DRDO test flies Rustom unmanned aircraft

The DRDO successfully flown in "RUSTOM", the medium altitude long endurance Unmanned Arial Vehicle (UAV) maiden flight here on Saturday.

The aircraft flown exactly as planned, up to a height of 3000 feet and remained airborne for 30 minutes and completed all mission requirements. It took off and landed (among the most challenging maneuvers for a UAV), using a runway at an air field owned by Taneja Aerospace, Bangalore, like a normal aircraft with the ground based pilot in full control monitoring every maneuver of the aircraft and auto mode remaining on.

Rustom is a Medium Altitude Long Endurance Unmanned Aerial Vehicle (UAV) being developed by DRDO for the three services, Indian Army, Indian Navy and the Indian Air Force of the Indian Armed Forces. Rustom is derived from the NAL's LCRA (Light Canard Research Aircraft) developed by a team under the leadership of late Prof. Rustom B. Damania in the 1980s. The UAV will have structural changes and a new engine.Rustom will replace/supplement the Heron UAVs in service with the Indian armed forces. Rustom UAV will be able to execute surveillance of the enemy territory up to a distance of 250 kilometers and carry a variety of cameras and radar for surveillance.

According to the ADE, the Rustom UAV will be better in its capabilities than the imported Israeli UAV Heron used by the Indian Army and will eventually supplement it. It will also be different from other Indian indigenous UAVs like “Lakshya” and “Nishant” and have many structural changes and a better customized engine.

12% Hike in Delhi and NCR Housing Rentals

House rentals on an average in Delhi and NCR have gone up by 12 per cent in the April-June period this year in comparison to the same period last year as per the real estate portal 99 acres.com on Tuesday said in a report. The report, which took 3 BHK flats into consideration, said the highest appreciation during the period in South Delhi was seen in the Saket area, where rentals increased by 31 per cent followed by South Extension, Safdarjung and Malviya Nagar by 24 per cent, 22 per cent and 21 per cent, respectively.

Home & Auto loans to be costlier

Many of the banks have raised their lending rate by 75 basis points. This makes the home and auto loans for the existing borrowers dearer. This increase is due to the RBI policy following which the lenders hiked interest rates. The RBI, had in its monetary review on July 27, raised the short-term borrowing (reverse repo) rate by 50 basis points and lending (repo) rate by 25 basis points.

Punjab National Bank (PNB), raised its benchmark prime lending rate (BPLR) by 75 basis points to 11.75 per cent.

Bank of Baroda, Corporation Bank and Oriental Bank of Commerce increased it by 50 basis points each to 12.50 per cent.

Union Bank upped their BPLR by 50 basis points to 12.25 per cent.

IDBI upped their BPLR by 50 basis points to 13.25 per cent.

SBI, has so far not hiked its BPLR .

Home and Auto Loans to get Dearer – RBI Hikes Interest Rates to Tame Inflation!

Winding the coil and unwind it! – thats what RBI seems to have done better than most other Central banks world over since the start of the global recession. In fact, RBI has gone one step further and announced that it will come out with more frequent mid-quarterly monetary reviews, on the lines of the major central banks abroad, for swifter monetary actions in sync with changing economic conditions.

In its first quarterly review of the monetary policy, RBI today increased both the short-term lending to 5.75% and borrowing rates to 4.50% from the immediate effect. However, the apex bank has kept the Cash Reserve Ratio unchanged at 6% on account of tightness of liquidity in the system.

At the same time, the RBI’s move to up short-term rates may also hinder industrial growth – particularly the manufacturing sector – as interest rates move northwards. The RBI has also revised growth forecast at 8.5% for 2010-11.

The RBI has raised its key policy rates for the fourth time this year, in its effort to unwind the stimulus measures offered during the global slowdown, by relaxing the interest rate burden and providing boost to the consumption in the economy. This forceful hike also comes on the back of stubbornly-held double-digit inflation (10.55% in June).

The RBI has hiked the repo rate – the rate at which banks borrow from the RBI – by 25 basis points. However, an up-tick of 50 basis points in the reverse repo rate – the rate at which banks lend to the RBI – has been above analyst’s expectations who had expected a 25 basis point increase in this key policy rate.

The central bank has raised its projection for the headline inflation for March end to 6% from 5.5% as forecasted earlier. With robust rebound in the real economy, the RBI has felt the need to sync the policy rates with the current market conditions and ensure price stability necessary to support this much-needed high growth.

With as many as four hikes in this year, aimed at taming inflation, the fears about bank funds getting costlier could well trickle down into the real economy in the form of costlier as well as reduced lending opportunities to the industry.

THE RISE OF AFFORDABLE HOMES

The concept of affordable homes came into existence after the recession that hit real estate industry in 2008. From the beginning of 2000, a house meant stretching resources to the maximum due to the IT driven property boom. Since many people could not afford the sky-rocketing prices, they were left out of league.

Although property prices were comparatively lower at the outskirts but buying there was not considered wise since the connectivity was inadequate.

After some years came the 2008 recession. The lapse of the IT sector which resulted in job uncertainty all around hit the realty sector, in the very similar manner as it did to many others.

Then the realty market which was much affected by the IT sector went under a price correction. With this correction came the new concept of Affordable Homes.

Home prices to go up by 2.5pc as service tax kicks in . . .

   Home prices will increase by about 2.5 percent with the  implementation of service tax on the residential segment with  effect from today, a leading property consultant said.

   “The implementation of service tax on residential properties  will result in an increase in the price of homes for end-consumers. Developers will justifiably be unwilling to  absorb this new tax burden and naturally pass it onto the  buyers,” Jones Lang LaSalle Meghraj senior vice-president for  capital markets Gautam Hora said.

   “The increase would be to the tune of 2.58 percent. Following this, overall demand and sales of residentialproperties will take a significant hit in all cities,” Hora  added.

   In the budget 2010-11, Finance Minister Pranab Mukherjee had  brought in real estate complexes under the ambit of service tax,  unless the entire consideration for the property is paid after  completion of construction.

Overview on Indian Real Estate Scenario

The flexible nature of the Indian real estate has earned its appreciated value over time. In fact, the rapid growth of the Indian realty market has enhanced aspirations for good standard of living. The present scenario of India has changed the way we live, from working style to recreation.

The major factors behind the rapid growth of the real estate are the relaxed policies taken up by the Indian Government on Foreign Direct Investment. The reform measures initiating strong economic development and the easy home loan terms and conditions, followed by increase in income levels, purchasing capacity and urbanization have expanded and shaped the current Indian Real Estate Scenario. Let us take a look at the factors in detail that has boosted the growth of the property market.

Factors behind the Growth of Indian Real Estate

• The FDI policies of the government encourage increasing number of foreign countries to invest in Indian properties. India has replaced US and ranks second most preferred location for real estate investment. During the period of 2004-05 US$ India attracted over 2.38 billion while in the first half of 2005-06 fiscal the nation had over 3 times of the foreign direct investment at US$ 7.96 billion. In has now become one of the dominant host countries for FDI in Asia and Pacific (APAC).

• The positive reforms implemented by the government has also initiated the growth. The real estate has grown so vast that the industry has turned out to be the second most employer after agriculture. Real estate of all forms ranging from residential, retail to commercial are being developed in full scale in cities like Mumbai, Delhi NCR, Kolkata, Chennai and many others.

• It is estimated that India would be producing about 2 million graduates in the ensuing years that would cause demand for 100 million square feet of office and industrial space.

• The presence of world renowned Fortune 500 companies further attract other major companies to establish their operational base in the country, hence generating demand for corporate spaces.

Real estate sector picking up: Industry body

he real estate sector is picking up after the slump witnessed during the global economic meltdown, an industry body said on Monday.
"In Chennai alone, in the whole of last year the total occupancy level was 2.6 million square feet. But in the last six months, we had crossed 2 million square feet of occupancy, which shows a rapid growth," National Association of Realtors Committee's media head Ramesh Nair said.
Demand has been growing at a decent rate and the property consultancy industry has tremendously evolved in the last 15 years, said Nair, who is also the managing director of the city-based real estate developer Jones Lang La Salle.
In view of this, the association, which represents over 1.2 million real estate agents spread across the country, will conduct its second edition of two-day seminar on 'NAR-India 2010' here from July 16, he said.
"The objective of the seminar is to educate the members of association on the latest trends in the real estate sector and to streamline the sector that is largely unorganised... This seminar will also help us to network with each other,"
NAR India 2010 chairman C Suresh Reddy said. He said over 500 delegates, including some from overseas, are expected to participate in the two-day seminar.

Real Estate Scenario in India

In spite with the recent ebb inside the authentic estate scenario, the Indian realty market place holds the 9th position among the retail markets of the world having a consistent development of 30% per annum. The favorable policies in the Indian government would be the significant initiator with the realty boom. In reality, the true estate industry Property In India is recorded to become second largest employer following agriculture. Concentrate is specifically on the numerous metros like Delhi and NCR, Mumbai, Kolkata for developing projects ranging from residential, retail to industrial complexes. Why Investing in Indian Realty Current market The boom in Indian economic system. Inside last financial year the economic system witnessed a considerable 8.1% boost. Due towards development, the purchasing energy from the investors has greater creating a rise within the request for realty properties. It’s got been estimated that there could be close to 2 million graduates from a variety of universities. Therefore, producing demand for offices and industrial Property In India room of above 100 million square feet. The new policies adopted by the Federal government of India concerning FDI (foreign direct investments) encouraging various nations to invest in Indian properties. The asset investments in India yields significant dividends. Being a result of which, about 70% on the investors are churning profit. Indian Actual Estate - Appealing Destination for FDI As currently mentioned, the positive approach on the Indian Federal government is the key element behind the growth on the Indian actual estate. The following may be the checklist of the FDI groups which have currently produced their mark inside Indian realty current market. List of FDI: Emaar MGF - The developer has invested a mammoth quantity of US$1 billion. It has the objective of developing pan-India projects ranging from residential, industrial, hospitality in integrated township and SEZ. Keppel Land - The Singapore based group in association which has a Bangalore Property In India based group has signed an agreement for creating residential and industrial buildings from the Indian Silicon City. DSP Merrill Lynch, Barclays Bank and Mauritius-based TH Holdings and Team have so far invested Rs.11, 460 crore inside the construction and realty sector. The record of foreign direct investors also contains AEA Holdings, RREEF (genuine estate purchase wing of Deutsche Asset Management), Capital Land, Royal RaJ Indian, Morgan Stanley True Estate Fund, IREO Investment Holding, Carrefour, Cayman Islands and several others. Some of the locations are frequently termed as “temples of new or modern India”, as a result reflecting the extent of property advancement in India.

Property prices in India see a marginal drop of 2% in April 2010

Property prices in India see a marginal drop of 2% in April 2010 says Makaan.com Property Index (MPI).

REALTY SECTOR REVIVES IN SOUTH INDIAN STATE OF AP

Realty sector in Hyderabad city of India's southern Andhra Pradesh state bounces back after the recent political crisis, as demand for residential and commercial properties grows.

The trend is growing evidently in Tier I and Tier II areas, as these are high-demand markets.

Hyderabad, is one of the ten districts of the Telangana region, affected by the agitation for a separate Telegana state.

Prices of the real estate sector have improved a lot with so many buyers coming in for the purchase.

"Market is improving as of now because of these developments happening in the Hyderabad areas like outer ring road area, Infosys campus and many other areas, so this is the right time to invest and to buy a customer," said Prabhakar, Sales Officer in Real Estate Company.

Some customers feel that Hyderabad city is the right place for investing money in the realty sector.

"NRIs, doctors and Information Technology (IT) people are coming forward for the investment and even some of the central government employees are also coming forward. As you know, now a days comparing with the facilities what we are giving on what rates we are giving, people are seeing benefits and on these bases they are coming forward for investments and showing interest," said Raj Kumar, Marketing Manager in Real Estate Company.

The realty sector is anticipated to grow at the rate of 30 percent annually over the next decade, which will attract foreign investment worth $30 billion, with a number of IT parks and residential townships being constructed across India.

The sector is one of the largest employers in the country, and has backward and forward linkages with about 250 industries, such as cement, brick, steel, building material and many more.

India 3rd Most Popular Real Estate Destination among Emerging Countries

Being heads and shoulders above the other countries, India has emerged as the 3rd most preferred real estate destinations. Real estate in India serves as an engine of the nation’s growth and presently it is one of the most lucrative grounds for investors who want to generate profit. The major boom in the real estate sector has been fueled by the industrial sector growth and liberalization policies of the government.

What has made India, the 3rd most popular real estate destination?

Budding economy: India’s growing emergence as a leader in the global economy is one of the major reasons of India becoming the 3rd most preferable real estate destinations. It has been found that the profit from construction especially IT sectors in India is 18% and 5% of India’s GDP is contributed by the housing sector. There is a demand for commercial real estate and the lease rentals have also been picking up. India has emerged as a fastest growing economy providing the best opportunity for capital appreciation.

Foreign investment: Investment made by the foreign investors in the townships, housing, construction projects etc. has enabled a high growth curve in the real estate sector. More than 18% foreign investors have shown interest in the real estate of India.

Market potential: As the 5th largest economy in the world, India offers high prospects for growth and earning potential. It offers unlimited opportunities for overseas trade.

Initiatives taken by the government: The initiatives taken by the government of India has offered a boost to the real estate sector making it the 3rd most preferred destinations. As a part of initiatives taken by the government, RBI (Reserve Bank of India) has declared concessional schemes for real estate sector. Steps have been taken to reduce the time taken for development of SEZ’s (special economic zones).

India’s real estate sector is extremely promising. An unhindered growth in the real estate sector for the next twenty years is expected. The above stated points clearly provide you with all the reasons that make India the 3rd most popular destinations among other emerging countries.

Selecting Real Estate Developers

eal estate developers are the visionaries who have insight to look at an empty space and determine its future. They have the potential to turn this empty space into marvelous buildings. Their job is very challenging, as they work on big scale projects that includes building multiple units altogether. But, these days, even small companies have joined the bandwagon of the real estate developers, thereby, making it difficult for the customers to choose reliable real estate builder & developer.

The major functions of real estate developers:

• Assessment of a particular site or property for construction
• Developing buildings and spaces
• Remodeling or renovating the decaying pieces of properties

Selecting Real Estate Developers:

It is vital to conduct a thorough research of the real estate developer with whom you are going to work in future. You can follow the underneath mentioned steps while selecting a trustworthy real estate developer:

• Market reputation: Go through the background of the real estate developer and determine his reputation in the market. Don’t take any decision in haste as it can prove disadvantageous for you.

• Ask the previous buyers: The best and sure shot way to ensure that you are dealing with the right real estate developer is to ask for the experiences of those who have already availed the services of the same developer. They can let you know about their experience in dealing with the particular real estate developer. You can know about the various aspects related to the construction process like timeliness, quality, behavior, delay in completion of the project etc.

• Know about the projects undertaken by the real estate developer: Get the information about the projects already undertaken by the developer and try to know about his position. Make sure to personally visit the project’s location, which has been built by the real estate developer. When you visit the site of the project undertaken, carefully examine the features of the building like furnishing, carpeting, architecture etc.

• Analyze the price quoted: Try and scrutinize that whatever you are paying for is worth it.

Therefore, experience acts as a major determinant while choosing an efficient real estate developer. So, a customer should ensure the above mentioned points, before hiring a real estate developer for building spaces.

ANALYSIS OF INDIAN HOUSING SECTOR

The realty market in India is flourishing these days. Not just the domestic real estate developers but also the investors from all across the world; especially the NRIs are attracted to this Indian real estate market. If this continues, it is then expected that very soon the realty market will overtake the other industrial sectors in terms of contribution to GDP growth.

Currently, the major constituents of the Indian housing industry are the affordable houses which target especially the low income groups and economically weaker class. In the field of medium and luxury housing, in next few years, it is expected to see a remarkable growth since this segment has huge prospects for further developments. The hiring of expat employees by the MNCs and then providing them with luxury housing benefits is one of the reasons for the development of this sector. Also, the demand for luxury housing by NRIs is acting as a catalyst in the growth of this sector in India.

RNCOS presented a report called “Indian Housing Sector Analysis” in which it gave exhaustive information and objective analysis about the growth of Indian housing industry. The current and past market performance, market structure and factors critical to the success of the Indian housing industry are also covered in this report.

Based on the relation between the past market growth and growth in base drivers, such as government support, long-term interest rates, disposable personal income, household size, contribution by housing finance industry, GDP growth, growing industrialization and competitive structure, a forecast is been made in this report about the Indian realty market.

India Real Estate Report Q3 2010

India Real Estate Report Q3 2010 ; Of all the countries whose real estate sectors are reviewed , few are experiencing economic conditions quite as promising for real estate companies as India. We forecast that overall GDP growth will accelerate from 7.0% to 7.8% over the coming year. The increase will be driven by domestic demand. Lending by India's banks is increasing again. Massive investment in infrastructure will, or at least should, facilitate urban development. After a poor monsoon and harvest in 2009, the fortunes of India's rural sector should also improve this year.
Nevertheless, India's developers still face difficulties. Across the five cities where we interviewed incountry sources - Mumbai, Gurgaon, Chennai, Hyderabad and Bangalore - rentals slumped in 2009. In some cases this was because of the perceived risk of a recession in India (or, in the case of Bangalore, a real recession in the export markets served by businesses in that city). In other cases, contradictory government policies posed additional problems.

Construction sector gets tax concession

In a relief to realty sector and home buyers, Finance Miniser Pranab Mukherjee on Thusday announced tax concessions to the construction sector, which was brought under the ambit of service tax in this year's Budget.
With today's announcement, service tax would be levied on 25 per cent of the gross sale value of property compared to 33 per cent proposed in the budget in February this year. "I propose to provide the tax relief to this (construction) sector by enhancing their rate of abatement from 67 per cent to 75 per cent of the gross value, where such value includes the value of the land constructed upon,"
Mukherjee said replying to the debate on Finance Bill in Lok Sabha.
This means property prices would rise by a lower than expected 2.5 per cent. To give thrust to the low cost housing schemes for the urban poor, he announced exemption of service tax on constructions under Jawaharlal Nehru Urban renewal Mission
(JNNURM) and Rajiv Awas Yojna.
Real estate developers as well as Urban Development Minister S Jaipal Reddy had asked the Finance Minister to review the proposal, saying that the proposal would hit the sector which is recovering from a huge slowdown in demand. In Budget 2010-11, the Finance Minister brought development of real estate complexes under the ambit of service tax. "In the construction of complex services, it is being provided that unless the entire consideration for the property is paid after the completion of construction (i.e. after receipt of completion certificate from the competent authority), the activity of construction would be deemed to be a taxable service," says the Budget proposal. Post-budget, Finance ministry officials had clarified that service tax would be imposed on 33 per cent of selling price as there is an abatement of 67 per cent.

Is Indian Real Estate Industry in an Unpredictable Growth?

Many are of the view that Indian real estate industry is in an unpredictable growth. In fact, a little while ago the industry was in a slump due to the recession that has swept across the world.So far as the Indian property market is concerned,the slump was only a transient phenomenon. Now, the market is back in the saddle and the real estate scenario is agog with deals and talks.And the new climate augurs well for the prospective investors.Reportedly,in the preceding quarter the price of prime commercial property in the metros and main cities across India has registered on an average 10 percent increase which is by and large a welcome change after months of recessionary market.Alongside, residential property market in the lower and middle income level sector has shown a marked increase in demand.Investment analysts and industry veterans are savvy as to a sustainable growth in the market in the coming future.

In order to arrive at any conclusion as to whether the Indian real estate industry is in an unpredictable growth or not, we need to appreciate facts in a wider perspective. Arguably,there is an overall growth in the property sector across India. The contention is as to whether or not this growth is susceptible to the vicissitudes and vagaries of market conditions in an unpredictable way.While we consider the strengths of the real estate market, we have to take into account the emergence of India as a major consumer market in the world.Necessarily,of late there is higher concentration of multinational corporate operations in India than ever before.Inevitably,this acts as major catalyst for a higher demand for both commercial and residential properties in India now.

Whether the Indian real estate industry is in an unpredictable growth or not is a matter to be analyzed vis-à-vis the findings of industry experts and economic analysts.Industry veterans are sanguine to hold that the real estate Indian industry is poised for great strides in the coming future. Reportedly, the industry is undergoing a metamorphosis. Sector-specific and macro-economic factors are the contributory elements in this growth phase. Jones Lang LaSalle, the world-renowned real estate analyst categorically maintains: 'economic recovery during CY 2010-11 is likely to reinvigorate the interest of foreign investors in India's real estate market. We expect enhanced capital inflow in the real estate sector in the medium-to-long-term'. Further, the International Monetary Fund has reported that while the advanced economies of the world will register an average 3.8 percent retrogressive growth in the coming years, India and China will record an average growth of 5.4 per cent. This growth in the national income will directly sustain the growth in the real estate industry.

Indian Real estate Sector is growing up.

The outlook on Indian real estate sector may not be too bright at the moment, but that is not deterring mutual funds from investing in paper issued by property developers.

In addition to the old restructured papers of Gurgaon-based builder Unitech, debt schemes of fund houses like SBI, ICICI and UTI have invested in papers of companies like K Raheja, Emmar MGF Land and Shapoorji Pallonji.

As per mutual fund tracker Value Research, UTI Bond (medium term) fund has invested Rs 14.7 crore in ‘BBB’-rated floating rate bonds of Emmar MGF Land. ICICI Prudential Liquid Fund has invested over Rs 421 crore in secured debentures of K Raheja Corporation. LIC Income Plus and SBI Short Horizon Debt Fund have invested Rs 1.8 crore and Rs 1.6 crore respectively, in the ‘A1’-rated commercial papers of Shapoorji Pallonji.

However, raters tracking debt are comfortable with the debt-equity mix of most real estate companies and are positive on the sector. “The fundamentals of India’s real estate sector are improving, as seen by better liquidity and improved demand in the residential segment,” said Rakesh Valecha, senior director, Fitch Ratings.

Enhanced affordability, lower mortgage rates and better job security have helped revive demand for homes, according to Mr Valecha. “Demand in the commercial segment remains weak, primarily due to over-supply and the scale-back of expansion plans by corporate India. But then, we expect demand for commercial spaces to improve in the second half of 2010,” he added.

According to analysts, in sharp contrast to 2007 and early 2008, real estate companies are not investing money to acquire mass land bank or other fixed assets. Post the turmoil in end-2008, real estate companies have realised the need for a stronger balance sheet. Many over-leveraged real estate firms have used their cash in books to de-leverage themselves.

Equity analysts tracking the sector are currently maintaining a neutral to near-positive outlook on the real estate sector. They expect prices to be stable in the medium term due to good demand. Property prices may only rise 3-5% over the next few months, say analysts.

Such a price trend could sustain the demand for real estate for a longer term. Moderate demand will enable real estate companies to complete existing projects and take up new ones. Pressure on profit margins, however, cannot be ruled out, analysts opine.

Overall, credit metrics are expected to recover in 2010 and 2011, as developers are expected to improve their capital structure, operating margins, and liquidity. According to sources, the restructured loans of Unitech are expected to come up for repayment (or reaching maturity) in about 6-8 months’ time. Unlike in 2008, fund managers and paper valuers are not expecting the company to have too many problems in repaying the debt.

Property prices in India rise by 17% in last one year:Makaan.com

The rise in national index is attributed to the hardening of property prices in the western markets of Mumbai and Pune, which rose by 29.4% and 28.1% respectively. Property investors and real estate industry players can take a sigh of relief; property prices in India have shown a reasonable uptrend in the last 12 months. As per the March 2010 release of Makaan.com Property Index (MPI), the national index stood at 1117 compared with 954 in the corresponding month last year, an increase of over 17%. The rise in national index is attributed to the hardening of property prices in the western markets of Mumbai and Pune, which rose by 29.4% and 28.1% respectively. Delhi rose by 6.8% in the same period. Putting pressure on the index were the property price movements in southern cities of Hyderabad, Bangalore and Chennai that corrected by 3.2%, 2.5% and 1.4% respectively over the last one year.  It is interesting to analyze the trends in property price movements. Prices fell in the first half (Jan-June period) of 2009 when the index dropped from 1000 to 946. This period was marked by complete lack of interest among investors & home buyers in making long term high value purchase decisions. With the Indian economy showing sign of revival and consumers becoming more confident about their future earnings, the property prices started rising in the second half (July-Dec period); with the index reaching 1128 in December 2009. The month of November and December saw two interesting trends. Firstly, developers in Mumbai, Delhi & Bangalore increased the prices of their existing projects. Secondly, new launches happened at prices significantly higher than the prevalent rates. This rise was too fast and too high and led to crowding out of home buyer as they caught off guard with this unexpected jump in rates. This led to lower transaction during the January to March 2010 period. The national price index moved in a narrow range from 1080 to 1117 during this period; beautifully capturing the mood of the market. Commenting on the findings Aditya Verma – VP & Business Head Makaan.com says, “Going forward, the signals from the economy are quite positive - the Budget for FY11 has been received positively, there is overall optimism in all sectors, job visibility is better among the salaried class. Realty sector is seeing the effects of this in the form of new launches across cities. For sustained development, it is critical to maintain property prices at the current level. Attempt to increase prices can lead to fall in demand.”

Property Investments in India: A Risk Analysis

Property investment is one of the most significant investments for all the investors who buy property with an intention to generate monetary returns. Investment in property is usually done by people to generate profit though renting it or for capital growth. Generally, investment in these properties is not done for residential purpose.

Benefits of property investments:

√ In a long term, the prices of the properties are bound to increase.
√ You can give the property on rent.
√ You can obtain tax variations and generate revenues.
√ You can receive tax deductions.

With the enormous benefits, there are a lot of risks associated with investing in these properties in India. Read ahead, to get a view of risks that can turn your property investment dream into a complete nightmare.

You are going to read about the risks associated with investment in property in India:

♦ The major risk associated with property investment is that you may loose your money that you invested. It is also called the capital risk.

♦ If the property in which you invested is in another currency, then the movement of the currency may affect the value of the property.

♦ You may have to sell the property on the same price on which you bought it.

♦ You may not find a tenant easily and you may have to fund the mortgage payment during these days.

♦ If you get a bad tenant then he can turn your head upside down. Damage to property, unpaid rents, anti social behavior, missing items, structural problems are the common problems that can be faced by the investor who has given his property on rent to a bad tenant.

These are the most common risks that an investor can face if he doesn’t invest in the right property or give the property on rent to a wrong tenant. Keep the above mentioned points in mind to invest rightly.

New Government Initiatives to Boost Real Estate Sector in India

At the Government turn most brand brand brand brand new process initiatives have been taken not long ago to progress the genuine estate zone in India. These process decisions will lend a impulse and procedure to the industry. It is over disbelief which the brand brand brand brand new initiatives will clear the intensity of the sector. Also, along with the impulse package voiced by the Government, the Reserve Bank of India (RBI) has taken a decisive step whereby banks have been authorised to digest brand brand brand brand new schemes profitable to the skill sector. As partial of the Government initiatives to progress genuine estate bang zone India, RBI has spoken concessional schemes for the genuine estate sector. Such initiatives include:• Urban Land (Ceiling and Regulation) Act, 1976 (ULCRA) repealed by increasingly incomparable series of states. • In box of integrated townships, the smallest area to be grown has been brought down to twenty-five acres from 100 acres. • 51 per cent FDI authorised in single-brand sell outlets and 100 per cent in cash-and-carry by the involuntary route. • Full repatriation of strange investment after 3 years. • Minimum collateral investment for wholly-owned subsidiaries and corner ventures stands at US$ 10 million and US$ 5 million, respectively. • 100 per cent FDI authorised in genuine estate projects by the involuntary route.Further, in the attempt to beginner brand brand brand brand new policies to progress the genuine estate zone in India, the Ministry of Commerce and Industry, Government of India, has taken stairs to revoke the time taken to rise special mercantile zones (SEZs) by simplifying the procedures to get the tax-tree industrial enclaves notified. Now developers can simply get their land personal as an SEZ at the opening itself by producing pretension deeds to infer their ownership. Again, the Government has voiced multiform concessions in the Budget 2008-2009. New Government initiatives to progress zone of Real Estate India embody extenuation a taxation legal holiday on increase from initiates in the monetary year 2007-2008. In sequence to suffer this benefit, the housing projects should be of the affordable housing section sort of 1000 to 1500 block feet. Another condition is which such projects should be finished by Mar 1, 2012. Further, the Finance Ministry has allocated US$ 207 million to accede to 1% seductiveness funding on home loans up to US$ 20, 691. In sequence to relief this benefit, the price of the home should not be on top of US$41, 382. It is believed which these initiatives will be supplement serve procedure to the genuine estate zone in the country.

Real Estate in India: Growing Towards New Heights

The factors such as booming economy, favourable demographics and liberalised foreign direct investment (FDI) regime, the Indian real estate sector has witnessed a revolution. The real estate in India is growing at 35 per cent. This sector is estimated to be worth US$ 15 billion and anticipated to grow at the rate of 30 per cent annually in the coming decade. India has become a new market for foreign investors due to its potential economical growth rate. As a matter of fact, this sector is attracting foreign investments worth US$ 30 billion in number of IT parks, hotels, medical, telecom and residential townships which are being constructed across India.

Real estate in India is the second largest employing sector including construction and facilities management. This sector is linked to about 250 supportive industries such as cement, brick, transport, steel, etc through backward and forward linkages. Accordingly, a unit increase in expenditure has a multiplier effect in this sector, as capacity to generate income is as high as five times.

Rising income levels of a growing middle class is the main reason for growth in the real estate. Apart from the income, other factors such as increase in nuclear families, low interest rates, modern attitudes to home ownership and a change of attitude amongst the young working population are responsible for real estate development. Therefore, it can be said that real estate property have changed the attitude from ’save and buy’ to ‘buy and repay’ to boost housing demand.

As per the information by ‘Housing Skyline of India 2007-08′, a research firm Indicus Analytics, it has predicted that there will be demand for over 24.3 million new dwellings for self-living in urban India by 2015. Moreover, rapid growth of the Indian economy has faced a cascading effect on demand for commercial property to meet the needs of business such as modern offices, warehouses, hotels and retail shopping centres.

With the significant investment opportunities emerging in this sector, international real estate players have entered in the country. Effective participation from large local and international industrialists have resulted in potential economical growth of India which is moving towards maturity. Currently, foreign direct investment or FDI inflow into this sector is estimated to be between US$ 5 – 5.50 billion. A unit of Deutsche Bank for instance, aims to invest more than US$ 1 billion over three years in Indian construction and real estate property projects. Russian conglomerate Sistema plans to develop hotel, offices and residential complexes in major cities of India with an initial investment of US$ 100-200 million.

The boom in this industry has attracted large number of realty funds to step into this market. Prominent global players such as Carlyle, Blackstone, Morgan Stanley, Trikona, Warbus Pincus, HSBC Financial Services, Americorp Ventures, Barclays and Citigroup among others have all already checked into the Indian realty market.

Among international players, the many Indian realtors are going global by making their name in the international market through significant investments in foreign markets. Prudential Real Estate Investors for instance, has acquired Round Hill Capital Partners Kabushiki Kaisha, a Japanese asset management firm. Embassy Group has settled a deal with the Serbian government to construct a US$ 600 million IT park in Serbia. Parsvnath Developers in collaboration with the Al-Hasan Group in Oman.

Importantly, government has introduced many innovative reform measures to discover the potential of the sector. 100 per cent FDI is allowed in realty projects through the automatic route, for instance. 51 per cent FDI permitted in single brand retail outlets and 100 per cent in cash and carry through the automatic route. With growing economy in India, the demand for all segments of the real estate sector are likely to continue.

Banks cut down on lending to real estate

Reserve Bank of India (RBI) data shows that banks are cutting down on loans to real estate and reducing exposure to credit card debt. Loans to real estate increased by a mere 0.9%, while credit card outstandings have fallen by 28.3% in the year to 26 February.

Real estate loans are loans to builders and are distinct from housing loans.

Between 20 November 2009 and 26 February, credit card outstandings went down from Rs22,635 crore to Rs20,737 crore. Outstandings on account of real estate loans, however, went up from Rs88,581 crore to Rs91,607 crore.

Growth in lending to real estate has been steadily declining, from 41.5% year-on-year (y-o-y) as on 28 August 2009 to 15.3% as on 20 November 2009, and now to 0.9%. This suggests that the widely expected higher capital requirements for lending to the realty sector by RBI may not be necessary. Housing loans, which are loans to individuals and distinct from loans to real estate, have gone up by a tepid 8.3% y-o-y, although the rate of growth has been steadily increasing. In November 2009, for instance, the rate of growth of housing loans was 7.3%.

Education loans have been the fastest-growing component of personal loans, rising 31.2% y-o-y.

In the services sector, bank lending to professionals showed the highest rate of growth, at 36.9% y-o-y. Banks continued to lend hand over fist to non-banking financial companies and these loans grew 25.8%.

Loans to infrastructure continued to grow strongly at 42.3% y-o-y, although the pace slowed from 47.2% y-o-y in November. Construction loan growth was meagre at 8.1%. Banks’ exposure to the petroleum, coal products and nuclear fuels sector continued to decline, albeit at a slower pace.

RBI move won't affect home loans

The real estate sector welcomed the credit policy announced by the Reserve Bank of India (RBI) on Tuesday.

The sector termed the central bank's move as balanced and said there will be no immediate effect on home loan rates.

"The RBI policy is balanced. It gives a strong message on inflation indicating a possible tightening of interest rates in the future. But it may allow infrastructure growth with measures on infrastructure bonds," Pradeep Jain, chairman, Parsvnath Developers, said.

"I don't foresee any increase in interest rates on home loans in the first quarter of the current fiscal as currently there is sufficient liquidity in the market. But definitely the banks will be raising the lending rates in the long run," he said.

"However, in the near-term, home buyers will not find interest rate as a stumbling block in their buying decisions. This is applicable to the housing loans as well, which is a relief measure for the realty sector," Jain added.

Another welcome step is a cut of five per cent in the substandard bank loan rates, which now stands at 15 per cent. This will help infrastructure companies to acquire more funds from banks, which will solve the longterm funding problems faced by the companies, he added The National Real Estate Development Council (NAREDCO) has also applauded the anti- inflationary stance of RBI in curbing prices of the major inputs in construction, steel and cement.

However, Rohtas Goel, president, NAREDCO, said, "At least the first-time home buyers should be covered under priority sector borrowing by RBI, with upper borrowing ceiling of Rs 30 lakh." According to Vidur Bharadwaj, director, The 3C Company, "The repo rate hike will turn funds costlier for banks, which might result in the increase in interest rates. But since home loan is an asset- based secured loan in a bank's portfolio, it may not see any immediate rise."

"The majority of home buyers choose a property based on their immediate requirements. So, a marginal rise in interest rate is not of much consequence to an end- user," he added.

The Bombay Stock Exchange (BSE) Realty Index advanced 3.08 per cent and BSE Bankex moved 1.53 per cent higher on Tuesday.

India back to business fairly soon

The global real estate recovery will be longer, slower and more muted in mature economies than it will be in India or China feels Mr Colin Dyer, Global CEO and President, Jones Lang LaSalle Inc. In an interview with Business Line, Mr Dyer discusses the structural changes in the real estate sector as a result of the recession and about the short-lived opportunity to buy at lucrative prices.

Excerpts from the interview:

Avoid realty at this point of time: Elara Capital

With interest rates hardening, the funds flowing into the real estate space could become a problem, real estate IPOs have also not been getting too much of attraction. Do you think this is something that will not reflect in the stock prices? 

30% Rise in Mumbai Home Sales

Mumbai home prices have jumped about 30 percent over the past six months, leading to a drop in home sales in India’s financial capital as higher prices deter buyers, Knight Frank LLP said. “Residential property prices have risen too much too fast,” Pranay Vakil, chairman of Knight Frank (India) Pvt. said in an interview in Mumbai. “We are seeing resistance at higher prices and as a result volumes have declined.” The average sale price of existing homes between 1,000 square feet (93 square meters) and 2,000 square feet has climbed 11 percent to 20,000 ($450) a square foot in North Mumbai in the fourth quarter from the three months to Sept. 30, according to data from property consultant Cushman & Wakefield. That was the highest in at least eight quarters.

Banks likely to raise realty loan rates on real estate projects

The Reserve Bank of India (RBI) may make borrowing more expensive for builders by asking banks to set aside more capital for loans to commercial real estate projects. A higher capital requirement will force banks to raise interest rate on such loans.

The Unknown Facts about Real Estate in India

There are many unknown facts about India Properties.In a country where there is traditionally the predominance of the agricultural sector, that sector continues to be greatest source of employment generation. It may be an unknown fact that the Indian real estate sector is the second greatest employment provider in the country. This sector significantly contributes to the national income and Gross Domestic Product and it is expected there will be an average 10% increase annually in these aspects. The recent slump in the property market in India consequent upon the global economic downturn is reported to be evening out and the industry is projected to register considerable growth in the coming years. The observation of the international property consultants Jones Lang LaSalle is significant in this context: “economic recovery during CY 2010-11 is likely to reinvigorate the interest of foreign investors in India’s real estate market. We expect enhanced capital inflow in the real estate sector in the medium-to-long-term”. Again, Jones Lang LaSalle says, the faster economic growth of the nations like India, China, Brazil and Russia will pay the way for faster recovery of the real estate sector in those countries when compared with countries like the US and the UK.