Wells Fargo Dumps Maytas Hill County

The world class Maytas Hill County SEZ, a flagship venture of Maytas Properties and the only venture of the company still afloat is now in trouble. US-based Wells Fargo, the first and only firm to have tied up with the SEZ coming up in Bachupally and had even located its office there, pulled down its signboard the day after Raju’s confession and is now planning to pull out of the venture completely, according to sources.

Sources said, the company has been on tenterhooks ever since the Satyam-Maytas merger fiasco unfolded and has been watching the developments closely ever since. Officials say they will “definitely pull out of the SEZ if the situation worsens’’. The banking firm has another office in Raheja Mindspace, Madhapur.

“The plan to set up the office there was made not just because of the SEZ but also the residential township. But now the main concern is the ability of Maytas Properties to raise funds and complete the project and looking at the situation now things are pretty bad,’’ says an official, mentioning that it will be easy for Wells Fargo, which is currently housed in an incubation centre (a temporary structure), to leave Maytas Hill County as “the impact on withdrawing will be low both in terms of money and time as the construction of the permanent structure is still in the initial stages,’’ he says.

It is also learnt that there have been around 50 cancellations in Maytas Hill County ever since Satyam-Maytas merger fiasco. These customers who had only “booked’’ apartments
and villas in the plush residential blocks have now pulled out. Other customers of the Hill County are now giving serious thought about selling their property, only that there wouldn’t be any takers for now.

“During the last two weeks I have been constantly receiving calls from my previous customers who are extremely worried and are asking for my opinion on what they should do with their property and whether they should let it go,’’ confesses an ex-employee of Maytas Properties adding that even if Maytas is able to sustain the township it will be difficult to convince the customers otherwise.

A group of about 100 customers of the township have now formed a clique and are planning to approach Maytas to sort out all their apprehensions regarding the viability of the project. “We are scared as all of us have invested lot of money and despite repeated assurances from the Maytas officials we are still very worried. The management has offered to meet all of us so we will probably have a discussion with them in the next few days,’’ says a member of the group who had bought a villa just seven months ago.

Even though the construction of the apartments and villas, which now cost anything between Rs 1.5 to Rs 4 crores, are now almost complete, investors are concerned about the possibility of Maytas being bought over by another firm. “There is a possibility that some other company might takeover Maytas as there seems to be no source of funds anymore for the Satyam-backed company. I have spent Rs 1.5 crores on my villa and now the only option is to shift into the place as very few people will be willing to buy it now even at the same price,’’ says another customer.

Maytas officials however denied that anyone has backed out of the township or the SEZ in recent times.

SOURCES:
Times Of India

Market getting Better with 20% price Correction

And finally... the Genuine buyers are back.

Property Market in Hyderabad has seen a 15- 25% drop in prices in the past six months.

The Genuine Buyer understood this very fact and going ahead in persuing their dream home.

With banks droping their Home loan intrest rates to 8%, people are in a hurry to find their property as per the requirement(Location/Budget/Ammenities etc..).

Reality Firms Stepping in to Educational Sector

At a time when the biggies of real estate are divesting non core businesses, a clutch of mid-level developers are chalking up plans to invest in the ‘recession proof’ education sector. 

In the last one month, four real estate developers have announced plans of setting up business schools across the country with the combined investment exceeding Rs 500 crore. “It’s a natural progression for a real estate developer to foray into the sector which offers such a tremendous growth potential. There is a shortage of supply in the education sector which we feel we can successfully cater to,” says Pranav Ansal, Chairman, Ansal API. 

With diminished demand for housing and a cash constraint, it’s a natural progression for many developers with available land banks. The Chennai based R. R Industries, Ahmedabad based Omega Realty, Delhi based Ansal Plaza and Kolhapur based Sanjay Ghodawat group are betting heavily on the `business of education’ to diversify their businesses; a model that has worked successfully in some countries like US and Canada. 

The Delhi based Ansal API plans to invest Rs 200 crore in next three to five years for setting up private schools, engineering institute across various centre in the country. The group has already tied up with e-learning service provider Educomp and has leased out its three operational schools in Gurgaon to Educomp. The realty major also plans to build school in townships being developed by them. 

Similarly, the Ahmedabad based Omega Realty plans to get into business schools - to be named as United World School of Business - with a proposed investment of Rs 105 crores. The three proposed schools in Mumbai, Delhi and Ahmedabad will commence operations in academic session 2009-10. 

Another builder to jump into the education bandwagon, the Kolhapur based Sanjay Godhwat Group plans to offer courses in engineering, management and also in the pipeline is an international school. The development of the 150 acre Sanjay Godhwat Institute will happen in three phases with an investment of over Rs 250 crore. 

The trend is being seen amongst the builders in south too. Chennai based real estate firm R. R Industries has tied up with National Management School (NMS) which is being set-up by US academics to start 25 business schools across the country with an estimated cost of Rs 9 crore. 

Experts say the reason for the rush into education is the burgeoning demand supply gap and also a logical extension into an adjacent category for builders who have the necessary wherewithal. 

Karan Khemka, principal, of a global strategic advisory boutique explains, “High rate of returns on investment coupled with huge imbalance in demand supply is attracting real estate players towards the sector who will be at ease in setting up the required infrastructure who already have land banks with them”. But the diversification won’t be an easy one, as similar initiatives have flopped in China.

Real Estate Market Outlook. Have Builders been too Sluggish to React? Hyderabad - March 2009

1.0 Coming to Terms with Hard Reality 

Builders are like middle aged women. It takes a woman courageous effort, to come to terms with the harsh reality of aging. You can continue to live in a make believe world for months or even couple of years…but natural aging just can't be stopped.

Those who read the signals and adjust their lifestyle, carry on with minimal impact, on their lives. Those who refuse to read signals and adjust lifestyle, end up in medical care. 

90% of women are smart enough to admirably adjust and are prepared well in advance. (Salutes to women on Women's Day!!). However, more than 90% of the builders react sluggishly to realities of the market which could affect, if not personal but definitely their financial health. 

2.0 Reading Signals Early and Reacting Swiftly 

In a booming market, builders were quick to react by resetting prices upward, every week. The possibility of making larger profits drove them to be extra alert! When market trend shows negativity, it is rightly expected that the same builders would be quick to act, to cut losses. After all, cutting losses is MORE IMPORTANT than making quicker profit. (In boom, whether one reacts quickly or not, there is profit, always. Its only the quantity of profit that varies. But in a sliding market, money gets burned. And that could be deadly)

And this is exactly where builders have gone, dreadfully wrong. Even now, many are in a "make believe world". Comforting themselves, with grandiose vision of early boom! Unfortunately, they are unaware that they are shooting themselves in the leg. And soon, the self inflicted injuries may aggravate.

Cutting losses by aggressive pricing in anticipation of worsening market, should have been the mantra 9 to 12 months ago. But the opportunity was lost due to the blind belief that boom is perpetual and negative trend, a flash in the pan. Builders offered small cuts from August 08 onwards which had absolutely no impact. 

There were opportunities as late as September 08 to offer aggressive pricing and convert leads to Sales. But once the negative trend firmed into solid slide, NOTHING could work. Its only in December 08, after a whole year and a half of negativity, that few builders started to react with larger cuts. But the horses had bolted in September 08 itself. And builders who reacted late, know that the stable is empty. 

For the smarter builders, the market has indeed given an opportunity to prepare itself for the future. Those who have learned the lesson that procrastination will cause misery, may be quick to act during a slide, after the next boom! 

3.0 Truth Hurts 

Developers are not expected to focus on the larger economy or keep track of business and employment trends, world wide. The primary business is to build and sell. And in the melee, they are either unaware or if aware, ignore emerging trends. 

Their outlook is very narrow and is intensively latched to generating sales at rates, that are not clued to trends. Even when there is appreciable fall in month to month sales, they choose not to look at the root cause. 

During last year, we had the opportunity to advise four developers on pricing as well as downsizing. The exercise reached nowhere with developers shooting down proposals which was based on emerging trends and established facts. These developers could have been winners and built projects, instead of losing crores, if they had acted diligently.

Since the market situation changes fast, suggested rate will have to be reworked and tinkered every month. What is saleable in May, could be too high in November of the same year. 

4.0 Case Studies 

Project 10Km from Gachibowli - Suggested pricing was Rs.2800/sft in May 2008. (Off course the rate is no more acceptable, today) Struggled with high rates and even now carries on, with the overheads mounting. 

Project near Guchibowli - Suggested rate for Villas under Rs.150L, a hot rate at that time in January 2008. For large plot with large Villas. But was priced close to 200L. Also we advised to reduce plot sizes to have Rs.100L villas, which was not agreed. Developer remained adamant and the plots too remain adamantly unsold. Meanwhile, money continues to get burned, since land was purchased partly with Blade fund.

Project 2Km from Narsingi - Suggested pricing level was Rs.2200/sft in April 2008. Actual launch by developer Rs.3150/sft. Naturally Struggled to book at the price and has been forced to bring price down drasrically 

Project near Guchibowli- July 2008. This is one project where the developers correctly decided not to launch, after discussions thus avoiding hardship and saving money

5.0 Ungainly Sales & Marketing Set Ups 

In boom time, any Tom, Dick and Harry in marketing/sales could be a hero. What is surprising was the profligacy of some developers to appoint too many people. And in such scenario, inefficiency spread, like wild fire. 

No more than one good guy is required to handle sales of 300 to 400 apartments whether its boom or bust time provided there is management and ground level support. Its absolutely wrong to expect sales to happen, by adding many more staff. If the sales comes down, its due to market situation not because there is insufficient staff! Nor is it because the efficiency of the Manager has come down. Its no use barking up the wrong cabin, while the rate cat is in the Chairman's Chamber. 

6.0 Current Outlook 

With the economy showing no signs of recovery and elections scheduled to be completed by Mid May, we can not expect any change in the trend which remains negative. As we had commented earlier, till there is appreciable upswing in economy, job security and new job creation, it would be foolish to expect Real Estate Sector to recover early. Global indicators currently point to couple of years of hardship, unless certain positive triggers happen, in between. 

The buyers are absolutely uninterested in housing loan rate cuts and freebees. They are interested only in "reasobable" capital cost. The price of properties will eventually settle at position of cost plus reasonable profit. And this is that part of finely wrapped real estate anatomy, which most developers still feel shy to look at. Its time for them to gather courage, lift the veil and take a deep, hard, close look!

The lowest price reachable in each project will depend on the cost structure of the project and risk associated with it. Though 2 projects may be close by, we can not expect price X in both, due to structural, specification, land cost, land ownership, approval and funding differences. 

Foreclosures and Bank Sales? Is there a possibility to buy cheap Apartments in Hyderabad, India?

1.0 Where can I get information on foreclosure properties being put up by banks for sale? 

We have received many enquiries asking where information can be obtained on foreclosure properties being put up by banks for sale. All of these enquiries originate from NRIs or their relatives here. 

In the US, buyers have defaulted and continues to default on home loan repayments. Few consecutive defaults sets in foreclosure action and there are specific legal provisions in different states, how the matter is to be dealt with. Its not a very quick process but can spread over 9 months to year or more, after a default is confirmed. 

In India the boom started in 2005 and ended in early 2007. In 2007 itself, prices had jumped and buying had fallen to miniscule levels. 2008 was an year when almost nothing got sold. In effect not many people have really bought high priced apartments or villas. The sales in 2007 (after prices jumped) and 2008 have been sporadic and mostly, purchases were by buyers who had the resources and bought to stay. 

If we take Hyderabad, there has not been any investors around for buying flats for last 1.5 to 2 years. People who bought at cheap earlier prices, are never going to default. Even with correction, market rates are still much higher than their "bought rates." 

People who bought in 2007-2008 are resourceful, had their numbers ready and that is why they bought. Except few cases, do not expect anyone to default. Such few cases will have NO market impact since these will never be known widely. For the market to react and participate there has to be a critical mass of defaults, which is not at all possible 

.0 Individual Loan Default 

Buying of a property by an Indian is usually a "family affair". Even nuclear families fall back on parents / in laws / uncles for support, while booking a property. There is unwritten commitment from several people, behind each purchase. 

If someone is stressed, family will standby. You will find pre-payments happening now, to reduce EMI. In fact banks have been reporting increased prepayments and rescheduling of loan by increasing repayment period and reducing EMI. No bank has reported foreclosures of individual accounts due to default, even though economy has been under severe stress for more than 7 months now. (There are only unsubstantiated loose talk fed by news from US) 

In India, each housing loan is Guaranteed by someone known to the borrower. Once a borrower defaults and default is persistent, the bank will immediately sound out the Guarantor. The Guarantor is legally bound to pay EMI and settle any outstanding, if borrower defaults. Making Guarantor pay is considered a taboo, in India. Something that is to be absolutely avoided. And this fact also ensures that immediate family steps in to ease the burden. ( As far as we know such Guarantor provision does not exist in US Home Mortgage Agreements) 

And even if someone is unfortunate not to have family support and lands up in big mess, usually banks will give interest free breaks, reschedule loan etc. If nothing works, (it may take couple of years to reach a stage of "nothing works"), the legal process starts which again is very laborious. Banks have to issue legal notices, get court orders etc before it can attach property. Even after attaching, selling-off is not easy. Again, court will be involved. With the way Indian legal system works, banks can not shake off the properties quickly at all. 

So basically except sporadic incidents, never expect enough properties to come into market, at all, from individual home owners. Obviously, people in India chucking their homes and running away, is just a dream that many in US may have. Its not going to happen here at all. 

3.0 Default by Builders 

Now..this is a possibility which can not be ruled out. The reason is the fact that unlike individuals who get cocooned by family circle, companies have no love lost between them. If a business fails, its not practical for families to support since the default amounts are HUGE running into several crores. But does this help the eagerly awaiting so called "foreclosure buyer?"! Lets examine.

Logically, there is possibility that builders who are unable to sell and hence are unable to meet debt service obligations, will default.. In fact, most of the builders in Hyderabad have already defaulted. BUT, banks have a peculiar issue. They need to dress up their accounts and need to show as less NPA as possible by end March. 

In fact, this March was hectic month for Banks here, with loan rescheduling exercise underway with all builders. Builders are given moratorium from payment for several months, loan repayment period is altered and several other exercises are carried out. 

Banks will keep quiet for another year and start running again, in the first quarter of 2010 before Financial Year end. If by that time, builders are unable to recoup, they may be forced to start legal process which again will take months. 

Most interesting thing about builder default: If builder has already completed construction, he would anyway have sold the inventory slowly, at reduced rates and got out of the mess. (So finished ready to occupy apartments, will not come from banks due to builder default) 

If builder had cash flow, he would have anyway completed work, sold and got out, during the rescheduled loan period. No builder will give finsihed flats to Bank! But if builder is unable complete work during this period, then banks get stuck with worthless, incomplete structures, jutting into the sky. 

Now, this is what is going to come into market for our dear people who are looking for Foreclosure Flats!! 

And we can remain assured, that the NRIs who look for foreclosure properties in India will be the last ones to touch such ghost structures with No "BAP" to complete work. 

Incidentally, Asset Reconstrcution Companies are taking shape on India now. They are supposed to buy these NPAs from Banks and later package such bad assets and sell to risk hungry funds. Obviously again, individual buyers will not be involved. 

4.0 Does individual buyers buy Foreclosure Properties in the US?

If we are to believe a trust worthy source like Investopedia, it's a firm NO. Its says that the legal position of such properties are sticky and generally only investor groups or funds which take big risks, touch them. More info at: http://www.investopedia.com/ask/answers/08/foreclosure-investing.asp 

5.0 Conclusion 

Its more than obvious that talk of buying foreclosure properties in India is appearing due to complete lack of understanding of ground realities. Also it sounds a bit cruel, to think of feeding on another's misfortune. 

Source: http://www.exclventures.com/News-Real-Estate-foreclosures-India-Apr09.asp

Lodha Group Launches 'Casa Bella' – Luxary for Mid income Group

CASA BELLA, the largest and most ambitious integrated township project in Dombivali, by Lodha Group, India’s premier luxury real estate developers was launched today. Catering to the aspirational needs of the Indian middle class, the township will be spread over 125 acres of land and CASA Bella will be built over approximately 40 acres of land as an integrated residential township with 3500 residences under the first phase of development. The residential development will comprise of 11 clusters. CASA BELLA is planned with over 86% of open space. The residences will be available in 1, 2 and 3 BHK luxury. The apartments will be priced at 11.7 lac onwards for a 1 BHK, 14.9 lac onwards for a 2 BHK and 24.3 lac onwards for 3 BHK.

CASA, a sub brand of Lodha group has already made a mark for itself by selling over 1000 units under its multiple offerings, CASA Univis, Royale and Ultima within a couple of months. The focus of CASA brands is to provide optimal & best value by providing luxury living for middle income segment which has been unheard of. Gated communities, open spaces, parks, club, gym are just some of the initiatives to mention that have been provided through the brand CASA.

Commenting on the launch of CASA Bella, Mr. Abhisheck Lodha, Director - Lodha Group, said, “CASA Bella will bring combination of the quality, luxury and value to Dombivali. It will change the skyline of Dombivli and redefine the standards of living of its residents. It will be a mini city with all conveniences and utilities one can imagine all available within an integrated residential township. Project in Dombivali is the largest initiative by the Lodha group and will see planned development of 9000 acres. The township will be a complete self sustaining eco-system with a residential & commercial hub and world class amenities & infrastructure.”

‘CASA Bella – the city of dreams’ is the largest ever development project taken up in Dombivali and several major initiatives taken around the project will make Dombivali the destination to be in. Located in Dombivali, on the 4-lane Kalyan Shil Road, CASA Bella is only 25 minutes drive from Thane and 15 minutes from Navi Mumbai, 6kms from Dombivli station and around 20 minutes drive from the proposed location of the new international airport. The Usarghar station is located within the site which provides regular train service on the Central Line through connectivity to Diva Station on the Diva-Panvel line. In the future, it is proposed that the station will have direct connectivity upto VT.

Mr. R. Karthik, Senior Vice President-Marketing, Lodha Group said, “CASA Bella employs the expertise of the world’s best architects, designers and engineers to create lavishly proportioned homes of unparalleled comfort and lifestyle for all its residents within its universe. With state-of-the art medical facility, power supply for 24 hours, security systems with cutting edge technology, transportation facilities, Mumbai’s largest clubhouse spread over 50,000 sq. ft, retail mall with multiplex and school, the project in Dombivali will stand unrivaled in value it delivers and create an entirely new category of luxury homes within easy reach of the aspiring India.”

According to Mr. Kapadia, Director, Kapadia Associates, “CASA BELLA is a self contained, Integrated and a Lifestyle oriented township where people will feel proud to live in. It aims to be the most sought after property in the vicinity with excellent connectivity, concentration on social infrastructure, max utilization of space in a unique manner and contemporary architectural language to establish an identity for the project. The master plan has laid emphasis on open spaces, green clusters, recreational facilities and pedestrian friendly development with major amenities being located within a 7-10 min walking distance from the residential units.

The vision of Lodha group is to create an iconic urban development in Dombivali which will provide its residents all the comforts at their fingertips. From playschool to international universities, medical centres to multi specialty hospitals, gardens to golf courses, small business offices to SEZ’s this development will have it all.

About CASA
CASA – meaning ‘Home’ in Spanish earmarks a residential revolution in the mid-income segment benchmarking facilities that spell luxury available at benchmark pricing. As the leader in innovation in real estate, Lodha recently launched its sub brand ‘CASA’ to cater to the needs of the mobile, aspirational middle-class to have the best in life for themselves and their families, while ensuring security, comfort and value for money. With this brand, Lodha Group makes foray into creating the best quality and value realty in the mid- income segment by providing comprehensive housing solutions with high intrinsic value.

The first project through the sub-brand CASA is Univis at Ghodbunder Road. After the overwhelming success of CASA Univis, the Lodha Group launched a series of successful mid income luxury projects; CASA Royale, CASA Ultima at Thane and CASA Essenza at Dahisar.

About Lodha Group
Established in 1980, Lodha Group is a premier real estate developer headquartered in Mumbai. The Group is currently developing in excess of 27 million sq. ft. of prime real estate over 30 projects in and around Mumbai, from Nepean Sea Road to Dombivli, making it the largest developer in Mumbai and one of the largest in the country. The group is now expanding into Western and Southern India and recently kicked off their geographic expansion by launching Lodha Bellezza, an unparalleled super luxury residential project in Hyderabad and is soon expected to launch its first project in Pune.

In 2007, the Lodha Group received the largest ever FDI in the real estate sector in India. In addition, it works with leading financial Institutions, designers and product manufacturers to bring together the most premium offerings for its customers. The Group focuses on development of residences and office spaces in various formats including standalone projects, IT campuses, weekend retreats, townships and SEZs. From luxury garden residences in South Mumbai to large integrated townships in the suburbs, the group caters to diverse consumer needs across all segments. The Group currently employs over 1300 professionals. With a vision to build better lives, Lodha exceeds the expectations of customers through innovative, world-class solutions, thereby creating value and at the most opportune moment.

Cybercity township coming up at Kukatpally

Real estate developers in Hyderabad seem unfazed by the difficult times being faced by industry, if one looks at the big ticket projects coming
up in the city.
Hyderabad-based Cybercity Builders & Developers is at present working on the Rs 650-crore Rainbow Vistas township project in the upcoming Kukatpally area on the outskirts of the city.
Cybercity Builders is promoted by six entrepreneurs, three of whom are promoters of Ashoka Developers & Builders, another real estate sector major in Hyderabad. The project is a joint venture between Cybercity and Ashoka. The latter has some landmark projects in Hyderabad to its credit such as the Ashoka Bhoopal Chambers and the Ashoka My Home Chambers.
“The size of the project is 2.5 million sq ft built in multiple blocks of 14 floors each. The apartment size would vary from 1,100 sq ft to 1,500 sq ft,” Uttam
Korupol, Cybercity chief executive officer, Cybercity, told FC Estate.
Korupol said the company is confident about the project's success as there was a huge latent demand for quality housing at reasonable rates, even in present market condtions. “No matter how the economy is doing, people will always need homes to stay in,”
he added.
Rainbow Vistas would be an integrated affordable township spread over 15 acres, comprising two and three-bedroom apartments. The developers plan to build 10 to 12 towers housing 1,500 to 1,600 apartments. The prices would be in the range of Rs 28 lakh to Rs 40 lakh, depending on
the size of the unit and amenities provided.
“Cybercity has been working diligently in optimising the design through value engineering and we promise to offer value-for-money facilities,” he said. The company is planning to start construction by April this year and the project is expected to be completed within 24 months. The company has invested Rs 20 crore in the
project so far.
The proposed gated community promises amenities such as power backup, water softening plant, a club house, food court, children’s play area, walking track, automated security system, car washing area, gym and safe deposit lockers.
The project is strategically located 5 km from HITEC city and is connected by a 100-ft road to the JNTU-Kukatpally road.

Source:http://www.mydigitalfc.com/real-estate/cybercity-township-coming-kukatpally-610