Land deals in India to drop by 20% this year to Rs 15,000 crore: Cushman & Wakefield

NEW DELHI: Hit by a demand slump in the residential sector, India is likely to witness around 25 per cent decline in land deals to around Rs 15,000 crore, realty consultant Cushman & Wakefield today said. 

The firm also said most of the land purchases would be done by regional smaller players instead of big developers. 

“The market sentiment is very negative. This year we may see land deals worth Rs 15,000 crore happening across various locations in the country,” Cushman & Wakefield (C&W) Executive Managing Director (South Asia) Sanjay Dutt told PTI on the sidelines of CII realty summit here. 

According to C&W, India had seen land deals worth Rs 20,000 crore in 2011, he added. 

Dutt said out of the expected transactions, Rs 7000-8000 crore have already taken place. 

When asked about the locations, he said: “NCR and Mumbai will alone account for 60-70 per cent of the total deals, along with some top tier I cities. Some tier II cities will also witness some deals.” 

Most of the land purchases will be done by regional smaller players instead of big developers, he added. 

He further said organised players like Godrej, Mahindras and L&T will continue to purchase land as and when required. 

Talking about the demand, Dutt said sales of housing units have fallen by about 30 per cent across the country in the last one year. 

“Some places in Mumbai and NCR prices have gone up tremendously in the last two years. This has led to slowdown in demand,” Dutt said.


NCR Planning Board clears Greater Noida Masterplan 2021, breather for housing projects

NEW DELHI: The technical committee of the National Capital Region Planning Board on Thursday cleared the controversial Greater Noida Masterplan 2021, paving the way for builders to resume construction of stalled residential projects in Noida Extension.

The committee will now send the modified draft plan to the board for approval, one of the members told ET on condition of anonymity. The final approval is expected within a month, this person said.

The board had asked Greater Noida Authority, the civic body in-charge of the Noida Extension, to incorporate changes in the draft Masterplan. These included 16% area for green space, 20% for housing economically weaker sections and a solid waste treatment plant.

Construction of around 100,000 affordable homes in the new township came to a halt a year ago after the Allahabad High Court quashed land acquisition in a few villages. Farmers in these villages had alleged that the state government coerced them to sell land at lower than market rates. The high court had said that construction could resume only after the NCR Planning Board approves the Masterplan.

The meeting was attended by the chief executive officer of Greater Noida Authority, Rama Raman, and SN Shukla, Uttar Pradesh’s principal secretary for housing.

In 2009, developers had flocked to this part of Greater Noida when the authority increased the floor area ratio from 1.75 to 2.75 and increased the density from 800 persons per hectare to 1,600. This allowed developers to build 140 apartments per acre compared with 70 earlier. The authority later increased the FAR to 3.5.

As a result, the developers could price apartments much lower than in the adjoining areas of Noida, where FAR and density norms are still lower. “We are relieved. This is positive news and we hope that construction can start quickly,” said Satish Dobhal, general secretary of the Noida Extension Flat Buyers Association, who has also part-paid for an apartment in the area.

Once the Planning Board gives its nod, builders will be able restart construction at their projects.

“Most developers had already constructed 20-25% of their projects. Now, we can restart our projects,” said Shiv Priya, executive director at Amrapali Developers, which has five projects in the area.

This also means farmers will start getting compensation for their land acquired by the Greater Noida Authority. They will now be compensated on the basis of the new formula devised by the court. As per the formula, 64.7% additional amount will be paid as compensation, along with 10% of the developed plot instead of the 6% promised earlier.


Home sales drop as property prices rise faster than salaries

NEW DELHI: Have you heard of anyone buying a home in the last few months? Most likely not. And those you know were planning may tell you they postponed plans, especially after poor salary increments this year.

Manas Tripathi, an executive at a Delhi-based car company, for instance, changed his mind after his employer increased salaries by only 5% earlier this month. “Property prices have gone up, but my ability to service a large loan hasn’t. Interest rates are also still high,” he says.

Like Tripathi, many young first time homebuyers are pushing back plans to buy a home because of the slowdown, further making things bad for builders already grappling with low sales. Reserve Bank of India’s decision on Monday to keep interest rates unchanged has also added to the worry.

Brokers say home purchases in the mid-price range have dropped 20% and some builders are switching to high value projects where the impact is less.

“There has been a 20-25% drop in sales in the last three months. Many middle managers across industries are shying away from making such a big investment in this current market,” says Abhay Khemka of Khemka Investments & Properties in Gurgaon.

Home sales in Delhi-NCR were down 57% and in the Mumbai Metropolitan Region (MMR) by 58% in the January-March 2012 quarter, says Samir Jasuja, chief executive officer at property research and analytics firm PropEquity.

Home prices though are still on the rise, making it difficult for middle-class buyers to manage their household budgets efficiently if they decide to take a home loan.

“People take loans considering a graduating income so that they can cope with payments in the future. That hasn’t happened this year and so we could see demand for home loans come down,” says RV Verma, chairman of the National Housing Bank.

According to estimates from global HR consulting firm Mercer, average increments across sectors was expected to be close to 12% this year, barely beating inflation. In many industries that have not performed well in the last one-year, this figure hovers around mid-single digit. Earlier, in April, IT bellwether Infosys announced that it will not be giving any increments as it had failed to achieve its own guidance for growth in the January-March 2012 quarter and its projection for fiscal 2013 is also lower than it expected.

With low salary increases, loan eligibility of prospective buyers has remained stagnant while home prices have raced ahead. “Many of our clients have postponed their home purchases. But they are in a dilemma. If they do not buy a home now, they know the rate at which home prices are going up, they would be priced out of the market when they venture out next,” says Sumit Joshi, director of Noida-based brokerage firm Real Credit Consultancy.

According to real estate research firm Liasas Foras, between Q4 of 2010-11 and Q4 of 2011-12, property prices in the NCR have increased by 33% in the last one year and in MMR by 17%. Bangalore has seen a modest increase of around 8% in the period.

“Where prices have not gone up too much, like in Bangalore, healthy sales are still happening,” says Farook Mahmood, managing director of Bangalore-based property brokerage firm Silverline Realty.


Puravankara Projects sets up office in Saudi Arabia

NEW DELHI: Bangalore-based real estate developer Puravankara Projects is venturing into Saudi Arabia to cater to the housing needs of non-resident Indians living in the country.

There is a large interest among Indians in the Kingdom of Saudi Arabia to invest in luxury and affordable homes in India and with a new office in Al Khobar, Dammam, Puravankara is hoping to tap into this growing market for its projects in India. The company has had a presence in Dubai for over two decades.

To reach out to NRIs, the company has also set up a 24/7 sales support desk in India through which Indians anywhere in the world can reach out at any time.

“The office in Saudi and the 24/7 sales desk would help many Indians abroad who have always thought of owning a home in India, but have not had the time or the means to help them in the decision making,” says Jackbastian K Nazareth, chief executive officer of Puravankara Projects.


Supreme Court reserves verdict on Sahara investors row case

NEW DELHI: The Supreme Court today reserved its verdict on Sahara Group’s plea challenging the Securities Appellate Tribunal ( SAT) order directing two of its companies to refund around Rs 17,400 crore to their investors.

A bench of justices K S Radhakrishnan and J S Khehar reserved its judgement after extensively hearing the arguments on behalf of the company and SEBI.

The Tribunal’s decision was earlier stayed by the apex court which had on January 9 also admitted the appeal filed by the Sahara Group.

“We want the amounts of the investors to be secure. You can also give a bank guarantee or list of the assets of the company,” the apex court had said.

The Sahara Group had said it has sufficient assets to ensure the protection of interests of the investors.

The group had earlier told the court that it has filed an affidavit explaining that it will protect the interests of 2.3 crore investors who have put in their money in Sahara India Real Estate Corporation (now known as Sahara Commodity Services Corporation Ltd) and Sahara Housing Investment Corporation.

The court had on November 28, 2011 also asked the companies to place before it their 2010-11 balance sheets and statements of accounts for November 2011 and had issued notices to the central government and the SEBI seeking their response on Sahara’s plea.

The stock market regulator had also restrained the two entities from accessing the securities market for raising funds till payments were made to the satisfaction of SEBI.

The two companies, promoter Subrata Roy Sahara, and directors — Vandana Bhargava, Ravi Shankar Dubey and Ashok Roy Choudhary — were told jointly and severally to refund the collected money.

The company had then approached the Supreme Court which asked it to approach the Tribunal.


Sahara firm bypassed norms to raise funds: SEBI to Supreme Court

NEW DELHI: The SEBI on Tuesday told the Supreme Court that the real estate arm of the Sahara group of companies had no right to mobilise Rs.27,000 crore from 30 million investors through debentures without complying with the regulatory regime.

The Securities and Exchange Board of India (SEBI) said the company raised the money through optional fully convertible debentures without complying with the regulatory regime of the stock market and listing on the bourses.

Senior counsel Arvind P. Datar, who appeared for the SEBI, told the apex court vacation bench of Justice K.S. Radhakrishnan and Justice J.S. Khehar that Sahara India Real Estate Corp. Ltd. (SIRECL) initially had every intention of going public but sought to camouflage it by saying that it did not intend to do so.

The other Sahara company involved in the case is Sahara Housing Investment Corp Ltd.

The court asked the Sahara firm’s counsel as to what was the material to show that it was not a public issue but a private placement.

Any company which made an private placement of shares or debentures to more than 49 people was treated as having made a public issue, and consequently was within the jurisdiction of the SEBI, Datar said.

Contending that the apex court should not disturb the Oct 18, 2011, order of the Securities Appellate Tribunal (SAT), Datar said that SIRECL had mopped up Rs.27,000 crore from 30 million investors and the entire amount was unsecured.

The balance sheet of the Sahara company did not inspire any confidence about the security of such a huge amount, he said.

The SAT directed SIRECL to refund the money to investors within six weeks along with 15 per cent interest.

The apex court was told that of the Rs.19,400 crore raised by the companies, Rs.2,000 crore had been invested.

The senior counsel told the court that it would be “just and proper in the interest of justice” that the two Sahara companies be directed to refund all the amount that had been collected in violation of the statutory provisions governing the securities market.

The court was told that when SEBI followed up its query with SIRECL, it was told that the company had written to the corporate affairs minister and was awaiting a reply.

“The fact which needs more attention is that this massive mobilisation was made outside the well developed investor protection framework developed by the SEBI,” Datar said.


DLF sells hotel arm to Kolkata-based consortium for Rs 567 crore

NEW DELHI: DLF, the country’s largest real estatecompany, has completed the sale of its hotel subsidiary, DLF Hotels & Hospitality, that owns land parcels in four cities to a Kolkata-based consortium of Avani Projects and Square Four Housing & Infrastructure Private for Rs 567 crore on Monday.

The hotel subsidiary that does not include hotel subsidiary Aman Resorts was started in a joint venture with leading hospitality chain Hilton International.

However, DLF had bought out foreign partner’s 26% stake in December last year for Rs 120 crore. DLF Hotels & Hospitality owns land parcels in Kolkata, Chennai, Mysore, and Thiruvananthapuram.

Four Square Housing chairman and managing director Ganesh Singhania said that the consortium of Avani Projects and Square Four Housing & Infrastructure has completed the transaction.

“We have made the entire payment of Rs 567 crore on Monday from internal acrual.” The DLF spokesperson declined to comment.

DLF is expected to make the announcement on Tuesday. ET had reported about the deal on December 12.

Persons familiar with the development said that Square Four that has signed the deal with DLF in December, has formed a consortium with Avani Projects of Aniruddh Daga to complete the transaction.

Under the deal, Avani will be in-charge of Kolkata and Chennai projects that has land parcel of 6 acres and 6.6 acre, respectively. Square Four will be in-charge of Mysore (2.4 acres) and Thiruvananthapuram (2.14 acres)

The acquirers will build luxury hotel only in Kolkata land, while in other places there will be residential and commercial units, said a person involved in the deal.

“The Kolkata land will be used for a five-star hotel and luxury residential complex, while Chennai land will be used for residential purpose.

In other two locations, it will be a mixed use of residential and commercial,” he added. The acquirers have already received the approval from the authorities in these locations, he said. Following the consummation of the deal, the company name will be changed to Adone Hotel & Hospitality.


HDIL gross debt comes down by Rs 237 crore to Rs 4,082 crore in FY12

NEW DELHI: Realty firm Housing Development and Infrastructure Ltd (HDIL) has reduced its gross debt by Rs 237 crore in last fiscal at Rs 4,082.31 crore on higher sales.

The company’s debt stood at Rs 4,319.76 crore at the end of 2010-11 fiscal.

In an investors presentation, the Mumbai-based company said its consolidated gross debt reduced by Rs 237 crore in 2011-12 financial year, which is 5.5 per cent lower than the previous year.

The consolidated net debt stood at Rs 3,855.53 crore as on March 31, 2012 as the company had a cash balance of Rs 226.78 crore, it added.

Last month, HDIL reported 70 per cent rise in consolidated net profit at Rs 315.51 crore for the quarter ended March 31, 2012 against Rs 185.21 crore in the year-ago period.

The revenue rose by 13 per cent at Rs 625.12 crore in the fourth quarter of last fiscal as against Rs 552.65 crore in the corresponding period of the previous year.

During the entire 2011-12 fiscal, HDIL’s net profit fell marginally to Rs 809.83 crore from Rs 821.75 crore in the previous year. The revenue rose by 7.5 per cent to Rs 2,006.41 crore from Rs 1,865.47 crore in the review period.

The company currently has 22 ongoing projects aggregating to 87.88 million square feet and out of that housing is about 37 million sq ft.

HDIL has a total land reserves of 231.63 million sq ft (saleable area) as on March 31, 2012.

The company’s shares were trading at Rs 66.80 on the BSE in late afternoon trade today, up 4.7 per cent from previous close.


Property deals in Delhi’s unauthorised colonies after regularization

NEW DELHI: The Delhi government today said restrictions on sale and purchase of properties in over 1,200 unauthorised colonies will be lifted once the process to regularise them is completed.

“Sale and purchase of properties in those colonies will be allowed once the process to regularise them is completed,” Revenue Minister A K Walia told the Assembly while replying to a question.

Government is in the process to regularise over 1,200 colonies, which were given provisional regularisation certificates. These colonies are home to around 40 lakh people.

Answering a separate question, he said restrictions were put on General Power of Attorney (GPA) as a mode of property transfer following an apex court order.

He, however, clarified that the Supreme Court had not banned GPA but ruled that property transaction through GPA will not be considered valid.

The Supreme Court had on October 12 last year ruled that sale transactions carried in the name of GPA will have no legal sanctity and immovable property can be sold or transferred only through registered deeds.

In a bid to ensure strict adherence to the Supreme Court order on property transactions, the Delhi government last month had said no sale deed will be registered if it is done through GPA.

Walia said property transaction done through GPA prior to the Supreme Court order will be valid and parties concerned can regularise such transactions by paying the required registration fees.

In such transactions, he said the value of the immovable property at the time of the transaction will be considered for registration but stamp duty will be applicable as per current rate.

“The stamp duty will have to be paid as per current rate. But we will consider the value of property when the transaction had taken place to calculate the registration fee,” Walia said.


DLF raises asset divestment target by Rs 5,000 crore

NEW DELHI: DLF will close the sale of luxury hotel chain Aman Resorts, a Mumbai land and its wind power business in the next six months and has set itself an additional target of Rs 5,000 crore through sale of non-core assets in the medium term, the company told analysts today.

The firm’s management said that in fiscal 2011-12, it managed to raise Rs 1,774 crore through sale of non-core asset against a target of Rs 5,000-6,000 crore. It has been trying to sell non-core assets to reduce its debt that stood at Rs 22,725 crore at the end of Q4 2012. It reduced its debt by 33 crore in the quarter. High finance costs resulted in the company’s net profit dropping 38.6% in the last quarter of the fiscal year.

Fourth quarter income declined to Rs 2,747.45 crore from 2,869.72 crore a year ago. The company’s management told analysts that the overall target for asset divestments has been increased by an additional Rs 5,000 crore in the medium term, but did not elaborate on the assets it will divest this time.

DLF had expected to raise between Rs 5,000-6,000 crore through the sale of Aman Resorts, the 17.5-acre land parcel in Lower Parel and the wind power business, but these deals have not closed yet because of lower than expected bids in a slack market.

Net profit for fiscal year was down 26.8% to Rs 1,200.82 crore from Rs 1,639.61 crore a year ago. Total Income, however, grew marginally from Rs 10,144.45 crore for the year ended March 31, 2011 to Rs 10,223.86 crore. The second half of the year saw a one-time impact of Rs 300 crore for the company because of the shift it made to third party specialised contractors.