Category: General

Maytas Customers Caught In A Bind

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

When customers of Maytas Hill County, the flagship real estate project of Ramalinga Raju promoted Maytas Properties, met with the fund-strapped firm's management including Rama Raju Jr last month, they were assured that work on the project that had stopped over the last few months would commence in April. The assurance has now fallen flat with not an inch of movement at the project site in Bachupally. But now it is not only the customers but even banks with considerable exposure in this housing-SEZ project that are worried about the crores blocked in this venture.

The high-end Rs 710-crore Hill County township that comprises apartments and villas ranging from Rs 40 lakh to Rs 3.5 crore was the only project kept alive by Maytas Properties after Raju's confession on January 7. Several customers have already made 90 per cent of the payment so far. The down payment amount notwithstanding, all customers asked their banks to hold back funds to Maytas until work begins at the site again. There are an estimated 1,000 customers of the Hill County project and the apartments were to be handed over to them by October and a second set in March. But these promises were made prior to the devastating scam Raju confessed to.

Now, the liquidity crunch at Maytas Properties is severe and observers say it is unlikely that the  company would be able to manage funds as things stand now. The government appointed Maytas Properties director, Ved Jain, says that liquidity remains its most serious problem. "We are in talks with both lenders and vendors. Arrangements are being made so that things start moving on,'' he said, adding that the board was working on it (resolving the problem). According to sources, Maytas Properties has contracted the work to one Prasad & Co. and representatives of this contractual firm have met owners of villas seeking money to complete the remaining work against a credit note. "The idea faced a lot of resistance initially. But owners of some villas where just about 10 per cent of the work is remaining have somewhat agreed to this deal. Obviously, they do not think they will get this money back and the credit note would be of no use,'' said the owner of an apartment, adding that owners were realising it was better not to depend on the Maytas management. Customers say they do not know which wa

Decline In Office Rentals Continues

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Office markets across the country continued to show a downward trend as most markets recorded negative growth in rental values after supply across eight major cities in India outstripped absorption by 45 per cent.Mumbai, the financial capital of India, witnessed the sharpest decline in rental values in the first quarter of 2009 while the National Capital Region witnessed significant decline in rental values in central business district in the first quarter of 2009, according to Cushman & Wakefield’s latest office market report.

Micro markets of Mumbai including those of Lower Parel and Worli recorded drops of 37 per cent and 29 per cent respectively from a three per cent and 13 per cent drop respectively in the preceding three months. Rentals in central business district of Nariman Point fell by 13 per cent in the first quarter of this year compared to 20 per cent in the previous quarter. Rentals in NCR’s CBD, mainly Connaught Place dropped by 17 per cent, the highest in the last 3 years, the property consultant said in the report. The drop comes after a 14 per cent decline in the previous quarter. Bangalore rentals fell in the manageable range of three to seven per cent in key markets.

“The first quarter of the year can be termed as the weakest so far in terms of commercial office take up across major cities in India as compared to a similar period for the last 2/3 years,’’ said Kaustuv Roy, Executive Director, Cushman & Wakefield. Bangalore witnessed the highest new office space supply of approximately 2.81 million square feet and also the highest demand of 1.29 million square feet. NCR and Mumbai witnessed fresh office space supply of 2.6 million square feet and 2.47 million square feet respectively and absorption of 0.8 square feet and 0.9 square feet respectively. Chennai, which had been reeling under over supply pressures saw moderate supply 0.98 square feet and absorption of 0.9 square feet. Hyderabad and Ahmedabad saw no addition to the current stock.

Vacancy levels had remained largely consistent to last quarter with most IT/ITeS destinations witnessing high vacancy levels. Chennai’s peripheral location (Rajiv Gandhi Salai) recorded the highest vacancy of approximately 42% while the city average was at approximately 18%. The lowest vacancy was recorded in Ahmedabad at five to six percent due to limited leasing activities and no new supply in the market.Mumbai recorded a vacancy of approximately 11-12 per cent while vacancy levels in NCR stayed at a manageable 8 -10 per cent. Bangalore, Pune and Kolkata remained at an average of 16 -18 per cent. Hyderabad saw some slackness in activities and therefore recorded a reasonably high vacancy of 23% of which prime suburban region comprising of Banjara Hills and Jubilee Hills recorded a higher 35% vacancy.

"Re- negotiations and migration to more cost effective locations has been the norm for the cautiously advancing corporate sector. However going forward we are likely to see supply contraction,"said Roy."Acutely affected areas like IT/ITES and certain corporate office destinations will see deferment of projects to bridge the gap between supply and demand. While rental values are expected to be under pressure in short to medium term, going forward lower rentals are likely to have a more positive impact on the absorption numbers," he added.

Hyderabad Real Estate Prices Down By 40 Percent

General | By mahendra | 2009 Trackbacks (0) Comments (1)   

The recession has taken its toll on Hyderabad Real Estate market where land prices and apartment prices are down by 40 percent. The job losses specially in IT/BPO sector and speculations over more job cuts lead to this down trend. Though this is good times for new buyers, it is really going tough for builders and resellers. Builders are coming forward and willing to negotiate prices with the customers. And some builders are even advertising with ‘buy one and get one’ tag in order to dispose their properties as early as possible.The residential land prices near Manikonda, Gachibowli and Kokapeta which were going for Rs.20,000 - Rs.25,000 per Sq.Yard before are now Rs.12,000 - Rs.15,000 per Sq.Yard.

Most of the apartments which were sold for Rs.3500 per Sq. Ft before are now going for Rs.2000 per Sq. Ft. or even less. A two-bed room flat in Nizampet road, Kukatpally is costing around Rs. 20 lac now. And the prices for independent house/villas also fallen down by more than 35%, an Independent house of 2700 Sq.Ft area in locations close (< 5Km) to Hitech city is costing now around Rs.50 lac. And also builders are more open and flexible now with respect to instalment payments.Reserve Bank of India (RBI) today announced that it is further cutting repo, reverse repo rates by 0.25 percent. A cut in reverse repo will have a direct impact on home loans that will become cheaper and this certainly brings good cheer amongst consumers.

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Hyderabad Now A Hotspot For Infra Investments

General | By mahendra | 2009 Trackbacks (0) Comments (1)   

Southern metros led by Bangalore, Hyderabad and Chennai have become the most favoured destinations for attracting infrastructure investments from corporates ahead of Mumbai , Delhi and Kolkata, an Assocham study said.The report "Indian Metros : pulling infrastructure investment" pointed out that the three southern capitals accounted for 70% of total private investments in infrastructure projects among six metros in India. Kolkata, Mumbai and Delhi accounted for the remaining 30%. As per the Assocham study, the private sector has bet Rs 33,161 crore on the southern metros compared to Rs 14,240 crore in other tier-I cities.

The southern metropolitan cities are less urbanized with a combined urban population of about 16 million compared to Mumbai (18 million), Delhi (18.7 million) and Kolkata (15 million), the Assocham study said. Assocham president Sajjan Jindal said: "Southern cities are attracting private attention towards infrastructure projects primarily due to better state policies, availability of talent due to engineering and business institutes , high literacy rates and rising per capita income ." The study said that even when the real estate sector across the country is facing problems, investments in realty projects have acquired highest share in overall infrastructure investments in the southern tier I cities.

Around 12 projects were announced by the private sector during last six months amounting to Rs 12,990 crore. Bangalore had a maximum of six realty projects while Hyderabad and Chennai had five and one respectively . The second highest investments are lined up for SEZs. As much as Rs 12,150 crore would be spent in developing five SEZs by the corporate sector in southern metropolitan cities.

Real Estate Crisis Badly Hits Retail Sector

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The impact of recession in US economy has badly hit Indian real estate market along with sectors like retail, steel, cement, hospitality and logistics. Till October 2008 the real estate industry was a very booming industry in India. Also the high net worth of individual investors especially those involved in retail and IT had created a very fast pace of demand in Indian real estate sector which have gain a very high impact image of investing in India. But the downturn produced shocking waves in the real estate market, which further impacted sectors like retail, cement and iron. The result is unavoidable.

Relating only retail to real estate, the scene is bad. Its pace is equivalent to zilch today. In the time of recession, no retail company wants to buy exorbitantly high priced spaces, neither they want to pay highly charged rents. While just a year ago, the retail industry was the next big hope for India's economy. Stores were opening everywhere, with sprawling malls and tony boutiques holding glitzy launch parties across the country. Retailers bought up every inch of space in India's largest cities, sending real estate prices through the roof. Even India's small towns caught mall-mania. But as India's economy feels the impact of the global recession, Indian consumers are cutting back on spending, and retailers are facing a major slowdown and hence, real estate. For a deeper insight into the industry, Financial Times sought comments of people on - "Are retail real estate blocked funds nowadays?"

Recession being a worldwide phenomena, has affected every trade and industry. The change in corporate's business strategy to relocate from high cost to lower cost locations with a similar slow down in the IT-ITES industry has seen vacancy levels going up in the retail / office space, as most of the stock was created in anticipation of the demand. I don't fully subscribe to the view that retail real estate are blocked funds nowadays as the buyers still have an option of offering reduced rental costs to the retailer. If a comparison of ROI is made in today's market, the return from retail real estate market is pegged at somewhere in-between 11% to 15% depending upon the location of the property, whereas banks seldom offer return of more than 10% per annum. India 's favourable demography, low mortgage penetration, falling interest rates and ongoing infrastructure demand will keep the retail real estate property downturn from being protracted.


SBI Draws Pvt Bank Customers With Home Loan At 8% Interest

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The special housing loan schemes launched recently by State Bank of India at 8 per cent interest rate have triggered migration of customers of some private banks to SBI.While the exact number of migrated customers/loan applications could not be ascertained, the foreclosures of housing loans at leading  private banks for loan swapping have gone up noticeably, according to sources.

"We actually expected to drive good demand for new home loans from prospective buyers but are pleasantly surprised with increasing  response on the loan swapping front," a senior SBI official from Mumbai told Business Line. However, the new loan applications still remain "dull" in some major  urban locations due to expectations of further dip in the real estate prices and interest rates, he added.Sources in some private banks, including ICICI Bank, confirmed the "noticeable"  foreclosures in home loans. "There is also significant  increase in the number of enquiries on foreclosure penalty and request for list of documents necessary for applying for a loan with another bank for swapping," said a source in ICICI Bank.Existing customers are also hoping for some benefit in view of the reduction in interest rates by SBI and other banks. "When I asked whether any renegotiation of interest rate on my home loan is possible, I was told by the bank staff that I can close the loan to go to another bank," said Mr S. Reddy, a senior IT professional who had taken Rs 20 lakh housing loan from ICICI Bank here. However, the official spokesperson of ICICI Bank in Mumbai said: "There has not been any increase in number of foreclosures of home loans."

A HDFC Bank official said while new customers were weighing their options, the existing customers are enquiring about the penalty and foreclosure of loans. The penalty for pre-closure of loans after payment of EMIs for three years now ranges between 2.25 per cent and 3 per cent of the outstanding in different banks. The benefit for a customer who swaps his loans from a higher rate to a  loan at 8 per cent interest for one year is varied. "This is a calculation which needs to be worked out at the individual level depending on the loan amount outstanding, rate of interest and its nature (flat/floating) and the foreclosure penalty one has to pay," said Mr Dattatreya Sarma, Deputy General Manager, State Bank of Hyderabad (which is also offering home loans at 8 per cent).

ICICI Banks Reduces Home Rates

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ICICI Bank, the country's largest private sector bank, has cut its home loan rates by 25-50 basis points (100 basis points = 1%) for new customers with immediate effect.Unfortunately, existing home loan borrowers from the bank will continue to pay a higher interest rate. ICICI Bank is the first private sector bank to reduce rates in the wake of the Reserve Bank of India's decision to cut its benchmark policy rates-repo and reverse repo rates-by 50 bps on Wednesday. Earlier, State Bank of India and Canara Bank had reduced interest rates on home loans.

public sector Bank of Baroda also cut its benchmark lending rate by 50 bps to 12% with effect from April 1. The cut in the bank's prime lending rate will reduce the interest burden in all its advances which are linked to its benchmark prime lending rate (BPLR, a rate offered by a bank to its best borrowers), including home loans from the bank. UCO Bank too announced on Friday that it was cutting BPLR by 50 basis points to 12.50% from the current level of 13%. According to the new floating rate structure of ICICI Bank, the interest rates would be 9.75% against 10% earlier for home loans of less than Rs 20 lakh. For loans between Rs 20-30 lakh, the new rate would be at 10%, compared with 10.5% earlier, while for loans of Rs 30 lakh and above, the interest rates would be at 11.50% against 12% earlier.

"The rates are still fairly stiff compared to other major players, especially if you look in the Rs 30 lakh and above category. If you look at the other major players, the rate is in the range of 10.50-10.75%,'' said Harsh Roongta, CEO, Apnaloan, an independent loan tracking firm. "LIC Housing Finance offers very attractive rates. Even Canara Bank's new offer was attractive,'' he added. Earlier this week, Canara Bank announced that it would charge 8.25% interest for the first year for loans up to 20 years. Last month, SBI announced a home loan scheme where interest rate for the first year was fixed at 8% and the rate would change from the second year. The move invited criticism from other housing loan providers, which feared that the scheme was a deliberate attempt to wean away their existing customers. Many banks are likely to take cue from ICICI Bank and announce rate cuts soon. visit for all the home loan rates of different banks

Realty Prices Fall By 10-40 Per Cent

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It's here. After talking of a rebound, putting up with stagnation and offering freebies and discounts, developers hit by a demand crunch and economic slowdown are biting the real bullet, lowering prices in key apartment zones in or around Delhi, Mumbai, Bangalore and Hyderabad.Real-estate prices across the country have fallen by 10-40 per cent. And while prices vary depending on location, size, quality, amenities and time of possession, there are clear indications that the earlier price surge created by speculation and high growth has petered down. Developers are generally still not cutting prices of existing projects, but they face a market in which re-sales could do much the same thing.The country's second-largest builder, Unitech, is planning new projects in the suburbs of Noida and Greater Noida at Rs 2,000-2,500 per sq foot (psf), according to a spokesperson. This is the same area where market players say prices were roughly twice as much a couple of years ago."It makes perfect sense for industry leaders to rationalise project prices," said Anuj Puri, country head at real-estate consultancy firm Jones Lang LaSalle Meghraj. "That is the need of the hour."

Market players say in the Gurgaon area, well-developed zones have over the past year seen rates slump by 8-12 per cent, but remote areas are seeing a crash of 20-35 per cent.For example, a plot in Sushant Lok Phase II today sells at about Rs 23,000 per sq yard compared to Rs 30,000 only six months ago, a fall of 23 per cent.  However, genuine deals are few because buyers are waiting for a further fall, while sellers are hoping for a rise.In Noida, flats that went at Rs 5,000-6,000 psf a year ago now come for Rs 3,500-4,200, while in Greater Noida, the fall has been from Rs 3,000-3,800 psf to Rs 2,000-2,800 psf.DLF is already selling a project in the New Gurgaon area that covers locations like Manesar at Rs 2,200 psf. A company spokesman said prices had dropped by at least 10 per cent in Chennai and by 25 per cent in Bangalore. Developers are not sure if there would be a similar fall in the North.Buyers in Mumbai and Pune could expect a further 10 per cent reduction in prices, Puri said. In the Mumbai-Pune zone, realty prices for ongoing projects have already crashed by 25 to 40 per cent in the past six to nine months, say local market players. "It's difficult to predict the bottom (of prices)," said Niranjan Hiranandani, managing director, Hiranandani Constructions. "I don't think prices will reduce further."

In Pune, prices have come down to  Rs 2,200-3,000 psf from about Rs 4,000 earlier. "The market has touched more or less 2005-06 price levels and unlike other places the conversion (deal) rate is high in Pune," said Lalit Kumar Jain, chairman, Kumar Builders, a developer from Pune. Prices in Navi Mumbai were zooming till 2007 with escalations in the region of 70-100 per cent in two years. But over the past year, a 20-30 per cent fall is clearly visible. "We have reduced our rates from Rs 7,000 psf, at which we sold six months ago, to Rs 4,700 now," said Om Gehlot, whose project Gehlot Majesty is situated on Navi Mumbai's Palm Beach Road.

Slowdown Is Good News For Green Buildings

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As real estate sector goes through one of its worst times, consumers are looking at value-for-money options and developers are looking at cutting overheads while trying not to compromise on quality. A section of property builders say the economic downturn iis beginning to prove a boon to the green realty sector because of established and proven technologies that reduce running costs of buildings.

Homebuyers and companies buying office spaces have also shown their preference for green buildings that will drive the market with greater focus in the year ahead. “We are seeing a growing interest even among existing buildings to retrofit certain technology elements that can save energy in either air-conditioning, or lighting, or the use of water. Many hotels and hospitals, even offices, are beginning to see the advantages of managing waste within their premises, for this eliminates the cost of transporting waste and the mess of waste that is not disposed off,” said Chandrashekar Hariharan, chief executive officer, of Bangalore-based Biodiversity Conservation (India) (BCIL). He added that “Green realty sector will benefit from the market downturn as investors and buyers today are more discerning and weary of parting with money without the assurance of greater benefits and features that can save on energy bills, water bills, and on managing the waste without the risks of health hazards and without reliance on inefficient municipal bodies.

If energy efficiency becomes the norm for buildings, it would be the start of a minor revolution to reduce demand for energy, as well as to bring efficiency in management of precious water resources and more effective waste management in our cities.” “One has to devise a business model that would benefit as well as adhere to the green norms,” said P Surya Prakash, managing partner of Hyderabad-based SatyaVani Green Homes.He said green buildings are not just environment-friendly but alsohelp cut costs such as maintenance costs for the building and cost of power for the customer. To involve his clients completely in green initiatives, SatyaVani Green Homes has decided to incentivise the customer by subsidising power for 25 years by Rs 18,000 per year. “We bring down connected power load. Normal buildings need 12 mw of connected power. We are making this a zero carbon power. We call this green power,” says Surya Prakash. The concept may not be new, but developers who are actively involved in the green initiative say that green builders should strengthen the movement by sharing their experiences and the advantages they have gained.

“The focus should deepen in learning more tools and techniques and design approaches for better management of energy, water, and waste with cost efficiency and ease of execution being the prime factors,” says Hariharan.BCIL is also offering information at no cost on several things that can be done to bring energy efficiency in many things we buy or use or do in our daily workday lives, he adds. In 2008, there were as many as 240 million sq ft of commercial buildings that requested green certification. The residential green rating system was launched in May 2008 and in less than four months the initiative received applications for a staggering 150 million sq ft of residential apartments, which aspired to green, from builders. The approach has been facilitated by technology and management processes for construction that are reasonably user-friendly and can therefore allow for scale and replicability.

A Realty Boost At Times Show In Hyderabad

General | By mahendra | 2009 Trackbacks (0) Comments (1)   

The real estate scene may be going through its worse stage in years, but that has not stopped buyers from evincing interest in new Real estate Projects or the offers that go along with them. This was in ample evidence at the Times Property Show that began on a positive note at Taj Krishna lawns on Saturday where 14 builders and developers displayed their new and ongoing projects in the city at 24 well designed stalls of the Times Property Home Affair show.

The fair has properties ranging from Rs 8 lakh to Rs 2.5 crore. Commissioner of I&PR, C Parthasarathi, who inaugurated the show, said that the fair gave both builders an opportunity to fight the slowdown. Putting up a fair is itself a brave move, he said. Developers hoped that being the first property fair in 2009, it would wake up the property market and provoke others to give some impetus to the industry. The crowds thronging the fair in the evening certainly made them smile. A visitor Srilekha Sundar said she was pleasantly surprised to find some really good bargains. "The media has been mentioning that rates are coming down and there is scope for negotiations, but I was skeptical. I can seriously consider buying something soon now." Developers were also encouraged by the response. "We expect to finalise some deals here because we found genuine buyers," said one developer who did not want to be named.

Surprisingly the government-owned Rajiv Swagruha Corporation is also here offering properties within a range of Rs 8-37 lakh alongside big names like the Aparna group, Aliens, Aditya Housing, PBEL, INDU, Janapriya, Modi, Saket and fairly new ones like Silpa Real Estate, Madhu Infra and SAP Constructions. There is clearly a wide range of choices, with something for everyone. This fair gives an opportunity both to builders and buyers to get the best deals and value additions. So if one is looking for a good property buy, Taj Krishna is the right venue where the Home Affair ends today.

Real Estate Market Bore The Brunt Of Slowdown In 2008

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What goes up has to come down.On a high since 2005, Indian property market descended in 2008 with prices falling by 15-20 per cent.High interest rates regime and economic slowdown, coupled with the ripple effect of the US subprime crisis cooled off the overheated realty sector to some extent, forcing developers to adopt cost-cutting measures, such as deferment of projects, salary cuts and layoff of employees.

Developers, big or small, faced huge liquidity crunch as both end-users and investors shied away from the market. The sector's woes got further accentuated from the kind of battering it received at the stock market, with its share price falling like ninepins.The fall in sales volume was so sharp that turnover and profit of almost all the companies started to decline from the first quarter of 2008, which became more pronounced as the year progressed. "In 2008, the Indian realty sector took an unprecedented body blow.There has already been an overall drop of demand to the tune of 45-50 per cent," real estate consultant Jones Lang LaSalle Meghraj Chairman and Country Head Anuj Puri said. He pointed out that the prices of residential units fell by an average of 15-20 per cent across the country and said similar trend was witnessed in rentals for retail spaces.


The slump in demand forced developers to offer discounts and freebies to boost sales. But that did not help the industry, and sought government's help to come out of trouble.The Centre did not disappoint the industry and announced lower interest rates for home loans up to Rs. 20 lakh, which prompted the developers to focus on affordable housing.It was all well till the end of the last year and realty majors like DLF, Unitech and Emaar MGF were all set to raise huge capital from domestic and overseas markets in 2008 to fund their massive expansion plans. But the mood changed within a few months when Emaar MGF had to withdraw its maiden public offer of over Rs 7,000 crore in February because of bad market condition.On seeing the fate of Emaar MGF's IPO, many other realty firms decided not to try their luck in the capital market.The development was in complete contrast to 2007 when the sector emerged among the top fund-raiser with DLF leading the chart at over Rs 9,000 crore.

The realty index on the Bombay Stock Exchange fell by over 82.49 per cent at 2,283.52 points on December 30 compared to 13,037.89 points on January 1 this year. Unitech seemed to be the biggest loser with its scrip currently trading over 92 per cent down since the beginning of the year.The shares of DLF, IndiaBulls, HDIL, Sobha Developers, Omaxe and Parsvnath also crashed between 73 per cent and 90 per cent on the BSE during the review period.The crash in the global stock market also forced the country's two largest real estate firms, DLF and Unitech, to defer their public offer in Singapore indefinitely.Even though the developers bore the brunt of slowdown with falling sales and declining profits, they did not shy away from announcing projects with huge investments.Facing the heat, the major developers, including DLF and Unitech, which till last year were focusing on luxury housing, diversified their product portfolio to affordable housing. DLF announced to invest Rs 15,000 crore to develop 40,000 units, while Unitech said it would build 10,000 apartments with an investment of Rs. 2,500 crore over the next few years.

They would offer these housing units in the range of Rs 15-50 lakh. Omaxe announced a mammoth investment of Rs 80,000 crore in the next five years to build 10 lakh housing units, which the developer has planned to offer at Rs. 3 lakh to Rs. 15 lakh.Not being able to generate funds, the developers also had to put on hold projects involving big investments or slow down the construction work. Better late than never, the government came to the rescue of the industry and asked the public sector banks to announce cheaper home loans up to Rs. 20 lakh.Realising the impact of slowdown in the housing sector on other industries, like cement and steel, and its employment generation capacity, the government is mulling another package to boost the sector, expected to be announced in the new year. Hopefully, the second stimulus package will bring smile to the common man and provide much-needed relief to the real estate sector.

Satyam Computer Diversifies Into Real Estate Business

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Satyam Computer Services Ltd (NYSE:SAY), a leading Business and Information Technology services provider, today announced that its Board of directors has approved the proposals to acquire 51% stake in Maytas Infra Ltd and 100% stake in Maytas Properties Ltd.

"The two acquisitions pave the way for accelerated growth in additional geographies and market segments such as transportation, energy and several infrastructure sectors for the core IT business." said Satyam Chairman and Founder B. Ramalinga Raju."This would de-risk the core business by bootstrapping a new business vertical in Infrastructure. This market segment can mitigate the risks attributed to developed markets and traditional verticals that are likely to be impacted by the recessionary economy. The established brand of Satyam can further enhance the penetration into emerging markets and within the infrastructure industry. The two companies being acquired in a challenging market offer potential for significant upside in future.

" The toal outflow for both the acquisitions is expected to be US$ 1.6 billion comprising of US$ 1.3 billion for the 100% stake in Maytas  Real estate Properties and US$ 0.3 billion for the 51% stake in Maytas Infra. The acquisition of Maytas Properties would be immediate. In the case of Maytas Infra, Satyam will acquire 31% from the promoters and make an open offer for additional 20% from the public given that the company is a listed entity on the domestic stock exchanges. While the price proposed to be paid to promoters is Rs 475 per share, the price for the open offer has been approved to be Rs 525 per share and is subject to change in line with SEBI regulations.

Satyam reiterates its continued thrust and emphasis in the global IT and IT enabled services. The company will continue to invest in strengthening the global partnerships with elite customers.Mr. Raju added, "We are confident that the combined entity will deliver greater shareholder value in an otherwise challenging environment. We are also convinced that the integrated organization would be stronger and more diversified to deal with the uncertainty of the market."

The Satyam Computer stock closed the day at Rs.226.50, up by Rs.1.10 or 0.49%. The stock hit an intraday high of Rs.231.90 and low of Rs.222.25.The total traded quantity was 513502 compared to 2 week average of 697158.

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Relief For Battered Realtors May Come Soon

General | By mahendra | 2008 Trackbacks (0) Comments (1)   

The urban development ministry has drafted a bailout package for the real estate industry, which would be shortly sent to the finance ministry for consideration. The ministry has called for relaxation in norms for foreign loans so that realty companies can tide over the liquidity crunch, urban development secretary M Ramachandran said on Monday. The note has also urged the finance ministry to consider other sops like rescheduling of total debt of the real estate industry and reduction in home loan rates for affordable houses. “We have included some of the demands from the National Real Estate Development Council (Naredco) in the note.

Once the finance ministry clears the package, it will go for Cabinet approval,” Ramachandran said. Naredco has asked for a reduction in the interest rate on home loans by at least 3-4 %. The rate of interest on home loans has drastically gone up from around 7.75% in 2004 to around 12.75% now. Almost 90% of home buyers opt for loans to buy homes. But with the hardening of interest rates, and liquidity crunch in the market, demand for houses has been hit. The council has also asked for rescheduling of bank debt to real estate developers with a moratorium of one-two years. The total debt of the real estate is to the tune of Rs 25,000 crore, a Naredco statement said.

The industry body has also asked for an easing of norms for foreign loans and declaration of ongoing projects as NPAs. Meanwhile, to bring about correction in the property prices, the Naredco has asked its members to cut prices by reducing costs, cutting profit margins, reducing advertising and brokerage costs. Its members include DLF, Ansal API, Unitech, Parasvnath Developers, Sobha developers and several other realty companies. There are several factors working against the Indian real estate sector. Banks are getting jittery over loan disbursals to real estate developers. Even if the developers manage to get loans from banks, they are hardpressed to keep more collateral with the banks. To further aggravate the situation, the property market has also been witnessing a drop in PE fund flow.

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Government Mulls Trimming Impact Fee On Real Estate

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With a slowdown in construction activity and requests from builders’ associations, the municipal administration and urban development (MA&UD) is considering reducing impact fee. The Greater Hyderabad Municipal Corporation (GHMC) and Hyderabad Metropolitan Development Authority (HMDA) are collecting impact fee from builders, especially the ones who build structures above five floors and commercial buildings, as such construction would put more burden on infrastructure.

After the new building rules were issued under GO 86 in 2006, the MA&UD introduced the impact fee in the city. As per the rules, a builder constructing a 15-floor building has to pay Rs 20 crore including impact fee either to GHMC or HMDA. The real estate builders claim it has become a burden to take up big projects coming up in over 10 acres. Apart from this, the city-level impact fee is being collected by the GHMC for constructing commercial buildings, shopping malls and multiplexes in core areas of the city. The impact fee is collected from builders apart from other permission fee.

The builders’ associations are also demanding that fee be collected based on the number of floors instead of the height of buildings. IT firms seek fourmetres per floor instead of normal three for false ceiling and AC ducts. The Builders Forum has asked the government to reduce the impact fee and collect it after completion of the building as the impact (burden) on the infrastructure will be after completion of the building or collect the fee in instalments,” Builders Forum president C Sekhar Reddy told TOI. “The state government will take a decision on the impact fee in a week,” an official said. The city impact fee was enhanced last year by grading the 61 commercial roads into A, B and C categories based on the width and traffic flow on it.

GHMC has been collecting Rs 400 per square feet (sft) on total built-up area in category ‘A’ roads, Rs 300 in ‘B’ roads and Rs 200 in ‘C’ roads apart from the city-level impact fee that is being collected by the GHMC for giving building permissions. If a builder or owner wants to construct ‘A’ category buildings on ‘B’ category roads, they have to pay three times the impact fee instead of what is charged in category ‘B’ roads. Similarly, if builders want to construct ‘B’ category buildings in ‘C’ category roads, they have to pay three times more impact fee.

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ORR May Face Delay As Land Owners Put Up New Demand

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Nearly 740 acres of land is yet to be acquired for the Outer Ring Road (ORR), though the work on the second phase is already on. This is because of opposition from land owners. Even three years after the land acquisition began for the state government’s ambitious project, of the required 5,200 acres of land for phase II, so far about 4,460 acres have been acquired. The land includes agriculture land, plots and institutional land. The HMDA paid Rs 565 crore as compensation and allotted 5,69,000 sq yards of land to the land losers towards land for land compensation.

Following slump in real estate prices, the land losers, who were hitherto demanding land for land, are now reluctant to take land from the HMDA. The works of 62-km ORR phase-II A from Narsingi to Patancheru and Pedda Amberpet to Shamshabad began in December 2007. They were targeted to becompleted by May 2010. Phase II B works from Patancheru to Pedda Amberpet via Medchal, Shamirpet and Ghatkesar are expected to begin in January 2009. Of the total land required, nearly 2700 acres of land is required for phase II A. Though the works were started a year ago, the HMDA is still to acquire 500 acres of land for the Phase II A. While nearly 200 acres of land are in court cases, another 300 acres are to be acquired in areas like Koheda, Kongera and Srinagar where the farmers are not parting with their land for the ORR. Phase IIB requires 2,500 acres.

The government is yet to take over 240 acres in Shamirpet, Keesara and Korremla areas. Apart from this, the HMDA had acquired about 434 acres land for the ORR phase I from Gachibowli to Shamshabad which was opened to the public a week ago. “If the situation continues like this and the land is not acquired, it will be impossible to complete phase II on time,” an officer said. The farmers are not coming forward since of the total 5,200 acres nearly 3,900 acres are agriculture land. ORR proje

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