Delhi clears Rs.1,100 crore for housing projects

Delhi's State-Level Steering Committee on Jawaharlal Nehru National Urban Renewal Mission (JNNURM) Friday cleared five dwelling projects worth Rs.1,136 crore. 

Under the projects, 7,672 rooms offering ten-bedded and five-bedded dormitories would be constructed by the Delhi State Industrial and Infrastructure Development Corporation at an estimated cost of Rs.906.30 crore.

Under other two projects, two sets of 3,052 and 3,600 rooms will be constructed at Kanjhawala and under two more projects 4,620 rooms will be constructed at Samaspur at a total cost of Rs.229.83 crore.

The accommodations will be rented out to firms, contractors for industrial workers and to other migrant workers who cannot afford to rent homes at market rates.

JNNURM is a massive city-modernisation scheme launched by the ministry of urban development.

The meeting was chaired by Delhi Chief Minister Sheila Dikshit.

Sobha Developers gives new sales guidance of $363M for FY13

BY  Pooja Sarkar; VCCircle

Has recorded drop in sales in sequential basis, but up 26 per cent year on year at 0.84 million square feet.

Bangalore based realty company Sobha Developers has seen growth in its first quarter operational numbers as compared to last year. For the quarter ended June 30, it managed to sell 0.84 million sq.ft of new space, which is valued at $87million (Rs 4,79 crore), with an average realisation rate of Rs 5,737 per square feet. Though year-on-year there is a growth in sales realisation of 26 percent, sequentially there is a decline. In Q4FY12, the realtor had sold 0.863 million square feet.

In the same period last year, Sobha had managed to sell 0.67 million square feet, for an average price realisation of Rs 4,547 per square feet.

The company has also given a new sales guidance for the year of $363 million (Rs 2,000 crore) for this fiscal for the period last year the developer managed sales of $309 million (Rs 1,700 crore). In the last quarter the developer managed to launch a new villa project called Sobha West Hill in Coimbatore with a total saleable area of 0.14 million square feet.

At present it is accruing money from projects across Bangalore, NCR, Chennai, Pune, Thrissur, Coimbatore and Mysore.

Kejal Mehta and Dhrushil Jhaveri real estate analyst from Prabhudas Liladher wrote in their report to their client “on account of strong launches and monetization of old sales, coupled with a steady execution, the company has brought its net debt down from $220 million (Rs1,210 crore) in FY11 to $207 million (Rs 1,140 crore ) in FY12. We further expect net debt to reduce to $161 million (Rs 890 crore) in FY13, resulting in a DER of 0.56, down from 0.67 in FY11.”

Sales from its Gurgaon project witnessed a strong sequential increase of 24 per cent.

Industry Status for Real Estate sector mooted at CII’s Realty 2012

Technology, Skills, delivery & credibility: key game changers for Real Estate sector’s growth – CII’s Realty 2012 Conference    Jun 28, 2012

Real Estate’s development is development of the country - Sudhir Krishna, Secy, MoUD, GoI

“Real Estate sector’s development is the development of the whole country”, said Dr Sudhir Krishna, Secretary, Ministry of Urban Development, Government of India while addressing the industry at 8^th edition of Realty 2012, organized by Confederation of Indian Industry (CII) Northern Region, here today.

All basic amenities in the urban areas like Water, solid waste management, transport system can be profit making, so Public Private Partnership (PPP) in the urban areas should be encouraged, he further suggested. 

“Historically the unorganized and fragmented real estate sector in India is slowly evolving into an organised sector with strong focus on technology, efficiency, skills, a strong delivery mechanism, community development, infrastructure development and adoption of green practices” said Mr Anshuman Magazine, Chairman, Realty 2012 & CMD, CBRE South Asia Pvt. Ltd. “The companies who do not concentrate on these factors will find it difficult to sustain in the long run”, he added.

“Technology and efficiency would be the real game changer in this sector considering ever changing scenario”, said Mr J C Sharma, Vice Chairman & Managing Director, Sobha Developers Ltd.

“It is disheartening that real estate sector which is linked with 300 industries directly or indirectly, provides employment to 50 million people and contributes 17 % to India’s GDP is still to get the industry status for itself. Hence there is a dire need to change the perception about the Real Estate sector’s and enhance its credibility in the eyes of all stakeholders including consumers, government, Banks, RBI and the regulatory bodies. And this would happen if and only if we deliver what we promise”, said Mr Sachin Sandhir, Managing Director, South Asia, RICS.

“Inspite of the Regulations that exist in the sector, we have to dedicatedly take the sector to the next level. Some of the challenges like unavailability of land, acute shortage of labour, high cost of capital and unstable government policies and regulations need immediate attention” opined Mr Munesh Khanna, Senior Partner, Grant Thornton Advisory Private Limited.

Mr Chittaranjan Kumar Khetan, Joint Secretary, Ministry of Urban Development, Government of India highlighted the issues faced by the customers and shared the set of approvals and permissions that the Real Estate Developers have to pass through. He further shared that the Draft Real Estate (Regulation & Development) Bill 2011 would not only safeguard the interests of the consumers to a large extent but would also be a balanced in nature. The bill is almost ready and just needs to be put in the parliament for approval.

Mr Rohit Modi, Former Deputy Managing Director, Gammon India Limited said that “we need to see things from bigger perspective where in all stakeholders, viz urban local bodies, real estate companies, government, banks etc work in coordination for over all implementation of infrastructure development programmes and make all necessary facilities and amenities available to the consumers at best prices and also to safeguard their interests for enhancing the perception of the fast growing sector which has immense potential to grow with FDI in multi brand retail also to be allowed in coming future. Source: cii.in

Fund sources dry up for realty firms

The funding avenues exploited earlier by real estate sector seem to have dried-up as investments in the sector shows significant decline.

Between March 2010 and December 2011, foreign direct investment in real estate declined by a drastic 92 per cent and its share in total foreign direct investment shrunk from 16.83 per cent to 1.94 per cent, according to a Knight Frank report.

Fate of fund flow through initial public offerings, qualified institutional placements and private equity is also similar. As a result, all hope is stemmed on revival in sales, said the report.

Samantak Das, national head research, Knight Frank said, “over the last few years windows of financing for the real estate sector has changed. While in 2009 the sector has witnessed funds coming through QIP, IPO, FDI but with the volatile market conditions these routes of fund raising have dried up. FDI funding has also reduced significantly due to slowdown in the global economy. Foreign investors also refrained from investing in the sector as there were delays in project execution and returns were low in many cases.”

Further people who have invested in the realty shares had also lost money and are refraining from investing in the real estate stocks, he added.
 

Since 2005, 21 realty firms have raised Rs 21,306 crore through IPO and FPO of which Rs 14,574 crore or 68 per cent was raised alone in 2007, post the opening up of FDI in real estate sector.

The year 2008 had no new issues in the form of IPOs or FPOs while there was just one issue in 2009. In 2010, post the global crisis, the economy saw some support in terms of stronger UPA government at the center which helped as many as five promoters to raise Rs 4,312 crore.

While QIP window opened up for the realty players, improved sentiments coupled with low interest rates resulted in pent-up demand translating into property sales. Of the total fund raised through QIPs since 2009, 84 per cent came in the year 2009 itself.

The year 2011 witnessed a phenomenon of high property prices, high interest rate and low sales. Dismal corporate earnings growth coupled with a weak employment scenario impacted the realty industry. Funding avenues like IPOs, QIP and FDI, which were harnessed in the earlier years¸ dried up.

Ravi Ahuja, executive director, Cushman and Wakefield said, “definitely avenues of funding for the realty sector has dried up in the last couple of years due to which there has been a 15-20 per cent price correction witnessed in commercial prices in some pockets of Mumbai and residential prices also witnessed a bit of correction.”

Realty developer’s holding capacity has strained as funding avenues witnessed a drastic decline.

Das said that the only option real estate developers are left with to raise funds are through private equity investment which are coming much costlier as they are not only picking up stake of companies but are also charging high interests. Source:http://m.mydigitalfc.com/news/fund-sources-dry-realty-firms-394

Parsvnath debt remains a worry, Ansal profit falls

Realty firm Parsvnath Developers Ltd (PDL) said recently that its consolidated net profit fell 28% in the third quarter and it failed to reduce its Rs. 1,300 crore debt because of the rising cost of building material and high interest rates. New Delhi-based PDL’s net profit in the three months ended 31 December fell to Rs. 22.54 crore from Rs. 31.37 crore a year earlier. The firm’s revenue increased 6.8% to Rs. 239.62 crore.

“Our profit has declined because of higher expenditure on construction and employees cost besides higher interest cost,” Parsvnath Developers chairman Pradeep Jain told reporters. The company’s net debt stood at around Rs. 1,300 crore at the end of third quarter, he added. It had reported debt of about Rs. 1,200 crore during the second quarter ended 30 September.
 

“Debt remains a major concern for most real estate companies. The realty index will continue to underperform,” said Param Desai, a research analyst at Nirmal Bang Equities Pvt. Ltd, a Mumbai-based brokerage.

Another Delhi-based real estate firm, Ansal Properties and Infrastructure Ltd reported a drop in third-quarter profit and revenue. Net profit fell 35% to Rs. 21 crore from Rs. 32.37 crore a year earlier. The company’s revenue during the October-December period, too, declined by 35.1% to Rs. 226.1 crore.

According to a January report from brokerage IDFC Securities Ltd, despite the three months to December being the festive quarter, new launches and sales failed to result in any significant improvement for real estate firms. Sale of non-core assets has become the preferred mode of reducing debt for realtors.

“There has been an absolute slowdown. Sales dropped for most firms; results are on expected lines,” said Sharan Lilaney, an analyst at Angel Broking Ltd.

PDL plans to sell non-core assets in Kochi and Chennai to reduce debt, Jain said. While the land parcel in Kochi is meant for developing an information technology special economic zone, the Chennai plot is designated for a mixed-use development. The firm recently invited bids to sell its commercial tower project in central Delhi. Source: Indian Express