Kingfisher House on sale

Located near the domestic airport at Mumbai’s Vile Parle area, The headquarter of defunct Kingfisher Airlines popularly known as the Kingfisher House is being put up for e-auction by State Bank of India through which interested buyers will bid for it online. The base price for this multi-storey building, with a built up area of over 17,000 sq.ft, has been set at Rs.150 crore. The property is expected to generate interest among corporate houses and retailers, mainly because of its proximity to the highway.

Although not a very large property, Kingfisher House will find buyers mainly because of its strategic location for many businesses specially related to aeronautics, airlines-related businesses, logistics or even corporate houses and banks.

However, real estate advisers feel that the price of the property as quoted by the auctioneer is on the higher side. It is way above the market rate around the area where the Average commercial property rates in and around Vile Parle is at about Rs.28, 000 per sq.ft, according to various online property listings.

In February 2015, a consortium of 17 banks led by the country’s largest public sector lender State Bank of India (SBI) had taken possession of Kingfisher House in a bid to recover loans granted to the airline. Last month, SBI Capital Markets Ltd (SBICap), an investment bank unit of SBI, issued a public notice saying the property would be sold through an e-auction.

As per the notice for this e-auction, Kingfisher House also has unpaid dues of property tax of Rs.67 lakh.

Bollywood Celebrities Prefer to Invest in Tax Free Bonds

Legends of Bollywood have been fuelled by the overwhelming star power of celebrities such as; Akshay Kumar, Kareena Kapoor, Aishwarya Rai, Ranbir Kapoor and Amir Khan. Few of us know that Indian bond market is fully or partly fuelled by a generous smattering of investment by these superstars. It is reported that Akshay Kumar with age 48 years have earnings of Rs 128 crore in the year 2015 and due to that he is one of the big and most regular  investor in fixed income instruments as recently he has invested huge amount in IRFCs (Indian Railway Finance Corporation) tax-free bonds. When IRFC issued its bonds with Rs 4,532-crore and it was offerings 25 percent reservation for high net worth individuals and this category was used twice on Day One of the opening of IRFCs bond issue. As Aamir Khan and Akshay Kumar with earnings of Rs 104 crore and Kareena Kapoor Khan with earnings of Rs 53 crore have also also put their money into IRFC bonds, as per the sources.

According to Hiten Shah, Director at SK Capital Advisors, “Now Bollywood celebrities have realized that fixed return instruments are more secure and attractive as they offer them tax-free way to invest more money for long term such as; for 15 to 20 years, whereas; if they will go for fixed deposits, so it will be taxable and are for shorter tenure”. The more he added that most of the celebrities believe that on the time of liquidity requirement, they can use these instruments by selling them into the market and it will help them to generate additional profit through capital appreciation over and above the interest rate if the interest rate falls. These days even young celebrities such as; Ranbir Kapoor (Age 33) have the earnings of Rs 85 crore and currently he is investing in the bonds, former Miss World has invested in tax-free instruments such as;  in the recent issue of NHAI (National Highway Authroity of India).

Apart from that on the other side, for most of the celebrities real estate is the most preferred investment as some of them have bought living pads in Dubai, New York and London. Now they prefer to invest in the stocks, bonds, private equity funds and in mutual funds, as per the reports. However; some of the celebrities such as; Salman Khan and Amitabh Bachchan have invested in the stocks of listed and unlisted companies. These cine stars prefer to make their investments after the consideration of CA and other professional and they also invest through wealth managers and relationship managers of big banks and financial firms.

In the latest offering of IRFC, now even single investment of more than Rs. 10 lakhs will categorized as non-retail. And in this category¸ the investments of 10 year tenure will provide the interest rate of 7.07 percent per annum, whereas; for 15 years and 20 years tenure the interest rates are; 7.28 percent and 7.25 percent respectively. Whereas; FDs for the duration of 5 years in SBI provides 7 percent interest rate, after paying 30 percent tax, which means you will get 5 percent less net income.

State Bank of India

According to latest reports, in Odisha SBI, a public sector lender had advanced home loans of worth Rs 400 cr for year 2014 – 2015 and now country’s largest public sector lender SBI (State Bank of India) has set a target to extend Rs 500 cr worth home loans in Odisha for the year 2015 – 2016.

As per the statement of the BVG Reddy, Chief General Manager of State Bank of India, Bhubaneswar circle, “At the end of November 2015, our bank has already extended Rs 280 crore home loans and at this point of time we are expecting the closer with Rs 500 crore advances to the sector. This public sector lender had advanced a home loan of worth Rs 400 crore in the year 2014 – 2015 however; the NPA rate for the same sector was about one to two per cent. State Bank of India has extended its finance portfolio with tune of Rs 3325 crore which comes under home loan portfolio on the current date.

According to reports, SBI is all set to organize its own property expo “Utsav -2015”on date December 11 to 13 at Bhubaneswar. In present, about 40 real estate developers and builders which are affiliated to CREDAI (Confederation of Real Estate Developers Associations of India), NAREDCO (National Real Estate Development Council), Real Estate Developers Association of Odisha and Association For Odisha Real Estate Developers are seems to participate in the property expo “Utsav -2015”.

Last year at the same event people has booked more than 200 housing units and loan of Rs 30-40 crore were sanctioned. Currentl y, SBI is operating in more than 800 branches in the state Odisha and has an NPA of more than 6 percent with maximum slippages in the agriculture sector, education loans, micro, small & medium enterprises (MSME) sector and others.

Air India – Real Estate

Air India, the national carrier is ready to take off its plan for real estate monetization, as AI has finalized a deal to sell its 4 apartments in South Mumbai. After three years of gap, again Air India has finally started to sell its properties in Mumbai. Following by many unsuccessful attempts, this national carrier has finalized made a deal with public sector lender State Bank of India (SBI) to sell its 4 apartments, which is located in south Mumbai and the price of deal is Rs 88 crore.

Recently, the Union Cabinet approved the sale of these properties and after that now it is expected that apartments will be handed over to the State Bank of India in the month of December 2015, as per the statement of a top official. As per the statement of an Air India spokesperson, “This is first time when we have actually made deal as per terms and conditions laid in the turnaround plan”.

All the four apartments are 3 BHK flats in Sterling Apartments with measuring carpet area of 2,033 sq ft and the property is located at Peddar Road, South Mumbai. These properties were the houses of top executives of Air India, but now these key officials of national carrier have relocated to New Delhi and after that these apartments were identified as surplus and were put up for deal with SBI.

Turnaround Plan of Air India:

For its turnaround plan, Air India also sought cabinet approval to sale its land in Kolkata which is worth Rs. 25 crore and a residential property in Mauritius (worth Rs. 3.5 crore) to the NBCC (National Building Construction Corporation). Air India, needs to sell the property or real estate assets of Rs 5,000 crore to repay the high-cost debt as well as to generate few more funds for further investment and to meet the working capital, as a part of its turnaround plan of AI. It is expected that in near future AI will sell parcels of land as well as residential and commercial properties in Indian and abroad.

Air India

Air India is surviving on a bailout package approved by the government in 2012. As part of its turnaround plans to reduce a debt burden of 40,000 crore, the grieving PSU plans to sell real estate assets worth Rs 5,000 crore to generate funds. Executing on the plans, AI has decided to sell four residential apartments in Mumbai to State Bank of India (SBI) for Rs. 90 crore.

The flats, each having a carpet area of 2033 sq ft situated at Sterling Apartments on Peddar Road in South Mumbai that hitherto housed top executives of the national carrier, will now be official residences of SBI top executives.

An AI official confirmed that the airline in August 2013 had invited bids for these flats through e-auctions and the Bank emerged as the highest bidder. “We have received a nod from the Cabinet as well as all requisite approvals to sell & transfer the rights on these flats to SBI,” said the senior Air India official.

Property-festival-offers

Despite real estate developers trying all kinds of marketing gimmicks like funding schemes with upfront payment as low as 5 percent of home price, interest waiver for 2-3 years and freebies, sale velocity has not picked up. The residential property market has been deserted- by investors due to slow moving market with stagnant or dipping prices and by end users because of unaffordable prices.

Even the unexpected 50 basis point repo rate cut by the Reserve Bank of India (RBI) may not see a significant improvement in demand in the festival season. Earlier, only a part of the multiple rate cuts amounting to 75 basis points effected this year before September 29, was passed on to the consumers by the banks.

However, within a week of the announcement by RBI, the hopes of real estate developers and home buyers seem to have been shattered as the banks have still not transmitted the cut to the borrowers.

The State Bank of India (SBI), which earlier announced a 40 basis points cut in its base rate, has now revised its decision by reducing the base rate cut by 50 percent to protect its margins.

Even more confusing is the SBI’s new policy to offer home loans at 20 basis points higher than the base rate to women and 25 basis points higher than the base rate to men in contrast to its earlier policy of offering home loans to women at base rate and to men at five basis points above base rate.

Although other banks had also announced 20-30 basis points cut in their base rates, home loan rates are still hovering well over nine percent. The inability of the banks to transmit the RBI rate cut to home buyers is sending negative signals across the market.

The extraordinarily high inventory and muted sales call for price rationalisation. RBI Governor Raghuram Rajan had also asked developers to cut prices to spur sales. Even Credai chairman Irfan Razack, advised developers to offload high inventory by rationalising prices. Developers however, are holding on to prices as steep rise in input costs and high cost of loan servicing lowers their margins to a great extent.

Domestic home buyers who form the bulk of customers, are therefore not enthused enough to jump in the fray. They are waiting for prices to fall and in the backdrop of interest rate dampner; it looks unlikely that this festive season will turn out to be a Savior for both developers and home buyers.

Get new home this festive season

Buying a new property was hitherto out of reach for home buyers given the peaking real estate prices. The demand for realty therefore, has been stagnating. Despite this, no attempts to review prices have been made to lure buyers to the market again.

According to RBI Annual Report, the number of unsold properties have not only increased but there has also been a fall in number of new launches. The real estate sector has 48 months worth of unsold inventory which is very high. However, instead of lowering prices, they depend on the Central Bank to reduce interest rates.

Industry body Assocham, in a recent survey indicated that the residential market in Delhi-NCR is trapped with an estimated inventory of 1,70,000 units, while  data compiled by property advisory JLL India and Confederation of Real Estate Developers Association of India (Credai) shows 77,460 residential units across Mumbai, Thane and Navi Mumbai are lying unsold.

Realty experts opine that in order to clear the huge backlog, there is a scope of easing property prices especially in Mumbai & the National Capital Region.

With the festive season round the corner, developers are already providing different schemes and attractive discounts on residential properties. A further 10% discount or price correction on an average is expected in the market, states a report in the Asian Age.

While the RBI Governor Raghuram Rajan in the SBI Conclave highlighted the need for lowering realty prices to stimulate demand, Navin Raheja, the Chairman & Managing Director of Raheja Developers believes that any further price cuts are not likely.

HDFC cuts its Home Loan Rate

HDFC, which is one of the largest home loan provider and private sector bank in India, it cuts home loan rate by 0.20 per cent to 9.9 per cent, as per the reports of Press Trust of India. However the revised rate are applicable for new as well as old or existing both customers. It is expected hat in near future more banks will follow the same path and in result the EMI (equated monthly installments) will come down, where as this is the time of joy for the home loan customers of HDFC.

The home loan rate cut is the wakeup call for several other big banks such as; SBI, ICICI Bank, Axis, and other banks who are major player in home loan industry as they are cutting their minimum lending rate or base rates for the comfort of customers. However, Raghuram Rajan, Governor of RBI urged to all banks to pass the benefits of its repo rate cut to customers.

Whereas; the central bank keep its rate unchanged.

SBI reduced its home loan rates

India’s largest public bank, State Bank of India on Tuesday revised interest rates on home loans. Now SBI will offer uniform interest rate on home loans from effective August 26. SBI has cut interest rate by 5-15 bps on home loans.

For the home loans up to Rs 75 lakh, the interest rate will be 10 basis points above the base rate and for home loans of above Rs 75 lakh the interest rate will be15 bps above the base rate.

Earlier, on December 20, 2013 the rate of interest on SBI home loans were reduced with a separate interest rate structure that was also rolled-out for woman borrowers 10.25 per cent ((for loans above Rs 75 lakh) and 10.10 per cent (for loans up to Rs 75 lakh) too, a senior official with SBI said.

Mr. G S Sandhu, finance secretary said, the central government is planning for new interest subvention scheme, to encourage affordable housing, which will meet part of the buyer’s home loan burden. He said that according to scheme, there would be interest subvention up to 5% for loans up to Rs 5 lakh, while at present the interest subvention is available only on loans up to Rs 1 lakh. Interest subvention refers the subsidy that government provides the borrower, which makes the discount given by the lender.

Sandhu said that a blueprint on affordable housing plan is being prepared and this time the government is clear because it wants time-bound results. For affordable housing the new government had big plans and vision. The more burdens falls on public sector banks and real estate investment trusts could be a game-changer for the sector.

Senior executive with one of public sector bank said, increasing the loan limit to Rs 5 lakh will immensely increase the utility of these loans because this will enable the underprivileged to take benefit of low-cost housing schemes, which will be undertaken by state governments.

SBI officials said, it has now been decided to offer uniform interest rate on home loans, irrespective of the loan amount effective from August 26, 2014.