new supply came in the range of Rs 50 lakh to Rs 1 crore followed by 29 per cent in the range Rs 25 lakh to Rs 50 lakh. Reports stated that the units of two bedrooms constituted 36 per cent in the new supply which was followed by three bedroom units at 35 per cent. MMR and Bengaluru have 28 per cent and 31 per cent of the new supply respectively.

India’s largest realty firm is going to raise approx. Rs 3,600 crore

As per the recent reports, DLF, the India’s largest realty firm is going to raise approx. Rs 3,600 crore in current quarter by issuing the securities, which is backed by its IT-SEZ and it is the part of DLF’s strategy to replace the debt of higher interest rates. The same report stated that on Tuesday, DLF rallied about 2.27 per cent in intraday trade. However; the stocks must gains to settle on 0.7 per cent which is higher at Rs 139.3.

DLF is also planning to issue its first ever REIT (Real Estate Investment Trust) in the present fiscal to monetize its commercial assets. According to the statement of Ashok Tyagi, who is Chief Financial Officer of DLF, “Currently we are actively working with different rating agencies and investment bankers for CMBS issue (Commercial Mortgage Backed Securities). The more he added that we don’t have any kind of time frame to launch the Commercial Mortgage Backed Securities, but sources are indicating that DLF will launch its CMBS in next two months.

In February 2015, DLF was set to launch its CMBS of about Rs 3,600 crore as a part of SEZ business to improve its quality of debt. In present the company is waiting for SAT (Securities Appellate Tribunal) judgment on the SEBI’s order that had ban DLF from accessing the capital market for 3 to 4 years.

In March 2015, Securities Appellate Tribunal had passed the order on the basis of ‘majority order’ by imposing the ban for next three to four years from the side of SEBI. In 2014, the DLF had launched the country’s first ever CMBS and was successfully raised more than Rs. 900 crore in two rounds of CMBS with the help of two shopping malls in Delhi. Currently the net debt of DLF is about Rs 20,336 crore as per the data on December 31, 2014 out of which Rs 14,000 crore are from the rental arms.

It is expected that soon company will monetize its commercial assets to list REITs (Real Estate Investment Trusts), as per the statement of Tyagi. Whereas; in current fiscal DLF also want to float its first REIT but currently it is subject to receive the requisite approvals. The more he added that Real Estate Investment Trusts now become viable as government has clarified that MAT (minimum alternate tax) will be applicable on the time of actual transfer of these units. Apart from all that the DDT (dividend distribution tax) will continue to be an alternative for some of the real estate players who are looking for REITs. In simple terms we can say that there are 4 to 5 pilot REITs are about to launch in this fiscal year.

It is clear that REITs will help to unlock the value of completed and leased assets which can be used for debt and capex reduction. The DLF is planning to raise the Rs. 3,000 crore via PE (private equity) on each project level, as per the statement of CFO of DLF. However; the discussion is underway with some of the private equity players, but still there are no timeline for such PE deals. Apart from that company is planning to divest around 50 per cent stake in four of the latest projects to PE firms. Now its clear that DLF is looking for the way to raise the funds through PE routes to boost its cash flow because there have been sluggish nature in the sales of houses in last year.

In past one to two year the DLF has land bank from about 300 million sq ft out of which approx. 50 million sq ft is under construction and due to that the share price went up to 1.25 per cent which is Rs 138 piece on the BSE index with market cap of Rs 24,644 crore.

PropTiger.com acquires Makaan.com

PropTiger.com realty portal, which is backed by News Corp through its own Singapore based firm Elara Technologies has recently acquired India’s leading online property listings platform which is Makaan.com. It offers perfect platform to end users and real estate investors for property listing as well as transactions in India.  Now this acquisition will bring the PropTiger.com and Makaan.com on the same online real estate platform to provide end-to-end services to those who are interested in property buying no matter they are property brokers, property agents, end users or investors, real estate developers, banks and even private equity investors.

In less than one month time its second acquisition by PropTiger.com as earlier it has acquired OoBI (Out of Box Interaction), which was Bangalore-based digital interaction design company. According to the Co-founder & CEO of Proptiger.com, Dhruv Agarwala, “In present we are working on business expansion and integration with a sole purpose to bring out synergies immediately, but for next few months we will operate both companies PropTiger.com and Makaan.com separately”.  However, at PropTiger.com our main strength is the end to end services for primary segment whereas; with Makaan.com, now we are able to develop the personal relation with more than 40,000 brokers in more than 50 major cities of country and it also has control over the secondary market in real estate sector.

In November, Rupert Murdoch’s News Corp, which is media baron had acquired about 25 per cent stake in Elara Technologies which is Singapore based company and it is the parent company of PropTiger.com, which is Noida based online real estate marketing platform with the valuation of $ 30 million or Rs 186 crore whereas; it has real valuation at $ 120 million, or Rs 744 crore. In this round of acquisition the existing investors such as; Horizen Ventures, SAIF Partners and Accel Partners had infused more than $ 7 million or Rs 43 crore into the company.

China is one of the most innovating and fastest growing real estate market

We all are aware about the fact that China is one of the most innovating and fastest growing real estate market and real estate developers of China prove it, when they constructed 57 storey skyscrapers in just 19 working days. Here are the details of Mini Sky City of China;

Story behind 57 storeys building in just 19 working days:

One of the China based construction company is claiming that they had completed the construction work for 57 storey skyscraper in just 19 days at central China and its world’s fastest construction in the world ever.

Rectangular Mini Sky City:

The Broad Sustainable Building Co, China based Construction Company put up the rectangular as well as glass and steel structure for Mini Sky City through modular method and by assembling three floors on daily basis in the main provenance of Hunan, the capital of Changsha, said the VP of company Mr. Xiao Changgeng. The Broad Sustainable Building Co is ambitions to assemble the world’s tallest and most attractive skyscraper of 220 floors in just three months and the work on Mini Sky City will be separated by winter weather. Recently the video of assembly has become very popular in China on various video-sharing sites as it was first uploaded on YouTube.

Uniform architecture:

These kinds of modular architecture are very useful for the high rise apartment’s building blocks in US and UK, but according to some of the critics this method can lead to city-scrapes with overly uniform architecture. However; Liu Peng who is the Associate director of ARUP Beijing, the Engineering consulting firm stated that this method is very efficient and useful in the development as it is safe and reliable way to build skyscrapers in very less duration.

Details about Mini Sky City:

This Mini Sky City has more than 800 apartments and 19 atriums with the office space for more than 4,000 people and it will go for sale from May 2015. Whereas; according to the real estate experts the building structure and foundation is reliable and safe withstand earthquakes.

In the finishing process, one of the Changsha based company has spend more than 4 months to fabricate the building in 2,736 modules before the starting of construction. As per the reports, the first 20 floors were completed in 2014 and the rest 37 floors were built in the duration of 19 working days which was from January 31, 2015 to February 17, 2015. With the advanced technology the company has constructed two to three floors in day.

Current status of building:

Now the company is waiting for the governmental approval or its 220 floor Sky City at the location Changsha.

Central government closes about 62 toll plazas

In the recent action, central government informed in Lok Sabha that they has closes about 62 toll plazas, which are on highways and expressways in public interest after the recovery of cost of capital.

During the period of question hour in Lok Sabha, Pon Radhakrishnan, the minister of State for Road Transport and Highways, stated that “In public interest our government has closed about 62 toll plazas on national highways and expressways after the recovery of capital cost”.

All of these toll plazas were located in Karnataka, Madhya Pradesh, Uttar Pradesh, Bihar, Gujarat,  Kerala, Andhra Pradesh, Tamil Nadu,  Maharashtra, Telangana, Chhattisgarh, Manipur, Odisha and Rajasthan. Recently, government launched a web portal to make sure that all the road users can access the information that now onwards concerning toll plazas which are on the expressways and national highways are now under National Highway Authority of India and Road Transport and Highways Ministry.

The more he added that the total revenue collected from all of these toll plazas are about more than Rs 9283.23 crore for the year 2012 to 2013 whereas; Rs 11,436.59 crore for the year 2013 to 2104 and about Rs 14,214.48 crore for the year 2014 to 2105.

However; the information also includes the required fee rates for the different sets or categories of vehicles at any of these  toll plazas, as well as the information about the facilities available at troll plaza and the emergency contact numbers.

Housing.com buys online discussion forum IREF

Recently, a real estate portal Housing.com buys online discussion forum IREF (Indian Real Estate Forum) with a aim to provide and improve the content which can help the real estate investors and home buyers to make choices which and retain or attract the first time buyers in the retail real estate market.

This Mumbai-based real estate portal is financially backed by Japan’s SoftBank and after the deal it is expected that Housing.com will pay Rs 8 crore to acquire Indian Real Estate Forum that have a base of more than 1.5 lakh active users. Apart from that the first two acquisitions of company is expected to close in next one to two months.

In December 2014, Housing.com has  received a funding of about $ 90 million or Rs 560 crore from Japan’s SoftBank and after that they has set apart a corpus of Rs 200 crore for acquisitions. According to the officials of Housing.com, after the acquisition IREF will function  independently under the charge of Ravish Naresh who is a cofounder at Housing.com.

The forum is well known real estate platform for its unbiased and transparent project information’s, developers information’s, localities information’s, agents or brokers information’s, and plots information’s. According to officials of Housing.com we are in the last stage to acquire PropEquity and the deal is of Rs. 80 crore, but executive of PropEquity are saying that they have declined the deal.

While coming to desired changes in IREF, it is expected that there will be few changes in the section of IREF as Housing.com is planning to answer each and every query related to the builders, projects, brokers and agents. Whereas;, the Housing.com also planning to buy PropEquity, so that it can attract more and more business users as it is well known fact that PropEquity is a real estate data it its most of the clients are PE developers,investors and financial services who love to spot the market trends to generate the insights about real estate market.

Free office space for Indian company who is looking forward to setting up business

Nottingham is counted as the one of the lesser known or popular cities in the United Kingdom. The city has now come forward and announced that they will be offering free office space for Indian company who is looking forward to setting up business in that region. This office space will be completely free of cost for a period of two years. The main reason behind this announcement is solely to encourage all the Indian companies to look at London not just as any business location and more forward with that. As far as the city is concerned, the City Council of Nottingham comes under the East Midlands region of the United Kingdom.

The Nottingham city:

According to Nat Puri who is a Punjab-born businessperson as well as ambassador of Nottingham, the city is not limited to be only considered as the ultimate destination for setting up business but being cost effective, makes the city a much more fun place to stay in contrary to what other Indians feel, I came to the city just like that but ended up falling in love with the space. Representing the Nottingham City Council, Mr. Puri stated that the announcement is not a rumor but it is to encourage people to come to the city and own a 250 square meter office space, available in the heart of the Nottingham city. The business owner does not have a pay for atleast a year or two for that acquired office space. This move is towards breaking out the inertia and encourages Indian companies to explore the business options in the city. It is all about exploring out the business opportunities in the city.

According to Nottingham City Council’s Director of Economic Development, Chris Henning, this move is about providing soft balance for Indian companies. He further added that the city offers attractive investment platform for companies especially from India. This all can be attributed to the innovative businesses, which are developing faster than before apart from academic interest, making the city ultimate gateway for Traders in Europe. This is a long-term strategy targeted towards Indian businesses led by the council and comprises of companies like University of Nottingham and Nottingham Means Business. The main strategy is about building trust through Investment Bridge, which has proven to attract Indian businesses.

Chris also made another announcement to the University of Nottingham that requires them to work along with the Indian Consul General’s office located in Birmingham. According to Shuchita Sonalika, who is the Director and Head of CII’s UK operation; there has been a sudden increase in the interest shown by the Indian companies towards exploring business opportunities in some of the less popular area of the United Kingdom. Reports suggest that even Air India is looking forward to expanding their business around some of less known placed in the UK and might look into East Midlands airport as their hub for starting new flights. Nottingham city is known for having the highest employment rate in terms of knowledge-based services. The city council is focusing on the Nottingham city to make their regional business engagement strong.

Supertech to raise Rs 500 crore

The leading real estate firm Supertech is planning to list its six of the rented as well as operational malls with REIT (real estate investment trust) to raise Rs 500 crore in the duration of next two years which is the year 2015 and 2016. As per one of the latest survey Supertech has more than 2 million sq ft of retail space in its six malls out of which two are in Ghaziabad and one each is in Noida, Rudrapur, Haridwar, Rudrapur, and Meerut.

However there are few products under construction by Supertech. Currently Supertech is in discussion with one of the Singaporean company which has experience in setting up the real estate investment trust in various real estate markets. As per the statement of officials we are in the starting stage for the listing of our assets and REITs own the properties to get the rental income and distribute it among investors. For real estate investors they provides high dividend with a liquid option where one can invest in the real estate sector.

Most of the real estate firm in the country and as well as some of the private-equity funds are showing interest to set up the REITs because stock market regulator SEBI (Securities and Exchange Board of India) notified its rules to list the trusts in September 2014 with a aim to view and attract more and more funds in a transparent manner, so that real estate developers can pool the money for the development of new projects. But till now no REIT is listed in India and it’s just because the lack of clarity in taxation process. With a aim to encourage local listing, central government is decided to do some capital gains in the favor of sponsors in the Union budget of 2015 at the time of listing of REITs on rental income.

However the capital gain will be applicable for all the direct transfer of same or different assets to any kind of these trusts. But still the budget is not offering any clarity on dividend distribution t as. The major real estate developers such as; RMZ, DLF, Embassy Office Parks, Ambience and many others with PE firms such as; Kotak Realty Fund, Red Fort Capital and Blackstone is known for listing their assets as REITs. They have develop the acquired rent producing assets in past few years as it could attract more than $1 billion or Rs 6,280 crore in 2015 witht eh additional tax benefits announced in the union budget of 2015, said the property consultant from JLL India. However most of the property experts said that in near future more exemptions can be made by the state as well as central government to make its segment more attractive for real estate players.

But it’s clear that the Capital gains taxes will exempted on the transfer of any SPV (special purpose vehicles set up to carry new real estate projects) share by different or same sponsors but at the MAT ( minimum alternate tax) is still applicable. If the minimum alternate tax will be so it will make REITs more attractive for real estate developer, says Shweta Aggarwal, Director of BMR & Associates.

Real estate market declined by 6%

After surveys it’s clear that the investment in real estate sector by various public and private sources in all over the country has declined by six per cent in last four years of duration. It is clear that for the year 2013 to 2014 the investment in real estate sector in country fell to Rs. 14.30 lacs crore whereas; for the year 2011 to 2012 it was approx. Rs 15.2 lacs crore.

After the survey of Assocham, real estate experts find that more than 76 per cent of total investment in real estate was attracted by the various real estate projects and rest was from non-starter real estate projects in the duration of 2011 to 12 and 2014 to 15.

State wise analysis of Assocham:

After state wise analysis it is clear that for the period of 2014 to 2015 the top five states by the highest share in real estate sector in terms of investments are 21 per cent by Maharashtra, 14 per cent by Uttar Pradesh, 13 per cent by Gujarat, 12 per cent by Karnataka and 8 per cent by Haryana. Coming to the CAGR (compounded annual growth rate) the Assam has witnessed the maximum growth rate in terms of attracting the rela estate investments for the year of 2011 to 2012 and 2014 to 2015 which was 82 per cent followed by 19 percent by Bihar, 17 per cent by Odisha, 16 per cent by Uttar Pradesh and 12 per cent by Uttarakhand.

However; the states which recorded the maximum fall in real estate investments are 40 per cent in Jharkhand, 37 per cent in Himachal Pradesh, 29 per cent in Madhya Pradesh, 16 per cent in Haryana and 7 per cent in Gujarat. The survey was draw by the feedback of 100 big and small companies who are active in the sector of real estate in top cities of the country such as; Chennai, Indore, Lucknow, Mumbai, Delhi, Bangalore, Jaipur, Ahmedabad, Hyderabad and Pune.

Most of the real estate developers are veering the poll and it’s clear that they are down just due to the lack of focus of government from improving demand or supply in real estate sector. Whereas; the survey indicated that the previous and latest Union Budgets was disappointed the real estate sector with the exclusion of the new plan ie. to develop the 100 Smart Cities in the country. Apart from all that the increase in the rate of service taxes by 14 per cent makes the real estate sector but more expensive and it has direct impact on the sales and it is clear that it will make down the real purchasing power of average investors and end users in country.

All the real estate developers are have concern about the increase in excise duty on goods and service tax on construction and also increased on petrol and diesel prices with increase in freight rates on the cement which lead the construction cost in real estate sector. Now there is need to speeding up procedural requirements in the field of real estate sector which have just passed through the single window clearance system from different approvals to increase the operational efficiencies and cost of investment along with the stable and predictable policy framework in real estate sector.