Goodies and early bird discounts are not a new feature of India's real estate story, but the timing is significant. Real estate prices have climbed off their historic highs in the last six months on account of tighter liquidity and an overall decline in sentiment.
The real estate industry is witnessing a slowdown. In anticipation of rates to fall, consumers are postponing their purchase plans. Developers, for their part, are finding it difficult to access cheap credit with banks reluctant to lend to them. Both residential and retail demand has moderated though the demand for office space remains strong. Inspite of this, most property cos are expected to post reasonably good Q4 results. Builders are banking on mid-income projects.
A host of public sector banks had cut interest rates in the earlier part of this year following an advisory from Finance Minister P Chidambaram in January. Private and smaller state-owned banks, however, did not cut rates.
The initial cost of the project, including land, is Rs 125 crore (Rs 1.25 billion) and the development cost is nearly Rs 1,400 crore (Rs 14 billion). The company is planning to fund the project through debt and draw more funds from Lehman if required, sources said. Recently, PLL and Lehman tied up to invest in the realty projects of Peninsula. In the Rs 700-crore (Rs 7 billion) joint venture, Lehman invested Rs 500 crore (Rs 5 billion).
Basel-II mandates banks to set aside more capital for advances to unrated companies. From Apr 09, the problem will grow bigger since all loans above Rs 20 cr will require similar treatment unless companies get themselves rated. Basel-II is the 2nd of the global banking accords that provide banks with guidelines to measure various types of risk they take. Indian banks have to be Basel-II-compliant from this fiscal. Banks will have to assign 20% risk weight to AAA-rated firms.
Saffron Asset Advisors, which manages the real estate investments of NYSE Euronext-listed Yatra Capital, is now planning to launch a bouquet of funds focusing on India. The company is aiming at a total corpus of Rs 4,000 crore (Rs 40 billion) in the next couple of years.Starting from real estate, the company will launch sector-specific funds such as healthcare, logistics, infrastructure, hospitality.
Lenders ask RBI to ensure cheaper credit for infrastructure sector. Banks say while hardening of rates may be required to combat inflation, even a 50 basis point rise could render many projects unviable. In a meeting with RBI, bankers factored in the impact of higher interest rates on most sectors as a part of the inflation management drive but indicated that the government & the central bank should take steps to ensure cheaper credit for building roads, power plants & ports.
The company has plans to open offices in the US, Singapore and other parts of West Asia such, such as Oman and Qatar in the next couple of years. "The NRI community is totally underserved. We want to tap the vast business potential arising from 2.5 crore (Rs 25 million) NRIs working abroad,'' said Kapil Wadhawan, vice chairman and managing director, DHFL.
While banks are busy firming up business plans for 2008-09, some of them have already conveyed to the Reserve Bank of India about prospects of a moderation in the credit growth. In March, many banks held talks with RBI on resource conditions and growth prospects. In fact, Bank of India has already scaled down the estimate for the current financial year to 17-18 per cent compared with the 24 per cent rise it had targeted in the just-concluded financial year.
Sky-high rentals are forcing retailers to explore new ways to stay afloat. Many have done the obvious thing by shifting to cheaper locations or simply downing their shutters. But others are renegotiating deals with developers to ensure business sustainability. New deals like longer "rent-free" periods, no "lock-in" clauses in agreements and revenue-sharing deals with developers are becoming common.
The move, if implemented, could change the way banks transact business. For starters, the loyal public sector bank customers could be the biggest gainers, with the Pay Commission recommending that government offices should stay closed only on the three national holidays -- Republic Day (January 26), Independence Day (August 15) and Gandhi Jayanti (October 2). All cheque clearances are expected to be faster and make money available in your accounts earlier than at present.
Unitech and Indiabulls Real Estate Ltd (IBREL) have deferred the listing of their respective real estate investment trusts (REITs) on the Singapore Stock Exchange (SGX)owing to the liquidity crunch in the global markets. Both Unitech and IBREL have received approval from the SGX for the initial public offers (IPOs) of their trusts.
Mumbai-based property developer Oberoi Constructions, led by billionaire Vikas Oberoi, is planning a Rs 4,000 crore ($1 billion) initial public offer by year end. Vikas Oberoi, also known as Vikki Oberoi is at the 707th slot in the Forbes annual list of billionaires with a wealth of $1.7 billion.
Betting on higher margins from private labels, Reliance Digital, the consumer durable chain of Mukesh Ambani's Reliance Retail, is planning to introduce its own brands of home theatres, LCD televisions and digital cameras. The brands, according to a source, will be called Rldigi. Reliance Digital is planning tie-ups with domestic and international consumer durable and appliance companies. These private labels are expected to contribute 12-15 per cent of Reliance Digit
Future Group will retail lightings and electrical products under a new brand - Bijli Ghar.
Today's Writing Products is entering retail of office supplies and stationery products with 500 retail outlets.
Videocon's consumer durable and electronics chain Next has opened nearly 330 stores in the last two and half years, making it the largest chain in the country. Turnover is expected to cross Rs 1,000 crore (Rs 10 billion) in this financial year. Business Standard caught up with Next's Director K S Raman on the company's growth plans.
Rejects proposals by Bank of India, IndusInd, Kotak Mahindra and HDFC.
The aircraft costs nearly $45 million (nearly Rs 180 crore). The company owns a 12-seater Challenger 604 and a seven-seater Cessna Citation Bravo under the fixed wing operations.
Real estate developers like Indiabulls, DLF, Peninsula and even retail giant Future group are all considering converting space reserved for malls and hyper-markets to office space to meet heavy demand from financial institutions, investment banks and large companies.
© 2026 Rediff.com - Investor Information - Advertise with us - Disclaimer - Privacy Policy - Sitemap - Feedback - About us - Terms of use - Grievances