The cash strapped realty companies can have a breather in budget for 2011-12 as the Finance Minister is expected to make announcement of a guarantee corpus for banks on realty lending. Track2Realty has learnt that the banks will get this guarantee corpus of Rs. 1000 crore to lend for housing projects.
The RBI and market regulator SEBI have enhanced their vigil on funds coming from Mauritius, suspecting round-tripping or routing of illicit money back through the island nation.
Value and Affordable housing remains a segment where government should definitely continue to provide developers with tax free status which was available earlier. Rather than restricting it to unit sizes as in the past of 1,000 / 1,500 sft per housing unit, the government could instead have a maximum per unit value of say Rs. 15 lakhs for units near Tier I Cities, Rs. 10 lakhs for Tier II Cities.
While the Indian realtors have often cribbed on the issue of under representation of the sector in respective budget, they have seldom admitted the fact that the real estate has been a divided house over their wants and needs. Navin M Raheja, MD, Raheja Developers suggests a way out and asserts that tax sops given to real estate will actually increase the government revenue.
Mumbai witnessed the highest absorption in the year in 4Q10 which was recorded at 1,328,582 sq ft (123,429 sqm) indicating robust demand. Demand for Grade A office space was broad-based and not restricted to the banking, financial services and insurance (BFSI) sectors, which typically dominate Mumbai’s tenant landscape. Domestic and multinational occupiers from the consulting, aviation, IT/ITES and other industries were active in acquiring front-office and back-office space in 4Q10.
The Hyderabad commercial office market posted a strong increase in demand in 2010 with the foray of new occupiers such as United Health Group, JP Morgan Chase and Facebook, and the expansion of existing tenants including TCS, Accenture, Google, Mindtree and Cognizant. Majority of the leasing transactions were recorded in the peripheral districts of Hitec City and Gachibowli. During the year, the city also witnessed strong pre-leasing activity. Demand of SEZ space in the city increased as compared to IT Parks in 2010.
There is a school of thought that states that you should buy a home as soon as you can afford it, or as soon as your home loan application is approved. In fact, the only question one tends to ask in context with home buying is whether property prices and interest rates are amenable at that point in time or not. On the surface, this makes sense. However, not all surfaces are reliable mirrors.
With liquidity from traditional channels like banks and equity markets drying up for property developers, non-banking finance companies (NBFCs) have raised rates for loans to real estate companies by two-three percentage points (200-300 basis points). The rates have gone up from 15-19 per cent to 17-22 per cent. The rates vary according to the developer, the project and the requirement of the company, say NBFCs and consultants.
The Fitch Ratings 2011 outlook for the Indian real estate sector seems to contradict itself. While it says the realty market is stable in the year, it also warns of a negative bias. The negative forecast of Fitch Ratings is, however, based more on the sentiments than the emerging market reality.
In the immediate aftermath of the bribes for loan scam involving LIC Housing Finance, the Finance minister Pranab Mukherjee in conjunction with Dept of Financial Services asked for a complete monitoring of all the companies mentioned in the CBI case filed. All public sector banks, financial institutions and state owned insurance companies have been asked to examine their exposure to the 21 companies named by CBI in the housing loan scam, and give a subsequent compliance report.