RBI concerned over hike in lending to realty sector

Ahead of the quarterly review of the monetary policy, the Reserve Bank of India has drawn attention to the sharp hike in lending to the commercial Real Estate India sector. Year-on-year growth in such lending has touched nearly 70 per cent , the RBI said in its Report on Macroeconomic and Monetary Developments here on Monday.

The outstanding loans to real estate jumped to Rs 46,295 crore as on May 25, 2007, from Rs 27,285 crore a year ago, a rate of growth that the RBI felt was still high.

However, the string of rate hikes by the RBI has begun to take effect on non-food credit growth. Non-food credit by scheduled commercial banks has moderated to 24.4 per cent year-on-year (Rs 3,67,258 crore) as on July 6, 2007, from 32.8 per cent (Rs 3,70,899 crore) a year ago.

On inflation, the RBI maintains its projection of 4-4.5 per cent. “The resolve, going forward would be to condition policy and perceptions for inflation in the range of 4-4.5 per cent. The objective would be conducive for maintaining self-accelerating growth in the medium term.”

Resource://moneycontrol.com

Yatra Capital posts maiden loss per share of 0.15 eur

Yatra Capital Ltd posted a maiden loss per share of 0.15 eur for the period from May 26, 2006 to March 31, 2007 on expenses of 1.5 mln eur.

The real estate investment firm, which completed a 100 mln eur placing in December, said no dividends will be paid for the period due to its short tenure on Euronext, and as no investments were made by period-end.

Yatra said it has since committed 72.57 mln eur or 72.57 pct of the funds raised from the IPO, after evaluating over 143.29 mln eur of potential investments.

The company is also in talks to invest 16.5 mln eur and said it expects to be fully invested in a 'relatively short' time.

Chairman Sir Nigel Broomfield said, 'Real estate investment into India continues to provide opportunities for capital appreciation, and we are confident that the investments made to date, and those made from our strong pipeline of investments, will produce the target returns as stated at the time of flotation.'

Yatra Capital is a Jersey-based company which has been set up to invest in Indian real estate. tfn.newsdesk@thomson.com ndi/ran/cm2

Source://hemscott.com

India Property 2007 London calling

The 4th India Property 2007 – London, India’s only official Property show, being organized by The Confederation of Real Estate Developers Association of India (CREDAI) and Maharashtra Chamber of Housing Industry (MCHI) will be held at Olympia Conference Centre, Hammersmith Road, London from July 20 – 22, 2007.

This exhibition is supported by the Ministry of Urban Development, Government of India, and co-sponsored by LIC Housing Finance.

India Property 2007 London aims at attracting foreign investments from NRIs and other investors to explore vast opportunities available in the Indian real estate industry. Leading developers from India will be participating, showcasing residential and commercial properties, plots and bungalows from Mumbai, Pune, Goa, Bangalore, Delhi, Kolkata, Chennai, Noida, Gurgaon among other places.

Indians constitute the largest foreign-born inhabitants in London. One third of people living in London are born outside the UK and Indians are the largest ethnic group among this overseas population.

London is the financial hub of Europe and one of the three ‘command centers’ for the global economy. Its geographical location coupled with multi-cultural infrastructure, low taxes particularly for foreigners, business friendly environment, excellent air connectivity with a good mix of South African Indian, Gujarati businessmen and large population of Punjabis, has been the deciding factor in making it the perfect venue for this property exhibition. Also, its location would give greater accessibility to Indians living in other parts of Europe to visit this exhibition as well.

Said Mr. Rajni S. Ajmera, President, CREDAI, “With the boom in the economy, Indian Real Estate has emerged as a Global destination for world’s top construction companies, architectural firms & allied industries seeing the huge growth potential that it offers. In line with the growing interest in Indian Realty, our shows facilitate an interaction between the NRIs, realty investors & developers, all under one roof, wherein they get to know firsthand the types of properties available, loan options & other formalities required, in finally procuring their property back home.”

“Indians living in London are well placed in British society, who are in the top level income group, having a high disposable income. With the current boom in the Indian realty, this seems an ideal time for them to invest in property back home, which would give them excellent returns at the same time giving a boost to the Indian economy”, added Mr. Mohan Deshmukh, President, MCHI.

Sharing his views on India Property 2007 London, Mr. Nainesh Shah, Chairman, International Exhibitions, MCHI, said, “We have seen Non Resident Indians from London making huge investments with many of our members in the past through our exhibitions, and this has encouraged all our members to sustain their marketing efforts in this market. We are happy that the investments have become very constant and we hope to offer more in this exhibition.”

According to Mr. J.S. Augustine Co-Chairman, International Exhibitions, MCHI said, “CREDAI & MCHI’s India Property 2007 is official being held for the 4th time in London this year. The interest levels amongst NRIs have increased many-fold in the last three years. NRIs have benefited immensely through our exhibitions which are the only official Property exhibitions held worldwide & have bought peace of mind by making the right choice in purchasing properties from our shows. We are proud that we have played a key role in facilitating such a process for the NRI community at large & we strive for bettering this year.”

CREDAI Assurance

CREDAI and MCHI ensure complete transparency and assurance to the customers throughout the entire transaction and guarantee them the amenities and specifications as promised during the deal. In the event of any dispute the consumer can approach CREDAI to assist them in resolving the same.

About CREDAI

Confederation of Real Estate Developers Association of India (CREDAI) – is the apex body representing associations of real estate and housing developers from all over India. Its purpose is to promote housing and real estate developments in an organized and cohesive manner and provide a liaison with government bodies to effectively represent the views and needs of the industry. It has more than 3000 members spread over more than 17 states in India.

Source://clickpress.com

Wants to invest in IPO? Think again

Here’s a sobering thought for those who believe in investing in IPOs. Listing gains — the return on the IPO scrip at the close of listing day over the allotment price — have been falling substantially in the past two years. Average listing gains have fallen from 38% in 2005 to as low as 2% in the first half of 2007.

Of the 159 book-built initial public offerings (IPOs) in India between 2000 and 2007, two-thirds saw listing gains. However, these gains have eroded sharply in recent years.

Experts say this trend can be attributed to the aggressive pricing strategy that investment bankers adopt before an IPO. “While the drop in average listing gains is not a good sign, it could be due to the fact that IPO issue managers are getting aggressive with pricing of the issues,” says Anand Rathi, chief economist, Sujan Hajra.
While the listing gain was 38% in 2005 over 34 issues, it fell to 30% in 2006 over 61 issues and to 2% in 2007 till mid-April over 34 issues. The overall listing gain for 159 issues listed since 2000 has been 23%, according to an analysis by Anand Rathi Securities.

Aggressive pricing means the scrip has often been priced at the high end of the pricing range, which would restrict the upward movement of the stock, leading to reduced listing gains for the investor. It also tends to suggest investors should not indiscriminately pump in money into IPOs.


But some market experts point out that India fares better than other countries. “Internationally, there have been periods of negative returns and low positive returns in India should not be considered a bad thing. IPOs are a price discovery exercise and not guaranteed to make money. There could be times when listing returns will be negative,” said UBS Securities executive director and head of India equities Sandeep Bhatia.

Significantly, the phenomenon of low listing gains is taking place at a time when funds mobilisation through IPOs is at a nine-year high and mega-IPOs are taking place. Corporate India raised a whopping Rs 30,914 crore through IPOs in the first six months of 2007.

This year, there were two mega issues from DLF and ICICI Bank. While Delhi-based real estate major DLF raised Rs 9,625 crore, ICICI bank raised Rs 8,750 crore. “Falling listing gains are a function of market corrections. In India, it takes nearly 20 days before a scrip gets listed, during which there can be serious volatility. This year, the volatility in the market has been much higher than last year, which explains the low listing gains,” said Citigroup global markets managing director and head of equity capital markets Ravi Kapoor.

Listing gains, which reached an all-time high of 51% in 2003 fell to 30% in 2006 and just 2% in the first half of 2007. In 2001 and 2002, listing gains were negative.Experts say even when the listing gains are positive, high effective interest costs of heavily oversubscribed issues and high costs of locking-in funds during a bull market further impact the gains to IPO investors. In fact, many of the highly oversubscribed issues led to losses for investors due to, among other things, high interest cost on the invested fund.

There has been a sharp fall in absolute listing gain in recent years. Strong demand for new equity seems to be a major factor for this. At the same time, persistence of low return can quickly reduce investor interest in new equity issues even in a bull market.

The past four financial years have seen IPO mobilisation to the tune of Rs 90,000 crore. Book-built IPOs are usually underpriced, leading to noticeable listing gains for about two-thirds of the issues since 2002. About 15% of the issues resulted in over 60 % listing gain, which on an annualised basis resulted in a nearly 1,100% listing gain. Even when book-built IPOs result in listing losses, such losses are generally limited to 10%.

Among the sectors which saw five or more book built IPOs since 2000, listing gains have been substantial for healthcare, financial services, construction, media, power and technology. Sectors which witnessed either listing losses or small gains include textiles and engineering.
Resource://indiatimes.com

Stay with frontline cos in real estate sector

Dilip Bhat of Prabhudas Lilladher advises to stay with frontline companies in the real estate sector.

Bhat told CNBC-TV18, “On a long-term basis for any economy, I think real estate is certainly a very integral part of any economic growth or any stock market movement, which is going to go up. All of us know that real estate occupies almost about 11-12% in some of the good markets and even in some of the emerging markets. So in India some or the other the way the real estate structure exists, it hasn’t given that comfort or confidence where they would be able to show entire growth as such and people fear some kind of leakages in terms of profits and all more important probably they have not got a hang as to how the growth is going to pan out.”

He further added, “But against that background it’s important that one has to stay with some of the frontline companies; the real estate companies. I think the real estate has been a huge laggard but going forward I see that some of these companies probably will participate very actively and probably will also be a part of the portfolios in the times to come.”

Disclosure: It is safe to assume that my clients and I have investment interest in the stocks/sectors that have been spoken about.

Source://moneycontrol.com