Jan 29 2015 : The Times of India (Delhi)

NCR flat sales during JulDec drop by 43% but

prices go up
Prabhakar Sinha
New Delhi:

Consultancy Firm Expects Recovery & Stabilization In 2015

The residential real estate market in the National Capital Region (NCR) slumped to
its worst performance in a decade, with sales plunging 43% in July-December 2014
compared with the same period the previous year, according to a report prepared by
consultancy firm Knight Frank India.
However, while sales volumes were down to only 40,575 units in the second half of
2014 as against 71,421 in the corresponding period in 2013, prices rose by 3% on an
average. With sales down, the number of launches in NCR the country's biggest real
estate market--during the second half of 2014 declined by 24% to 73,143 units against
95,768 units in the same period of 2013.
Other key markets in the country like Mumbai and Bengaluru performed much
better compared to NCR. In Mumbai, sales volume fell by 9% to 67,715 units. In
Bengaluru, sales were down only 3% at 55,701 units.
But even in these cities, the number of launches declined sharply . In Mumbai,
launches were down 43% during the period, while in Bengaluru, it was down 13%.

Overall, the sales volume in the top six cities--NCR, Mumbai, Bengaluru, Pune,
Chennai and Hyderabad declined by 17% to 2,34,930 units in the second half of 2014
and new launches by 28% to 2,68,950 units.
But the Knight Frank re port was optimistic of a turnaround in the first half of
2015.It predicted a 4% increase in the overall sales of residential units in six cities in
Jan-June 2015, compared with the same period last year.
However, it will be a while before new launches pick up. It predicted a 4% decline
during the first half of 2015 against the same period in 2014 because of the large
unsold inventory .
Prices, the report said, will rise in the first half of this year.Mumbai is likely to
witness the sharpest rise at 10%, followed by Bengaluru at 3% and NCR at 2%. How
the sector performs will depend a lot on the announcements in the Union budget,
Shishir Baijal, chairman and managing director of Knight Frank India, said. 2014 has
not been a great year for Indian real estate as stated in our latest ... report, jointly
developed with Ficci.
However, he added: We expect 2015 to be the year of recovery and stabilization.
The current economic indicators look positive, though the real impact will only be felt by
the second half of this year. A surprise rate cut by RBI has marked the beginning of the
new year and going forward, the Make in India campaign, REITs, FDI relaxation and
smart cities, among others, augurs well for giving the muchneeded boost to stakeholder
sentiments.
The good news is that commercial real estate demand picked up substantially in the
second half of 2014.

Nov 14, 2014, 04.06 PM IST |

Source: Moneycontrol.com
Residential real estate in 2015:
Blue skies some way off With the government recently relaxing foreign direct investment
norms for real estate firms, property developers have a got a fresh lease of life when it
comes to funding
Residential real estate in 2015:
Blue skies some way off With the government recently relaxing foreign direct investment
norms for real estate firms, property developers have a got a fresh lease of life when it
comes to funding Post your opinion here.
Calendar 2014 was nothing to write home about (pun intended) for residential segment
of real estate firms. The coming year may not be any different, at least in metros and tier
1 cities, unless property developers are willing to drop prices to a point where it become
attractive to a potential buyer to own a house instead of renting one. With the
government recently relaxing foreign direct investment norms for real estate firms,
property developers have a got a fresh lease of life when it comes to funding. That will
enable them to hold on to prices for a little longer in the hope that buyers will finally
throw in the towel and buy the houses at the inflated rates. But it remains to be seen if
holding on to prices will be of much help.
A recent by brokerage house UBS shows that on an average pre-sales were down 50
percent in 2014 while residential inventory is close to a seven-year high on an average.
According to a report by real estate consultancy Knight Frank, there are around 2.3 lakh
unsold houses in Mumbai. The situation is not much better in Delhi-NCR, where there
are about 1.7 lakh unsold houses and sales were down 37 percent during the first half

of the calendar. Anecdotal evidence suggests that sales were muted during the festive
season as well, reflecting buyers resistance to higher prices. Interestingly, property
prices have been stagnant even as the stock market has been on a tear since
September last year, with benchmark indices rallying over 75 percent. In the past, there
has been direct correlation between the stock market and the property market. A rally in
the stock market invariably fuelled a similar upswing in property prices, as investors
ploughed profits from their stock deals into real estate. That has not been happening for
some time now. A key reason is that retail participation is not at the same level as it was
during the bull run of 2004-08. And the investors who have made money dont seem to
think of property as the best place to reinvest their profits.
There is another reason why house sales are yet to pick up despite the boom in the
stock market -- jobs. Jobs are not being created at the same pace as they were being in
the previous bull run. There is still over capacity in the system, and most companies are
right now focusing on getting their balance sheets in shape before expanding capacity.
Property prices could still see a meaningful correction, if banks start putting pressure on
the builders. When property prices crashed in 2008-09, banks should have ideally
forced builders to sell property at reduced prices if need be and repay the loans owed to
banks. Instead, with some regulatory help as well, banks restructured the loans more
liberally than they should have, allowing builders to get away lightly.
But the RBI has become stricter about banks exposure to the real estate sector in the
last few years.
Recently, Reserve Bank of India (RBI) deputy governor R. Gandhi expressed concerned
about the level of exposure of banks to the real estate and housing sector. The real
estate and housing sector accounts for 13-14% of banks exposure.
Gandhi said RBI was very much concerned about further exposure beyond these
levels, adding that increasing exposure would not be prudent, reported the Mint
newspaper.
The number of real estate players that can access FDI is limited. Most builders still have
to rely on domestic channels of funding, and banks are an important source. Already
banks have been nudging real estate firms to bring in more equity capital, and industry
sources say the instances of evergreening of loans (borrowing afresh from same bank
to repay old loan so as not to be declared defaulter) involving realty firms are on the
decline. Starved for capital, state-owned banks are less inclined to indulge real estate
firms.
Read more at: http://www.moneycontrol.com/news/real-estate/residential-realestate2015-blue-skies-some-way-off_1228721.html?utm_source=ref_article

Will FDI rejuvenate the real estate sector?

The new Government, in its intention to rejuvenate the sector, eased FDI norms for real
estate sector recently.Will FDI rejuvenate the real estate sector? The new Government,
in its intention to rejuvenate the sector, eased FDI norms for real estate sector recently
Shashwat DC moneycontrol.com
It is a no brainer that the real estate market in India is in the throes of crisis, a deep
crisis. For the past year or so, the market prices have more or less remained stagnant,
and yet the sales have not picked up at all.
In fact, according to a recent report released by Liases Foras, the inventory of unsold
property stood at a staggering 815 million sq. ft of residential space across six cities at
the end of September quarter this year. This is the highest ever stock of unsold
inventory. According to the same survey, this inventory was good enough to last for the
next 3-4 years. On the other hand you have the stock bourses, where investment is
booming, as the Sensex crosses one milestone after another with each passing day.
The big reason experts attribute to the stagnation in real estate business is because of
the peak price for apartments and land that had been rising over the years based on
speculative gains. The prices had hit a ceiling of sorts, and apparently there was no
room for it go north.
The other big factor that gets cited is the unavailability of land. Because of new norms
on acquisition, land has become a premium and developers are having a tough time
securing the supply. Finally, the cost of production too has gone up, with the prices of
almost every commodity that is involved in construction getting more expensive with
each quarter. Higher costs coupled with lower sale were the reason why there was an
overhanging glum in the market.
The new Government, in its intention to rejuvenate the sector, eased FDI norms for real
estate sector recently. From reducing the minimum built-up area, capital requirement,
reduced exit norms, the new policy is aimed at bringing in investment into the sector.
Little wonder, the real estate industry seems to be very gung-ho about the new norms,
as the cash-strapped people can now look at alternative sources to fund their projects.
According to the projections made by the government the ease of norms will boost the
sector and help bring down the housing costs.
Yet, the fact is that FDI is a double-edged sword, and whenever it enters into a market
sector in the shape of 'hot money it almost always is accompanied by inflation. In

pursuit of profits, and the expectation of rising prices, the prices in real estate that had
been stagnating for so many days might see an upward shift.
Recently, when Donald Trump, the serial investor was in India for a launch of an uberrich project, he had announced that India's real estate process were among the lowest
in the world. While many people were shocked at the fact and took it for humour, the
fact is that because of the currency arbitrage, for investors from US and other places,
India's real estate still is the El Dorado, where you invest money and leave in a hurry.
Even though the government has imposed a time-limit on these investments (3 years),
keeping in mind the typical gestation period of a project, the FDI can enter a project at
the onset and leave when the project gets completed.
In the end, the FDI in real estate might just be the shot in the arm for the developers,
but for the average citizen who had been waiting for sometime hoping to land a good
deal, the deal might just have gone tougher. This just might be the start of another
speculative cycle.
Read more at: http://www.moneycontrol.com/news/real-estate/will-fdi-rejuvenaterealestate-sector_1227834.html?utm_source=ref_article