Tata Housing expands global footprint, starts Dubai operations

NRI’s contribute 15-20 per cent of the total housing sales in India and factoring this, Tata Housing, the realty arm of Tata Group has opened an office in Dubai. This, the company feels is the right move at the right time to help NRIs buy their dream homes in India.

Tata Housing has offices in Sri Lanka and Maldives and the company offers best-in-class service to prospective clients.

The Gulf Cooperation Council contributes to 50% of the international sales, and NRIs contribute to more than 30% of the population in UAE. The Company is currently offering certain schemes for a limited period, to NRIs.

The company is also into senior living projects, which gaining popularity.

In another move, Tata Capital Housing Finance is planning to raise about Rs 2,000 crore this financial year through a combination of bank loans, borrowings from the market and re-finance facility from the National Housing Bank (NHB). The company had raised about Rs 6,500 to 7,000 crore last fiscal.

Source: Business Standard

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Godrej lends helping hand to realty sector

Godrej properties will take over under-construction properties in National Capital region, where developers are short of fund and are unable to sell. This would be done as a joint venture where Godrej will endorse the construction and sell the product.

It is not only Godrej, but other companies like Bharti Realty run by Sunil Mittal have been approached by developers as well. This new trend of taking up an under-construction project and developing and selling it is yet to catch up.
The companies mentioned above will necessarily look for clean projects with licenses and approvals in place. Joint development is preferred than an outright purchase of land by these realty arms of big groups, where in acts as a service provider as well.

Research data showed 335.2 million square feet of which unsold was at 321.7 million square feet resulting in liquidity crunch and slowdown.

Inventory in months denotes the time required to clear the stock at the existing absorption pace. A healthy market maintains an inventory of eight to 12 months but there have been delays ranging from three to five years across many projects.

Source : Business Standard

Precast India Joins Hands with Tekla BIM Software

Tekla India Pvt ltd and Precast India Infrastructure Private Ltd has entered into a strategic alignment, which is of immense importance, as this would mean moving towards advanced building methods such as precast construction and implementation of latest software and technologies.

Tekla provides Building Information Modeling (BIM) software to the construction and engineering industry. PIIPL, on the other hand is a leading precast company in India.

Precast technology is adopted to avoid delays in delivery and to boost product quality. Precast construction enables developers to save up to 60% time compared to projects using cast in older construction methods.

In other words, if traditional construction methods take one year to complete a project, the precast construction takes just about 4 to 5 months to complete a project of a similar scale.

Tekla’s most accurate and information rich civil structural 3D BIM models would enable PIIPL to undergo a smooth & seamless construction process with no wastage & errors. Tekla’s technology would also help to enhance collaboration and project management while managing design to construction oriented engineering process.

PIIPL undertakes high volume contracts for IT buildings, commercial complexes and Industrial buildings. And Tekla drives the evolution of digital information models to provide greater competitive advantage to the construction, infrastructure and energy industries.

Source: The Financial Express

Planning retirement portfolio

With increasing life expectancy and inflation, retirement planning has become a critical part of financial planning. Rising life expectancy raises longevity risk, which means a retired person may outlive his investments and the corpus may not be enough to sustain the desired lifestyle, post-retirement.

Inflation proof investment is the need of the hour as rising prices will erode the value of money. And retirement planning can be a tedious and continuous process keeping in mind appropriate asset allocation.

Here is how one can build a corpus chalking out cash flows and income by balancing portfolios. Portfolios need to be built on current risk tolerance level. Since less than 10% Indians have social security, retirement planning is important to maintain current living standards.

Investing in products that one understands is more important. It is also important not to overemphasize one particular category of asset. Any investment plan should have two components. One that earns minimum basic income and another that gains from select equity exposure. De-risking into debt instruments is done after retirement.

Higher returns are always coupled with risks; hence balancing invests appropriately to mitigate risks. Systematic withdrawal plans (SWP) can help maintain cash flow into your account. Possibility of one-off income like inheritance can be factored as well.

Funding retirement with rental income can be a good option as well, and one has to keep in mind the need for upkeep expenses and factor in the possible vacant period. It is always advisable to have an expert manage your portfolio for you, in order to have a realistics plan for your retirement and also pass on the legacy to beneficiaries.

Source : Financial Express

Bank lending to real estate slows down

Banks have reduced lending to commercial real estate sector, a step taken due to slow down in the economy. Other reasons quoted were the struggle faced by the sector, such as price crash and high inventory.  Lending between May 30, 2014, and May 29, 2015 to commercial real estate business grew at 7.5 per cent only while a year ago the figure stood at 17.8 per cent.

General economic activity being low coupled with reasons like low risk appetite has caused a low demand for such funding. Commercial real estate has a higher risk weighted asset; therefore lenders are also more stringent about lending to this sector when compared to lending to individuals.

Real estate lending grows faster than overall bank credit growth, but since the banking system have turned off the sector the financial year has seen a slow pace of growth of credit in this sector.

Experts say, the fall out of the lending squeeze has led developers to either stop construction — which has led to increase in the unfinished product — or to cut prices.
Source : Business Standard

Signing a Joint venture

Joint venture propositions can be beneficial for the land owner, but many a time the land owner is not aware of the legal aspects involved. When the venture gets stuck without a progress, due to reasons beyond anticipation landowners are unable to exit the agreement or sell their property.

Let us understand what a joint venture is and its related terms.

A joint venture is not a legal form of organization and hence an agreement has to be created. All aspects of construction, investment, profit sharing etc has to be charted out and responsibilities fixed. A joint venture ends once the business purpose, for which it is formed, ends.

A joint venture is characterized by risk sharing, combining capital and expertise of the involved parties and speculative objectives.

The following factors are considered while drafting a Joint venture.

1. The initial and future capital contributions of all the stake holders are specified clearly.
2. Returns to be paid to the investors need to be mentioned.
3. Profit sharing and risk taking proportions, in all the financial, legal and operational aspects need to be charted out in order to reduce the impact on individuals.

The land owners can check the following while getting into a real estate joint venture agreement

1. Background check of developers needs to be done to verify their credibility and success rate in previous projects.
2. Register a new company as a private limited company and transfer your land to the books of this company. Here the agreement will be between two companies where one provides the land and the other provides investment and expertise.
3. To get the appropriate number of housing units assigned to you in the joint venture agreement along with a clear mention of the number of units, floor and size of the units
4. Seek the services of a legal company with the right expertise to represent you.

Source : The Internet

Joint Venture – An Introduction

Landowners who possess a vacant piece of land are now looking at generating revenue from their land, which may till recently, be a non-revenue generating asset. A property that is strategically located and highly priced can be a source of revenue to its owner, as these can be looked at for development of residential units.

The land owner has to identify a reliable builder / developer with whom he can enter into a joint venture. He can approach experts /consultants to guide him in his transaction. This is when the owner himself cannot venture into the Joint venture himself, due to lack of expertise and funds. Depending on the property prices nearby and the availability of funds for investment, a joint venture deal is formed.

While a JV is a profit making journey, there has to be a clear agreement on the profit sharing percentage, details of construction and the time frame. The land owner usually does not invest money in this venture, since his contribution is the land (capital asset) itself. A portfolio manager can advise the landowner and the builder on these terms and conditions to amicably move forward on the venture.

The consultant does the major tasks of arranging for investments for such ventures, approvals etc. It is to be noted that a land owner does not get more that 30-40% share of the completed property especially if the property is constructed on a land commanding a very high cost. In most cases a payment is made to the land owner as cash/ cheque and also in the form of completed apartments. The owner gets an advance payment of 10-12 per cent of the deal as a good will payment. This is usually a non-refundable payment. Certain cases see a refundable amount being given as an initial payment as well.

An irrevocable general power of attorney (GPA) is executed by the site owner. The GPA is registered on stamp paper, of suitable value, with the registrar so as to make it legally binding. However, all the documentations such as sanction applications, approval documents and document transfer, etc. are done in the name of the owner of the plot for legal purposes.

A consultant portfolio manager ensures that clauses regarding penalty, in case of delay etc are incorporated to ensure that the landowner does not suffer any losses. Payment clauses in the case of delay to compensate the loss of interest on the profit is calculated and incorporated. In case the land owner lives on the property and needs to move to another location during the period of construction, the necessary steps to are taken to compensate the land owner for the rent.

Joint ventures are excellent means of combining the expertise of Portfolio managers, investors and developers. The success depends on sound underwriting and careful preparation of the agreement that will also govern the relationship of the parties involved in such high-stake ventures.

Source: The Internet

Hottest investment destinations in India

Offbeat locations can be a really god investment option, if chosen wisely.  They may initially lack the basic amenities and growth, lack of community options and entertainment. This feeling of lack of value for investment will only be short term.

Identifying the right localities for investment will define the success of your real estate projects and success of your endeavors.
Here are some hottest investment destinations
Lepakshi, in Anantapur District, Andhra Pradesh is a charming area 120 km north of Bengaluru. The place is culturally deep rooted and economically well off. Due to its proximity to important metros and industrial hubs combined with ease of accessibility, this area has great scope for real estate investment.  Lepakshi knowledge hub has The Indian Institute of Science, Hindustan Aeronautics Limited, Bharat Electronics Ltd, DRDL, Bharatiya Agro Industries Foundation and Electronics Corporation India Limited set up their units here. Anantapur has potential of becoming an industrial hub for aircraft parts and maintenance, apart from being a fertile land area with all civic amenities.
Dharmapuri is in Tamil Nadu, and is part of Salem district, and has several places of interest like Hogenakkal Falls is 46 km away from the district. Investment becomes easier here because of clear titles and proximity to economic growth zone. Tanflora Infrastructure Park promoted by the Tamil Nadu Industrial Development Corporation adds another dimension to Dharmapuri. The venture promotes floriculture near Hosur and Tamil Nadu area, providing infrastructure, post-harvest logistics and marketing facilities.

Bagepalli is a destination 100 km north of Bangalore and located in Chikballapur district. The destination is perfect for a weekend getaway with rich historical significance.  It is just 6km away from Bangalore and has all basic amenities present.

Another area which is popular is Pavlani Village located in Ratnagiri district of Mandangad Taluka in Maharashtra. There is connectivity and enough development activities happening here. Dapoli which is close by is a camping destination. The land is suitable for agriculture and the Government is initiating several development plans here.

Apart from identifying these locations, it is imperative that you choose a developer who is trustworthy, experienced and know the market movements and trends early enough.

Source : The Economic Times

Buying quality homes that last….

Land in prime areas is snapped up by developers even at a higher rate because they are quite sure that the location itself will attract investors/buyers. Most develop these projects at a minimal cost and sell them as finished products to unsuspecting buyers. Such incidences are high in smaller cities.

Banks do a cursory check on the construction quality, but that is not enough. Here are some ways that will help gauge the quality of the construction.

The developer’s brand, to begin with, is a good indicator of the construction quality. The other indications are design of the structure and the materials used, whether construction is done scientifically or not.

A keen observer can look at telltale sign of cracks that give away the quality of construction.  Likewise the appearance of the building and the fixtures and paint used can also reveal the quality of the materials used.

Activities like curing of concrete at the construction stage also play an important role. The buyer may not be able to keep an eye on such details.

Value addition is through landscaping and through other methods adopted, to ensure a longer life span of the building. The true value of any property, however, is in the share of land owner by the owner.

Quality of a construction can be assessed by looking at the safety and security it provides, to the person residing in the complex, with lesser maintenance cost, over the years.

Source : The Hindu

Price correction – only way to trigger revival of the realty sector

The Real estate scenario in India has puzzled many analysts and company executives, with its slowdown that has lasted for more than two years now. Analysts feel that further correction in prices will enable inventory liquidation, triggering revival of the sector.

Localities in New Delhi and Mumbai have seen a fall in prices by 25% while smaller cities like Lucknow and Indore have reported price correction of up to 5%. Even with these corrections, buyers are hard to come by.

Property launches have reduced drastically in 2014 -2015, in comparison to those during the corresponding times in 2012. The inventory pile up of these launches has lasted for more than 71 months in the NCR. Same is the case with Mumbai where inventory has lasted 46 months, unsold.

Experts have not pin pointed the reasons for slow down, for this long a period. There is no clear reason, but this could be due to a combination of reasons. Some of the reasons we could think of were lesser land acquisition in rural areas, lending squeeze by banks to commercial realty, distressed real estate liquidation by lenders, cut down on subsidies during the NDA rule (resulting in a check on funding real estate through subsidy often pilfered by politicians and builders), low rental yields in property markets in India compared to its Asian peers, and, the hit on black money.

The truth is that the above factors are affecting the sector and this has been demonstrated further by the slowdown in the cement industry, the prime mover for any construction.

Source: Business Standard