Demand Pick Up may Boost Realty prices<http://news.indianpropertyreview.com/> <http://fusion.google.com/add?source=atgs&feedurl=http://feeds.feedburner.com/IndianPropertyReview> ------------------------------
- Demand Pick Up may Boost Realty prices<https://mail.google.com/mail/?ui=2&view=js&name=js&ver=-avVHOlK8rk.en.&am=!JezeveXP3KC5ZZny0fM6Qo921SLV1VCin1MReTBPyA8pFrw#126db61d396065a4_1> - Incomplete Projects Creating Problems for Unitech<https://mail.google.com/mail/?ui=2&view=js&name=js&ver=-avVHOlK8rk.en.&am=!JezeveXP3KC5ZZny0fM6Qo921SLV1VCin1MReTBPyA8pFrw#126db61d396065a4_2> - Realty Estate Sector Witnessing Labour Shortage<https://mail.google.com/mail/?ui=2&view=js&name=js&ver=-avVHOlK8rk.en.&am=!JezeveXP3KC5ZZny0fM6Qo921SLV1VCin1MReTBPyA8pFrw#126db61d396065a4_3> Demand Pick Up may Boost Realty prices<http://feedproxy.google.com/~r/IndianPropertyReview/~3/wDOXtrb9Xks/?utm_source=feedburner&utm_medium=email> Posted: 17 Feb 2010 01:15 AM PST <https://feedads.g.doubleclick.net/~a/MzNJbS5jRdpBetgJ1pC82e4PwzU/S63kS2cJkHV0nX0QJeLzfgBvh0Y/0/pa> <https://feedads.g.doubleclick.net/~a/MzNJbS5jRdpBetgJ1pC82e4PwzU/S63kS2cJkHV0nX0QJeLzfgBvh0Y/1/pa> [image: up-arrow]Home prices may remain firm or inch up slightly in metros such as Delhi and Mumbai and their suburbs despite an expected rise in interest rates as demand picks up once again on the back of renewed activity on the employment front, bankers and realty players that ET spoke to said. However, they felt that prices at extended suburbs — such as Greater Noida and Manesar near Delhi and Navi Mumbai, along with tier-II and tier-III townships — will remain under pressure due to over supply of housing, lack of connectivity and paucity of jobs in such locations. The residential demand is not just the function of the interest rate, said Keki Mistry, vice-chairman and managing director of HDFC, the largest home-loan player in the country. “The demand is primarily driven by job creation and job confidence. When any individual buys a home, he or she enters into a long-term payment obligation. Therefore, buyers need to have confidence of retaining their jobs,” he said. The late-2008 and early-2009 realty crash was largely thanks to the fear of impending job loss in light of the financial slowdown, Mr Mistry said. “Given the robust industrial growth rate, it is apparent that jobs will be created and there would not be any scepticism on protecting jobs. This in turn would continue to fuel demand for homes,” he said. Niranjan Hiranandani, a leading Mumbai-based developer, said demand for residential segment is likely to increase by a compounded annual growth rate of 30% over the next five years. His caveat was that in between this period, there could be a marginal slowdown in demand. “But in the long-term, growth story is intact,” he said. “Prices in metros, which primarily constitute the premium segment, continue to strengthen further as there is hardly any fresh supply such as in Delhi or very limited supply like in Mumbai,” said Amit Bhagat, managing partners in ASK Private Equity Fund. “In suburbs and extended suburbs, the prices are more a function of location, supply and job creation. The current trend indicates that prices will remain firm or even rise marginally,” said Mr Bhagat. “However, in tier-II and tier-III cities, besides extended suburbs such as Greater Noida and Manesar, there will be pressure on pricing,” he added. “Prices have already started firming up for the past couple of months,” said Rajiv Talwar, executive director DLF, the largest developer in the country. “However, the prices are yet to reach the peak level of 2007. The current prices are 10-20% from the lower end of 2008 or early 2009. Given the supply, particularly in the mass market, it is unlikely that prices will come to the 2007 level,” he added. Real estate was one of the worst-affected sectors in the global downturn as buyers kept away from the market and banks became skittish about lending. However, last year banks introduced teaser home loans to boost demand for housing in a slowing economy. They started offering home loans at very low interest, some even as low as 8.25%, much below their prime lending rate (PLR). However, the Reserve Bank of India has asked banks to withdraw teaser loans (lower interest rate for the first two years and subsequently increased it at floating rates) from April and has already increased the cash reserve ratio (CRR) by 75 basis point, thereby absorbing Rs 36,000 crore of excess liquidity from the banking system. CRR is the minimum liquid assets banks need to park with the central bank. Developers and lenders feel that RBI move will impact the sector. The hike in CRR is set to increase interest cost for developers. A senior executive with a bank said that after the RBI announcement, one of the leading developers was finding it difficult to raise two-year loan at 10% and three-year loan at 10.5%. “There is a clear sign that interest rate for the developers will increase,” he added, requesting anonymity. The rise in the home loan rate will put pressure on middle-class consumers who are aspiring to buy homes, said Mr Talwar. Following the robust industrial growth of 16.8% in December, it is apparent that more jobs will be created, which will also result into more demand for commercial assets, said Mr Hiranandani. Incomplete Projects Creating Problems for Unitech<http://feedproxy.google.com/~r/IndianPropertyReview/~3/vpzVVtYaLA8/?utm_source=feedburner&utm_medium=email> Posted: 17 Feb 2010 12:08 AM PST <https://feedads.g.doubleclick.net/~a/MzNJbS5jRdpBetgJ1pC82e4PwzU/lNhMp_BOlS3_d4hPCyZgUv88psI/0/pa> <https://feedads.g.doubleclick.net/~a/MzNJbS5jRdpBetgJ1pC82e4PwzU/lNhMp_BOlS3_d4hPCyZgUv88psI/1/pa> [image: incomplete house]Developer Unitech’s Rs 2,022 crore inflow from sale of part stake in the telecom business will bring down its debt, but it may not be time yet for investors to grab the stock as the company may still not be out of the woods. The country’s second largest real estate company has to scale up its execution capability as it launched more projects to catch the affordable housing frenzy that may keep pressuring its profit margins for quarters to come. It already has its hands full with incomplete projects which substantially brought down margins last quarter. And the spectre of higher interest rates and the possible demand erosion because of a steep rise in real estate prices in the past few months may add to the woes. The Rs 2,022 crore from Telenor will help the company bring down its Rs 6,200 crore debt and its current debt to equity ratio of 0.55x. Its nine months earnings per share in December 2009 was Rs 2.25, down from Rs 5.66 a year earlier. Unitech aims to accelerate completion of its ongoing projects to boost earnings. But here again, it has missed the scheduled delivery of its past projects of 17 million (m) sq feet, which it now plans to complete by end- FY11. Its operating profit in December 2009 quarter fell by 26 percentage points despite a 58% y-o-y growth in sales at Rs 778 crore. In the nine months to December 2009, Unitech launched 24.42 m sq feet, which is equivalent to its 2007 launches when the real estate boom was at its peak. Of this, 13 m sq feet have been booked by customers which may bring it a revenue of Rs 5,550 crore over four years. Although Unitech aims to go beyond its comfort zone of Gurgaon near New Delhi to spread the risk of concentration, it may take time as it is not so strong financially. Nearly 47% of projects under construction is in Gurgaon. Its expansion includes Bhopal, Kolkata, and Chennai. Mumbai, with 42m sq feet of saleable area is the second biggest after Gurgaon. It has done Rs 1,500 crore of bookings in Mumbai through sale of premium and residential housing as well as commercial projects. The debt may be going down through these fund raisings, but the catch lies on from where Unitech will get the funds for building all the projects that it has announced. The challenge for the management is to show that it can execute on time without running into delays as in the past. At an annualised EPS of Rs 2.97 and at the current market price of Rs 74.7, Unitech is trading at 25 times its FY10 earnings, which is lower than its peer DLF that is trading at a P/E of 26x. On a net asset value basis also, the stock is trading at a discount, yet investors may be better off waiting for one more quarter to see the progress on project execution. If the company ramps up its execution, it will act as a key driver for the stock. Realty Estate Sector Witnessing Labour Shortage<http://feedproxy.google.com/~r/IndianPropertyReview/~3/6jaTkVF_fSg/?utm_source=feedburner&utm_medium=email> Posted: 16 Feb 2010 03:06 AM PST <https://feedads.g.doubleclick.net/~a/MzNJbS5jRdpBetgJ1pC82e4PwzU/ISbmT5BJnTu0R4REdMfjEkDqL2c/0/pa> <https://feedads.g.doubleclick.net/~a/MzNJbS5jRdpBetgJ1pC82e4PwzU/ISbmT5BJnTu0R4REdMfjEkDqL2c/1/pa> [image: construction-work]Real estate firms are feeling the pinch of skilled and unskilled labour shortage as infrastructure growth picks up and workers get tapped by retail and other service-oriented industries. Cost of acquiring and retaining talent is going up too. “Delays are high in finishing stage. Shortages of carpenters, painters and electricians are even more severe than masons. It is inevitable that there will be delays in project completion unless the shortfall in these skills is overcome,” said Aroon Raman, vice-chairman of CII-Karnataka & MD of Raman Fibre. Mr Raman says the infrastructure industry right now employs 30 million workers of which 50% are in real estate. In Bangalore alone, the shortfall in people with slightly more advanced skills in the real estate segment including infrastructure creation and minor repair and maintenance projects — both residential and commercial — is expected to be of the order of 50,000 workers. A World Bank study also says that India is staring at a labour crisis in the construction sector. The supply of skilled and semi-skilled workers will barely keep up with the pace of growth and will fall short by 18-28% under medium growth scenario. However, under a high-growth scenario, the shortage will be to the tune of 55-64% over the next eight years. To boot, contractors are finding it difficult to hire even migrant labourers for projects. “There is problem sourcing people, as these workers are migratory. It has become difficult to retain people too,” said Solomon JP, CEO, LabourNet, a firm that aims at improving earning opportunities of workers in the unorganised sector. And shortage of labourers has hit the construction industry at a time when real estate business is on a rebound. Mr Solomon says the shortage is forcing contractors to pull out workers from one site and park them in another. LabourNet has 20,000 blue-collar workers, majority of whom are employed in the real estate sector. Most of the skilled and unskilled labourers come from Tamil Nadu, Orissa, Rajasthan, Uttar Pradesh, West Bengal and Bihar and North Karnataka. “Demand surge has consistently outstripped supply. Companies are taking certified people on contract. It is difficult to find skilled workers,” said Rajesh AR, vice-president of Bangalore-based staffing firm, TeamLease Services. To retain talent, builders are loosening their purse strings, upgrading technology, offering joining and retention bonuses, salary payments in advance, bringing labourers from rural areas and providing them accommodation and crèche facilities in the city. The wages have increased by 20% year-on-year. For example, Chartered Housing has taken a small number of electricians, carpenters and plumbers on its payroll and has also set up a team of in-house project management consultants to mitigate these problems, said Balakrishna Hegde, MD, Chartered Housing. The firm has six projects under execution. “Labour will become biggest constraint going ahead. Adopting new technology is the only way to eliminate labour shortage,” said Ravi Ramu, director, Puravankara Projects. The firm has adopted technology where it can complete a single floor in six days and reduce manpower requirements. Sobha Developers too has set up a skill training institute for blue-collar workers. “Significant spurt in the construction activity is leading to shortage of workers. We train people who are PUC-qualified in our academy for a month and onsite for two months. And we retain most of our workers by offering regular increments,” said JC Sharma, MD, Sobha Developers. The firm, currently, has 11,000 workers onsite and will require an additional 6,500 with new projects coming up. Nitesh Estate has tied up with multiple contractors to tide over labour shortage. “Shortage of construction workers is an inherent predicament in our industry. It is difficult to hold workers as they are migratory in nature and shuttle between jobs, said a spokesperson. Staffing firms Adecco and TeamLease have also moved in to ameliorate the crisis. “Companies are looking at migrant labour from industrially backward states to fight the shortage,” said Sudhakar Balakrishnan, managing director, Adecco India. Adecco and TeamLease currently have 7,000 and 8,000 blue-collar temps, respectively, on their payrolls across different industries. You are subscribed to email updates from Indian Property Review<http://news.indianpropertyreview.com/> To stop receiving these emails, you may unsubscribe now<http://feedburner.google.com/fb/a/mailunsubscribe?k=MzNJbS5jRdpBetgJ1pC82e4PwzU> . Email delivery powered by Google Google Inc., 20 West Kinzie, Chicago IL USA 60610 -- Dubai Properties Google Group is managed by: Farzad Mohammad / Senior Investment Adviser, Mob:0098 912 213 3890_moderator....@gmail.com You received this message because you are subscribed to the Google Groups "Dubai-properties" group. To post to this group, send email to Dubai-propertie@googlegroups.com To unsubscribe from this group, send email to dubai-propertie-unsubscr...@googlegroups.com For more options, visit this group at http://groups.google.com/group/Dubai-propertie?hl=en
