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Hurt real estate sector reeling under sand bans 5/19/2013                   MARGAO: The construction industry in Goa is reeling under a double whammy-an economic slowdown-infused buyer s market and a debilitating shortage of construction material, especially sand. While the state government has banned the extraction of sand in Goa, the Karnataka government has banned its transportation to Goa. These developments have led to a severe scarcity of this fundamental construction material and an over 100% escalation in its price. There s also a paucity of other construction materials such as stone aggregate, rubble and laterite stones. "The acute shortage of sand and other construction materials has led to a slowdown of construction projects," Datta Damodar Naik, managing director of a reputed Margao-based real estate firm, and former president of CREDAI (Confederation of Real Estate Developers Associations of India) told STOI. He explained that the months preceding the monsoon constitute the peak season for construction activities in Goa and are used to the optimum by both the organized and unorganized sectors in the construction field. This summer, construction activity has taken a hit. Sand transporters too are a worried lot. With the transportation ban by Karnataka in place, contractors are forced to transport the sand from Karwar, Ramnagar and Londa-considered superior to Goa s local produce-on the sly and are inevitably selling it at a premium. "Sand from the Kali riverbed in Karwar is fine and free of silt and other organic impurities. Sand extracted in Goa, on the other hand, is coarse and needs to be screened, which besides adding to the cost of labour, renders a significant portion unusable for construction work," explained N Prashant, a sand transporter. He pointed out that the locally available sand also has high levels of salinity and is therefore not advisable for concreting work. Stating that the transport ban has left almost 250 persons engaged in the business jobless, Prashant demanded that the state government provide them with adequate financial compensation on the lines of that being given to the mining-affected. The escalation in prices has obviously led to a rise in the cost of construction, but builders are not keen to transfer the burden to customers owing to the already slack real estate market. The stakeholders in the construction industry are hopeful that the new government in Karnataka will lift the ban on sand transportation to Goa. From P1 "The real estate sector is reeling under the effects of global recession. The ban on mining in Goa has also compounded the problem. While on one side, new sales are hard to come by, old buyers are facing problems in repayment of their house loans. It s a buyer s market. Besides, in this year s state budget, the real estate industry is among the heavily taxed sectors. We are sandwiched from all sides," lamented Naik. Considering the paucity of fundamental raw materials, what alternatives is the industry adopting? "RMC or ready-mix concrete in one option, as sand is substantially used for concreting purpose. It s expensive, but convenient," said Naik. "Another alternative is artificial sand and since a number of plants manufacturing this have come up in Goa and neighbouring areas they can cater to Goa s requirement." He added that these moves reduce the requirement of local sand to tasks like plastering, etc. Sources said that as an alternative to laterite stones, many construction firms have resorted to using concrete blocks. tnn

UP witnesses remarkable achievement in outstanding investments in real estate sector 5/17/2013                   LUCKNOW: As per a sector specific analysis by Associated Chambers of Commerce and Industry of India ( Assocham), Uttar Pradesh has witnessed a remarkable progress in outstanding investments in real estate sector from 2008-09 till 2012-13. The most populous state of India, which is also the biggest consumer base for any company has recorded a 106 percent growth in total outstanding investments in the real estate sector, which is quite impressive as compared to an all India growth of mere 25 percent in the same period. UP holds sixth rank among all states in the total value of outstanding investments which happened in realty across India till March 2013 to the tune of Rs 14 lakh crore. It has a share of over 9 percent in the same.

UP witnesses remarkable achievement in outstanding investments in real estate sector 5/17/2013                   LUCKNOW: As per a sector specific analysis by Associated Chambers of Commerce and Industry of India ( Assocham), Uttar Pradesh has witnessed a remarkable progress in outstanding investments in real estate sector from 2008-09 till 2012-13. The most populous state of India, which is also the biggest consumer base for any company has recorded a 106 percent growth in total outstanding investments in the real estate sector, which is quite impressive as compared to an all India growth of mere 25 percent in the same period. UP holds sixth rank among all states in the total value of outstanding investments which happened in realty across India till March 2013 to the tune of Rs 14 lakh crore. It has a share of over 9 percent in the same.

Chart of the Day: High five for real estate 5/14/2013                   The total of $105bn was fuelled by a 30% surge in deals across Europe and Asia against the first quarter of last year. This was below the $150bn registered in the fourth quarter which tends to be more buoyant than the rest of the year, but buying interest is growing fast. Appetites were strongest for prime property, although Jones Lang noted interest in higher yielding secondary real estate in Europe. Interest in secondary property, parallelling a rise in junk bonds, could propel the scale of deals beyond last year’s $450bn. David Green-Morgan, Jones Lang capital markets research director, confirmed: “Investors are starting to look slightly higher up the risk curve.” The Jones Lang report added: “There seems to be no slowdown on the horizon. If anything the flow of capital is increasing and arguably the weight of money has never been higher." “Continued quantitative easing around the world is increasing liquidity and reduces the cost of debt,” said Jones Lang. The availability of debt finance at competitive interest rates is key to fuelling property values, leading to a competition between investors for assets. The search for yield is persuading investors to put their frequent concerns about the illiquidity of the property market to one side. In the Americas, the growth in deal volumes is more restrained at 9%. US institutions are leading the buying spree, as you can see in the attached chart. Jones Lang said: “They remained one of the most active cross-border purchasers in the first quarter.” Successful fund-raisings in the last quarter have propelled institutional purchases. Japanese and US real estate investment trusts are back in the market. Sovereign wealth funds are also showing more interest in real estate, increasingly with joint-venture partners.

Despite FDI no respite in sight for retail real estate 5/16/2013                   Stung hard by the weakened economic climate and with no immediate prospects of a rush by foreign companies into multi-brand retail following the liberalisation of foreign direct investment (FDI) norms in the sector, growth in retail lease rentals in India will remain subdued over the next two years (an estimated 2-4% per annum). Incremental supply coupled with high vacancy levels in operational malls will continue to outstrip demand until 2014. Even now, demand remains abysmally low across most of the 10 major cities, a trend that emerged after the global financial crisis in 2008. Rentals across these cities shrank by 7-9% annually in the period between 2008 and 2012 and oversupply continues to plague many of them even today; mall vacancies in some of them are as high as 30-35%. Compounding this will be the fact that around 38 million sq. ft. of retail mall space is expected to materialize in these 10 major cities by 2015—Ahmedabad, Bangalore, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, NCR, Mumbai and Pune—although this will be far short of the nearly 67 million sq. ft of mall space that is planned. Today’s scenario is a far cry from the industry hey days during the last decade— during 2004-05 to 2007-08, organised retail grew at 28% compounded annual growth rate or CAGR. Retailers struggled in 2012-13 as weak consumer sentiment hit growth. Net space additions were lower as many companies shut down unprofitable stores and rationalized existing store spaces. Consequently, Crisil Research estimates that the organized retail market grew by a muted 10% in 2012-13, and will grow by around 12-14% in 2013-14 due to a marginal recovery in consumer sentiment arising from an improvement in the macroeconomic environment. Importantly, the expected boost to lease rentals due to the liberalisation of FDI in multi-brand retail is unlikely to materialise by 2014 as many companies are on a wait and watch mode because of the ongoing political uncertainty. Even if a company decides to foray into the country in the immediate term, it is likely to take at least 2-3 years before its investments, particularly in back-end infrastructure, begin to yield results. Of the 10 major cities—in cities where FDI in multi-brand retail has been permitted namely Mumbai, Pune, Hyderabad and parts of NCR (Delhi, Gurgaon and Faridabad)—the incremental demand from foreign retailers is expected to materialize only after 2014. But for that to happen, a number of issues still remain to be ironed out. The decision to permit 51% FDI in multi-brand retail was taken in September 2012 (10 months after the proposal was initially cleared and put on hold thereafter) and the FDI cap in single-brand retail was removed in January 2012. But there is still a lack of policy clarity, although the Supreme Court’s recent decision to dismiss a challenge to the government’s decision to liberalise FDI in retail will be seen as a major positive step by foreign retailers. Policy riders in multi-brand retail such as the sourcing and back-end investment clauses are particularly worrisome for foreign retailers because certain segments such as apparels and electronics do not require that much investment in the back-end. Factors such as the mandatory approval required by the state governments are also playing on retailers’ minds (currently only nine states and two union territories have allowed FDI in multi-brand retail). That is not to say that there has been no forward movement since the policy changes. Although no concrete proposal has been received in multi-brand retail, around eight proposals in single brand retail, amounting to Rs.114 billion, have been cleared by the Foreign Investment Promotion Board of India, including Swedish furniture retailer Ikea’s proposed investment of Rs.105 billion. Ikea has proposed to set up 10 stores in India in over 10 years. Eventually, however, global giants such as Walmart, Tesco and Carrefour will find the lure of the India growth story and its inherent potential hard to resist. This will result in organised retail growing at a robust 18-20% in the longer term. But for the medium term, it is mostly wait and watch for FDI. That, of course, is not good news on the retail lease rentals front, particularly with the lingering uncertainty on economic growth.

Buy IB Real Estate with a target price of Rs 93: Sandeep Wagle 5/15/2013                   Real Estate. ET Now: What is your view on IB Real Estate? Sandeep Wagle: IB Real Estate is a BUY call with a target of Rs 93 and a stop loss of Rs 82.

Real estate regulator Bill will see light of the day soon; it is in the interest of all stakeholders: R V Verma 5/11/2013                   The Central Registry of Securitisation Asset Reconstruction & Security Interest of India (CERSAI) portal would be open to the public by mid-June, says R V Verma, chairman and managing director of National Housing Bank (NHB), a shareholding bank in CERSAI. In an interview with Neelasri Barman, he says the portal would provide a seamless payment gateway system and enable checks on information related to the properties that would be transacted. Edited excerpts: The Union Cabinet has deferred a decision on the real estate regulator Bill. When can it be expected? It s only a matter of time, as this is a critical need and would serve the larger interests of consumers and aid transparency in the sector. This would, in turn, have a number of positive implications, including a large flow of funds, better credit availability and lower risks. These would result in more efficient and transparent pricing and enhanced confidence among lending institutions. It would be akin to reforms in the real sector (supply side), which has lagged sectors such as finance. We are optimistic the Bill would see the light of the day soon, as it is in the interests of all stakeholders. Earlier, you had said disbursements in 2013-14 would be better than in 2011-12. Which factors would contribute to the disbursement growth? Yes, that s right. We would be closing the year ending June 30 (NHB follows the July-June financial year) with the highest-ever disbursement for the bank in a single year-about Rs 18,000 crore. Recently, NHB had crossed an important milestone-total refinance of Rs 1 lakh crore. The home loan market, for primary lending institutions (PLIs), as well as NHB, has seen robust and sustained growth. For PLIs, 2012-13 saw growth of 19 per cent, which is likely to remain so, if not improve in 2013-14. NHB s refinance schemes cover a wide spectrum of lending by PLIs. NHB is also supported by the government and the Reserve Bank of India (RBI), in terms of allocation of resources (Rs 6,000 crore under the Rural Housing Fund and Rs 2,000 crore under the Urban Housing Fund for 2013-14). This helps us expand our operations and extend support to PLIs in lending to under-served market segments. Besides, NHB s thrust on low and moderate income housing has given us a low average loan size (in terms of refinance)---Rs 9-10 lakh. NHB is also encouraging lending in niche areas such as energy-efficient residential housing projects and solar water heating & solar lighting equipment for domestic use, in line with the government s thrust on encouraging energy conservation, energy efficiency and use of alternative renewable energy sources. We see growing passion among the people for green and clean energy environment, including in rural areas. How successful has CERSAI been, in terms of preventing fraudulent transactions in real estate? In about just two years starting operations, CERSAI has developed into an important source of information and data on transactions related to equitable mortgages. The central registry, or the CERSAI portal, has about 8.4 million transactions on its platform, which is being actively visited by banks, housing finance institutions and other lending agencies under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. These include subsisting mortgages, as well as new ones, created after CERSAI was set up. It is encouraging to receive positive and valuable feedback on the usefulness of the portal and the quality of data. As data on the CERSAI portal provides the status of encumbrance or creation of charge on a particular underlying property, lenders visiting the portal can avoid creating a second charge or lending against the same property, through misrepresentation by the borrower. The portal also updates the charge once the loan is fully amortised. While this helps prevent multiple lending against the same property at the individual transaction level, the CERSAI portal also mitigates the risk at the sector level. We have connected CERSAI with major credit bureaus in the country, through the CERSAI portal. An important message underlying this integration is credit risk emanating from frauds, misrepresentation and credit profiles of borrowers has to be mitigated through an organised and integrated system of information, one that is quick, reliable and cost effective. We are planning to open the CERSAI portal to public view by mid-June. We are working to provide a seamless payment gateway system for the individual members of the public to enter the site and check information relating to properties they would be transacting. You plan to raise Rs 14,000 crore this financial year. Would this include a tax-free bond issue? Yes, we believe there a good appetite for tax-free bonds among retail investors. This requires a great deal of time and planning. I feel a little more aggressive marketing, with more realistic and competitive pricing, can whet the appetite of institutional investors, as well, banks, financial institutions and companies. How much did you raise through your term deposit scheme last financial year? Considering interest rates are headed south, do you plan to revise rates this financial year? Frankly, term deposits form a very small part of our resources, but help us remain connected with the retail depositor community. We have not aggressively pursuing our retail deposits, but there is good potential; we will take measured steps in this direction. We keep a close watch on our cost of funds, as also the prevailing interest rate regime and the outlook, to take a view on our resource profile and lending rates. As a development finance institution, NHB operates on thin margins.

Northeast experiencing real estate boom 5/10/2013                   Guwahati, May 10 (ANI): The countrywide boom in the real estate sector is now visible in the northeast, especially in Assam, which has fast emerged as an investment hotspot. Assam is a growing hub for trade and commerce in the Northeast. And, this has opened up new vistas for the real estate industry. Shopping malls, showrooms, apartments and hotels - the new face of city has made it one of the most happening places in the country. And to tap the potential - real estate developers are venturing in. In recent years, the demand for both residential and commercial complexes is on the rise. "Now the government is focusing in Northeast and there is immense potentiality for development basically industrial projects," said D K Roy, DY General Manager, TANTIA construction, Kolkata Recently, a three-day realty expo was also held in Maniram Dewan Trade Centre in Guwahati. Organised by AREIDA, it aimed at bringing real estate leaders and customers under one roof. Many multinational companies also participated in the expo. "We have our own service, showroom here in Guwahati. Now we are concentrating on the entire Northeast because northeast is one of the fast growing market in India and buying products is very good. We already sold many products because this is the most developing area and expecting more good number in future," said Parag Miraz, a participant. The decline of insurgency has triggered economic growth in the Northeast. One of the sectors to benefit from this - is the real estate. (ANI)

Why Mumbai real estate rates will continue to be stable 5/13/2013                       In the Indian city which has for years carried the unwholesome reputation of being the most over-priced in terms of residential real estate valuations, there is no relief in sight for aspiring home buyers. Over the last four years, property valuations in the financial capital have increased by an average of 66 percent. All ‘expert’ predictions of an imminent correction over the last three years have proved to be wrong. It is true that going by all known market dynamics, a correction was inevitable. Lack of affordability over an extended period is a known catalyst for downward revisions in any market category, including real estate. One of the primary reasons for Mumbai’s ‘unreal’ price movements is the limited supply of ‘clear’ land. AFP Another globally accepted precursor of a property market correction is a surfeit of unsold inventory. If these two indicators would have held true in Mumbai, the city’s residential real estate market should have corrected three years ago. However… Ground Reality Residential property prices in Mumbai have increased steadily after the correction seen post the Lehman debacle. In the period from the second quarter of 2009 to the same quarter in 2013, residential real estate prices in Mumbai have increased by 66 percent. In Thane, the increase has been even higher at 70 percent while Navi Mumbai has seen a staggering escalation of 74 percent. Even within Mumbai, some locations have crossed the 66 percent average increase in the same period. The Malad–Borivali belt has seen an increase of 85 percent. The cumulative price escalation figures for Mumbai, Thane and Navi Mumbai represent the highest among all cities in India. During the period in question (2Q 2009-2Q 2013), Gurgaon and Bangalore – undeniably two of the hottest real estate markets in India – saw increases of 52 percent and 46 percent, respectively. From an end-user’s perspective, Mumbai’s astronomical residential price increase is undoubtedly irrational. Below the surface, however, there are market forces at work which cannot be mitigated. Escalation triggers One of the primary reasons for Mumbai’s ‘unreal’ price movements is the limited supply of ‘clear’ land. Other factors at play are the reduction in new launches over a 1.5 year period from 1Q 2011 to 2Q 2012, caused largely by a slowdown in approvals for new projects, and the high interest rate scenario in 2010-2011. In this period, the government, in its efforts to curb inflation, raised lending rates around 12 times. Every time this happened, developers’ input costs for their projects rose in tandem. The matter was further compounded by the pressure on developers to give assured return to investors who had bought into their projects at the pre-launch stage. Meanwhile, there was a high rate of price volatility in other asset classes such as equity. This, along with the high cost of debt, brought about a massive liquidity crunch. As a result, developers’ backs were to the wall when it came to purchasing the massively priced land parcels. This limited new project launches. The historical title disputes attached to many of these plots did not help matters much, either. In the midst of all this came the new development control rules, which caused many projects to come to a grinding halt midway as developers and architects struggled to adapt projects at various stages of development to a completely new set of mandatory guidelines. Finally, we need to consider the phenomenon that is, in degree if not in principle, more or less unique to Mumbai – that of developers as well as buyers adopting the dubious philosophy of benchmarking prices in an particular locality based on one or two high-profile transactions or over-hyped launches. Demand remains steady Through it all, the demand for investment residential properties and end-user homes in the country’s financial capital has remained stable. The ever-increasing number of second home buyers within the city and the firmly entrenched – and admittedly vindicated – mind-set that real estate prices in Mumbai will never go down will ensure that the stability of Mumbai residential real estate market will continue.

Karnataka polls: Real estate funds prop up polls 5/2/2013                   BANGALORE: There s a big dip in the amount of cash floating around this election, particularly of the unaccounted variety. The 2010 ban on iron ore exports from the state, imposed in the wake of rampant illegal mining, has changed the spend scenario, leaving only the flourishing real estate sector to fund poll fortunes -- at least in Bangalore City, Bangalore Rural, Mysore and Tumkur. This shift in money power from iron ore mining in Bellary district to the real estate sector in Bangalore will be a key change in the poll dynamics, as compared to 2008. Money generated through illegal businesses is laundered through various means, including mortgaging of land to generate funds. "Real estate money does play an important role in all elections, more so this year," Trilochan Sastry of Karnataka Election Watch said. Over the years, various cash-rich lobbies have funded parties and key individuals. For long, the liquor lobby funded elections and reaped a good harvest through successive governments. Then came the capitation lobby. With communities and individuals establishing medical and engineering colleges, money flowed during elections. Then came a real estate boom, and the contractor-developer lobby took up prime position, before mining came to the fore. Now, it s back to the land lords. "There s no doubt the real estate sector will play a vital role in this election, in the absence of mining. It doesn t mean that big builders are pumping in money. Candidates and their key supporters are involved in some way or other in the land business," said Zahed Mehmood of Silverline Realty. Most of the candidates, irrespective of the political parties they represent, and Independents contesting from Bangalore and Mysore, have a direct or indirect hand in land transactions. Many candidates with ancestral property started developing housing or commercial projects, while some sitting MLAs invested money in real estate after they became members of the assembly. However, none of the well-established developers are in the fray. Another way contestants are generating money is by pledging their benami properties to credit cooperative societies and private moneylenders. Candidates have taken this risk, unmindful of high interest rates. "These transactions are made some months before the election process starts. As nationalized banks seek detailed information on ownership and the source of the land, private moneylenders and credit cooperative societies are good sources," Prashanth Sambargi of Mars Realty said. Intra-corporate short-term loans are another source of money flow. Unlike in 2008, this time, intra-corporate loans are not too popular. "Some transactions have reportedly taken place, Sambargi said. Here, money is transferred to a candidate or his family-run company, for which the candidate pledges land or a house. Money flow Moneybags have hijacked Karnataka. Money power is also in full play in the state. In a few states, releasing of manifestos by major political parties is just a ritual. Thereafter, it s a money fight, tons of it. All parties, including Congress, BJP, KJP and JD(S) fight elections based on money power.

New property tax to hit Bengal real estate sector: CREDAI 5/8/2013                   The real estate sector in West Bengal would be hurt if a proposed tax on property sales is introduced in the Finance Bill 2013, the Confederation of Real Estate Developers Association of India s (CREDAI) Bengal chapter said Wednesday. This, according to CREDAI Bengal, is because valuation of properties by registration authorities in the state in many cases are much higher than their actual transaction values. The central government has proposed a new tax on real estate transactions on the basis of assessed valuation of a property at the time of transfer, instead of levying a tax on the basis of sale price fixed when the project was initiated. "In West Bengal, developers are largely affected due to the high valuation (of properties), which in lots of cases are more than the actual transaction price," CREDAI Bengal President Harsh Vardhan Patodia said here. Developers said the impact of the proposed tax on the sector would be huge across India as they have to pay additional income tax on the income, which is "not actually earned" by them and similarly purchasers also have to pay taxes based on deemed income, which they have "never received". According to them, the impact of the new tax would be "much greater" in Bengal as in many cities, including Kolkata, the actual value of property is much less than the valuation assessed by the stamp duty or registration authorities. "The declared circle rate (for valuations) is much higher in the state and in some cases it goes up to 25 percent to 100 percent of transaction," Patodia said. According to Patodia, if the state government did not rationalise the circle rate, real estate transactions would be impacted severely. "The problem is across India. But if West Bengal does not rationalise the rate in certain areas, transactions will not take place, so the business will come to a standstill. This problem will be very peculiar to the state," he added.

Gayle becomes brand ambassador of real estate firm Read more at: http://www.thatscricket.com/news/2013/05/09/gayle-is-brand-ambassador-real-estate-firm-067641.html 5/9/2013                   Patna, May 9: West Indian cricketer Chris Gayle was on Wednesday (May 8) named brand ambassador of Patna-based real estate company, Agrani Homes. The announcement was made by company s Chief Managing Director Alok Kumar at a function here. In his brief speech, Gayle expressed happiness over his association with the company active in Bihar, Jharkhand and National Capital Region. The big-bodied Jamaican, however, refused to talk about cricket. Gayle recently set a new record for the fastest century in the history of the game which came off just 30 balls for the Royal Challengers Bangalore in the IPL, and then went on to make the highest score ever in Twenty20, ending unbeaten with 175 off 66 balls. A large crowd had gathered at the venue, a leading hotel here, to get a glimpse of their favourite cricket star. The fans also thronged the airport and the residence of JD(U) Legislative Council member Sanjay Singh, who is also associated with the real estate company, on the arrival of the hard-hitting batsman. Read more at: http://www.thatscricket.com/news/2013/05/09/gayle-is-brand-ambassador-real-estate-firm-067641.html

Will residential real estate suffer same fate as gold? 4/26/2013                   With gold prices currently on the descent, many investors are asking themselves if residential real estate prices will follow. Gold and real estate are the two primary investment routes for retail investors in India, so this is definitely a valid question to ask. The performance of residential real estate as an asset class is doubtlessly dependent on the macro-economic factors that also dictate the performance of other asset classes, including gold. Nevertheless, the correlation between gold and real estate prices is not as distinct as one may at first assume. Price movements in the real estate sector are the result of supply and demand. This is true for gold as well, but the demand drivers for real estate are not the same as for precious metals. Though, in investment terms, they technically fall under the category of asset classes, the demand for residential property stems from the desire for home ownership that is hard-wired into the Indian psyche. It is demand from end-users that dictates investors’ appetite for residential property. In India, precious metals are an investment class that most people will consider after this basic desire is satisfied. Moreover, the prices of precious metals are not location-specific - they rise and fall uniformly. This is hardly the case with real estate, which performs differently at different times in different cities and micro-locations. In a vast country like India, it stands to reason that various markets will display varying pricing dynamics. Real estate valuations also range from rational to irrational in different areas within the same cities, depending on the levels of supply, demand and investor activity. At the same time, other cities continue to remain uniformly rational because they are largely end-user driven. How good is residential real estate for investment today? There is no one-size-fits-all formula for the viability of residential real estate as an asset class for investment. Different investors have different levels of expertise, experience, market knowledge and risk appetites when it comes to different asset classes. Those with insufficient expertise in stock trading are not likely to see satisfactory ROI from their activities on the stock market. Likewise, investors who lack the requisite knowledge and research to make winning real estate investment decisions will not meet with much success in this vertical. Real Estate investors who have sufficient market knowledge or work with experienced real estate consultants will not fail to see lucrative returns on their investments. Three parameters for successful investment in any asset class are when to invest, how much to invest and when to exit. In real estate, three additional variables are where to invest, into which size and configuration, and in which location. Residential real estate investment: Short-term & long-term outlook In the short term, residential real estate prices in different cities will either remain steady see minor upward or downward fluctuations. In the long term, they will rise again. The fundamentals of the India real estate story are extremely strong. Even in this turbulent economic environment, India remains the cynosure of interest by global MNCs and investors who see the limitless potential of a young, growing economy, a wealth of highly trained workforces across the manufacturing, IT/ITeS and services industries. All this translates into assured job creation, and therefore demand on the residential real estate market. However, Indian residential real estate is definitely not the best route for short-term investors. When it comes to opportunistic trading, gold is doubtlessly a far more suitable asset class - not least of all because one can purchase it in small or large amounts and liquefy it quickly. Turning a profit with gold is really only a matter of timing the market. Of course, this applies for residential real estate, as well. However, thanks to a conservative banking system that makes flipping extremely unattractive, residential real estate as an investment class is a very different ballgame in India. More and more regulations are being brought in to subdue the appetite for speculation in this sector. Also, the lowest entry point is definitely much higher than for gold. Finally, it requires a minimum incubation period in order to bring appreciable returns. Even after one has satisfied all the basic investment criteria - good location, right size and configuration, right entry point and right entry price - one needs to stay invested for the mid-to-long term in order to garner the best possible returns. As a general yardstick, an investment horizon of 3-5 years is ideal.

Gurgaon: Buyers seek more teeth in real estate bill 4/29/2013                   Around 300 representatives of various residents’ welfare associations (RWAs) in Gurgaon on Saturday demanded a stronger real estate bill and setting up of a regulatory body with sufficient power to take action against erring developers. Stakeholders converged for a discussion on the Real Estate (Regulation and Development) bill 2011 organised by the Federation of Apartment Owners’ Association (FAOA). The realty bill, which is yet to be tabled in the Parliament, proposes to set up a real estate regulatory authority in every state. Once the centres are set up, developers would have to submit all disclosures to the regulators concerned. According to the proposed bill, developers will be able to advertise their projects only after declaration of their approved plans, timeline and other details. “We are not trying to be a trade union or getting into a confrontation mode with developers, but we will certainly try to further our legitimate causes,” Gautam Gulati, senior vice-president, FAOA. The discussion was to be attended by union minister of housing and urban poverty alleviation Ajay Maken. The minister, however, didn’t turn up. The FAOA had recently made a representation over the draft bill to Maken. Some of the issues raised by them were transfer of maintenance and operations of condominiums, parking charges and stricter environmental adherence during the construction of flats. Sanjay Bhasin of Bellaire Flat Owners Association said homebuyers were being pushed to the wall by the builders “who indulge in illegal practices”. According to the residents’ body, the new law would require compulsory registration for builders who are developing projects on more than 1,000 sqm of area. Failure to do so will invite imprisonment of up to three years or a fine of up to 10% of the total project cost. The developer community, on the other hand, has been demanding an ‘industry’ status for the real estate business. “The demography of homebuyers in India has changed. The young and educated service class is demanding more transparency in the deals with realtors. The industry here is presently going through a phase of professionalism,” said Yash Gupta, MD of realty major Hines India.

Wealth due to real estate boom: DKS 4/27/2013                   Attributing the enormous growth in his wealth during the five years to the “real estate boom” in IT city Bangalore, former minister and senior Congress leader D K Shivakumar said he has a debt of over Rs 90 crore. At an interaction with journalists, jointly organised by the Press Club, Bangalore and the Bangalore Reporters’ Guild here on Friday, the Congress leader clarified that he had not amassed any ill-gotten wealth. “Coming from a well-to-do family, I had purchased some lands in and around Bangalore a few years back. Their prices have now zoomed manifold and hence this wealth,” he said. Referring to media reports that the value of his wealth accounts for over Rs 251.5 crore in 2013 as against his declared Rs 75.59 crore, he said, “The media failed to present my debt status which stood at about `90 crore.” “My political opponents, including JD(S) leader H D Kumaraswamy, had tried to implicate me with several graft charges,” he accused. Referring to the Assembly elections, he predicted a clear victory for the Congress and said “We may win 130-140 seats and form the government on our own strength.” Shivakumar also denied that those who had lost on the ticket would play spoilsport.

Tread carefully with US real estate 4/22/2013                   WHETHER it be apartments for $100 million or houses for $100, the US has something for just about every property buyer, but Australians thinking of making an overseas investment should know that real estate in Uncle Sam s backyard is a whole new ball game. Recent years have seen Australians inundated with advertisements for great investment opportunities abroad, after US house values fell 33 per cent from their 2005 peak, before bottoming out in February 2012, according to figures released by the data company CoreLogic. Some of these deals included houses in areas that were worst-affected by the GFC being listed for less than $10,000. What the advertisements neglected to mention was that many were in abandoned neighbourhoods and slums, where values could take decades to recover, if at all, due to the collapse of industries and bankruptcy of major employers. A typical example was Detroit, where according to realtor.com, some properties are still listed for $100 or less. he city had once been a mighty stronghold for the automotive industry, but now one third of residents live below the official federal poverty line, unemployment hovers around the double digit mark and the average price of homes sold in 2012 was $7500. "Houses in these locations are not great investment opportunities, said Shaun Osher, founder of New York real estate agency CORE. "Metropolis cities are a better investment opportunity because your demographic of audience is much wider. Mr Osher, who will be on the Gold Coast in May for the Australian Real Estate Conference (AREC 13), warns that if a deal seems too good to be true, it probably is. "If you buy a family home in Detroit, there are only so many people interested in that property type, he said. ``Compare that to a penthouse in Manhattan, almost everybody wants a piece of that. Mr Osher said Manhattan apartments range in price from $1 million to $100 million, making them among the most expensive in the world. While most Australians could not realistically invest in such a market, more affordable opportunities do exist. "The Miami market is very interesting right now, Mr Osher said. ``It s booming and there are a lot of new developments coming up. "On the west coast, Los Angeles and San Francisco are two very interesting markets because they always attract an international audience. According to realestate.com, existing three-bedroom houses can be bought for below $80,000 in Miami, while new constructions start at $212,000. These prices sound attractive, but investing in the US requires plenty of due diligence and a couple of ``working holidays . "It is very important to visit in person, source your own properties and your own property managers, because otherwise, when something goes wrong you are a long way away, property consumer researcher Steve Butcher said. "This can mean paying for overseas trips to sort problems out through the legal system of a different country. From a legal side, properties can only be bought through a US bank account, which have to be established in person and physically signed for onsite. And tax requirements must be fulfilled in both countries. US property may not be an option for some, but Mr Osher believes Australia has its own great opportunities. "Globally, people look for the same attributes, quality and location, he said. "Buy low and sell high. Buy when people are selling and sell when people are buying. If you follow that strategy, you should always do well.

Real estate may not follow gold experts say 4/23/2013                   Mumbai: Real estate prices in India are unlikely to go the way of gold and decline, experts said. Gold and real estate are primary targets for retail investors in India. “The drop in gold rates could have some knee-jerk reactions and impact short-term sentiments, but fundamentally speaking, gold and real estate have their own dynamics that drive their prices,” said Samir Jasuja, founder and chief executive at PropEquity a real estate research firm. “At the face of it, gold prices may look correlated but structurally, the demand-supply equation for gold and real estate are different.” The argument that the sudden drop in gold prices would have a knock-on effect on real estate may not be correct, he said. Gold prices collapsed internationally last week after the European Commission said Cyprus—one of the countries in the European Union—may have to sell gold worth about €400 million (around Rs2,845 crore today) to rein in its fiscal deficit. “The correlation between gold and real estate prices is not as distinct as one may at first assume, but the demand drivers for real estate are not the same as for precious metals,” said Anuj Puri, chairman and country head at real estate consultant Jones Lang LaSalle India, adding that the fundamentals of India real estate are strong. Experts say the market dynamics differ—gold is a more suitable asset class when it comes to opportunistic trading because it can be bought in small or large amounts and liquidated quickly. Residential real estate is not the best avenue for short-term investors, they said. “More and more regulations are being brought in to subdue the appetite for speculation in this sector. Also, the lowest entry point is definitely much higher than for gold,” Puri said. Real estate is fundamentally a long-term investment with a higher entry price, said Jasuja. On the Multi Commodity Exchange of India, gold has fallen 18.21% to Rs26,548 per 10 grams from its peak of Rs32,460 on 26 November. But it has gained 6.35% in the past five days.

Real estate developers all for demolition drive 4/24/2013                   While some of the local political leaders are opposing the move of demolishing illegal constructions by the municipal corporations, the Confederation of Real Estate Developer’s Association of India (CREDAI) has stepped forward to support the civic authorities. The CREDAI officials stated that the demolition drives against illegal construction is the need of the hour and urged civil authorities to set an example by curtailing the growth of such structures in the future. The issue of unauthorised construction came to light after an illegal building in Thane Municipal Corporation limit collapsed earlier this month, which killed over 70 people. Similarly, last year, an illegal building collapsed at Taljai in the Pune Municipal Corporation killing more than 10 people. Now the municipal corporations in Pune, Pimpri Chinchwad and Thane have taken up demolition drives against illegal constructions, which is being strongly opposed by some local political leaders. However, CREDAI’s support to the drive will strengthen the corporations’ move. Hemant Naiknavare, CREDAI-Pune Metro president, said, “It is the need of the hour to raze illegal buildings and discourage such construction in the future. Some builders who are involved in illegal construction are maligning the name of the real estate industry. Therefore, in the interest of the industry, we are supporting the elimination of the illegal construction.” Rohit Gera, vice-president of CREDAI Pune-Metro, said, “Unauthorised constructions are done without paying requisite development charges or any taxes to the corporations. Such developers use sub-standard materials and put the life of occupants at risk.”

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