Saturday, July 30, 2011

Snapdeal Gets $40 Mn From Bessemer, Nexus Venture And IndoUS Venture has raised $40 Mn in series B funding led by Bessemer Venture Partners, along with existing investors Nexus Venture Partners and IndoUS Venture Partners.

The funds will be used to expand its operations and employee base to 800 from current 500.

This year in January, Snapdeal raised $12 Mn from Nexus and IndoUS.

Snapdeal operates across 50 cities in India retailing 10,000 brands, averaging at 1.5 Mn new members per month. Its members has increased from 1Mn to 8 Mn in six months.

It also has operations in 5 countries - Sri Lanka, Nepal, Bangladesh, Maldives and Singapore and plans to acquire companies in Asia-Pacific region.

Founded by Kunal Bahl and Rohit Bansal, Snapdeal, owned by Jasper Infotech, initialy launched with retail lifestyle services, has diversified into branded products, electronics, fashion accessories and travel.

Last year, Jasper has also launched, a parent informative portal and it aims to become a platform for hospitals, baby care brands to interact with parents.

last year, Snapdeal acquiredBangalore-based Grabbon.

Recently, Snapdeal adopted a remote village in India and enabled clean drinking water facilities for its people by installing manual pumps. To show their gratitude, the village’s residents have decided to rename their village to Nagar.

In teh group buying space, earlier this month, Mumbai-based RCSPL, which owns real estate group buying portal raised $1 Mn in its first round of funding from Indian Angel Network.

by Charmi Gutka | July 29,2011 - 10:52 AM

Topics        : Private Equity
Industries  : Technology

Thursday, July 28, 2011

NAR & CREDAI Join Hands to Bring Transparency and Ethics in Real Estate Sector

National Association of Realtors India (NAR-India) and Confederation of Real Estate Developers Associations of India (Credai) have come together to bring transparency and ethics in property sales and other service offerings to customers. The two associations signed an agreement of cooperation to this effect on the sidelines of NAR-India’s third annual convention here.

“This initiative will help us in streamlining the brokerage process and to scale up the brokerage industry. We want to create a common language of fair and ethical practices among the realtor community to give a better service to customers,” PSN Rao, chairman of NAR-India, said. Brokers and builders are the two key stakeholders of the real estate industry and it is imperative that a synergy is cultivated between the two, according to him. The association represents about 14,000 brokers across the country. Credai president Lalit Kumar Jain said the collaboration between the two associations would also help reduce property prices.

The 12th Plan envisages a requirement to build 27 million dwellings even as the rapid growth in urbanisation is expected to add another 60 million people in the cities and towns by 2020, according to him. “Policy makers have to think of taking steps, including reducing the approval time lines, to make housing affordable to all sections. We need to create a decent accommodation for every person in the city and avoid mushrooming of urban slums,” Jain said.

Central govt approved 16 overseas investment proposals

Indian government has sanctioned 16 overseas proposals, as govt expecting business more than 9.24billion rupees ($207million) in the form of Foreign Direct Investment (FDI). In the previous month meeting these proposals has been approved by the cabinet committee as Foreign Investment Promotion Board (FIPB) has referred it.
Whereas L&T Finance Holdings has got consent to increase its Initial Public offerings (IPO) by 4 billion rupees from foreign investors as part of its private placement. However there are several other companies also has received approvals but yet no fresh inflows of cash have been specified. Centum Electronics of Bangalore is one such, which expects to undertake additional defence-related spending, and Star News Broadcasting.
Apart from this those who have got approvals including Soma Toll ways Pvt. Ltd. for investments worth 5 billion rupees in an investing company and Global Gourmet Pvt. Ltd. for issue of shares on a partly paid basis to develop the company’s food-processing business. According to the reports investment board have postponed the 14 proposals comprising of financial companies Natixis Global Asset Management and BNP Paribas on the other hand seven proposals were rejected and two were withdrawn by the applicants.

Posted: 27 Jul 2011 05:56 AM PDT

Wednesday, July 27, 2011

Farmers must get land's potential value: KP Singh, DLF

NEW DELHI:DLF ChairmanKushal Pal Singh termed the ongoing farmer agitation overland acquisition a 'revolution' and said farmers whose land is acquired must be paid the potential value of their property and not merely the current market value. But the head of India's largest real estate company said he was not in favour of retrospective compensation as it would set a grave precedent for all land deals across the country.

Land acquisition for industrial and residential projects has become a controversial issue with farmers demanding higher compensation in Noida Extension, on the outskirts of Delhi, which they claim was acquired at throwaway prices under the pretext of urbanisation.

Last week, the Allahabad High Court directed that land inNoida Extension be returned to farmers, sending ripples across an industry hit by high home loan rates and low sales.

"I believe this agitation will eventually settle down. Two revolutions are happening today. One is a revolution related to transparency and the second is related to acquisition of land. Without land, how can you have development of roads, highways, townships, etc? But it must be done based on rationality. If the government is able to settle these issues in the new Bill (upcoming land acquisition Bill), then we will be a winner, otherwise we will continue with the problem," Singh said in an exclusive interview.

He blamed people living in cities who make laws for the poor without understanding their issues. "All policy framework since Independence has been done by urban people. There is no true representation from rural areas."

Singh urged the government to make rehabilitation integral to land acquisition in the new Bill and said instead of a one-time payment, an annuity-linked payment system stretching over a period of time should be devised.

"Land is an emotional issue for the farmer in India. You cannot deal with his reaction by giving him money. Pay the money, but pay the right money," he said, pointing out that in Haryana farmers receive annuity for 30 years.

Singh suggested that land acquisition should be left to private builders, and the government should intervene only to acquire those pockets where farmers are not willing to give up land.

Sourced:- Economics Times

Builders say 20 percent fall in real estate prices likely

Property prices are expected to correct around 20% as realty developers may not be able to hold on to the current prices following the Reserve Bank of India’s liquidity tightening move to increase repo and reverse repo rates by 50 basis points (bps) each. On Tuesday, RBI raised its benchmark short-term lending rates by 50 bps each. This was the 11th successive hike by the central bank since October 2009, pushing the rate cumulatively by 325 bps.

“Banks will put pressure on developers for improving their business liquidity. It’s a question of who blinks first, and for now, it looks like developers will. This will result in properties becoming cheaper by up to 20%, which is good news for the buyer,” said Pranay Vakil, chairman of property consultancy firm Knight Frank India. According to experts, the current rate hike may achieve what the earlier 10 rate hikes could not. Most realty developers may be now forced to cut property prices and move the inventory out to infuse liquidity into their business, said market experts.

“It will lead to softening of property prices, as this 11th successive hike in rates will push equated monthly installments, or EMIs, up by 20% at aggregate level and to take care of this 20% hike, the borrower will have to increase his pre-tax income by almost 30%,” Vakil said.

The move has come in as a shock and will hit both developers and home buyers given the higher cost of funding, said most realty developers. According to leading realtor Niranjan Hiranandani, who is also vice-president, Indian Merchants’ Chamber and managing director of Hiranandani Constructions, RBI has done “beyond what’s necessary.”
The industry is facing a crunch and the fund gap over the next five years alone would be as high as $70 billion. The RBI announcement, therefore, could be detrimental to the growth of the industry and economy,” said Lalit Kumar Jain, national president of Confederation of Real Estate Developers’ Associations of India. This will particularly impact developers who have so far resisted any price cut.

“Volumes would certainly take a hit, particularly in the budget segment where buyers are more sensitive to increase in EMIs on their home loans. Ultimately, though, property prices should trend downwards as the ability of the developers to hold on to inventory would be increasingly under strain, given the rising cost of funds,” said Anjan Ghosh, senior group vice-president, head of corporate sector ratings ICRA.

  Source:-Magic bricks
 July 27, 2011 – 12:06 pm

Tuesday, July 26, 2011

IndiaCo arm IncuCapital Advisors launches Rs 100 crore fund

BANGALORE: Early-stage venture capital firm,IncuCapital Advisors, has launched its first fund with a target corpus of Rs 40-100 crore.

The firm, a subsidiary of BSE-listed private equity firmIndiaCo Ventures. was launched this year to incubate early-stage start-ups.

According to Kapil Khandelwal, member of IncuCapital Fund Advisory Committee, the fund will raise its capital from Indian investors and has already received a commitment of Rs 35-40 crore. "We might do an early closure once we reach the half-way fund raising mark, which we expect to reach in two months," he added.

The fund's investment committee will include Manish Kumar and Surojit Nandy, co-founders of IncuCapital, IndiaCo Ventures' vice-chairman Rahul Patwardhan and newly-launched IvyCap Ventures' founder Vikram Gupta. The ticket size will be between Rs 50 lakh and Rs 8 crore and investments will be in early-stage ventures that could even be at the ideation stage.

"We aim to invest in companies that can scale quickly," said co-founder Manish Kumar. "Considering the ticket size, we will not look at capex heavy sectors like manufacturing, unless we have a co-investor," said Khandelwal.

IncuCapital is one of many such incubation funds that are focusing on the early-stage funding space.

The Morpheus, a Chandigarh-based start-up accelerator, started out over three years ago as an incubator that provided assistance to fledgling start-ups. In 2010, it raised an 95 lakh-fund and started investing Rs 5 lakh in each of its incubatees.

Source:- Economics Times

Monday, July 25, 2011

Home loan blues force banks to approach RBI

NEW DELHI: Facing a potential hit on nearly Rs 10,000 crore lent to builders and home buyers in Noida Extension, banks are planning to seek a special dispensation from theReserve Bank of India to do without setting aside funds for possible default on these loans.

"We will need the regulator's indulgence on the matter. This is an extraordinary situation necessitated by court rulings," said the chairman and managing director of a public sector bank.

The issue is expected to be taken up at the level of the Indian Banks' Association, the industry lobby group, whose management committee is due to meet this week.

Land acquisition in Sahberi and Patwari, where over 30,000 apartments and plots were sold, has been declared illegal by courts. TheAllahahad High Court is due to hear cases regarding more villages this week, but the fate of nearly 70,000 apartments in Noida Extension is uncertain.

Demands for higher compensation have spread to neighbouring areas too. Bankers, however, said that so far they had not faced any trouble in getting their dues as individuals usually stick to repaying loans. Builders, who were already stretched given the increase in input costs and a slowdown in demand due to the rise in prices as well as interest rates, were a bigger worry for lenders. Banks fear that some of the developers may use the court ruling as a ground to defer payments.

Around the time the HC decides on the petition for other villages in Noida Extension, bankers will discuss the prospect of IBA approaching authorities in Noida,Greater Noida and other government agencies to work out a solution that is beneficial to the interests of buyers and builders.

Source:- Economics Times

IDFC PE Invests Rs 150 Cr In GVR Infra Projects

IDFC Private equity (IDFC PE) has invested Rs.150 Cr in Chennai-based GVR Infra Projects Limited for minority stake.

The funds raised will be used by GVR Infra for projects in engineering and contracting space that includes the roads sector.

Veda Corporate Advisors was the advisor to GVR on the deal.

This is IDFC PE's third investment in the roads sector. Earlier, it has invested in L&T Infrastructure Developers and Ashoka Buildcon.

IDFC has made 33 investments and has invested in companies like GMR Infrastructure, Gujarat State Petronet, Delhi International Airport,Manipal Global Education, Moser Baer Solar Limited and Viom Networks.

Incorporated in 2001 by G Venkateswara Rao and Ganga Prasad, GVR Infra Projects is the flagship company of the GVR Group.

GVR Infra apart from having a portfolio of five BOT projects also handles EPC orders and projects in urban infrastructure, railways and irrigation sector in over eight states. 

GVR portfolio projects include Hyderabad's Outer Ring Road project, Hubli-Lakshmeshwar (SH-73) in Karnataka and Bangalore-Hosur (NH-7) among others.

This year in March, 3i Group invested Rs.500 Cr in build-operate-and-transfer (BOT) road projects of Hyderabad-based KMC Constructions Limited.

 | July 25,2011 - 11:58 AM

Transaction Reference: Economic Times

Suzlon To Sell Its 26% Stake In Hansen For $187 Mn

Suzlon Energy Ltd is selling its remaining 26.06% stake in Belgium-based Hansen Transmissions International N.V. to Germany-based ZF Friedrichshafen AG, for 115 Mn pounds ($187 Mn).

ZF will acquire Hansen for 444.8 Mn pounds ($725 Mn) in cash, or 66 pence a share. Suzlon's wholly owned Dutch subsidiary AE Rotor Holding B.V owns 26.6% stake.

While Suzlon's deal with ZF Friedrichshafen AG is under the 'Irrevocable Undertaking,' this will lapse if a new buyer offers at least 12.5% more than ZF's offer.

Founded in 1923, Hansen is a London Stock Exchange-listed company and manufactures wind turbine and industrial gearboxes.

Suzlon had acquired Hansen in 2006 from private equity firms, Allianz Capital Partners and Apax Partners, for $565 Mn. In January 2009, Suzlon sold 10% stake in Hansen to London-based investment company, Ecofin, for around $120 Mn and in the same year in November, Suzlon sold 35% stake in Hansen for around $370 Mn, thereby reducing its stake from 61% to 26%. The stake sale was aim at paying off part of its Rs.13,500 crore debt.

Founded in 1915, ZF makes everything from transmissions and steering systems to chassis components and complete axle systems. The Zeppelin Foundation, administered by the city of Friedrichshafen, owns 93.8% of the company.

Suzlon Energy is planning to acquire around 5% it currently doesn't own in Germany's REpower Systems AG for about 63 Mn euros.

In April, the company hiked its stake in REpower to 95.16% from 90.5% and said its unit AE-Rotor Holding BV had initiated the process to complete they buyout of balance shares.

Under German law, the owner of 95% stake in a company is entitled to a squeeze-out procedure where minority shareholders' stake can be acquired on a compulsory basis.  

Suzlon acquired a majority stake in REpower in 2007 to enter the European wind-energy sector and access the technological capabilities of the German company. Since 2007, Suzlon increased its stake in the company by buying out other shareholders like Martifer and Areva.

by Irfan Khan | July 25,2011 - 04:40 PM

Transaction Reference: BSE

Wednesday, July 20, 2011

Noida's Loss Is Gurgaon's Gain

Noida's Loss Is Gurgaon's Gain

Noida Extension has ceased to be of interest to any dealer or buyer. Within days of the Supreme Court canceling construction of residential flats in the area, which it said was meant to be an industrial hub, potential buyers are looking towards other satellites of Delhi – Gurgaon, Faridabad, Ghaziabad. Real estate brokers say enquiries for residential projects in Gurgaon and Faridabad have gained substantial spurt. They say the crisis in Noida Extension is beginning to mar consumer sentiment in Noida as well. “We have done more sales in Gurgaon in the last 11 days than in other areas. This also coincides with new launches from Vatika and M3M and plot sales by DLF. Customers today feel more secure about buying in Gurgaon than Noida,’’ said Mr Samarjit Singh, MD, Agni Property Services, a real estate services firm. Enquiries have dwindled for Noida Extension since the Allahabad HC order on Sahberi came in mid-May. Since then, brokers in Noida have been aggressively promoting projects on the Noida Expressway as projects with safe land title.

July 10 2011, Business Standard

One97 Mobility Fund Invests In Mobile Gaming Firm, TheMobileGamer

One97 Communications Ltd's One97 Mobility Fund has invested S$1 Mn (around $820,000) in Singapore-based mobile gaming company, TheMobileGamer (TMG).

The funds raised will be used by TMG, to produce 10 more games this year.

TMG is a publisher of mobile social games like Club Wars, Monster Fight and Fun Factory. It licences and develops games that are localised and distributed through various networks and operators in South East Asia.

Distributed directly through, mig33 and Mozat, TMG has more than 500,000 subscriber base for its games.

In March TheMobileGamer had raised S$0.5 Mn from Innosight Ventures.

One97 Mobility Fund is a $100 Mn fund that it committed with SAIF Partners. The fund invests in early stage mobile companies.

Last month, the fund invested Singapore-based LeapSky Wireless, which has developed 'JumpSurf', a device which provides cheaper international data roaming to customers through bulk data deals with telecom operators across geographies.

Transaction Reference: Medianama
by Deeshesh Chheda | July 20,2011 - 10:40 AM

Tuesday, July 19, 2011

Real Estate Booming in China


Despite the slowdown in global real estate market China’s property market is still booming and it has continuous upsurge in demand for properties as the sector rises 32.9% year-on- year to $407b despite tighter regulations. And it there is one reason of upsurge in demand is that realtors are providing them affordable housing.
According to the market analyst reports investment in real estate market rose to 32.9percent and increasing day by day and current state is 2.63 trillion yuan of which 1.86 trillion yuan went into housing, a 36.1 percent increase from the sameperiod last year, the National Bureau of Statistics (NBS) announced on Wednesday.
In the first quarter of the 2011 China’s Fixed Asset Investment (FAI) rose 25.6 percent to 12.46 trillion yuan. In June, Fixed- Asset Investment fell 1.04 percent from may, as per the NBS reports.
According to the market specialist affordable housing one of the most major factor for the country’s growth.

Posted: 14 Jul 2011 05:27 AM PDT

Mumbai's residential market at its lowest since 2007: Knight Frank

AHMEDABAD: Real-estate sale volumes in Mumbai, one of the strongest residential market in the country, have plummeted more than 70% since its 2007 heydays, says a recent report by global property consultant Knight Frank.

A drop in transaction volumes has hit the Central Mumbai market the hardest as the quantum of unsold inventory makes up over 40% of the units launched in this micro-market.

The Mumbai real estate market has stagnated over the previous three quarters, with buyers largely keeping away from the market with the expectation of an imminent drop in prices in the near future, states the report.

The Maharashtra State stamp and registration department data has shown a consistent decline in the number of property sales registrations over the previous year. Total property registrations have declined 20% for the six month period ending June 2011, compared to the corresponding period last year.

The report states that in the present market conditions developers have been more open to negotiation in the premium segment, reducing prices by as much as 20% in favour of a sizeable up-front payment.

Tight liquidity conditions, increasing inventories, rising interest rates, and construction costs should eventually tip the scales in the buyers' favour, the report adds.

Wednesday, July 13, 2011

Shiv Nadar-controlled HCL may buy out stake in DLF Pramerica Life Insurance Company

NEW DELHI: The Shiv Nadar-controlled HCL Group is in advanced discussions with real estate major DLF to acquire a substantial stake in DLF Pramerica Life Insurance Company Limited , for around Rs.450 crore in a two-phase transaction.

The acquisition will be done through a privately-held company and will represent Nadar's first diversification outside the IT business. Nadar set up HCL in 1976 and the two listed IT companies of the group - HCL Technologies and HCL Infosystems - have a combined market capitalisation of Rs.35,828 crore or $8 billion.

While spokespersons for both HCL and DLF declined comment, a person with direct knowledge of the talks said the HCL group company will first acquire a 44% stake in the insurance joint venture by buying fresh shares of the company and at a later stage, buy out DLF's residual 30% stake in the company, subject to approval of regulator Irda.

Regulatory Hurdle

At present, DLF holds 74% stake in the joint venture with Prudential Financial, the second-largest life insurer in the US, holding the remaining 26%. DLF's share holding in the insurance joint venture will fall to 30% after HCL's investment.

The transaction could face a possible regulatory hurdle as current guidelines stipulate that the original partner in a life insurance joint venture cannot sell its stake in the company during the first ten years of operations.

Last month, Reliance Industries announced that it was buying Bharti's entire stake in Bharti AXA Life Insurance , and if the insurance regulator gives the goahead for that sell-off, it will smoothen the way for this transaction as well. "Given an option, DLF would like to sell its entire holding in shot," said the person involved in the transaction.

Source:- Economics Times

India up 10 places in 10 yrs on insurance chart

UMBAI:MUMBAI: India has overtaken Spain to become the 11th largest insurance market in the World. But while the Indian market has jumped up 10 places in the last decade, Indian companies individually are yet to make their presence in global rankings because of their localized operations.

According to a report on world insurance markets in 2010, compiled by Swiss Re , total premium volume in the world market rose to $4339bn in 2010 - a growth of 2.7% after falling for two years after the global financial crisis. India's inflation adjusted growth which was only 4.91% in 2010-11 is still twice the growth recorded by global markets following a decline in US and several European markets.

In the decade since the opening up of the insurance sector the domestic protection industry has overtaken several developed markets. The gain in market share has accelerated after the crisis largely because of the shrinkage in several European markets. In the life insurance business alone India has raced ahead of ten major markets in the last decade. These include - Australia, Switzerland, Spain, Belgium, Sweden, Ireland, Netherlands, Canada, South Africa and Taiwan.

While the Indian market has grown, Indian companies are yet to make it to the top 20 list either in sales or market capitalisation.

According to Ashvin Parekh Partner Ernst & Young, Indian insurers have managed to grow by riding on the performance of the stock markets. "India per se is a strong savings economy and insurers have tried to capture this aspect by designing products around savings. And in order to render higher return they have designed products that are riding on the performance of other financial markets"

However, while the saving products give them the topline it does not necessarily translate into profits. "Although the margins are in the protection products, the real effort to push protection has not happened" said Mr Parekh. He points out that while the insurance companies have been successful in capturing the behavioural aspect of Indians when it came to finance they have willy-nilly shifted orientation to medium-term instead of having a long-term focus.

"From 2000 onwards, the Indian insurance markets has grown seven times. But at the same time the number of companies has grown four fold with around 45 insurance companies" said Monish Shah, director, Deloitte India. According to Mr Shah, the structural changes introduced by the regulator which will enable companies to raise capital from the markets and merge will be good for the industry. "In the medium-term there should be some consolidation and we will see some global size players from India" he said.

Most of the smaller markets like Canada, South Africa, Australia have companies that are giants compared to Indian companies. In terms of market capitalization, the top two life companies in the world are Chinese - China Life and Ping An Life Insurance. LIC which has marketshare of over 80% in total premium has revenues of less than $50bn, which keeps it out of the top 10 list.

Source:-Economics Times

Tuesday, July 12, 2011

Private equity and offshore funds flock as Banks cut loan exposure to real estate developers

NEW DELHI: As banks cut their loan exposure to real estate developers, some private equity and offshore funds as well as domestic financial services players are latching on to the opportunity by providing debt to these companies.

A number of them like Red Fort Capital , Credit Suisse and Goldman Sachs are setting up non-banking financial companies (NBFCs) to either lend to property firms or invest in debt and quasi debt securities issued by these companies. Local groups like Future and Piramal are also participating in such secured lending. Foreign funds have severe restrictions in taking direct debt exposure to real estate companies.

Earlier, they used to subscribe to instruments like optionally convertible debentures, preference shares and securities attached with put options to invest in Indian real estate companies. Such investments, which were essentially debt, would masquerade as equity investments under the automatic foreign direct investment route.

With the government shutting these investment windows, offshore investors have found out that it makes more sense to set up NBFCs to fund real estate companies. "This would mean better control over the asset for the investor. In today's environment, security is of paramount importance to investors," says Sanjay Darolia, vice-president, finance, at TCG Real Estate , which has an NBFC in India. In the past some of the foreign investors have burnt their fingers when they stepped in to attach securities following defaults.

The enforceability of securities ran into legal hurdles and borrowers pointed out FEMA violations to wriggle out of their commitments. Such problems are unlikely to arise when a local NBFC buys debentures that promise a high return. "A lot of private equity investments in the past had debt like features and RBI had raised questions about it. Now a number of funds are finding a more legal way of providing debt," says Sameer Nayar, managing director and head of real estate finance, Asia Pacific at credit Suisse Securities .

Credit Suisse has a local NBFC in India. Since property stocks have been volatile and suffer the most during a downturn, debt exposure by NBFC arms help foreign groups to diversify their bets on the Indian property sector. "Foreign funds are securing their equity investments in Indian real estate by taking parallel debt exposures through NBFCs along with their offshore equity funds," says Anckur Srivasttava, chairman of GenReal Property Advisers.

Apart from construction finance, many developers require money to repay their existing bank debt. As customer advances have slowed down, the developer is looking at ways to raise cash without reducing the price of his product. In the recent past, some developers have raised capital from moneylenders at very high costs, sometimes even up to 36% a year, in order to hold on to prices.

Foreign private equity funds that are looking to invest through their NBFCs can also raise money from local banks. They can leverage the money they have put in the NBFC up to six times. "This allows them to have a bigger balance sheet on the NBFC side," says an industry expert.

In India, foreign funds that invest in real estate are bound by FDI norms, which put restrictions on how much, and what they can invest in. "A key reason why NBFCs are being used by these funds is that NBFCs do not have to comply with FDI guidelines and there is a lot less end-use restrictions on them," says Srivasttava.

Private banks often use their NBFC subsidiaries to lend to property firms as the parent bank has internal exposure limits on such sector . Besides, NBFCs often serve as an intermediary between an FII (which are restricted from investing in unlisted debt securities) and a property company.

In such transactions the realty company places debt with an NBFC, then goes for stock exchange listing of the securities. Once listed, the securities change hands, with the NBFC offloading the papers to the offshore fund.

Source:- Economics Times

Disclaimer: Any content mentioned in the mail is for information purpose only and does  not constitute any offer or guarantee whatsoever on the content mentioned above. Prices are subject to change without notice.It is solely your responsibility to evaluate the  accuracy, completeness and usefulness of all opinions, advice, services, merchandise and other information provided and you are strongly advised to check these independently. Loans & Property Curry shall not be liable for any deficiency in service by the Bank/NBFC/builders/developers/sellers/property agents.

International Finance Commission to enter low-cost housing business, to invest in projects in NCR, Ahmedabad, Bangalore & Kolkata

BANGALORE: International Finance Corporation , the private investment arm of the World Bank, will soon enter the low-cost housing segment in India. The corporation is currently evaluating models such as tying up with developers, entering into public-private partnership with state governments and infusing money into a fund dedicated for affordable housing to give boost to its maiden housing venture in India.

"We had received management approval and wanted to enter into a segment which was largely untapped," said a senior official from IFC, who did not want to be named. IFC, which is working out the modalities, wants to offer homes in the .`3-10 lakh price range to households with incomes between Rs.8,000 and Rs.25,000. IFC will look at such opportunities in the suburbs of Ahmedabad, Bangalore, Delhi-NCR, Pune and Kolkata.

"The team is currently studying the cost implications associated with various models as it is a very high risk area. We need to tread carefully and understand the market," said the official.

IFC is also strengthening its affordable housing team in India. Senior investment and property development managers and green specialist from its global office are expected to join the Indian arm by August. The low-cost housing initiative is currently headed by Subrata Dutta Gupta who was earlier involved in IFC's housing finance business.

In one of its initiative, IFC, India's National Housing Bank , and the Rajasthan government are coming together in a unique public-private partnership to establish a new housing finance company in Rajasthan that will provide home loans to low-income households.

IFC's own stake and mobilisation through stakeholders such as National Housing Bank, government of Rajasthan, and private sector players will help establish the new company with an initial capital of $22 million. "The company would try to replicate a similar model in other states," he said.

The low-cost or budget housing segment in India has also attracted professionals like Jerry Rao, the founder of Mphasis , ex-Citibank executive Ramesh Ramanathan as well as the Tata group. A number of new players have also emerged in the housing finance space for lowcost homes. However, delays in clearances and high land cost for low-cost housing projects are forcing several developers to revisit their projects.

Players like Ahmedabad-based Bakeri Group , Evershine Builders , Lodha Developers and Indiabulls Real Estate have either pulled out of the low-cost housing segment or have changed their offerings. Of the total shortage of about 25 million affordable housing units in India, 98% constitutes demand from economically stressed and low-income households. The government's National Urban Housing and Habitat Policy recognises that public sector resources alone cannot meet this high demand.

Separately, the IFC is in talks with four non-banking finance companies to infuse capital in them to expand its low-income housing finance business in the country. It plans to invest around Rs.20 crore for 20% equity in two-three such NBFCs by 2012. Last year, IFC had picked a minority stake in Adhar Housing Finance , a new company floated by Dewan Housing targeting low-income households for housing finance.

Source:- Economics Times

Builders, banks pass buck; Greater Noida buyers left in lurch

GREATER NOIDA: Over 5,000 middleclass flat buyers in Noida Extension are staring at an abyss. They are the wronged ones as the bottom has been knocked out of their dream house because of a conspiracy of silence between the Greater Noida Industrial Development Authority and the builders. Neither told the buyers that the land was the subject of a court dispute. Now, the buyers face a dilemma . Either, they will have to bear the interest burden on the loans they had taken from the banks or agree to the terms of the very builders who misled them for transferring them to a new project.

They can seek a refund. The tripartite agreement between the buyer, the bank and the builder allows for a full refund in case the project is abandoned or called off. But the interest they have already paid to the bank will not be refunded and that's a huge amount. Anyone who has ever taken a home loan knows how the initial instalments just recover the interest.

Also, the builders - who are like the Authority paying lip service to the cause of the buyer and calling for calm - have quietly let it be known that they won't refund the full amount. This is a double whammy for the investors, many of whom have invested their life's savings for an affordable house in NCR .

Bankers suggest relocating to a new project of the same builder would ensure that the buyers don't lose the interest amount. But then they would be completely at the mercy of the builder who would charge current rates and give no discount. Forget about lifestyle choices of a swimming pool or a gym etc.

In these circumstances, approaching the courts may be the only recourse left to the buyers.



GREATER NOIDA AUTHORITY, whose acquisition process in Shahberi village has now been held to be illegal by SC


THE BUILDERS, who did not reveal to the buyers that there was a case pending in the Allahabad high court against the land acquisition


THE BANKS, which failed to do proper due diligence to ensure that the projects were free from any legal encumbrances


AT LEAST 5,000-6 ,000 INDIVIDUAL BUYERS, most of whom are not just paying rent on their existing accommodation but also EMIs for the loans they took to buy property in these projects. They entered into agreements in good faith, but were never given complete information


Those who have invested all, or large parts of their life's savings, in buying houses in the areas under dispute deserve justice. It is not their fault that the land acquisition process was flawed and has been struck down. Nor are they to blame for builders concealing from them the vital information that the land was under litigation. Even the banks failed to warn them that there could be problems with the project. In short, they are victims of a combination of deceit and incompetence. There is no reason they should pay for this mess. Not only must the builders refund their money with interest, the buyers should be paid compensation by both the builders and Greater Noida Authority for the mental stress they've had to undergo

Source :-Economics Times

Friday, July 8, 2011

Demand for Home Loans May Decline

At the peak of the global housing crisis in 2008, a group of executives at State Bank of India (SBI) were busy devising a new home loan scheme meant to boost the sluggish demand. The growth in housing loans had fallen from a high of 31.2 per cent in December 2006 to 4.1 per cent in March 2009. After State bank of India (SBI) launched its special home loan scheme, home loan portfolio of banks in India rose 30 per cent on a year on year basis till September 30 2010, against 20 per cent in 2009-10, according to data from the Reserve Bank of India (RBI). In 2011, as the housing market in the West slowly picks up, the Indian market may be in for slack. SBI withdrew its home loan scheme with effect from May, after RBI raised concerns on the borrowers€™ ability to repay them over longer tenures. After a period of sustained growth, bankers expect a moderation in home loan growth in the coming months. Rising interest rates and property prices are once again set to hit demand for home loans, say bankers.

Indian Realty News, 29 June, 2011

ICICI bank has raised home loan rates by 25bps

MUMBAI: ICICI bank country’s biggest home loan and other loan provider have raised their rates by 25 basis points to hike its benchmark rates. According to the ICICI senior officials said that “the hike was in direction with the increase in its cost of funds.” As the hike in base rate taken place within two weeks of Reserve Bank of India increasing policy by 25 basis points and it will be come into effect from 4th July.

Due to increase in rates by 25bps will push up the monthly installment on a 20year, Rs 30 L housing finance by over Rs. 500. ICICI is the only bank in India to respond to RBI’s policy measures, whereas several other lenders are setting back a increase with the fear that credit growth may falter.

Posted: 05 Jul 2011 05:18 AM PDT

Banks turned furious to Gr Noida’s realtors

After the Supreme Court’s surveillance with the concern of land acquisition for real estate in Noida Extension and Greater Noida, so banks other money lending institutions has said no to the financial help to under scanner projects. The projects such as Supertech-II (Ecovillage project) centrally located in the disputed land of Shahberi village — parts of projects of Amrapali, Panchsheel Greens and Ajnara Homes and the entire project of Mahagun Developers are not in the good books of banks, especially public sector banks.
According to sources when contacted to the leading the banks and money lenders such as UCO, PNB, SBI and LIC Housing Finance they said finace for this particular pocket is not available
Whereas private banks showed their willingness to lend the money to home seekers but banks such as SBI and PNB are not ready to lend money in Noida Extension area. A builder on the basis of anonymity said that “as the Noida extension area is now disputed so we are not interested to invest in that particular area.”

Posted: 06 Jul 2011 05:37 AM PDT

Monday, July 4, 2011

Government’s orders: Pay only for carpet area, not super built-up

The builder lobby which has till date cocked a snook at the Civic Body's attempts to stop malpractices in the real estate sector, will now have a tough law to deal with.

This monsoon session, the government is planning to introduce a new consumer-friendly policy that aims to put developers on a tight leash while forcing them to sell homes on the basis of carpet area only.

Called Real Estate Regulatory Authority (RERA), the policy will have provisions for stricter punishment for those who refuse to tow the line, and make it easier for home buyers to seek legal recourse. Confirming the developments State Housing Minister Sachin Ahir told Mumbai Mirror, "Government has made a change in the draft model which will keep a check on developers who sell flats on the basis of built-up area."

Over the years, home buyers have been arm twisted into paying for more than what is the actual area of the flat. A 1000 square feet house in Juhu priced at Rs 25,000 per square feet, should cost you Rs 2.5 crore. But thanks to the inclusion of the built up area which puts the saleable area of the flat at 1350 square feet, you have to pay Rs 3.37 crore.

Though the civic body has banned the sale of flat on the basis of built up area, the builder lobby has largely ignored the diktat, thanks to the lack of punitive measures.

Ahir said, "No one is following the rules as the government has no control over the sector. That's why we are planning to introduce RERA in this session. This will also have various consumer-friendly provisions."

These include safeguarding the buyer's interest when developers renege on their brochure promises of playgrounds and open areas. "These would be the ideal situations when buyers can fall back on RERA, which will be armed with judiciary powers," Ahir said, adding, former judges will taken on board as committee members.

RERA may aim to keep a check on runaway prices, experts feel it could just have the opposite effect as well. Already facing a strong opposition from the builder lobby, it may just encourage developers to jack up the unrealistic prices further if they are forced to quote carpet area prices only. Experts warn a rise of 30 to 40 per cent in the prices, which will consequently hit the consumer who is already struggling with escalating home loan rates and unaffordable houses.

Speaking for the developers, Sunil Mantri, chairman of the Sunil Mantri group urged the government to make RERA "reasonable and rational." He said, "If the government is considering regulating the developers, it should also consider committing to better infrastructure. Besides, if the civic body sanctions the plan on the built up area, how can the government expect us to stick to carpet area without increasing the price?"

Mantri says all suggestions to the government to sanction plans based on carpet area only have been ignored. "Had it been done, we would have no problem selling on the basis of carpet area and everyone would have gone home happy."

If the bill is passed during this monsoon in its present form, home buyers should expect a bleaker real estate scenario in the next six months.

Source:- Economics Times

Real estate sector to be hit as construction costs up 18 pc

MUMBAI: The increasing construction costs are expected to hit the real estate sector, says PropEquity, an online data and analytics search platform covering the Indian real estate industry, in a recent study.

"Taking into account price increase of the four key construction components - steel, cement, labour and bricks - there is an 18 per cent gross rise in construction cost over the last 2 years (2011 over 2009). This escalation will corrode the profit margins significantly," PropEquity study says.

The impact of increased delivery commitment along with escalating costs will affect the delivery of residential units on time. It is estimated that delivery of 480,000 residential units across affordable, mid and luxury housing segments, scheduled for completion during 2011-13, will be delayed in the 11 cities, the study says.

As a result, developers are likely to lose interest in projects, making delays in project execution inevitable, it adds.

PropEquity has conducted an extensive study of the construction delays in real estate projects and the impact on the industry. Data points covering over 10,000 projects being executed by over 1,500 developers across 11 cities in prime residential locations have been studied to arrive at the trends contained in the research report.

The cities that were included in the study were Gurgaon, Noida, Greater Noida (North); Mumbai, Navi Mumbai, Thane, Pune (West); Bangalore, Chennai, Hyderabad (South); and Kolkata (East).

To receive timely possession of apartments has become a distant dream for most home buyers. It is a sad state of affairs, with even projects promoted by the biggest names in the industry witnessing delivery delays much beyond committed timeliness, study said.

Delays in projects result in cost over-runs and a dilution of customer confidence, thereby multiplying the challenges for the developer. The past year-2010 can be regarded as a good phase for the residential real estate markets with absorption levels scripting a recovery with a huge price appreciation after the Lehman crisis in late 2008.

This recovery, though initially driven by affordable projects also witnessed healthy participation from the mid and premium residential segments more recently. The last 2 years have witnessed many developers selling a large volume of units, much larger than what they have sold and executed in the past.

This draws attention to the fundamental issue of execution capabilities, questioning the capacity of players to successfully execute on time and to the committed specifications. This assumes greater relevance since a majority of the delivery commitments are in the affordable segment with relatively thinner margins and in an environment of escalating input costs.

Saturday, July 2, 2011

Work of overhead electrification for Metro begins

Mumbai, – With the prospect of riding the Metro drawing close, the construction work of Metro is gaining momentum. The work of erecting the OHE masts (overhead electrification systems) on viaduct has commenced in a big way and 135 out of the 750 masts (poles) required for the overhead wiring have already been erected. The height of each mast – weighing about 550 kg – varies from 6 to 8 Meters depending on the designs.

“Power supply and electrification for a project like Metro Rail is probably it’s most critical part. The power required to run the trains is supplied at 25,000 volts through overhead electrification system. In short, this system provides life to Metro Rail. We are working hard to complete the task as early as possible on a stretch where Metro tests could be conducted this year”, said Mr. Dilip Kawathkar, Joint Project Director (PR), MMRDA.
Commenting on the development, Mumbai Metro One Pvt. Ltd. spokesperson said, “We have designed the entire system to the highest standard of safety following the most stringent standards and design codes”.
These masts are erected during the early hours from 1.00 am to 5.00 am. The distance between the two poles, on an average, is 30 meters.

Posted: 30 Jun 2011 11:49 PM PDT

Real estate market ready for correction

NEW DELHI/BANGALORE: Property prices are finally correcting after a year of upswing that crimped home sales across the country, a housing index showed on Friday.

Property rates dropped in the quarter ended March over the previous three months in eight of the 15 cities tracked by the National Housing Bank's residential housing price index, or Residex, with the fall being the steepest in India's silicon valley, Bangalore. Prices rose the most in Delhi, though at a modest 2.4%.

In metros where prices fell, Bangalore was followed by Hyderabad (4.6%) and Kolkata (0.8%). Other cities that saw a decline were Kochi (14.9%), Faridabad (6.4%), Jaipur (2.6%), Surat (3.8%) and Bhopal (3.6%). Prices in Mumbai, Pune, Lucknow, Ahmedabad, Patna and Chennai went up marginally.

"Some of the markets like Bangalore had seen a big increase in property prices over the last one year. Now the market seems to have responded to the slackness in demand and higher interest rates," said National Housing Bank chairman and managing director RV Verma.

Home loan rates have gone up from about 8% a year back to about 11.5% today. As a result, property prices, which have been on a boil across the country in the last one year, have begun to come down, forcing buyers to defer purchases in many markets, especially Bangalore, Mumbai and Delhi.

Naresh Dandapat, regional director (south) at property consultancy Knight Frank India, said there was a correction in the Bangalore market in the last 45 days. "It is headed for a further correction as developers are looking at tapping the latent demand in the market," he said.

Kolkata and Hyderabad have seen a general flight of capital because of political uncertainty. "In the January-March 2011 quarter particularly, there was not much of decision-making in Kolkata, both on the government and consumer side, because of the elections," Verma said. In both these cities, developers were keen to quickly exit projects by lowering prices.

The rise in interest rates in recent months was the main reason for prices falling in smaller cities like Jaipur, Surat, Kochi and Bhopal. "It impacts small buyers the most, who then defer their decisions to purchase homes," Verma said. The demand slump in these cities is not so much because of high property prices.

The surprising development was the price increase, though marginal, in Mumbai and Delhi, where demand had slumped in the last few quarters. "In these two cities big players have the capacity to hold on to prices," Verma pointed out.

In the last year, very few projects in Mumbai got approvals because of greater scrutiny by authorities, which has meant very little new supply. "As demand picks up, there will be short supply in Mumbai and prices will increase further," says Lalit Kumar Jain, president of Confederation of Real Estate Developers' Associations of India.

Source:- Economics Times