HMDA shows green path to builders

In a bid to make the real estate lobby in Hyderabad more eco-friendly, the Hyderabad Metropolitan Development Authority (HMDA) would, rather than focussing on the extant problems in residential households, be concentrating more on implementing better ‘green’ technologies towards future projects in the Hyderabad district.

According to sources in the organisation, new building standards and guidelines would be floated for upcoming construction projects, with special emphasis on environmental guidelines in the coming weeks. While the new environment friendly guidelines for upcoming commercial and residential projects have already been on display on the HMDA website for some time around, the implementation of the rules have never really taken off with smaller realty players in the city.

The HMDA in this regard announced that a consortium of builders, contractors and other stakeholders would be held at the city hotel, starting Thursday. The programme to be organised in collaboration with urban planning institutes from the private sector would focus on methods to increase the penetration of newer construction materials and methods that would have a lesser impact on the urban environment. Meanwhile, HMDA spokespersons confirmed “Incentives through discounts and similar means have been initiated at the planning level for developers undertaking new constructions.”

Furthermore, with alternative eco-friendly materials like Fly Ash available in the market, the HMDA is vying to woo builders into adopting the newer materials, which when adopted “should reduce running costs and the impact on the environment significantly,” revealed a spokesperson at the HMDA. Officials at the organisation also noted that “by adopting simple design measures, which ensure better airflow and insulation, the house or site owner can cut power costs by a significant percentage, which would translate to a lower overall running cost on the site in the long run.”

As such, the HMDA has made arrangements to introduce subsidised photovoltaic cell technologies like solar heaters among house owners, under the State Ministry’s scheme on Solar Photovoltaic Systems and Devices for Urban Areas. Moving beyond the local level, the HMDA also announced a one-time incentive of Rs 50 lakh to Municipal Corporations and Rs 25 lakh to other Urban Local Bodies, who would announce rebates in property tax for energy efficient buildings rated under the ‘Griha’ scheme, and undertake similar steps like introducing compulsory ratings of public sector owned buildings under the scheme and engage in large-scale promotion of ‘green’ buildings in their area.

Rainbow Vistas -

Rainbow vistas project -
The bhoomi poojan for the site is scheduled on 2nd Aug 2009 (Sunday).

I have happend to visit the site few days back and "Actually... its a great location."

Advantages:

1. Good location - 4 KMs from HITECH City (We can see the famous cyeber towers from the site )

2.Trusted bulders - Ashoka (has good liquidity and proven track record) and cybercity (Cybercity is fairly new and they want to have some accomplishments under their belt)

3. Rates: As per the location, 2500 per sft looks like a good deal, however scope of negotiation should still be there.

4. the 100 ft road, foundation stone was just layed out - in news

5. The current project has just some 400 odd flats, and there is less risk to invest in a society that has few flats, in comparison to other big ventures that talks about 2000 + Flats, that may impact delivery time

6. Getting a Bank loan will not be a problem as the payment plan looks equally spaced out by project's progress and the good name that Ashoka carries with it.

Market Update -june 2009

1.0 FY 2009 Year in review

Based on our interactions with the key market players in Hyderabad, the residential segment of

Hyderabad real estate market is likely to recover by third quarter of FY 2010.

Major residential property launches in FY 2009

In FY 2009, Hyderabad has seen significant investments into the residential real estate market

from local players, national and international majors across various segments of the market

including premium luxury, premium, affordable and low cost housing.

National real estate companies

In FY 2009 national real estate companies have launched the following large projects in the

residential market of Hyderabad.

• Lodha Group has launched its premium luxury apartments named Lodha Bellezza at

Eden Square - Kukatpally.

• DLF has launched its project -Lake District -The Summit at Kokapet in the affordable

housing segment.

Local real estate companies

Leading market players such as Indu Projects, Janapriya, Prajay, Aditya Constructions, Bharat,

Ramky, Nagarjuna, PBEL, Sree Srinivasa, Sri Aditya homes, SMR Holdings, Legend, Trendset,

Meenakshi, Sri Krishna and others have launched many new large projects in FY 2009 across

various segments of the market, while other major’s such as Aparna, Aliens, L&T and others have

been executing their large residential projects.

Market size in FY 2009 has shrunk

In the last two quarters of FY 2009, residential property transactions have come to virtual

standstill and have affected players across the Hyderabad market. We estimate that the market

size for residential property in FY 2009 to have shrunk by about 60% as compared to FY 2008.

Builders going slow

Leading developers in the city have gone slow on their projects and have prioritized on a few

projects due to tight liquidity and working capital issues. While large luxury segment builders such

as Lanco are now building only 13 residential towers as against the stated 26 towers in their sales

prospectus due slackening demand, others large builders have either postponed their

construction activities by a few quarters, restructured their projects or have scrapped the projects

altogether. The status of Hyderabad’s largest integrated township at Tellapur being built by the

ICICI Venture Capital, Nagarjuna, US-based Tishman Speyers consortium, comprising

development of over 400 acres and saleable area in excess of 30 million square feet is uncertain,

while cash strapped Maytas Properties is seeking customers to pool in an extra Rs 120 crore to

complete its upmarket residential project – Maytas Hill County.

No significant unsold inventory

Most Local builders in Hyderabad use the JV/JD route to build projects, while large local builders

and national players buy land and build projects. In Hyderabad, builders presently do not have

any significant unsold inventory of completely build projects. However, many of the projects which

lie unsold are projects under execution and are likely to be delivered in the next two years or

projects which have been announced and are still under the foundation stage.

Builders under stress to raise capital

Many Hyderabad builders have raised significant capital from VC, PE funds in the period between

FY 2006 to FY2009. In most cases, valuation of projects has been very high and VC/PE funds

today are stuck with the stock of unlisted companies/SPV vehicles, whose value has declined

significantly. With bank credit tough to get in FY 2009, builders have raised capital by selling

assets, tapping high net worth individuals, while few have raised capital from foreign investors.

QIP route for Hyderabad builders – might be tough

With very few listed real estate firms in Hyderabad, raising capital through today’s favorite

instrument qualified institutional placement (QIP) route for Hyderabad firms might be ruled out.

With many builders/companies under stress because of leveraged balance sheets, vulture

funds/high net worth Individuals are on a look out for distressed asset sale.

Changing focus of builders

The focus of builder’s up to the first two quarters of FY 2009 has been on the premium luxury and

luxury segment of the market. The market has changed by third quarter of FY 2009 and builders

have realized that the market for premium segment has reached a dead end and have gone back

to their drawing boards to launch new projects targeting the affordable segment of the market.

DLF, which was one of the early entrants to tap the affordable housing market in Hyderabad, has

managed to book more than 120 apartments as on April 2009, despite tough market conditions.

Residential Prices – Hyderabad – An analysis

NHB Residex has come out with property price movements for various cities in India. An analysis

of Hyderabad data reveals that property prices have declined significantly in West Zone in the

period Jan-Dec 2008 as compared to the year 2007. Similarly the South Zone and Central Zone

have declined marginally, while North Zone has shown marginal appreciation, the Other zone

(Shamshabad Zone) has recorded significant appreciation on account of the opening of new

airport. As of June 1st 2009, property prices across Hyderabad in the last one year have

decreased/corrected by more than 25-35% and today are at December 2007 levels.

2.0 Will the market recover in FY 2010?

Major Launches in FY 2010

Even in difficult market conditions, builders in Hyderabad have launched new projects in FY 2010.

A few large projects launched include

• Botanika by Koncept Ambience. – A premium luxury segment project near Botanical

Gardens in Kondapur.

• Rainbow Vistas launched by Cybercity Builders & Developers Pvt Ltd and Ashoka

Developers & Builders Ltd in the affordable housing segment of the market near

Kukatpally.

• Ramky group has launched Ramky Pearl a 17-acre habitat with luxury triplex villas

numbering about 110 in Kukatpally, Hyderabad.

• Legend Estates has launched Legend Chimes a 45 acre premium villas project at

Kokapet near to Hyderabad financial district.

• Mantri Group has launched its Celestia a residential and commercial project near the

financial district Gachibowli in the affordable housing segment.

FY 2010 Outlook: Pricing pressure on residential real estate is expected continue up to the

second quarter of FY10, while demand is likely to firm up.

Residential transactions improving: Builders are witnessing significant enquiries in Hyderabad

after the new government formation at both the state and centre level. After a long lull, in the

month of May 2009, builders have been able to sell properties at new price points in the market

for both affordable housing, villas and premium housing. Builders, who have offered value deals

to customers, have been able to report best sales in the last few weeks.

Delinquent property auctions likely: Banks have seen significant Housing mortgage loans

delinquencies in FY 2009 on account of slow down in IT sector and recession in the economy.

We expect banks in Hyderabad to auction delinquent property from the second/third quarter of FY

2010 and it is likely to have an impact on pricing of both existing projects and new project

launches.

Bank Lending rates – To dip further: While RBI has announced sweeping cuts in repo and

reverse repo rates in the last two quarters, banks have been reluctant to cut their Prime Lending

Rates (PLR) and have been lending to new customers at below PLR rates, while existing

customers have been paying at PLR rates. With the likelihood of a further rate cuts by RBI in

June/July 2009, home loan rates are likely to soften by a further 50 basis points.

Tightening norms by Housing finance companies

Housing finance companies are tightening lending norms/standards and loan to property value is

likely to be about 70-80% in FY 2010, which would mean that the days of easy housing loans

from banks, is over.

IT Outlook – Uncertain: Hyderabad accounts for bulk of the IT revenues from Andhra Pradesh.

and IT revenues from Andhra Pradesh grew by 20% to about Rs 31,800 crore in FY 09 as against

Rs 26,500 crore in FY 08. IT revenues which grew by 40% in FY 2008 were impacted by the

global economic slowdown in FY 2009. The outlook for IT sector in FY 2010 and 2011 still

remains uncertain on account of global recession and the industry growth rate might even

touchdown to 10% though the industry associations are forecasting a growth rate of about 13.5%

in FY 2010. IT customers who want to buy property are hesitating in view of difficult market

conditions and are watching the market developments keenly.

Market Outlook: Industry players in Hyderabad hope for a revival of the market in FY 2010 on

account of stable outlook for the Indian economy with a projected GDP of 6%. Likely recovery of

the US economy, optimism in the global markets, stimulus packages to the real estate sector by

both state and central governments and finally the likelihood of Telangana issue to be on the

backburner for another five years are the other factors which might aid the revival of the market.

With declining prices, demand is reviving slowly and is likely to firm up from the third quarter of

FY 2010.

Source: Marutish Varanasi (VRNETConsulting.com)

Real Estate Market is likely to recover by 2010

Presently facing a downward trend, the real estate market is likely to recover by 2010 with increase in demand for residential segment driven by improving affordability, steady economic growth and greater liquidity. These are the findings of a survey carried out in 10 cities, including Chandigarh, by the Crisil Real Estate Research Group.

The report says, “Demand in the residential market is expected to turn positive in 2010 due to these factors, however, a decline in the currently over-priced capital values of all the three real estate segments – residential, commercial and retail would persist through 2009.” “The commercial and retail markets would continue to witness erosion in lease rentals through the next two years,” it states.

The report provided information and analysis of more than 400 acres of land across 88 micre markets in 10 cities – Ahmedabad, Bengaluru, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Mumbai and Pune.

The report indicated that capital values for residential sector and lease rentals for commercial and retail properties have substantially corrected till March this year, due to slowdown in both the domestic and global economies. Cities such as Kochi, Chandigarh and Pune, which have greater investor presence as against end-users, witnessed a greater fall in capital values compared to other cities, the report revealed.

However, Crisil believes that demand for houses would improve in 2010, backed by lower home loan interest rates as well as better job security owing to higher growth in the economy.

Infrastructure gets its due share

The UPA Government seems to be holding the infrastructure segment close to its chest as building the nation, literally and figuratively, implies creation of both jobs and revenue generation.

Increase in infrastructure investment upto 9 per cent of the GDP by 2014, increase in allocations of sectors like power, road, railways, housing and irrigation, consistent focus to develop rural infrastructure, 87 per cent hike in Jawaharlal Nehru National Urban Renewal Mission are some of the highlights in Budget 2009 to overhaul infrastructure facilities.

"Support to socially-oriented and rural development programmes besides other appealing promises like urban and rural housing and simplifying the tax system are all positive signs. The thrust on infrastructure and housing spells well for construction and building materials such as cement and steel," said Sumit Banerjee, Managing Director, ACC Ltd.

However, the industry is slightly disappointed as cement fails to get any respite from high tax rates and duties.

Meanwhile, the marginal increase in personal income-tax exemption on housing loan interest is likely to increase retail housing demand.

The decision to allow India Infrastructure Finance Company Ltd., to refinance 60 per cent of the bank loans for public-privatepartnership projects in critical sectors over the next 15 to 18 months is expected to encourage private sector participation.

"The NHAI allocation upto 23 per cent would surely have an indirect impact on the industry and spur cement demand," said Puneet Dalmia, Managing Director, Dalmia Cement (Bharat) Ltd. Similarly, the full exemption of excise duty on pre-fabricated concrete slabs will boost the construction industry.

The extension of social security schemes to construction workers and mining labourers is expected to provide an indirect boost to the infrastructure sectors.

However, Budget 2009 has no major announcements for the Non-Banking Finance Corporations (NBFCs), who are poised to play an important role in credit delivery to micro, small and medium enterprises, offering services like construction and transportation.

"By not addressing this segment, the Finance Minister has missed out one fundamental segment. The only good news for NBFCs is the reduction of tax rate on lease rentals for plant and machinery to two per cent from the earlier 10 per cent," said Hemant Kanoria, CMD, Srei Infrastructure Finance Ltd.

Source: http://www.expressbuzz.com

General Budget 2009-10 - Highlights

Highlights of Union Budget 2009:

Advantage Infrastructure

• Rs 1 lakh crore projects for Infrastructure revival
  
• IIFCL and banks in position to support Rs 1,00,000 cr in infrastructure
  
• Highway and railways: Allocation hiked by 23%
  
• Stepped up allocation of funds from Rs 10,800 cr to Rs 15,800 cr for railways

• Govt have some success in attracting investments in certain sectors through PPP
  
• Allocation for Mumbai flood management hiked

Impact & outcome

Cheaper: Footwear, LCD TVs, branded jewellery, drugs for heart treatment, bulk drugs, textiles

Dearer: Mobile phones, set-top boxes, gold bars, gold and silver import

Tax slabs raised

• Income tax exemption limit for others raised by Rs 10,000 (Rs 1.5 lakh to Rs 1.6 lakh)

• Income tax exemption limit for women raised by Rs 10,000 (Rs 1.80 lakh to Rs 1.90 lakh)

• Income tax exemption limit for senior citizens raised by Rs 15,000 (Rs 2.25 lakh to Rs 2.40 lakh)

• 10% surcharge in Direct Taxes scrapped

• Individual law consultation not to attract service tax

• I-T Saral II form to be introduced

• No change in corporate taxation

• SEC 80IB benefit extended to natural gas

• Investment-linked tax benefits for gas pipelines, cold chains

• Sunset clause for Software Technology Parks of India (STPIs) extended by 1 year

• Minimum alternate tax increased to 15% from 10% of book profit

• Section 80DD to be hiked to Rs 1 lakh
• Fringe benefit tax scrapped

What is in it for you?

• Govt to spend Rs 120 cr in FY10 on unique ID

• Certain pension-related benefits extended to war-hounded

• National Web Portal for employer and employee to be launched

• Stepped up allocation of funds from Rs 10,800 cr to Rs 15,800 cr for railways

• Aila hurricane relief at Rs 1,000 cr
  

What Young India gets?

• Employment exchanges to be modernised

• Interest subsidy for educational loans

• Plan to cut female illiteracy by half in three yrs

• To launch national mission on female literacy
  

What Agriculture sector gets?

• Rashtriya Krishi Vikas Yojna stepped up by 30%

• Agri credit for at Rs 3.25 lakh crore for 09-10

• Budget makes subvention of 1% to benefit farmers

• Proposes to extend deadline to farmers to pay off 75% of loans by six months to December 31, 2009

• Ensure 4% agriculture growth
  

What Rural India gets?

• To provide Rs 2000 cr for rural housing

• Banking facilities in remote areas in next 3 years

• To add handloom clusters in West Bengal and Tamil Nadu

• Govt aims to have social security for informal sector

• PM's Adarsh Gram Yojana starts with Rs 100 cr funding
• NHB refinance to rural housing sector to be raised

• Indira Awaas Yojana outlay increased by 63%

• Bharat Nirman outlay raised by 59%

• Food security to provide rice, wheat at Rs 3 a kg to poor

• Allocation for Indira Awaas Yojana to be increased by 63%
• Govt. to move food security bill very soon

• NREGA outlay increased by 144%

• NREGA min wages set at Rs 100/day

• Special fund of Rs 4,000 cr from Rural Infra Dev fund to provide cheap loans to MSME
  

PSUs: Disinvestment on backburner

• PSU companies to remain under government control

• Govt wants public shareholding in PSUs to go up

• PSUs to remain under govt control

• Govt to set-up expert committee to advise on petro pricing products

• PSU Banks, insurance firms outside disinvestment plan

• There are signs of revival in domestic industry

Sops for industry

• Construction: Restore full exemption on goods such as pre-fabricated slabs

• Branded jewellery exempted from excise duty

• Tax holiday on commercial production of mineral oil and natural gas on NELP VIII

• MAT hiked to 15% of book profit from 10%

• To introduce GST by April 1, 2010

• Govt wants public shareholding in PSUs to go up
• PSUs to remain under govt control

• PSU Banks, insurance firms outside disinvestment plan

• Exporters borne the brunt of eco crisis, will provide adj assistance till March 2010

• IIFCL and banks in position to support Rs 1,00,000 cr in infrastructure
• Infra investment to be over 9% of GDP by 2014

• Gross capital flow rose to over 9% over GDP
  

Financial sector: The road ahead

Budget estimates: Interest payment expected at Rs 2,25,511 cr

• 8.5% growth in recent past fueled by pvt sector investment

• PSU Banks, insurance firms outside disinvestment plan

• Turbulence in world markets left Indian financial sector unaffected

• Fiscal deficit up to 6.2% from 2.7% fo GDP

• IIFCL and banks in position to support Rs 1,00,000 cr in infrastructure

Defence Budgets

• To spend Rs 1.42 lakh cr on defence
  
• Govt to build 100,000 homes for paramilitary forces
  
• Paramilitary housing project to cost Rs 1,000 cr
  
• Certain Pension related benefits extended to war hounded
  
• Paramilitary housing cost estimated at Rs 1,000 cr
  
• Govt proposes to launch housing for 1 lakh para military forces
  

Challenges ahead

• Fiscal deficit grew from 2.7% to 6.8% of GDP
  
• To lead the economy back to 9% growth
  
• Growth rate in 2008-09 dipped to 6.7% from average 9 % growth in previous 3 fiscal years
  

Hyderabad Real Estate Update

As you all know, the real estate has been down in dumps for the last year or so. Most of the projects went on hold, not many transactions and everybody looking for the rates to go down even further. So I wanted to check out if anything has changed after the recent elections. While there is a renewed optimism among the people I talked to, the overall activity is still very subdued. People got a taste of price reductions and now they are waiting for the prices to keep falling. While its alright to expect the prices to reach reasonable levels, it would be foolish to want them to go to unsustainable levels, as some of the buyers seem to be doing. No builder or seller wants to take losses on their transactions unless its absolutely unavoidable. So these buyers will be left waiting forever just like they were when the prices were going up crazily. IMHO, the prices are at very reasonable levels now, and there are some terrific values out there for serious buyers (not speculators).

Having said that, here is the current status of some of the big, and some not so big projects in the city.

Lanco Hills - Construction is going on at full speed. I don't know if it tracks to their original schedule but I did see a lot of activity on site. Some of the towers are up, and its a beautiful sight. This project is going to be the crown jewel of Hyderabad real estate. I heard the price is reduced to Rs.4500/sft, but its probably still high for the current market. But again, if the things go according to the plan there will be a certain value attached to a Lanco Hills address.














Aparna Sarovar - Another project where construction is happening in full swing. Builder seems determined to complete the project despite the market conditions, and I have a feeling they will achieve it. Location is a disadvantage, but it looks like its going to be another beautiful project.














L&T Serene County - I liked this project the best. Sits right next to the Gachibowli junction with ORR cutting right through it. Most of the blocks are sold out and occupied, but some newer blocks are coming up. A very good place to live for young families and from what I hear the flats here command a decent rental value.

Bloomfield Ecstasy - My post about Hyderabad RE wouldn't be complete without mentioning this project, as I bought my house here. Slow progress, but progress nonetheless. Deliveries are expected at the end of next year, and at this point access from Gopanapalli T-junction (the 1.5 km stretch) is still an issue. Commencement of Tishman Speyer project next door is the key, as if and when that takes off the area will come back to life.












Aditya Edenwoods (Tellapur) - I saw the project for the first time and didn't like it. The reason is simple - its located in the middle of a big HUDA layout and is surrounded by hundreds of small plots. Most of these plots are individually owned and possibly by NRIs and out of towners. So they have no urgency nor any incentive to build anything there. I think the place will remain like that for a long time to come.

Aliens Space Station 1 - Another project that I visited for the first time. What were the owners thinking, and what were the buyers thinking??? While the distance may not be a big issue, the immediate surroundings of the project are really shocking. This really goes to tell you how one can fool people with flashy brochures and designs. I have a feeling that most of the buyers didn't actually visit the place before buying. On top of all this, there is not much of activity on site. In my opinion, its very unlikely that this project will complete, at least not on the same scale as it was originally planned.

Vision Avenues (Infiniti Homes) - Lot of construction activity. Most of the houses are up, the plot sizes and distance between each house is very impressive. Going to be a very nice community when it is completed.











Indu Aranya - Lot of construction activity, but the location and quality of constructions are the big negative points

Indu Fortune Fields - Good project, but those living towards the railway tracks will have to put up with the constant noise of moving trains. I took a train to Tirupati, and when the train crossed IFF I realized how close the tracks were to some of the blocks. So check that out before you buy.

A lot of other commercial construction activity is going in the Financial district. ICICI building is coming up very nicely. Though recession slowed things down, there is still a lot of activity that's going on. Hopefully the economy will start recovering so some of the projects that went on hold can restart.

Souce:http://r2i2010.blogspot.com/2009/06/hyderabad-real-estate-update.html