AP Realty Sector At A Standstill

General | By mahendra | 2009 Trackbacks (0) Add comment   

With weeks of agitation continuing across Andhra Pradesh over the issue of statehood for Telangana, transactions in the real-estate sector have nearly come to a standstill in Hyderabad and other major towns, with buyers opting to wait and watch.After a gloomy recession-hit beginning to 2009 and major price correction, the sector had begun to gradually show signs of recovery in the last few months. However, the continued uncertainty over the statehood issue has set the clock back, according to representatives from the realty sector.The President of AP Builders Forum, Mr C. Shekhar Reddy, said the sector has taken twin blows in the form of economic recession and also drop in prices due to slackening demand. “The prices of residential properties have dropped by about 30 per cent in the last 12 months. The flexibility to go down any further has gone,” Mr Reddy said.The Managing Director of Koncept Ambience, Mr M.P. Agrawall, said: “While realtors are concerned about the ongoing agitation as transactions have come to a halt, genuine buyers are keen They expect some more downslide before buying.”The notion that there is more supply than demand is incorrect, he said. The economic downturn and lack of buyer interest in the first half has deterred many developers from venturing into new projects.The available supply will take care of the demand over the next six months, and “suddenly we will realise that there is need for more projects particularly in the affordable segment, which is in short supply,” Mr Reddy said.The Chairman of Confederation of Indian Industry, AP region, Mr Y. Harish Chandra Prasad, said: “The agitation is bad for the infrastructure sector and real estate players. It sends wrong signals to investors. We hope the issue settles down soon and the uncertainty is put behind, helping resume normal business. The offtake of commercial property too could be hit as companies and establishments adopt a cautious wait-and-watch approach.”

Speculative buying

The Chief Executive Officer of Lanco Hills, part of the Lanco Group, Mr S. Pochendar, said that speculative buying was missing in the market in the last six months. This augured well for the sector as the slowdown, coupled with demand-driven pricing, has helped stabilise prices.“Before the build-up to the current agitation, market was already subdued and bottomed out at every nook and corner of the twin cities. The number of takers too had come down. The speculative investment was totally out. The prices too had reached their lowest levels in the last four years. I don't see any more surprises in the sector,” Mr Agrawall said.Since the recent agitation, genuine buyers hope to see some more downslide, which is unlikely. There is also no likelihood of flight of investors, as some speculate. Investors invest wherever there is opportunity, not just in Hyderabad, but other States and in some overseas markets, Mr Agrawall said.However, some players said prices will go up in Vijayawada and Visakhapatnam as some of the speculative investors could prefer these growing cities to Hyderabad in the near term.Mr Shekhar Reddy, however, believes this is not true. From the interaction he has had with some of the project developers, they see this as a passing phase of their business cycle and are okay waiting for this phase out. “Even assuming that a separate state is formed, how will this change their existing business plans?” he asked. “Due to slowdown, with scores of real-estate developers delaying taking up new projects and concentrating on completing the ongoing ones, in the next six to 12 months we will suddenly face a situation where we will have increased demand and shortage of supply. This could potentially push up prices faster than we anticipate,” Mr Agrawall argued.Mr Prasad said the ongoing impasse could also affect the prospects of some of the major infrastructure projects such as the Hyderabad metro rail and foreign direct investment. Banks and financial institutions base their project estimation on the business prospects and valuation of real-estate. And if this comes down, they could be wary of funding new projects.

Impact on infra projects

Asked if some of the projects are in trouble due to liquidity crunch, Mr Shekhar Reddy said the situation is no different from the one about 12 months ago. In fact, several private equity players have set up their teams to look at potential buyout candidates or investment opportunities.“The agitation has had a negative impact on the sector. However, we are looking at the next year with much optimism and hope that the current stalemate is resolved. Once that happens, all those who are keen to own a property will be back hunting for properties,” Mr Pochendar said.For the real estate developers, reality has sunk in. From a stage a couple of years ago, where on the day of Bhoomi Puja most apartments would see buyer interest, realtors are now faced with the challenge of convincing potential buyers who prefer to wait and watch. This happens when it is a buyer's market, Mr Reddy said.


India Tops Real Estate Investment Market Iist In Asia For 2010

General | By mahendra | 2009 Trackbacks (0) Add comment   

India leads the pack of top real estate investment markets in Asia for 2010, according to a study by PricewaterhouseCoopers (PwC) and Urban Land Institute, a global non-profit education and research institute. The report, which provides an outlook on Asia-Pacific real estate investment and development trends, points out that India, particularly Mumbai and Delhi, are good destinations. Residential properties are viewed as more promising than other sectors and Mumbai, Delhi and Bangalore top the pack in the hotel ‘buy’ prospects as well.The study is based on the opinions of over 270 international real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants. Since the global economic meltdown, asset markets in the Asia-Pacific region have been holding up surprisingly well compared with their peers in Europe and the US. While pricing and rentals in the region fell steeply in 2008 and early 2009 in line with those in the West, markets across the region were boosted in the second half of the year by the remarkable resilience of the Chinese economy, which was buoyed by a series of fiscal and monetary stimulus measures.

As a result, many Asian markets have begun to flash positive signals toward the end of 2009. Transaction volumes have rebounded, although from a very low base, led overwhelmingly by China, the report said. “The relatively stronger fundamentals and the lack of dependence on foreign demand are seen as key advantages as India has managed to mitigate the severe recession that has hit most other Asian countries. “The recapitalisation by players in equity markets across Asia has been successfully replicated by some Indian developers, which has helped ease the liquidity stresses,” said Mr Gautam Mehra, India Leader for Real Estate Practice, PriceWaterhouse Coopers. Unlike the US and Europe, distress sale in Asia had been relatively minimal. This was due to several factors, including a relative abundance of liquidity; low loan-to-value ratios, leaving borrowers less vulnerable to loan servicing problems when the prices declined, the report said.Further, Asian banks remain well-capitalised, having experienced few major losses from derivative investments and also because of the ability of many large investment institutions to recapitalise via the capital markets, (particularly in Australia and Singapore) allowing them to pay down debt. Despite the recent bullish atmosphere, rebounds in most Asia-Pacific markets (with the exception of China) appear tentative and fragile. Although Asia-Pacific governments will probably be able to sustain high rates of liquidity for the foreseeable future, their near term prospects are probably tied to developments in the West and in particular the US, where de-leveraging is far from over.

“The idea that the recession is likely over gives rise to the widespread notion that global economies will now revert gradually to the same trajectories as in the past, which is normally what happens when recessions end,” said the ULI Chief Executive Officer, Mr Patrick L. Phillips. He said the aftermath was likely to be different because the imbalances that led to the global downturn remain embedded in the system and could not be quickly eliminated. Moreover, with spending by the Western consumers no longer acting as the primary engine of global economic growth, a new driver was needed to boost the world’s economy, and, in turn, the global real estate industry....http://www.maaproperties.com

City Realtors In A Tizzy

General | By mahendra | 2009 Trackbacks (0) Comments (2)   
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Hyderabad's real estate sector was in a state of shock on Thursday, just hours after the Centre conceded to the demand for a separateTelangana state. Speculating that the move would further dampen the already crippled industry, realtors were seen making their own calculations about the future of their business in the city. Apart from a few optimistic voices, most realtors opined that the T decision would spell doom for real estate in Hyderabad and result in a steep fall in the property value.


"We will go back at least by five years in terms of growth," said Khaja Asif Ahmed of Stellar Project Management Consultant, adding, "It will take at least two to three years for the political unrest to settle and till then no investor from outside would put his money here." According to his prediction, the industry, which is still battling the recession ghost, is set to hit a new low over the next few months.City realtors say that Hyderabad, as part of Telangana, would also disrupt the flow of sentiment-driven investments. "So far people from all over the state invested in Hyderabad because of its status as the capital of Andhra Pradesh. But if it becomes part of Telangana, people would think twice before picking up property here," said a Kukatpally-based realtor Madhusudan admitting that it would indeed be a long haul before the sector gains momentum. "Until a clear separation takes place, there will be no new investments," Madhusudan said.


A common sentiment that seemed to be riding high among most players from the sector was that of ‘protecting Hyderabad' from the turmoil by declaring it as the joint capital of two states. "Our fear of stagnation in transactions (purchases) can be best addressed through this move. That way the value of properties in the city would remain unaffected and investors too would feel secure," said Ashwin Rao, director, Primus Developers. Though Rao is one among the few optimistic builders who feel that the industry would be back on track, only after an initial glitch of a few months, he says that the common capital stand would be ideal to arrest the slump in the realty business.http://maaproperties.com

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