PARSVNATH TO RAISE RS 2,500 CR

Delhi-based Parsvnath Developers has decided to raise up to Rs 2,500 crore through issuance of securities , including Qualified Institutional Placements. The company has the approval of its board of directors. It will now seek permission from shareholders. “We want to raise money to reduce our debt and expedite our ongoing projects in the hospitality and the SEZ segment,” said Pradeep Jain, chairman.

Courtesy:- BS dt:- 24-05-2009

SECTORS TO WATCH OUT FOR

Liquidity-starved sectors such as infrastructure and realty could be the biggest beneficiaries of the vote of confidence for the UPA.
A clear mandate for the United Progressive Alliance and the continuity of the current government's policies are likely to keep the markets buoyant. Marketmen believe that foreign institutional
investors and domestic institutions, which were not participating aggressively in the markets thus far, are likely to invest for the long term, given the stable government at the Centre.

Opening up of the economy, allowing foreign direct investment and easier interest rates should improve liquidity and are expected to help sectors such as infrastructure, banking, India's largest realty companies--DLF and Unitech --have already raised over a billion dollars in the recent past and chances are that others might follow. Nirmal Jain, chairman, India Infoline, said "indications are that formation of a stable government will trigger flow of foreign capital in equity as well as debt. This would mean appreciation of the rupee and revival of liquidity-starved sectors such as real estate."

Analysts now believe that since the UPA can form the government without the support of the Left parties who were opposed to the idea of foreign direct investment, special economic zone projects, which were stalled, could get a fresh lease of life

Courtesy:- BS dt:- 18-05-2009

DLF TO RAISE RS 10,000 CRORE IN 3 YEARS THROUGH ASSET SALE

Owners Sell 9.9% In DAL For Rs 3,860 Crore In Open Mkt Transactions

DLF, India’s largest real estate company,

is looking to raise Rs 10,000 crore in the next 2-3 years through sale of its

treasury investments, land parcels and real estate projects, said its vice-chairman

Rajiv Singh.

Mr Singh’s family, promoters of the cash strapped DLF, had sold 9.9% stake in the

company on Wednesday for Rs 3,860 crore in open market transactions.

ET Now had first reported on Thursday that DLF promoters were selling stake. Capital

group picked up close to 5% stake in DLF, while HSBC, GIC and Fidelity bought smaller

stakes. The transactions were done at Rs 230 per share. DLF shares closed marginally

down at Rs 234 at NSE on Wednesday.

On the timing of the stake sale, Mr Singh said, “If it was the best or the worst, one

would know only in hindsight, but it was surely the right solution in the current

circumstances.” DLF had mopped up Rs 9,000

crore in an IPO less than two years ago. The company’s shares had peaked in

January 2008, crossing Rs 1,200 but declined to a low of Rs 124 earlier this year.

Mr Singh said he started thinking of the stake sale only a few weeks back, adding a

successful qualified institutional placement (QIP) by rival realty firm Unitech too

played a part in promoter’s decision to sell stake. “Unitech’s QIP did give a positive

signal that investors were interested in buying stocks. It really helped,” he said.

The funds raised through the stake sale will be advanced to privately held promoter

group company DLF Assets (DAL), which purchases properties from DLF. Mr Singh said he

was still working on the form of fund infusion in DAL, as to whether it will be in the

form of equity or some other instrument. The fund infusion in DAL will be used to buy

hedge fund DE Shaw’s $400 million (Rs 2,000 crore) investment in DAL and also to pay

back to DLF around Rs 1,600 crore.

Besides this, DAL is expecting to raise Rs 2,000 crore in debt through securitising

its rental income this year. Together, these fund raising initiatives at DAL will

bring down DLF’s receivables from DAL from Rs 4,900 crore to around Rs 1,300 crore.

A panel of independent directors is working on ways to integrate DLF and DAL. DAL will

continue to exist as an independent entity, but its ownership may change, Mr Singh

said. Therefore, DAL will not be merged with DLF, but may become a subsidiary of DLF.

While elaborating on DLF’s plans to raise Rs

10,000 crore through sale of assets and its portfolio of investments, Mr Singh

did not give details of its portfolio of investments, but said negotiations with

buyers are currently under way. The company will also sell some of its hotel projects

and certain businesses such as wind power to raise the amount.

The sale proceeds will be used to repay part of DLF’s Rs 14,000 crore debt. “Our

target is to halve our debt this year,” he said. The assets that will be disposed off

are “not contributing revenue in the short-term and are not strategic in the

long-term”, he said.

DLF had earlier this month said it would raise Rs 5,500 crore through asset sale in

FY10. The company expects to raise Rs 3,500 crore by the beginning of the third

quarter this fiscal. The sale of promoter’s stake has come just days after the closure

of DLF’s buyback programme, which had attracted criticism from some analysts for not

making the best use of cash. Mr Singh defended his decision saying, “The company

decided on buyback at a time when the economy was still not falling off the cliff.”

On housing market, Mr Singh said the demand has started picking up. “The worst is

over. But I will still be cautious and say that recovery is at least four to five

months away,” he said, adding that he didn’t see scope for further price correction.

Courtesy:- ET dt:- 14-05-09

AFFORDABLE HOMES SIGNAL REVIVAL FOR BIG BUILDERS

After suffering a severe slump for almost six months, leading
real estate firms are showing strong signs of revival on the back of affordably priced middle-income homes and flexible payment terms that are fuelling demand.

Bookings for new flats are surging as the price tags are well below the heady highs two years ago, say builders like national leader DLF and the Vatika Group.

DLF `s Capital Greens project in West Delhi launched last month at Rs 4,500-Rs 5,500 per squre foot sold close to 1,400 units within a day. In Bangalore, DLF launched a project with 1,800 flats priced at Rs 1,850 per sq foot. It sold 600 flats on the first day itself.

"As the largest real estate company, DLF took a conscious decision to reduce prices. The correction in prices have ensured that speculators stay out from the market as returns are not galloping," said Rajeev Talwar, group executive director, DLF Ltd.

Earlier this month, the Vatika Group introduced new projects in four Gurgaon sectors, pitching an 850-sq-foot flat at Rs 21 lakh and a 1,450-sq-foot apartment at Rs 43 lakh.

"Till last year, all developers were focused on upper middle class as margins are higher but the markets taught everyone a lesson. Now, players have changed gear to compact units to make up for reduced margins through volumes," Pankaj Pal, president, sales and marketing, at Vatika Group told Hindustan Times.

Unitech has already sold 2.5 million square feet of apartments in new affordable housing projects spanning 9 million square feet in NCR, Mumbai, Chennai and Kolkata. The company plans to launch 40 projects involving 27 million sq. feet by next March.

"There has been a turnaround for well located projects from reputed builders although buyers are still cautious and showing a preference for projects that are ready to move in or nearing completion. Flexible payment terms of developers have also led to some activity in the market," said Sanjay Dutt, chief executive officer at property consultancy Jones Lang LaSalle Meghraj.

Delhi-based BPTP Ltd is selling independent floors in Faridabad, offering1,296 sq feet starting at Rs 16 lakh.

"Within a week, we sold out close to 480 units of the total 600," said Amit Raj Jain, BPTP's vice-president, marketing.

Parsvnath Ltd says it has sold 480 units of its 510-apartment `Royal Floors' project in Lucknow, where a 1,135 square foot floor is priced as low as Rs 12.85 lakh
Courtesy:- HT dt:- 20-05-2009

THINGS LOOKING BRIGHTER

With prices of newly launched apartments coming within the reach of end users, the realty sector has started looking up.

After witnessing an acute slowdown during the third and fourth quarter of 2008, the
real estate sector has shown some recovery in the first quarter of 2009 ending March 31. If trends of absorption for the period January-March 2009 are any indication, a report prepared by Prop Equity Research suggested there has been a surge in absorption in majority of the cities. A recent study conducted by Prop Equity across Mumbai, Bangalore, Chennai, Hyderabad, and Gurgaon in NCR reveals that absorption has been high among the residential new launches in the first quarter of 2009 in Mumbai, Chennai and Gurgaon. The study attributes the success rate in absorption to the price correction and reduction in unit sizes introduced by developers in these cities. However, Bangalore and Hyderabad, which witnessed fewer new launches during the period, experienced a low absorption.

The real estate sector experienced one of the worst kinds of slowdown in demand because of rise in the interest rates in the January-March 2008, by almost 2 percentage points, to 12%. At the same time, the prevailing prices of residential apartments in most of the cities made them unaffordable for most buyers. The situation further worsened after global financial markets got affected due to the failure of banks and brokering houses in the US and Europe. This also affected Indian real estate market very badly and demand plummeted. According to the report, While October-December 2008 saw the nadir with absorption of only 1,113 units in Mumbai, the first quarter of 2009 witnessed the launch of over 14,478 residential apartment units and a corresponding absorption of 5,746 units. As against this, during October-December 2008, 3,096 units were launched, the report said. Similarly, in Gurgaon, during January-March 2009, 815 units were sold while 4,490 units were launched. As against this, in October-December 2008 quarter, only 587 units were sold from 3,708 units launched. Hence, both the absorption and launch figure showed sign of recovery.

The report says the main reason for increase in absorption of the new launched products is drop in the per sq ft rate and the reduction in the size of the units, which brought their prices within the affordable range of buyers. The report says most of these units were launched at a price almost 40% lower than the average pricing of apartments that were available in the first quarter of 2008. The average unit size of these apartments was also lower by almost 35%.

According to Samir Jasuja, founder & CEO of Prop Equity, "The increase in this high absorption trend can be attributed to price correction and reduction in unit sizes adopted by developers. This encouraging trend is indicative that the markets are poised for a recovery if proactive measures are adopted by
the real estate community to offer the right product at the right price to the consumers."

This trend continued in Gurgaon and Chennai where the new launches have witnessed high absorption after the unit sizes were reduced and average prices corrected by almost 15% to 25%. As anticipated, 61% of the total absorption in Gurgaon and 58% of the total absorption in Chennai in the first quarter of 2009 was constituted by the newly launched residential apartment units.

Courtesy:- ET dt:- 08-05-09

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REALTY BYTE

STRUGGLING BUILDERS PLAN TO SELL OFF THEIR NON-CORE LAND HOLDINGS

In a bid to raise money for their ongoing projects and survive the downturn, many builders are planning to sell off their non-core land holdings. In a booming property market, several builders had built land banks. Often, land was purchased even in markets where they had a comparatively low presence. With the market situation having changed, and other routes of raising funds - bank loans, private equity and going public - proving to be difficult, builders have resorted to selling their land, even at a discount. Ostensibly, the builders are not getting the price they had paid earlier. In some cases, say industry sources, builders are willing to settle for a drop in 30% over what they paid.

Courtesy:- ET dt:- 15-05-09

PLR AND HOME LOAN RATE

The prime lending rate (PLR) maes a

difference to home laon borrowers. Here is how it works to lower your home loan

interest rate

What is PLR?

It is a benchmark rate of interest at which banks lend to their creditworthy

customers. This rate is used as a yardstick to compute inerest rates for other

borrowers.

When does PLR change?

Apart from the bank's ownpolicy, PLR is also dependent on how the Reserve Bank of

India (RBI) toggles its key rates like the cash reserve ratio (CRR) and repo rate.

When the PLR is increased or decreased by the lender, it translates into more or less

outflow for the borrowers

Relation between PLR and home loan

interest rates

PLR is a benchmark that varies from lender to lender. The rate of interest charged by

a bank could be half a percent more tha the benchmark PLR. A cut in the bank's PLR

will reduce the interest burden for borrowers.

Impact of key policy rates on PLR

The RBI toggles its key policy rates to bring certain volatile situations under

control. For instance, the RBI may take measures to draw out excess money from the

system, rein in inflation, invigorate a slumped economy, infuse liquidity or control a

spiraling price rise.

CRR is the portion of funds tat banks have to retain with the RBI. Repo rate is the

rate at which banks borrow money from the RBI. If the RBI reduces the repo rae, it

will be cheaper for banks to borrow money. Lowering the CRR and repo rate will infuse

more liquidity into the system . This could translate into a less expensive cost of

borrowing

Courtesy:- FT dtd:- 29-03-09

PLAN BUDGET TO MAKE BUYING A HOME EASY

Factor in expenses and related costs while drawing up a
budget to buy your dream home. This way the repayment will be comfortable

Despite the gloom of job cuts and possibility of more recession, some people are busy realising their dream home. The mix of lower home loan rates and fall in property prices is infusing life into the real estate market.

Why are home loan rates falling?

The Reserve Bank of India (RBI) toggles key rates to infuse liquidity into the system, drain out excessive liquidity, control forces of inflation, increase economic activity and so on. A few months ago the inflation rate was at its peak. To rein in the soaring inflation umbers, the central bank hiked the cash reserve ratio (CRR) and repo rate. The CRR is the portion of deposits banks must keep aside with the RBI and the repo rate is the rate at which the RBI lends money to banks. Banks in turn hiked the rates and made loans for housing, cars and personal purposes dearer.

However, with the inflation numbers rubbing shoulders with the possibility of deflation, the RBI recently reversed its policy. It has pulled down the key rates to infse liquidity into the system and make borrowing cheaper.

How should you make a budget for a home?

A home is one of the most expensive purchases. And a home loan is a huge debt that the borrower is burdened with for 15 to 20 yeas. Hence, it is critical that you budget for it. Do not indulge in extravagant purchases that you may find hard to repay for. Borrow as little as you possibly can. It is not necessary to take 90 percent of the money from the lender when you can afford to raise some money from other sources. Make arrangements for the required margin money.

After paying your monthly EMIs, you must have sufficient funds to meet your regular monthly expenses, make small savings, set aside emergency funds and plan for long-term expenses. Unless imperative, avoid acquiring new debts.

Floating rate borrowers must keep rate fluctuations in mind before they borrow funds. Borrowing to the brink of your repayment capacity will put you in financial trouble, if rates go up. Keep a cushion that doesn't make your life miserable in case rates go upwards.

How does EMI work?

Equated monthly installments are used to pay both interest and principal each month. At the end of a specified number of years, the loan is repaid in fll. EMI comprises of two components - principal or the actual money borrowed and the interest towards it.

During the initial years of the loan repayment, a bigger chunk goes towards the interest component while the principal amount repaid is much less. Towards the end of the repayment tenure, mostly the principal component gets repaid.

In case of a pure fixed loan, the EMI due to the lender remains constant. In case of a floating rate loan, the EMI moves up or down depending on the bank's benchmark lending rate. When a lender increases the interest rate, either the tenure of the loan is increased (and EMI kpt constant) or EMI is increased (and tenure kept constant).

Planning for other expenses

Apart from making arrangements for down payment of 10 to 15 percent, home buyers incur additional expenses. This includes registration expenses, association funds, maintenance deposits, taxes due to the government, furnishing and woodwork etc.

Planning well ahead keeps you out of financial trouble.

Courtesy:- FT dt:- 05-04-09