Land acquisition money-spinner for realtors

Real Estate companies are making a killing even in the land acquisition process. As they announce plans of setting up projects in a particular area and start buying real estate, land prices in and around that area normally shoot up in anticipation of the development.

This usually leads to a huge difference in the price at which the developer buys the first acre and the last acre. However, as his average land acquisition price is much less than the final market price, he makes a substantial notional profit.

Consider this. A well-known developer recently acquired about 100 acres in Delhi’s Najafgarh area. Initially, the company paid Rs 25 lakh per acre and, but the last deal materialised at Rs 1.25 crore. Despite escalating land cost, the company was able to complete the acquisition for about Rs 40 crore, whereas the land is valued close to Rs 125 crore.

Source: economictimes.indiatimes.com

Real Estate, Big game big gain

The hard money lenders want the same thing you want - a shot at a great investment. Investing involves putting up your time and money with the intention of realizing a profitable return. When you keep this concept in mind, it's astounding just how broad the investing arena actually is. High rise buildings, apartment complexes, condominiums and luxury office space can become a reality - not just a dream!

If your credit rating is bruised and you're pressed for time, securing a hard money loan for a shot at a great commercial property - that's investing.

On the other hand, if an altruistic, financially secure professional discovers that they can make a nice return helping people just like you find the financing they need in order to build their real estate empire- even if all other avenues have failed - that's investing too!

Of course, as a hard money lender works to decide if yours is a worthwhile opportunity, there are other things they'll want to know.

But they knows very well that the real estate gives them a big return for their investment.

A house of dreams

Every one makes a house, a house of dreams. Every one tries to make it a home for their loved ones and then they try to make it house of dream...

Owning a house to be a distant dream

Despite a slight drop in interest rates on home loans, real estate prices are still very high in big cities. Experts say it will stay that way for several months. That means most people still can't afford a home of their own.

Vivek and Smeeta together bring in Rs 50,000 every month. After 15 months of negotiating expensive bank loans and leaping property rates, they've decided owning a house in Delhi is Mission Impossible.

"We have been hunting for our own house for quite some time now. But with a budget of Rs 30 lakh we can afford a house only in the outskirts of Noida or Gurgaon, so we decided to go in for a rented accommodation," said Smeeta Verma, Resident.

All across India, middle class families are getting doors slammed in their face. Home loans have climbed by five per cent in the last four years while property prices have doubled in parts of cities like Delhi, Bombay and Bangalore.

Fall in sales

A survey conducted by ASSOCHAM or Association of Chambers and Industries show that sale of residential property in the last three months is 70 per cent lower than the same period a year ago.

Over the last four years, the resale market has dropped by 60 per cent in metros, so nobody is buying property as an investment any more. The survey also found that 33 per cent of those who've taken home loans have been forced to extend their loan period by five years because of rising interest rates.

Prices not to fall

But real estate experts argue that dropping interest rates is not the way to go because property prices are totally out of reach for the average Indian. Every experts NDTV spoke to confirms that prices will not be falling in the next few months in any major metro.

"But if someone is expecting the property prices to fall to 2002 levels, that is quite unlikely. In certain pockets like NCR, Bombay, Bangalore the sheer demand itself will help property price to sustain or go for a minor correction. But for smaller cities we may see a major correction," said Malay Ray, Business Head, DCM Services Limited.

Banks like State Bank of India and Punjab National bank have dropped their interest rate by 0.5 per cent for the festival season, but they deny that this will continue beyond Diwali. And the problem is that middle class India still has nowhere to live.


Source://http://www.ndtvprofit.com/

Indian firm raises $800 million for real estate fund

Housing Development Finance, one of the largest Indian mortgage companies, said Thursday it raised $800 million from overseas investors for a real estate fund to tap the nation's surging demand for homes and offices.

The company, based in Mumbai, is seeking a 20 percent to 25 percent return for the nine-year fund, Housing Development said. The fund is the biggest dedicated to real estate in India, surpassing the $630 million Sun Apollo Real Estate Fund, according to Real Estate Intelligence.

"Most of the funds are showing good appreciation," said S. Karthikeyan, chief executive at Real Estate Intelligence, a firm based in Mumbai that tracks the property market. "Since we have not seen exits so far, we have to see how much money they actually make when the time comes to sell their property."

The Indian real estate development market may increase more than sevenfold to $90 billion by 2015 from $12 billion in 2005, Moody's Investors Service said in June. Funds of global investment banks are investing in Indian property as the economy grows rapidly.

India will need as many as 10 million new housing units a year by 2030, according to estimates by the Asian Development Bank. The Indian central bank restricts bank lending to real estate since it is considered sensitive and speculative and may lead to losses. Funds are stepping in to fill the financing gap.


Source//http://www.iht.com/articles/

Real estate prices to grow in India

Real estate developer Ansal Housing and Constructions Ltd today said that real estate prices in the metropolitan cities will grow between 10-15 per cent while 20-25 per cent in small cities of the country during next 1-2 years.

Ansal Housing forecasted this growth despite the claims that property market in India is overheated.

"The real estate prices in Delhi, Mumbai and other metro cities will grow by 10-15 per cent and on the other hand, the prices in smaller cities will increase by 20-25 per cent," Ansal Housing & Constructions Ltd, Director, Kushagr Ansal told reporters here on Friday.

Although the overall scenario of prices in the country tends to remain bullish yet there are certain pockets in which the market has shown sign of overheating, he opined. "There are some places like Gurgaon where the real estate market has reached its peak but in other parts of the country the prices will grow," he said.

"During the development of real estate in Agra and Indore by our company, we observed that the real estate prices in these areas have increased by 20 and 30 per cent respectively," he said.

Meanwhile, Ansal Housing & Constructions Ltd on Friday announced to develop residential township in Karnal at a land of 99 acres which involve an investment of Rs 150 crore.

The company has also plans to develop such townships in Zirakpur, Jammu, Kurukshetra, Panchkula and Yamunanagar in the near future, he said. Having posted a turnover of Rs 200 crore during last year, the company expects an increase in total turnover by 60 per cent in this fiscal.


Source://http://economictimes.indiatimes.com

Investors earn USD 7b from IPOs

Investors have made handsome profits from initial public offerings (IPOs) in the last one year with a majority of the companies clocking considerable gains in their stock prices during their debut trade.
Shareholders gained more than $6.73 billion on the first day of trade in shares they received in IPOs of 76 companies during the last 12 months, an analysis shows.
Of the 76 companies, shares of as many as 45 firms ended with an average premium of 23 per cent to the issue price on the first day of trade, while 31 firms fell below.
In terms of gain in market capitalisation, real estate developers DLF and Parsvnath led the way, followed by public sector Power Finance Corporation and Aditya Birla Group’s Idea Cellular.
Closing up by eight per cent over the issue price of Rs 525, DLF added Rs 7,680 crore to its market cap at the end of first day’s trade.
After just a few days of trading, DLF crossed the one lakh-crore market capitalisation mark, becoming the first realty firm to achieve the feat.
Another real estate major Parsvnath Developers added more than Rs 4,100 crore to investors’ kitty after the scrip jumped by 75.43 per cent in its debut trade to Rs 526.30, well above its issue price of Rs 300.
PFC had a gain of more than Rs 3,000 crore on its first day on the bourses with a 31 per cent rise to close at Rs 111.55 over its issue price of Rs 85.
Not far behind was Idea Cellular, which cornered Rs 2,780 crore from the market as its scrip rose by 14 per cent.
Other gainers were Sobha Developers and Tech Mahindra, which added a combined total of over Rs 4,674 crore to investors’ kitty.
However, the world’s fastest growing economy China left behind India in terms of wealth garnered by firms in the first day of listing.
Over the past 12 months, out of the 113 IPOs in China, the value of more than a third of firms on the A-share market doubled on their debut.
In terms of the average first-day gains, China has given 97 per cent returns, translating into a combined gain of $24.4 billion.
In India, it was not a smooth ride for all investors who invested in IPOs over the past 12 months as some firms could not make positive returns in their debut trades.
The list of losers is led by oil exploration firm Cairn India, which saw an erosion of more than Rs 4,000 crore in investors’ wealth on its debut day itself after the scrip fell by 14 per cent to Rs 137.5, below its issue price of Rs 160.
Among other disappointing debuts, Fortis Healthcare and House of Pearls Fashion witnessed a reduction of Rs 181 crore and Rs 157 crore respectively in market valuations.
In percentage terms, Broadcast Initiatives, which owns Hindi news channel Janmat, ended with a loss of about 42 per cent over its issue price, followed by marble importer Oriental Trimex and fashion accessories maker Evinix Accessories, with a plunge of 38.65 per cent and 38.54 per cent respectively.

Source://thestatesman.net