Property prices in TN stabilising: Sundaram BNP Paribas Home Finance

Coimbatore, Sept. 10:

Real estate prices in the Chennai market, which had trebled in the past five years, have taken a breather with property prices in the metropolis stabilising, according to Srinivas Acharya, Managing Director, Sundaram BNP Paribas Home Finance Ltd, Chennai.

He said though his company is not into reverse mortgage right now, it is open to the concept and would respond positively to any customer demand.

Speaking to Business Line here on Monday on the sidelines of the opening of its second branch in the city, he said the company’s loan profile has witnessed robust growth. He expected to close the first half of the current fiscal with a disbursement of about Rs 1,200 crore equalling what the company had disbursed in the whole of 2010-11 FY. In 2011-12, the loan disbursement was about Rs 1,950 crore

He said while demand was ‘still there’, what was happening at Chennai and Coimbatore was that real estate ‘prices have stabilised’ and property price increases were not taking place as frequently as in the past. Describing it as a ‘good sign’, he expected this development to draw more people to investment in housing.

While this could partly be due to buyers’ resistance, a key factor was that mega projects were taking time and absence of any price escalation in them was having an impact on smaller projects.

He said the Chennai real estate market had witnessed the sharpest growth in the country during the 2007-12 period. According to the NHB Residex, the 20-city housing price index with 2007 as the base year, Chennai realty prices had more than trebled in five years. Its nearest competitors were Faridabad, Pune, Bhopal and Indore but their gains were far less — just double the base rate. He did not expect the demand for residential space in Chennai and Madurai, among others, to come down.

Confirming the slowdown in growth in commercial real estate projects, Acharya said this segment was dependent on economic growth. The slowdown in the economy was having an impact on this sector as corporates have put the breaks on branch expansion. Even in the mall space, there was oversupply, particularly in Delhi. But Chennai could see some more malls that were specific to the residential areas where they spring up.

S. Rajagopalan, VP & Head-Operations, SBNPP Home Finance, said a big mall was coming up in the OMR area in Chennai that would fill the need for such a facility in the area.

On whether home loan rates would head South, Acharya said “home loan rates have more or less stabilised” in the past few months and the rates would go down only if the interest rates fall. But he felt that the interest rates did not have a great bearing on the purchase decision of home buyers.

He said the home finance companies are also becoming alive to the changing social situation that is reflected in loan tenures. Earlier, the home loans were made co-terminus with 60 years of age of the borrower. This was extended to 65 years and today loan closure up to 70 years is possible in exceptional cases. What has facilitated tenure extension is that companies are extending the retirement age of their employees to beat back attrition.

Referring to the home loan companies re-jigging products such as waiver of last year’s instalment for prompt repayment, Rajagopalan said in the experience of most home loan providers, the maximum loan tenure has been 12-13 years. This was because of the preference for pre-closure of loans. Besides, the loan’s tax efficiency tapers off as the term progresses.

On whether his company was eyeing the reverse mortgage space, Acharya said his company did not offer this product now. But as more parents were left to take care of themselves, the need for it would grow. There has been no request for it from its clients but his company was watching the trend and would ‘certainly come out with it’ once the demand arises in the coming years.

He said the branch opened in the R.S. Puram area in Coimbatore today was the 89th branch and 39th in Tamil Nadu. So far this year, 13 new branches have been opened and 12 more were slated for opening in the remainder of the year, enabling the company to cross a century of branches.

Source: http://www.thehindubusinessline.com/news/states/article3881135.ece

Realty firm for seniors to complete Rs 500 cr project in 3 yrs

Chennai: A real estate firm focusing on constructing dwellings for retired senior citizens in south India expects to complete Rs 500 crore worth of projects in three years.

The demand for retirement villas and apartments have been growing consistently over the last two years, Covai Senior Care Constructions, Director (Finance and Strategy) P B Anand said.

"Currently we are executing seven projects across South India valued at Rs 500 crore. We expect it to be completed in another three years," he said.

The Coimbatore-based firm is in the final stages of its Rs 50 crore fund raising plan, he said.

"We have investments of Rs 25 crore as equity from an investor based out of United States. We raised another Rs 25 crore through debts. Currently, we are in the fag of it (fund raising plan)" Covai Senior Care Constructions, Director (Finance and Strategy) Anand said.

He said the company is currently doing projects in Bangalore, Chennai, Puducherry and Coimbatore besides planning another project in Kancheepuram.

The company reported revenues of Rs 60 crore in 2011-12 fiscal and aims to register Rs 100 crore this year, he said.

Anand and Covai Senior Care Constructions Managing Director Colonel A Sridharan were here to announce their upcoming two projects at Puducherry and at Sulur near

Coimbatore, both of which are retirment villas and apartments.

Source: http://www.financialexpress.com/news/realty-firm-for-seniors-to-complete-rs-500-cr-project-in-3-yrs/994882/0

Developers focussing on amenities to attract Chennai buyers

Chennai

In order to attract home-buyers in Chennai, who are seen as conservative, developers are planning several township projects with a host of amenities in the coming months, says a report released by property consultancy firm Jones Lang LaSalle India. “There has, so far, been no scope for the growth of large-sized township projects within the city. Chennaites had been showing an unyielding preference towards living within the CBD because of the dearth of good schools, convenience stores, entertainment and restaurants in other areas,” said Badal Yagnik, managing director, Chennai & Coimbatore, Jones Lang LaSalle India.

“Developers had been more than happy to construct projects of 12-30 units with limited or no amenities, little or no green cover and extremely restricted open spaces.” However, things are set to change in the coming months. “In the coming months, Chennai will see a major change in this aspect, with a string of township projects by developers of national stature under execution and nearing completion,” he added. The new ‘game-changers’ include generous landscaping, serene environment, schools within the campus, big club houses, health club facilities for both indoor and outdoor sports, multiplexes in the vicinity, health care, restaurants and large swimming pools, states the study.

“As a result, community living in the true sense is finally going to emerge in Chennai. We anticipate that once these large projects are fully executed, we will see a decisive forward momentum in the concept of large, well-equipped residential communities in Chennai,” said Yagnik.

Source: The Economic Times, Chennai

Migrants build city homes

BHUBANESWAR: People from neighbouring states dominate city realty market's workforce even as workers from Odisha continue to migrate to outside the state in search of work.

While masons from Jharkhand and Bihar rule the state capital's construction works, carpenters are mainly from West Bengal. Those from Andhra Pradesh have a substantial presence in all categories while plumbing work is the forte of local people.

C S Sharma, a labour contractor from Jharkhand who operates from the city, said construction workers from outside Odisha outnumber the locals in Bhubaneswar. "Outside state workers tend to work continuously for months without taking breaks while local people take too many leaves. That is why it is easier to meet deadline with outsiders," said Sharma who currently has around 500 workers under him here, mostly from Jharkhand. Similarly, when Odia workers go for work outside Odisha they work without leave for long, he added.

The industry knows who is good at what. In various components of the semi-skilled works, people from different areas have expertise. "Masons from Bihar and Jharkhand are good at finishing work while there is no match to local plumbers, mainly from Kendrapada and Jajpur districts. Workers from Bengal are good in painting work and carpentry," said Manoj Chandrabanshi, another labour contractor.

Real estate developers said big projects prefer mix of workers. "If one employs workers say only from Odisha, none will be left to work during a festival like Raja. Similarly, those from West Bengal prefer to go home during Durga puja. If the workforce is mixed, work will not suffer," said D S Tripathy, state president of confederation of real estate developers of India (Credai).

Besides hundreds of housing projects by private builders, big-ticket government projects such as All India Institute of Medical Sciences, National Institute of Science Education and Research, Indian Institute of Technology are under construction in city these days. Besides, work for around dozen flyovers and expansion of National Highways are under way here employing a huge workforce.

According to 2001 Census, 16 lakh Odia were listed as seasonal migrants to other states. The cities attracting maximum migration from the state included Kolkata, Surat, Hyderabad, Visakhapatnam, Raipur, Coimbatore, Delhi, Chennai and Bangalore. While thousands of people from Odisha migrate to Nalgonda, Guntur and Vizag, among other areas of Andhra Pradesh to work in brick kilns and as farm labourers, migration from Andhra is also substantial. The 2011 census report on migration is still awaited.

Source: http://timesofindia.indiatimes.com/city/bhubaneswar/Migrants-build-city-homes/articleshow/15111095.cms

Blackstone eyes biggest realty deal

MUMBAI/BANGALORE: Blackstone Group is set to acquire 36% ownership in the tenanted office space portfolio of southern developer Embassy Property Developments for about $230 million (Rs 1,300 crore), said bankers close to the transaction. This will be Blackstone's biggest real estate deal in India, giving it part ownership of more than 12 million sqft office towers housing prominent technology names that drive the outsourcing economy.

Embassy, one of the top business park builders in the country, is demerging the FDI complaint office buildings in which Blackstone will acquire a significant minority interest. Blackstone has signed a term-sheet with the Bangalore-based developer and is conducting due diligence. The company's commercial play has largely been focused on the development of business parks, of which the two largest—the 100-acre Manyata Tech Park and the 65-acre Embassy Golf Links Business—are situated in Bangalore.

The tenant list of Embassy's office buildings— spread across Bangalore, Pune and Coimbatore—includes IBM, Accenture, Capgemini, Atos Origin, Cognizant, Fidelity, Mercedes Benz and Target. Embassy Group CMD Jitu Virwani and a spokesperson for Blackstone declined to comment. Embassy had shelved a $500-million initial public offering (IPO) last year.

The transaction values Embassy's new holding company for office buildings at $900 million after rolling over Blackstone's earlier investment in one of the projects. Blackstone had acquired HDFC's minority stake in a large business park for $100 million, and the latest deal takes overall investment to about $330 million. The Blackstone investment will cover only tenanted office buildings and not those under development.

Blackstone owns hotels, shopping malls and office buildings primarily in North America and Europe. The PE major has shown appetite for Indian office buildings and struck smaller deals with developers like DLF in the past two years. Blackstone's real estate portfolio, with an estimated worth of $48 billion, include Hilton hotels and the recent acquisition of Motel 6 from Accor.

Private equity firms and global investment houses are allocating a part of their portfolio to risk-free income yielding assets, such as IT business parks, which provide 9% to 12% assured returns besides providing capital value appreciation. Baring Private Equity Partners invested $100 million for a stake in the office space portfolio of another Bangalore developer RMZ Corp earlier this year, while Singapore-listed investment house Ascendas is in advanced talks to buy out an IT SEZ of Shriram Properties in Chennai.

Source: http://timesofindia.indiatimes.com/business/india-business/Blackstone-eyes-biggest-realty-deal/articleshow/14814726.cms

Trichy gains popularity as a realty destination

Neighbouring areas around Chennai like Coimbatore, Trichy and Madurai are gradually gaining momentum in the real estate space. Factors driving growth here are the peaceful and pollution-free environment coupled with affordable residential values that these Tier II cities offer. In recent times, Trichy has gained popularity as a realty destination for middle income buyers who want to invest in a calm and quiet place.

Market sources revealed that the employees of Bharath Heavy Electricals Ltd (BHEL) and the people working at the reputed educational institutes like National Institute of Technology (NIT), Bharathidasan Institute of Management (BIM) and Sastra University, Indian Institute of Management (IIM) are increasingly investing in Trichy’s residential space.

Noor Mohamed, Proprietor, Bharat Construction said that although this market has been seeing good demand in the past 1 year, but the ‘current’ position is dull. “The main incentives for Chennai buyers are the low budget 2BHK flats available here in the range of Rs 25 to 35 lakh. As for the rental market, demand has been maximum for 3BHK apartments with rental values between Rs 15,000 to 20,000 per month,” Mohamed added.

When speaking about the portfolio of buyers, Mohamed said that BHEL employees, bank officials and local businessmen are investing here apart from Chennai-based businessmen with a long-term investment viewpoint.

Mohd Rila of Crescent Residency said that people are getting attracted to this location, primarily because of ‘good quality’ in townships and gated communities that have come up in the last few months.

Rila said that due to developers launching projects here, market values of land have also seen a rise in recent past. Residential plots are the most active category in Trichy. MagicBricks.com statistics show that over 50% of the listings are in the plots category. Of the rest, builder floors and multi-storey apartments are seeing maximum supply. According to MagicBricks.com, of the total listings on the real estate portal, 56% properties are residential plots, 19% are builder floors, 12% are multi-storey apartments, 8% are residential houses and 5% are villas.

Usha Kumar, Managing Director (MD), Visranthi Builders said that residential values in Trichy have been rising for the past few months as more investment is being made from locals as well as Chennai residents. “In the past six months, capital values have increased by 20% in Trichy,” Kumar added.

The maximum demand has been in the Rs 30 to 35 lakh budget in localities like Thillai Nagar, Annamalai Nagar and Vayalur Road, Kumar said. Education and industries are the primary sectors because of which demand is taking place. “The growth of industries like BHEL, GK Industrial Park is propelling developers to set up projects and buyers to invest in these projects. Trichy could also evolve as an IT destination if MNCs in Chennai set up branches in and around this area,” Kumar added.

RP Builders & Property Developers Ltd, Sebco Property Developers, JK Promoters, Rohini Housing, Vignesh Flat Promoter, Manghalam Estates, Ganesh Builders are the established players in Trichy. Other groups entering this market are Pelican Gorup and RP Builders & Property Developers Ltd.

Road infrastructure too is witnessing a breakthrough with Reliance Infrastructure having completed two key road projects in Trichy. One is the Trichy – Karur Road, covering a length of 80 kms. The project is operational since October 2011 and the estimated cost of the project is Rs 7.3 billion. Secondly, Trichy – Dindigul Road covers a length of 88 kms and has been operational since September 2011.

Trichy is also a famous tourist destination with places such as Jambukeswara temple, Srirangam, Rockfort temple, among others. Apart from having a strong education and industrial base, Trichy also has many healthcare companies like Vasan Health Care, Kaveri Medical Hospital (KMC), Cethar Vessels, and Visranthi Mental Healthcare, among others.

Neha Kashyap, MagicBricks.com Bureau

Source: http://content.magicbricks.com/trichy-gains-popularity-as-a-realty-destination

TNHB to undertake redevelopment projects

Chennai

The spurt in redevelopment of housing board projects across the city has taken a new twist with the housing board itself taking on the mantle to develop residential complexes. So far, private developers have clinched joint development deals with the resident associations. An estimated 10 projects across the city are under development while others are under varying stages of negotiation to arrive at mutually beneficial formula.

For the first time, the Tamil Nadu Housing Board itself has been approached by the people in Coimbatore to undertake development on their behalf. The TNHB is planning to take up the redevelopment of housing board tenement in Singanallur on a 12 acre land comprising 960 units ranging in size from 260 sq ft to 450 sq ft.

In Chennai alone, the TNHB had developed over 1000 acres of land over a period of three decades and most of the units are now awaiting an opportune moment for redevelopment. It is a Herculean task to bring all the apartment owners to the negotiation table as it took many years for the private developers to clinch deals, according to industry sources who have been monitoring the redevelopment for several years now.

While the strategic locations prompted private developers to undertake redevelopment, the warring groups and the stringent conditions imposed by the existing owners eluded a final solution in many projects, say industry sources.

The redevelopment got a boost due to enhanced FSI eligibility as a result of the liberalised development control norms in the second master plan. When the TNHB took the development years ago, the FSI was less than 1. Now the second master plan enables them to get increased FSI ranging from 1.5 to 2.5 depending on the road width, plot area frontage, etc. As a result of the redevelopment, the owners will be entitled to get extra built-up area at competitive prices.

The development by TNHB itself will generate more confidence among existing flat owners. In the changing scenario, the TNHB is keen to introduce modern amenities in keeping with the changing times and the growing needs of households. Besides, the board is also keen to enhance the quality of construction with the availability of a wide range of building materials at competitive prices, according to official sources.

The board is also keen to pay the rentals during the reconstruction period for all the flat owners just like the proposals being implemented by the private developers. In addition the TNHB is exploring the possibilities to develop the units through PPP model.

The redevelopment exercise by TNHB itself will be in direct competition with the private developers who have already stuck deals with associations in select projects in city areas. There has been mixed reaction to the joint development exercise with some land owners stuck with private developers over the inordinate delay in completing the project on time. But, TNHB’s initiative will herald a new era and people may feel more comfortable to deal with government agencies as it is a win-win situation for both. According to official sources, the response so far has been overwhelming from the housing board flat owners across the state.

V Nagarajan, Property Consultant

Source: http://content.magicbricks.com/tnhb-to-undertake-redevelopment-projects

Higher FSI For LIG And MIG apartments in Tamil Nadu

Chennai

To insulate the poor and the middle-class from rocketing property prices, the state government has announced additional floor space index (FSI) for housing projects catering to the low income (LIG) and middle income groups (MIG). FSI is the ratio of land area to the built-up area.

The government will not levy any premium FSI charges while sanctioning additional FSI for LIG and MIG projects. In effect, the builder — the Tamil Nadu Housing Board or private developers — will be able to construct more built-up area without incurring additional cost on land. It would reduce the cost of such apartments, finance minister O Panneerselvam reasoned out in the budget. The FSI for multi-storeyed buildings is 2.5 while that for a ground floor plus three floors is 1.5. The new FSI guidelines are yet to be announced.

The minister announced a slew of interest waivers on housing loans disbursed by cooperative housing societies. Interest waiver for LIG units is increased from 50% to 75%, for MIG from 25% to 50% and for HIG from 10% to 25%. Also, penal interest has been waived completely. While the government will contribute Rs 390 crore towards interest waiver, the cooperatives will forgo Rs 545 crore penal interest. The interest waiver scheme, to be in force till September 30, is expected to help societies mobilize Rs 665 crore over dues.

The budget dealt a heavy blow to the construction industry, which includes the housing sector, by slapping a 50% increase in infrastructure and amenities charges, commonly known as impact fee, levied on all new buildings constructed in the state. As of now, a multi-storeyed residential building in any part of the state is charged an impact fee of Rs 25 per sq ft.

For multi-storeyed commercial, IT, industrial or institutional buildings, the impact fee is Rs 50 per sq ft in Chennai and Chengelpet regions. In Coimbatore and Tirupur, it is Rs 37.5 per sq ft and in other regions it is Rs 25 per sq ft. A 50% hike in impact fee will translate into an increase of Rs 12,500 to Rs 25,000 for a 1,000 sq ft building depending on the category it belongs to.

“The builder community welcomes the increase in FSI for LIG and MIG housing. It will bring in more housing stock at affordable rates. Tamil Nadu faces a shortage of three million housing units. The government could have avoided increasing the infrastructure and amenities charges. It will lead to increase in prices of apartments,” T Chitty Babu, Confederation of Real Estate Developers’ Association of India, secretary said.

Source: The Times of India, Chennai

Property deals peak ahead of guideline value revision

CHENNAI: With the new market-based guideline values for property registration set to come into effect from January, builders and buyers in the state are rushing to seal deals before the charges go up. The number of property deals has seen a sharp rise ever since the plan to revise guideline values was announced. In November alone, the state government earned Rs 715 crore from stamp duty and registration charges.

"There is panic in the minds of buyers and builders, as stamp duty and registration charges will go up once the new guideline values come into effect. A huge number of transactions take place daily these days, especially in Chennai and Coimbatore," a senior government official said.

In all, the government realized Rs 3,965 crore till November in the current fiscal from property registrations, 23.17% higher than the corresponding period last year. The November earning is the highest for a month in the last 20 years. In 2010-11, the government's revenue from stamp duty and registration charges was Rs 5,020 crore, and this fiscal it's expected to go up to Rs 6,500 crore.

Guideline value is the minimum value of a land fixed by the government, based on which stamp duty and registration charges are calculated. The charges add up to 9% of the property value. The draft of new guideline values is expected to be published on December 15, and the final values will be announced in January. The values were last revised in 2007.

While Chennai, expectedly, recorded the maximum number of property transactions -- 3.45 lakh deals in the last eight months -- Coimbatore was close behind with 3.18 lakh deals. The reason can attributed to the fact that Coimbatore has become a preferred destination for tier-two investments in the state with many business houses setting up facilities in the city, thereby giving a push to the real estate market.

Members of the Confederation of Real Estate Developers Association of India (CREDAI), a body of organized real estate developers, have taken exception to the new guideline values proposed by the government saying they do not reflect the market reality.

If the guidelines values of properties on Oppanakara Veethi, Cross Cut Road, DB Road and Trichy Road in Coimbatore have seen a three-fold rise in the revision, properties on Dr Radhakrishnan Salai, Boat Club Road, Poes Garden, Gopalapuram IInd Street and Montieth Road in Egmore in Chennai have been valued eight to ten times higher, they say.

CREDAI president T Chitti Babu said they were not against revision, but "a multifold increase was not acceptable." "There is a need for a study to understand the market prices. Otherwise, it will lead to malpractices and actual transactions will not come into revenue records. The officials have also found justification in our demands," he said. A crucial meeting convened by chief secretary Debendranath Sarangi on tax revenue on December 19 will throw some light on the final guideline values.

Tamil Nadu is among a very few states that do not revise guideline values periodically. Hence, major discrepancies exist between guideline values and market prices of properties.

Source: http://timesofindia.indiatimes.com/city/chennai/Property-deals-peak-ahead-of-guideline-value-revision/articleshow/11054212.cms

Budget Home exhibition till November 6

The property exhibition “Budget Home 2011” at CODISSIA Trade Fair Complex here showcases properties starting from about Rs. 10 lakh.

According to K. Santhosh Kumar, Head-operations, and Prashanth Bashyam, Business Head – Events and Exhibitions of Eyeball Media, the company is organising the exhibition here for the second year.

About 30 builders and five financial institutions have displayed details of their projects and home loan products in 45 stalls.

The three-day exhibition till November 6 is open from 10.30 a.m. to 8.30 p.m. and entry is free.

Five major builders from Chennai have details of projects in Chennai. In Coimbatore, projects on residential apartments, senior citizen residential communities, villas, and independent houses are displayed. The price of properties starts from less than Rs. 10 lakh and goes up to Rs. 50 lakh. The price of plots starts from Rs. 50,000 a cent.

According to the organisers, the event attracted a large number of visitors last year and this year, enquiries are expected for Rs. 200 crore to Rs. 250 crore.

With increase in interest rates, home buyers are taking time to take a decision. However, purchases have not come down. With cities expanding, several projects are coming up in the fringe areas and there is a demand for these properties. Eyeball Media plans to organise a luxury home expo here next year. The Hindu is the media partner for the exhibition.

Source: thehindu.com/