Banglore, Mumbai, Delhi real estate rankings nosedive

Uncertainties prevailing in the real estate market since the past few years have resulted in the country no longer being an attractive investment destination for international investors, says a recent survey.

Bangalore, Mumbai and Delhi, which are the top three realty markets in the country, have sharply slipped to 19th, 20th and 21st positions respectively in the list of 22 investment destinations in the Asia Pacific region, the survey ‘Emerging trends in real estate 2013′ by the Urban Land Institute and PricewaterhouseCoopers (PwC) said.

In 2012, these three cities were placed at the 10th, 15th and 12th position respectively in this study.

“The uncertainties in the real estate market is holding back international investors from investing in the country as they were doing in the last few years. Given the current scenario, where there is little or no clarity on policies, foreign investors will continue to adopt a cautious approach,” PwC India executive director Gautam Mehra told reproters while releasing the report here.

According to the survey, Bangalore is perceived to be a mature market and has demonstrated fairly stable prices and reasonable absorption trends.

However, the report notes that the Southern metro’s over-reliance on the sluggish global IT industry translates into low growth potential in the medium term.

The financial capital Mumbai is plagued with over- supply across asset classes, resulting in record levels of vacancy and stagnant yields, it says.

The report, however, has cast a positive light on Delhi and the surrounding NCR area in view of the expected master development plans for Delhi, Gurgaon and Noida, indicating a flight of capital from the Western and Southern regions to the North in the medium-term.

However, the report paints a rosy picture going forward. It says despite various issues plaguing the sector, there is hope ahead especially after the recent decision to permit foreign investment in multi-brand retail, Mehra said.

“The favourable demographics and inherent but latent demand continue to be redeeming factors. Several micro-markets continue to provide suitable investment opportunities for investors and end-users alike,” he said, adding the need of the hour is to deliver focused political and economic reforms.

“While the domestic realty sector may currently be grappling with certain socio-political and economic issues, particularly rising inflation and interest rates, uncertainty on fiscal policies, and subdued interest from opportunistic investors, there appears to be light on the horizon,” he says.

From a regulatory standpoint, the introduction of the alternative investment fund (AIF) regime seeks to streamline and regulate the myriad of investment schemes, in a bid to boost investor confidence, he says.

“One area that is yet to be developed is the real estate investment trust (REIT) regulation, which can provide an additional exit route for investors and enable retail money to be channelised into the sector through a regulated network,” Mehra concludes.

Bangalore realty one of the most affordable

Many may complain about the rise in realty prices in Bangalore. But if there is still a major city in India where a household earning between Rs 6 lakh and Rs 15 lakh a year can find good livable locations within the city limits, it is Bangalore.

“A mid-segment buyer does not need to go to peripheral locations of the city to find a home as he has options in good emerging locations within the city,” says Samir Jasuja, founder and CEO of PropEquity, a real estate data analytics and research firm that conducted a study recently on affordable locations.

The study finds that in the National Capital Region, you have to be in the Rs 9 lakh to Rs 20 lakh income category to find livable locations within the city. The study is still in the process of evaluating Mumbai, but it is likely that the income bracket there would be even higher considering the rate of realty price increases.

Bangalore is seen to offer buyers a range of products starting from 2-BHK units priced at Rs 32 lakh to 3-BHK units priced at Rs 54 lakh, across locations such as Electronics City, Outer Ring Road, HSR Layout, Marathahalli, Hosur Road, Tumkur Road, and Magadi Road.

“The city has a very balanced development which is not skewed towards certain pockets. Each region has options catering to buyers of varied income brackets,” says Jasuja.

A research report by global real estate consultancy firm Knight Frank found that 16,700 residential units were launched in Bangalore during April to November this year. Properties priced in the mid-market segment constituted by far the biggest component, though the premiumhousing market too gained momentum.

Real estate consultancy Cushman & Wakefield finds that in 2012, the average capital appreciation in Bangalore was 11-12%, one of the lowest among big cities. Chennai saw the highest appreciation of 16% followed by NCR at 15% and Mumbai at 14%.

“The city witnessed healthy demand from end us ers, as it offers a number of affordable options in the micro markets of Hebbal, Whitefield, Marathahalli, Jayanagar, and Bannerghatta Road,” says Sanjay Dutt, executive MD, South Asia of Cushman & Wakefield.

Many believe that Bangalore has avoided excessive speculative buying in recent years, which has kept prices in check.

Karun Varma, MD (Bangalore & Kochi) of Jones Lang LaSalle India, said Bangalore’s real estate market was one of the safest and most lucrative residential property ‘investment bets of the year’. Varma added that the top emerging destinations in the city in 2012 were Tumkur Road, Vijayanagar and Magadi Road in West Bangalore, which saw capital appreciation of 12% to 15%.

All for a secure connection

SAFETY MATTERS

Wires and cables have become an integral part of our homes and offices, and are extensively used in electrical and electronic equipment. The importance of safety in wiring and cables can hardly be over-emphasised, writes Bindu Gopal Rao

Urbanisation has escalated the need for infrastructure like housing, malls, commercial spaces, etc. In this networked society, there is an increasing dependence on wires and cables. Buildings use a variety of cables to meet lighting, communication, air conditioning, heating, security and solar. “Many  fire accidents occur due to the poor quality of wiring.

Short circuits can be attributed to the use of low-quality insulation material which is not flame retardant. During a short circuit, the cable catches fire, emits chlorine and reacts with oxygen present giving out dense toxic smoke, and also emits corrosive acids.

This toxic smoke numbs the brain, causes irritation, impairs vision and prevents a person from locating a safe exit thereby creating panic during emergency situations. An estimate describes the loss of life due to electrical fire accidents in two parts: 1/3rd of deaths happen due to primary burns or electric shock and 2/3rd of deaths happen due to inhaling of toxic gases.

It just goes to show that smoke emitted from burning of cables and wires lead to more deaths than burning itself. Many buildings use wires that are predominantly insulated by PVC, which contains chlorine. Installation of quality cables becomes an integral part during construction of buildings,” explains Srinivas K P, Managing Director, LAPP India. Safe cabling right from the structural phase is important as it prevents earthing, and fire hazards.

There should be proper conducting and proper strength of wires for this reason and it should prevent short circuiting. Adds Sandeep Pantvaidya, Vice President-Marketing, Sales and CRM, SPR & RG Constructions, “Modern day houses have so many appliances that put a lot of demand on the electrical system; computers, kitchen appliances, air-conditioners and televisions to name a few.

Hence, safe cabling is required in houses so that risks due to overload are minimal. Safe cabling is also important in order to avoid fire in case there is any breakage or short circuit. Concealed electrical wiring is the general practice used these days which provides safety and a cleaner look to homes.”

Poor wiring can lead to injury and electrically caused fires, both of which one would want to avoid at all costs. Majority of electrical fires are a result of old wiring and faulty outlets. To help prevent electrical fires in your home, it’s important to check your electrical appliances and wiring on a routine basis.

“As part of our ‘safety first’ commitment, we have taken care while wiring and cabling our flats. We have done extensive study of standard procedures so there is no danger to the resident families. We firmly believe that with electrical work, there is no excuse not to follow rules and regulations,” says Kumar Bharat, Director Bharat City, BCC Infrastructure.
Selection of electrical wires should be strictly based on the requirement/load factor.

“Neglecting the load factor and choosing the wrong wire could lead to fire hazards and burning of costly electronic items and in more severe case, threat to human life as well.
Therefore, electrical work should only be carried out by competent persons with the necessary skills and training.

To avoid any such mishaps, Havells offers wires that are FR-LSH(flame retardant-low smoke halogen) and HFFR(halogen free- flame retardant).
The FR-LSH wires are made from specially formulated PVC polymers that restrict toxic gases and smoke as they are self-extinguishing and do not allow fire to spread,” says Arvind Agrawal, Deputy General Manager, Havell India Ltd.

Practical implementation

Concealed wiring, use of circuit breakers, protection from critters, nails and any other materials that cut into the wire are some examples of how safe cabling can be done in your home. Developers and builders can install flame retardant cables or fire survival cables. These cables are Halogen Free Flame Retardant (HFFR) cables, which do not contain chlorine. The prime benefit of HFFR wires and cables is that they stop flame propagation through the sockets in which they are laid.

In the instance of fire, these HFFR cables do not emit acidic smoke, in turn reducing the fatality. Furthermore, fire survival (FS) cables sustain their composition, thus providing protection against short circuit even while burning under fire. These cables can be installed during construction of the building to offer safer homes and safer cities.

Radhika Mehra, HOD, JD Institute of Fashion Technology explains, “This can be implemented by having a plan for your electricals, working out electricity load available and total load (of the electrical equipment’s) as this helps in proper planning right from the beginning. Using FRP cables (fire resistant cables) and proper grade cables for proper functioning is also important.

Earthing is very important and ELCB (earth leakage circuit breakers) is very useful as it protects the gadgets of the house and prevents shocks. Properly rated MCBs should be used. Multi strand wires with proper rating should be used. There should be no looping in the wires in the conduit pipes. Appropriate thimbles and connecters should be used for cabling. All conduit pipes should be joined with PVC adhesives.”

Always opt for branded wires at home and seek opinion from qualified and certified electrician/consultant to work out the size of wires. Wires are usually hidden as they are installed inside the wall and hence require utmost attention because any rectification afterwards would cause huge inconvenience and it’s a costly exercise too.

Professional touch

One very important aspect is to get the cabling done through proper gauge wires and with the help of trained technicians. The wires should be of proper thickness to match different loads, and be a good brand. Cabling needs to be maintained through periodic inspection and repair since they are prone to breakages due to excessive wear and tear.

“Sub mains wires should be taken directly from the meter box to the respective floors and not be looped in between. Use of bus-bar in the main panels is very good for getting secured connections of the sub mains. Electrical, telephone, television and computer cables should all be in different conduit pipes to prevent disturbance in connection. All exterior switches should be properly covered so that no water falls on it or else water proof switches should be used,” says Mehra.

The wiring system in your home should meet or exceed the standards set by the National Electrical Code.

“The cabling can be done at home by using insulations. One needs to make sure that circuit conductors near-capacity do not overheat and to prevent this one can leave the conductor without an insulation. Before you can make electrical connections, you must first know what type of wire to use for the installation, what colour wire is needed for the application, and what the right size wire to handle the load of the circuit is. Also, one should ensure that one uses the right connection point for right kind of appliances,” says Sanjay Raj, CEO & Executive Director, Golden Gate Properties Ltd.

Tips for electrical / cabling safety

* Always follow the usage instructions on all appliances.
* Fix electrical or appliance problems right away. Use caution if fuses blow often, switches become hot or cause shocks, or circuit breakers trip often.
* Do not overhaul electrical outlets. Extension cords should not be used as permanent cords in homes.
* Damage to appliance cables and extension cords and plugs can also lead to electrical fires in the home.
* Purchase and use only safety protected lead wires and cables.

Tata Housing Raises Debt From IDFC

Tata Housing Development Company, after raising around R70 Cr by minority stake sale in one of its luxury project to American firm Portman Holdings, has raised R300 Cr by issuance of NCDs to IDFC.

The NCDs are divided in two parts with maturity of three and five years and are planned to be deployed in the coming 3-4 months.

In the last quarter, the company also augmented its capital by a commercial paper issuance worth R150 Cr which is to be used for working capital requirements.

The company recently sold entire second phase of Primanti, the luxury housing project in Sector 72 in Gurgaon, within two days of the launch. The project comprised 150 units spread across 4,50,000 sq.ft and valued at R350 Cr.

IDFC Real Estate Investments was planning to raise a $500 Mn real estate fund to invest in leasedout commercial assets earlier in June this year.

However, another group company in similar line of business, Tata Realty and Infrastructure Ltd. was planning to replace the debt in a Chennai project by switching to lower cost borrowing by issuing NCDs worth R1400 Cr. Both the group companies have been facing a conflict of interests on the basis of business operations and parent firm Tata Sons was in the process to combine them in a JV to develop projects.

Tata Housing also recently disclosed that it would not be pulling out of Maldives and is in talks with the government there regarding an alternate site for a housing project following plans to construct the Supreme Court on one of the allotted sites.

Besides Maldives, the company is investing $60 Mn to develop properties in Sri Lanka.

Earlier this year, Tata Housing had bid to buy certain American consulate properties which include the Lincoln House, Breach Candy and also other properties like the Altamount Road residential building and Washington House.

Tata Sons holds 99.86% of the company and it currently has around 25 projects under various stages of planning and execution across 10 cities in the country.

Some of its current projects include the New Haven in Bangalore, Eden Court – Primo in Kolkata, Shubh Griha in Ahmedabad and La Montana in Pune among others.

In recent months, Bangalore-based developers Golden Gate Properties Ltd. and Century Real Estate Holdings Pvt. Ltd raised R200 Cr and R100 Cr, respectively, from JM Financial Ltd.

In June this year Reliance Capital infused R45 Cr debt finance into Kumar Urban Development by subscribing to NCDs.

Besides being a preferable method of foreign investment in real estate projects, fund raise through NCD issuance also gives decent yields in the range of 14-16%.

Bangalore, Most Livable City in India

The Silicon Valley of India, Bangalore has emerged as the best city to live in, according to a global survey of cities conducted by Mercer, a global HR consultancy. The city has become the most livable city due to certain factors, in terms of housing option, infrastructure and global investors, reports Times Property.

Unlike other metros like Mumbai and Delhi, Bangalore’s realty market offers variety of property options to fulfill buyer’s requirement. The vibrant nature of Bangalore’s real estate market and the stable property prices make the city one of the leading real estate markets in India. This means Bangalore property market is one of the best locations for property investment in India.

S Bhaskaran, chief financial officer at Sobha Developers, a Bangalore-based property developer, stated that “There are good products available at various price points. You can buy a house at any price between Rs 20 lakh and Rs 1 crore or more,” reports Business Standard.

“This rating, essentially, showcases brand Bangalore and its merits. Of late, we have been denigrating the city and its many problems, particularly the garbage problem. Now, this report will help showcase Bangalore as a city of repute, as a magnet to which people flock from all over the world, and as a city that offers opportunity,” according to Harish Bijoor, Brand Expert.

Besides, Bangalore is an IT hub and it is home to major MNCs coupled with world-class facilities, which in-turn attracts global investors into the city. “If one is able to organize the work and home locations in a reasonable way, this city is very favourable to live in. It has a cosmopolitan culture and you can live life at your own pace. The quality of life and the costs compared to other cities is favourably placed. We definitely have a decisive advantage,” said L Krishnan, Chairman, Confederation of Indian Industry, Karnataka.

Good infrastructure and connectivity are also making the city one of the best to live in. infrastructure projects like Metro which is yet to complete in many parts of the city is driving the property prices high on areas near to metro corridors. Other infrastructure projects like the Outer Ring Road, elevated roads and so on are extended the city limits which turned far flung localities into micromarkets and such localities are like Whitefield, Sarjapur Road and Old Madras Road.

Windows, new and advanced

TRENDS

The use of cutting-edge technology has ensured that windows are getting energy-efficient and better. Bindu Gopal Rao explores the wide range of options available in the market today.

Windows are a wonderful functional element in a home. As a source that allows for natural light and ventilation, and one that shuts out noise. They can also be done up to add up to the overall decor of a home. Windows today are getting smarter and better and actually use cutting-edge technologies (yes, you read that right) to give you an experience like never before.

New vistas

Shani Corporation Limited has introduced Cora uPVC Performance Windows in India, which are both sound-proof and eco-friendly. These windows are built using eco-stabilisers and offer optimum insulation, therefore saving energy and the environment. They are versatile in design and function and can be uniquely configured into large combinations for maximising views and enhancing lifestyles. Pawan Rana, CMD of Shani Corporation Limited says, “We use the highest quality UPVC products in different designs which are perfect for Indian building styles. Each window is custom-made to suit your requirements - in size, colour and design.” Ram Kumar, zonal head, Karnataka, Fenesta Windows adds, “Changing home windows is a hot new idea in home improvement. It has always been Fenesta’s endeavour to design windows that are suited for India’s unique requirements. Our newly launched villa windows not only address these unique requirements but also expand the design palette available to architects and end users.” 

The villa window integrates the traditional Indian window design of grill and mesh (popularly made out of wood) with UPVC, the new age window material pioneered by the company in India. Some other unique window design options include designs that can span entire balconies, rise from floor to ceiling, sliders, casements (windows with sash that open outside), slider and casement combo, bay windows that can be created at any angle, arches and French windows.

The latest range of world class weather proof UPVC windows are especially designed for the lifestyle conscious in the country. “The new system is specifically significant for high-rise, condominium dwellings as it effectively counters high-pressure winds and rains, considerably enhancing the safety and comfort of houses. 

These windows are structurally strong and have a long life. They have been proven to substantially bring down noise and dust levels as well as reduce air conditioning bills. They are resistant to termites and require low maintenance. The windows come in a wide variety of colour and design options, thus making them a preferred choice for builders, architects and individual consumers,” says Rohit Bhatia, Business Head, OMA. Pella’s energy-saving technology can make a major difference in terms of comfort and energy use. These windows actually save up to 86 per cent of energy. Amit Sabharwall, COO, Pella India explains, “by using argon gas in between panes of glass, our windows make sure the air is non toxic and provides an extra layer of insulation from heat and cold. 

Low-Emissivity (Low-E) coating blocks harmful UV rays and reflects heat energy and also prevents fade damage to carpet, furniture and window treatments. Our range of ‘between-the-glass options’, helps you snap in blinds, shades, decorative panels and grills which are easy to change.”

Dress them up
Choosing the best curtains that complement the decor is the first step when it comes to decorating windows. 

Using linen window coverings to gorgeous silk panels, curtains are an easy way to decorate the window. Around the curtains, you can use tie-ups and stickers to keep them tied up. 

The latest innovative ways being used by people are painting the window in decorative styles or using caricature designs. Windows are important features while decorating interiors. You can have glass panel windows which ensure that your home gets enough natural light and ventilation also. Frosted glass, sliding glass and design windows enhance the decor of your home. 

Moreover, there are many varieties of designs for window curtains and blinds in the market. 

“Watch the windows of your home come to life with beautiful vinyl wall stickers. They are easy to use and give a beautiful paint-like effect to the surface you apply it on. You can place it on any smooth surface like windows or glass to change the look of your interiors.

What’s more, it is reusable and repositionable, so you can use it eight-ten times on different surfaces easily. Place them all together or decorate different walls all around the room. This is a very creative, highly aesthetic, adhesive wall art product and is a do-it-yourself one. The design range responds to almost every mood and personal preference,” says Narasimha Jayakumar, Chief Operating Officer of HomeShop18.com.

Product range

Big sized wooden windows with straight line designs and UPVC windows are the latest trend in India these days. “With changing trends we see that customers prefer using unique styles for their windows. The latest trend that marks windows is an arch window that adds to the elegance of the house, casement window that provides excellent ventilation, a bay window that adds to the focal point of the room and gives a feeling of spaciousness and garden windows that are generally used in the kitchen to ensure that there is enough light and air entering the kitchen adding to the greenhouse effect. These styles can be used in a standalone position or in a combination as per the design of the house. Latest window accessories used by customers to beautify their house are the window grills (aluminium, brass, mild steel, wrought iron, stainless steel or designer), faux iron, curtain rods, wall hangings around the rods on the window, wind chimes, painted windows, etc” says Sanjay Raj, CEO & Executive Director of Golden Gate Properties Ltd. 

Windows are no longer elements used to fill the openings in the building envelope. Today’s windows are expected to perform various functions such as letting in light, keeping out heat/cold, noise attenuation as well as being aesthetically attractive, needing lower maintenance and using energy saving/efficient materials. “The main advantage that the customer seeks today apart from the ones mentioned above is energy saving i.e. window material leading to a reduction in air conditioning bills up to 20-30 per cent plus saving of wood. 

“Therefore, windows made with high usage of energy-intensive materials like aluminium is a major plus. Consumer preferences in India are evolving from region to region and options are available in slider and casement windows, and combinations of fixed and casement. All these factors have propelled A49 group to construct innovative frontiers using this technology and innovation,” says Harsh Bhutani, Managing Director ED & P.

Window treatments

Window treatments are the best way to add colour, pattern and instant style to your room. While there are many types of window treatments that are available in the Indian market, they don’t all cater to your needs, so one has to choose accordingly. 

“Look at curtains, for instance. They are versatile when it comes to style, but only have two options when it comes to managing the amount of light that enters a room. 

“You can only have them either open or closed which limits your choice. Blinds also offer lots of options when it comes to light regulation. You can control these with much ease, letting you adjust the amount of light you want to allow into the room. 

“You can either have them fully opened, or opened in varying degrees, until they are closed. With these treatments, you can either have total brightness or total darkness depending on your choice. Modern blinds come with latest technologies where you can control them with a remote control. 

You can opt for variety of blinds which are there in the market like: rollers, blackouts, wooden, pleated, Venetian, Roman shade,” opines Vandana Khoshla, Creative Director of Elvy Lifestyle. Window shopping can be great fun, even literally, so give your windows a facelift now.

Home Trends For The Season

Living in a beautiful home is a need that is hard to dispute. Again, fashion is not just beauty but a blend of good attitude makes it more appealing. A home like everything else can be done up to reflect latest trends. Here’s how.

Bold Colors and Wallpapers are in

Today customers mainly look at retro and classy interiors with a “wow” appeal. “The latest trend marks bold colors that exude tons of personality. Another trend cascading the market is decorative walls with graphical stickers or decals or mirrored wall papers.
The latest trend in terms of color would be vibrant as people want to match the monsoon décor hence Turquoise, sea green, baby pink lavender, bold floral prints, owl prints are a few of the colors that people prefer.

Exotic wood work  making inroads in Indian homes.

Bamboos, exotic hardwoods and cork flooring are becoming increasingly popular choices and 3 D wall tiles are also a flowing trend in the market of interiors. They are incredibly appealing and affordable, making your room look pleasant and vibrant. Beside these wooden flooring is very upbeat and in vogue,” says Sanjay Raj, CEO & Executive Director, Golden Gate Properties Ltd.

You are known by the accessories you keep.

New home gadgets and accessories that are being used for home décor are antiques like fire place screen, candle holder, glass storage stands, dark colours of area rugs , wooden wall decors, sculptures,  antique clock, lamp shades which are owl shaped , pen stands etc. The reasons for change in the home and décor are mainly due to growing awareness of people and exposure for them to various options. With the advent of globalization and a major paradigm shift in the lifestyles of people there is always room to spend that little extra buck to beautify their homes.

Innovative digital wall and floorings to expand your creative canvas.

Alok Goel, CEO, Nitco adds. “The new trend that is catching up is Digital and Mosaico Tiles. Mosaico is an art of creating designs with small pieces of various materials like ceramic and vitrified tiles, stones, marble or any other material. Mosaic Tile fitting is where one can explore creativity and bring out really exclusive designs. The best part is there is no standardization; no limitation to professionals and one have liberty to experiment and execute the designs.’

‘Today one can work with stone, ceramics, shells, art glass, mirror, beads, and even odd items like doll parts, pearls, or photographs. 3D Printed tiles’ are the latest innovation in tile technology. Flat walls are passé. Nitco has acquired a state-of-the-art system that enables the printing process to be used on ceramic tiles. These tiles are created based on principles and procedures which are similar to graphic art work which offer photo-like high resolution impressions. Digital Technology is the future of your home décor, home walling, we at NITCO are very optimistic that digital printing will soon become a design based market from a price based one. Digital tiles are a must have for accentuating one’s lifestyle.’

Tata Realty to raise Rs 1,400 crore via non-convertible debentures

Tata Realty and Infrastructure Ltd (TRIL), a subsidiary of Tata Sons, is raising Rs 1,400 crore through a non-convertible debenture (NCD) issue to replace debt in a project in Chennai with long-term, cheaper borrowing.

.TRIL Infopark Ltd is a special purpose vehicle (SPV) building a 26 acre special economic zone (SEZ) project, Ramanujan IT City, a joint venture development by TRIL, Indian Hotels Co. Ltd and Tamil Nadu Industrial Development Corp. Ltd.

“The entire money will be used to replace the debt we already have on the project and not for funding of the project,” said managing director and chief executive Sanjay Ubale. “The investors in the issue are mostly foreign investors.”

The project is under construction, with about 1.4 million sq. ft of office space leased and operational and another 2 million sq. ft be to be developed. At a later stage, a 100 room serviced apartment building will also be built, Ubale said.

Standard Chartered Bank is the arranger in the issue, while Aditya Birla Finance Ltd is the co-arranger, said TRIL chief financial officer Niyant Maru.

TRIL’s NCD issue opened and closed on the same day last week, indicating that investors had been identified and the issue received good response, said analysts.

NCDs typically cannot be converted to stock and offer yields of 14-20%.

The real estate sector has been flooded with a number of NCD issues as developers are trying to raise capital for a variety of reasons including debt repayment and land payments.

NCDs are an effective instrument to bring in foreign funds in the form of debt, said Ambar Maheshwari, managing director, corporate finance, at property advisory Jones Lang LaSalle.

Issues of the instrument are mostly taking place in late-stage projects as against greenfield ones because developers have realized that it is harder to sell to investors when projects are at the digging stage, analysts added.

Brickwork Ratings India Pvt. Ltd has assigned a provisional rating of A (SO) with stable outlook for TRIL Infopark’s proposed NCD issue. Instruments with this rating are considered to have an adequate degree of safety regarding timely servicing of financial obligations and carry low credit risk.

The structured obligation suffix is added considering the escrow of lease rental receivables and the maintenance of a debt service reserve account with a minimum of three months interest under the control of the debenture trustee.

Rajalakshmi R., manager, research, Brickwork Ratings, said high interest rates and limits on banks’ exposure to commercial real estate have seen realty firms accessing capital markets via NCDs.

“A number of real estate companies seek to replace high cost funds with NCDs. Sometimes credit enhancements provided, such as an escrow of receivables, explicit support from parent company etc, see the credit quality of the instrument increase and render them more viable for investors,” she said. “The success of an NCD issue depends on the project type and status, promoters’ background, investor appetite for the sector, current economic scenario, pricing, etc.”

In recent months, Bangalore-based developers Golden Gate Properties Ltd and Century Real Estate Holdings Pvt. Ltd raised Rs 200 crore and Rs 100 crore, respectively, from JM Financial Ltd.

MOTOR SPORTS National TSD Rally from Saturday

JK Tyre on Tuesday announced the launch of the FMSCI Indian National TSD Rally Championship (fourwheelers) that is set to roll out with a ceremonial start on Saturday.
    India’s first ever National Time Speed Distance rally, promoted by Berunda Adventure Club and with a prize money of Rs 50 lakh, will feature six rounds --Bangalore, Ranchi, Chandigarh, Jaipur, Hyderabad and Coimbatore. The inaugural round will be flagged off on Sunday at 7am from Golden Gate properties (Tumkur road). The rally will traverse through Magadi, Ramnagar, Bidadi, Kanakpura, Sarjapur before finishing at Love Shack, near Indiranagar, covering a distance of 265-km.
    So far, the championship organisers have received 50 entries and they expect more participants to register before the entries close on Wednesday.
    The rally will be run in three categories -- Expert Class, Expert (With Original Equipments) and Amateurs.
    Leading car manufacturers such as Tata Motors (six vehicles) and Volkswagen India (four) have confirmed their entries while the promoters are hoping to attract constructors like Ford, Hyundai, Mahindra and Maruti.

Second-home buyers zero in on Hebbal properties

 
Even in times of real-estate ebb, Hebbal is the new destination for those seeking high-end, premium addresses.
But why Hebbal? “Basically, you are targeting the second-home buyer who can’t afford to buy on Palace Road or in Sadashivanagar or in any of the other central locations,” says Cherag Ramakrishnan, CEO, Equinox Realty, who is developing a high-end residential unit, Water’s Edge, near Manyata Embassy Business Park. Besides Equinox, Mantri Developers, G:Corp, and Karle have also launched projects in the same vicinity. Golden Gate Properties is also slated to launch a high-end residential project in the area.
“There is a shortage of high-end space within the city limits, and here you have a destination that’s 15 to 20 minutes away from the city centre, and has land available,” adds Jitendra Virwani, CMD, Embassy Group. 

Bespoke projects from RMZ, Embassy, and Godrej Properties, priced above Rs 2 crore, have been launched along the Bellary highway after the Hebbal flyover. Century, Brigade and Salarpuria have also planned high-end projects in this area. Last year, Sobha launched its mega township project of 1,500 units — Sobha City — located off Bellary Road. The average per sqft rates that developers are quoting is in the range of Rs 5,000 per sqft to Rs 8,000 per sqft. “The airport has definitely magnetized this part of town as it attracts a lot of senior management of companies. Hence, you see the pricing in the area is line with the customer profile,” says Raj Menda, CMD, RMZ Corp. 

Interestingly, the spike in residential activity in the region has brought back some amount of investor demand, though developers reiterate that Bangalore’s residential market is very much end-user driven. “There has been a lot of interest from investors from Mumbai and Kolkata for high-end projects in Hebbal,” says Sudeep Chandran, owner, Terrafirma Developers, adding that 15% to 20% of offtake seen in Hebbal is by investors. However, there are no signs of bulk buying by investors, which could potentially create a price bubble. “The senior management of IT companies is looking at north Bangalore as an investment opportunity. As of now, they are investors. Once the developments are ready, many of them would become end-users,” explains Ram Chandnani, deputy MD of South India CBRE South Asia, a global real estate consultancy firm. Says Farook Mahmood, CMD, Silverline Group, “Bangalore is turning to be a very mature market, and our prices are still one of the lowest as compared to other metros.” 

 According to another global consultancy firm Cushman & Wakefield (C&W), “The purchases in Hebbal are mostly led by long-term investors and the prices have appreciated consequently.” Considering the first two quarters of 2012, C&W says, “Hebbal has witnessed a price appreciation of around 8% in the high-end residential segment.”
However, the city’s eastern micro-markets such as Marathahalli, Whitefield, and Old Airport Road have witnessed the highest price appreciation of 32% year on year, which is in the mid-segment residential market, according to C&W.

Building Growth in South

Sanjay Raj, CEO at Golden Gate Properties speaks to Subhajit Roy about the company’s business focus in South India and its expansion plans

Looking at the ongoing slowdown, what is your perception on the current situation? According to me there is sluggishness across the country but luckily in Bangalore we are having genuine buyers at right location and right price. Therefore, we will be able to meet the expected targets. At the same time, we have branched out into plotted development to keep the cash flow ringing. Moreover, we are also launching Rs. 25 to 30 lakh bracket apartment under affordable housing segment. In this way we are positioning ourselves in different asset classes to keep us growing as per our projections.

Brief us about your entire portfolio?
We have crossed 1.2 crore sq. ft of completed projects and have got several ongoing projects. This year, we have six launches and are on the verge of launching another three by October this year. Out of the three, one is going to be a plotted development near Hebbal. Though, as of now, we do not have any projects under small township category, we will be launching a project around Chikka-Tirupathi Road in the outskirts of Bangalore by December this year.

As most of your business is concentrated on Karnataka which faces difficulties in terms of environment related regulations, are you finding any difficulties for your business?
We have no complaints about the same and are kind of used to it. If the authorities can speed up the procedure and implement online submission, there will be immense cost benefit. Today, we have to wait for almost 12 - 18 months from a time a land is purchased to get the necessary approvals before the work is started. If the time period is cut short, the benefits can be passed on to the customers. The Government has encouraged the idea of online submission and if it is implemented things will be much better. I think lot of transparency is being achieved already in the real estate sector. However there are some grey areas that need to be addressed before the project is made in terms of land acquisition etc.

We would expect the government to initiate measures on allowing faster approval, reducing home loan rates and give some concession in terms of the affordable segments so that more people would be able to buy homes. There is a very huge demand for affordable housing and the sector needs more encouragement.

Have you started any kind of project in the affordable housing segment?
We would be launching a project comprising of 550 apartments mostly in the Electronic City of Bangalore which would cost Rs. 25 lakh per unit. As far as affordability is concerned, we are making apartment in the bracket of
Rs. 25 to 30 lakhs.

Do you have plans to extend your business beyond South India?
Right now our main focus is only Hyderabad and Bangalore. We might look at Chennai and are working on one transaction. If that works out, Chennai will be our next destination.

How do you maintain the liquidity and what is your annual turnover?
At present our turnover is around Rs. 360 crore and target a growth of 40 per cent. We have various verticals that include plotted developments, apartments, villas, and row houses. Each segment keeps getting us revenue. Right now, we have launched projects worth ` 1500 crore which will be the turnover for us in the coming 2 to 2½ years.

FSI in Indian cities is much lower than global average, are you happy with the kind of FSI you get in Bangalore?In Bangalore it is fine. We have no complaints as it helps us branch out little more out of the city.

Metro project guides realty market

Property prices have gone up along the metro route in Bangalore

Before the Namma Metro got commissioned, a double bedroom house in Baiyappanahalli was available on a rent of Rs 6,000 per month. The demand for houses was little and tenants could even bargain with potential landlords. 

But as the gleaming Namma Metro coaches roll into the brand new Baiyappanahalli station, connecting it to the central business district around MG Road in 10 to 15 minutes, rents have skyrocketed. The same two bedroom house now rents for Rs 15,000 to 20,000 per month.

K Sridhar, a member and former chairperson of the general council of Builders’ Association of India (BAI) in Bangalore, lives in Baiyappanahalli. He said the growth in real estate will be higher in the years ahead as the Namma Metro extends its reach through phase 2. 

“Even the purchase rates of built up properties and vacant plots have gone up. I have seen property sales worth Rs 2,500 per sq ft before Namma Metro entered the scene and pushed property prices to Rs Rs 5,500 per sq ft,” he said.

Besides providing fast connectivity, the rules have allowed increasing the floor area ratio (FAR) from 3.2 to 4 for properties in a 400-metre radius of metro stations.

Dinesh R, another member of BAI, said this was a major reason for growth in real estate. 

This means there can be more built up area as a proportion of the plot area. “The effect of the FAR relaxation is visible along stretches like CMH Road, MG Road where commercial office spaces will go vertical soon,” he said.

Property rates have increased not just in Baiyappanahalli, but also along the all corridor of Namma Metro’s Phase 1 lines - east-west corridor from Baiyappanahalli Terminal to Mysore Road (18.1 km) and along the north-south corridor from Hesaraghatta cross station to Puttenahalli cross (24.20 km). 

Phase 2 corridors run north to south from Puttenahalli to Anjanapura Township (NICE Road) and along the Kanakapura Road and from Hesarghatta Cross to Bangalore International Exhibition Center (BIEC) on Tumkur Road. The extension of the east-west corridor is also proposed on both ends, i.e. from the Mysore Road terminal to Kengeri and Baiyappanahalli to Whitefield. 

U A Vasanth Rao, general manager (finance), Bangalore Metro Rail Corporation Limited (BMRCL), said one of the main changes the Namma Metro is expected to bring is the so-called ‘transit oriented development’. 

This means once the first two phases of the Metro are running, people will increasingly look for job opportunities as well as living spaces within the proximity of metro lines. “With the FAR relaxation in place, the very look of commercial spaces and workplaces will change in coming years in the City,” he said.

But experts are sceptic about the real estate boom along the Namma Metro corridors. Some of them warn that basic facilities, especially drinking water, for development fuelled by metro lines and relaxation in building rules. 

Vasanth Rao said urban development should not deviate from existing or future master plans for the City. He said it was hard to predict if the growth was going to be good or bad for the quality of life. “One cannot predict the exact volume of growth along the Metro corridors. The real estate market will decide its course in coming years,” he said.

However, Sridhar expressed concern about permitting higher FAR in properties along some metro corridors, where basic resources were scarce. “Apartments with huge swimming pools and recreation areas are coming up. Forget water for pools, there is a big question about drinking water to these areas. Underground water levels have gone down and there is no hope of getting Cauvery water either,” he said. 

Milind K, a member of Bangalore Realtors Association of India (BRAI) said it’s high time the city planners should intervene and draw some lines on the sporadic bursts in real estate along the metro lines. “Otherwise, the City is going to witness an unplanned growth just like it happened during the 1990s because of the IT boom,” he said.

Retrospective VAT on Property

There has been a prolonged flip-flop in progress with regards to the VAT issue, and the matter was sub judice for quite a while. Earlier, VAT was proposed to be at 5% of the value of residential properties, but was lowered to 1% and has now been fixed at 5% after all. This will have an obvious negative effect on buyers, because developers are bound to pass the added cost on to them.

In cities like Mumbai, this definitely does not spell good news in a real estate scenario which is already defined by high inventory pile-ups and reduced sales.

On the one hand, the market was awaiting new policies that would aim to boost flagging home sales. However, the Government’s need to ramp up its fiscal deficit by generating additional revenue seems to have gained the upper hand.

Buyers who had purchased their residential properties in 2006 would have taken possession of their homes by now and would not be affected. However, those who had made their purchases in under-construction projects in 2010 and have not yet received possession will have to pay 5% extra on the final amount.

In some cases, developers have protected their customers from possible VAT-induced price escalations by specific clauses in the agreements, but such incidences are exceptions rather than the rule.

In our view, this ruling will probably lead to a higher degree of disputes between buyers and developers, but will not necessarily result in cancellations. In certain areas, there may be viable alternatives to new constructions available on the resale properties market. If such options exist, buyers can definitely consider those options.

Subhankar Mitra, Head – Strategic Consulting (West) Jones Lang LaSalle India