Buoyed by the recovery in the real estate sector, realty giant DLF today said it will hire people to sustain growth of the company. The country’s largest realty company had trimmed staff count last fiscal due to the slowdown. “We are a growing company, we will be hiring people. Nothing very unusual about it,” DLF Chairman K P Singh told reporters here on the sidelines of Assocham function. He, however, declined to give details such as the number of people DLF planned to add and the timeline for it.

“Hiring is a process, which always keeps on happening. Some people go and some people come,” he added. In the 2008-09 fiscal, DLF’s headcount was down by 818 people to 2,882 as on March 31, 2009, from 3,700 exactly a year ago, a drop of 22.1 per cent. Singh, last November, courted controversy when he admitted to laying off of staff only to make a U-turn later. Asked if the recovery in the real estate sector has picked up speed, Singh sounded a cautious note. “This is gradual and is happening (but) it is too early to say anything. The recent Reserve Bank policies will have certain effect on this issue but the fact is, this real estate demand growth will commensurate with GDP growth,” he said.

Singh said RBI should not tighten norms further after raising the requirement for banks to keep the money aside while lending to commercial real estate from 0.40 per cent to one per cent on Tuesday. “I hope they don’t tighten up more. Let the growth be stabilised, so far it is not stabilised,” he said. Commenting on sales situation in the sector, Singh said: “It is a slow growth. It is a gradual growth. I don’t think it is going to jump very suddenly.” He also said prices are expected to rise. “When market grows, the prices also tend to grow. But generally we don’t do for the heck of doing it.”

City-based real estate firm Orbit Corporation has posted an 82% growth in consolidated quarterly profit on 91% rise in sales. The company’s net profit in the September quarter went up to Rs 25 crore from Rs 14 crore in the year-ago period while total income rose to Rs 141.9 crore. Orbit Corporation said it sold 62,650 sq ft in the July-September period as against only 9,599 sq ft in the same period last year, a whopping 550% increase.

The company in a statement to BSE also said that the real estate prices have moved up by around 10-15% in the quarter. The company, which has a major presence in redevelopment activities in Mumbai, said it is looking to increase its footprint in the city.

A recent survey conducted in Indian metros and tier-II cities has revealed that buyers in Ahmedabad will purchase the most property in the country, out of the maximum home-seekers across India, in the coming year. According to the survey, 80% of those who responded will be buying homes by the end of 2009, against the national average of 72% for property seekers. The corresponding figures for the other cities in the study were between 62% and 76%.

The survey was conducted by makaan.com, an online portal, in October and saw participation from more than 3,800 property seekers and 312 leading developers from seven metros and tier-II cities - Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Mumbai and Pune. A majority of the respondents were between 26 and 35 years of age. According to officials of makaan.com, the real estate market in India traditionally sees a surge in property buying and selling at the beginning of Diwali. Real estate developers introduce the most attractive offers at this time, and property seekers keep a lookout for these. But considering that the last one year saw property prices undergoing various levels of correction, would developers continue to have these offers this season is the question.

Called ‘Festive Reality’, the study analysed and highlighted the expectations of property seekers and what developers have to offer this year. “Ahmedabad is one such city, rather the only one that has the advantage of safety and peace compared to other cities of India. Also, with the kind of industries and educational institutions coming up in and around the city, the prospects for home buyers are very bright,” said Kishor Dedhia, MD, Space Management Ltd. Many corporate firms are also entering or planning to establish their presence in Gujarat, with Ahmedabad being the preferred city. This will drastically increase the requirement of homes, Dedhia said.

The survey said that developers in Ahmedabad and Pune expect a greater rise in property transactions. Good infrastructure and strong governance are the two main factors luring outsiders to settle in Ahmedabad. Also, the property prices in Ahmedabad are lower that those in other big cities and metros, which is an advantage for both developers and prospective buyers, said Mukesh Seth, chairman, Gujarat chapter, Confederation of Real Estate Developers’ Associations of India.

Emaar Properties, the largest developer in the region, has reported a net operating profit for the 3rd quarter at Dh.655m, which is 48 percent higher than that of second quarter operating profit of Dh.442m.
According to Emaar, the increase in profits have been due to scheduled handover of Alma townhomes in Arabian Ranches during the third quarter and better returns on some foreign ventures.
Emaar posted a third-quarter net profit of Dh.655mn, an increase by revised net loss of Dh.417mn during the same period last year. Emaar shares closed 0.2 percent higher at Dh.4.61 on Thursday, an increase from a low of Dh.1.77 in March.

The increase in earnings follows a net loss of Dh.1.29bn during the second quarter this year, mostly due to write-down of its business in the US, John Laing Homes, which filed for bankruptcy protection in February this year. Emaar bought the US developer in 2006 for more than one billion dollars.

The Company also switched over to new accounting process in April which books a profit only when completed property is handed over. Emaar recorded net profit of Dh.1.51bn during the third quarter of last year before changing over to new accounting procedure.
The market is also awaiting for conclusion of merger between Emaar, Sama Dubai, Tatweer and Dubai Properties.

Emaar is generating income from its hospitality unit, with the completion of The Address Dubai Mall, a hotel in Downtown Burj Dubai, during third quarter. Meanwhile, the flagship shopping center, the Dubai Mall, which opened last October, has 1000 stores and Emaar Healthcare Group opened its first medical center at Downtown Burj Dubai.

Emaar has also completed several of its overseas ventures, while the others under construction abroad are making good progress.

Emaar will open the Burj Dubai, the world’s tallest tower on 2nd December, which has attributed to the rise in profit to the handover of property at Arabian Ranches.

According to the Chairman of Emaar, Mohamed Alabbar, the focus for first nine months this year has been on project completion and strengthening of customer relationships.

Brazilians are the most optimistic in the world when it comes to their country’s prospects of economic recovery, which will benefit property owners in the country, according to a finance president.

According to News agency ANBA, Salim Taufic Schahin, Arab Brazilian Chamber of Commerce president, speaking at a conference in Turkey said that there is good feeling in the country thanks to investment opportunities which are being presented following recent sporting hosting decisions including winning bids to host the football World Cup in 2014 and the Olympics in 2016.

The president said that the good perception of the country, which is set to boost Brazilian real estate owners as the country continues to pull through the recession, economic analysts have expanded their projections for the GDP of the country, rising from 4.2 per cent to 4.5 per cent. Earlier this estimate stood at just four per cent.

He commented: “Much investment should come and we will have an important flow of capitals and lines of credit opened.”

In what could be good news for Brazilian property investors, a survey undertaken by the WIN Network found that Brazilians had the most positive outlook for the next three months, believing their financial situations will improve in that time and the respondents from the South American country also trusted their government to steer the country through the recession, according to the Guardian.

Foreign and domestic investors are awaiting initial public offerings of large Turkish companies, according to Huseyin Erkan, President of the Istanbul Stock Exchange (IMKB).

Mr. Erkan said that it is the perfect time for initial public offerings. The Privatization Administration should definitely consider making an initial public offering. He noted that it is appealing for foreign investors that Turkey has managed the crisis well and performed admirably.

In a landmark development, the Athens Stock Exchange and the Istanbul Stock Exchange have announced the creation of an index with the 30 largest companies, 15 of the largest and most heavily traded companies from each market. The number of stocks from the banking sector will be limited to four from each market to boost trading in the region’s largest stock markets.

“The GT-30 will certainly add further visibility to both markets, which is a significant contribution at a time when the world markets are gradually recovering from the financial turmoil, said Mr. Erkan.

He commented: “If large companies are offered to the public now, I expect the demand to be high. An initial public offering for one or two medium-size or large-scale companies may take place through the end of the year. The significant initial public offerings are likely to take place in 2010.

In good news for Istanbul property investors, Ali Babacan, Turkey’s State Minister and Deputy Prime Minister, said the vision of the government is to make Istanbul initially a regional and eventually a global finance center. He enumerated those factors as low business running costs, qualified labor force, domestic and regional economic growth potential, and attractive style of living.

Due to the huge FDI inflows, Construction activity is booming in and around Istanbul and along Turkey’s enormous coastline. Buoyed by a supply of quality residential property, a growing retail sector and increases in disposable income and employment opportunities, the demand for property seems set to continue. Istanbul has great investment potential as growing population and economic growth has lead to high price rises in recent years. Also locals are involved in the property market which means there is excellent resell market and exit strategy. So now would be an ideal time to purchase off-plan property in the city.

Impressed by the infrastructure development and synergy between town planning and bylaws in Japan and South Korea, real estate players in the city now believe vertical growth is the solution to the crunch of land in Ahmedabad. Recently, a team of around 120 real estate developers of Gujarat had been on a 10-day tour to Japan and South Korea. The tour was organised by Gujarat chapter of Confederation of Real Estate Developers Association of India (Credai).

The developers were very much impressed by the city development projects undertaken by the governments of the two countries. Unlike the US, Japan and Korea feel severe crunch of land, so they prefer vertical development, said Dushyant Pandya of Vishwanath Group. He also said horizontal development would mean higher prices of land.

“At present, the land prices in the city are no longer affordable for citizens. Though, many say the prices here are still lower than that in Pune or Bangalore, one should not overlook the fact that even the average earning of people here is lower,” he said. Suresh Patel, vice president of Gujarat Institute of Housing and Estate Developers (Gihed), said though Japan is under higher risk of earthquake, the government allows 100-storey buildings. “It makes us wonder why we are not allowed to build 20-25 storey residential complexes in the city,” Patel said.

Almost half of the representatives of the delegations were from Ahmedabad. The delegation visited Osaka, Tokyo and Kyoto in Japan and Seoul in South Korea during the 10-day tour. It had business to business meeting along with having a look at various infrastructure projects there. “Town planning is not only about building houses, it is also about traffic, law and order and civic amenities,” said Jaxay Shah, president of Credai, Gujarat Chapter. He said there must be a perfect blending of development and services. He felt that since the government was about to prepare a plan of Ahmedabad’s development for 10 years, the officials concerned should also visit these countries.

Shah said there was a need to create skilled human resource pool that for providing quality works. He said Credai is planning to set up centres for training of all levels of people involved in real estate sectors. However, the government should help the association with providing adequate land for setting up such centres, he said.

“We want to set up such training centres first in four major cities of the state - Ahmedabad, Vadodara, Surat and Rajkot, and then take it further to small towns,” he said. Shah also stressed the need to develop knowledge back up. “Though the government-run ITIs are running some courses, for real development public-private partnership is a must,” he said.

Developers said property prices were likely to go up after the Reserve Bank of India (RBI) increased the provisioning for commercial real estate. This, they said, would increase the cost of funds. Developers expect up to 75 basis points rise in cost of funds after the central bank increased banks’ provisioning requirement for commercial real estate from 0.40 per cent to 1 per cent. “I think affordable housing will become more expensive as banks will raise rates and credit offtake will slow. Availability of bank funds will become a big issue for developers now. We will bank more on our sales and instead of raising additional funds. We will focus more on internal accruals,” said Sarang Wadhawan, managing director of HDIL, a Mumbai-based developer. “Execution of projects will suffer due to lack of bank funds,” said Wadhawan.

A number of property developers such as DLF, Unitech, HDIL and Lodha, among others, have ventured into affordable housing since the third quarter of the previous financial year to beat the slowdown in property sales. The projects are 25-40 per cent cheaper than market prices and carry margins of 15-20 per cent as against the luxury projects’ margins of over 50 per cent. “It will certainly increase our cost of borrowing. We will consider this increase like any other increase in input cost,” said Bharat Mody, chief financial officer of Akruti City. RBI increased provisioning as it felt that credit flow to commercial real estate had risen sharply and there had been large increases in restructuring of loans by developers. Some top developers of the country such as DLF, Unitech and HDIL have restructured loans worth Rs 10,000 crore after RBI allowed banks to do so.

“The amount of non-food bank credit going to commercial real estate is very small, I believe around 3.7 per cent. However, our decision was prompted by two considerations. First, the rate of growth of credit through CRE has been accelerating at one of the fast rates. Second, we looked at the restructuring done by banks. While the restructured portion at the aggregate level was 4 per cent, it was 14 per cent for the real estate sector. This prompted us to raise the provision requirement for the real estate sector,” RBI Governor D Subbarao said at a press conference in Mumbai today.

Loans to the real estate sector grew 41.5 per cent in the 12 months up to August 28, 2009, to Rs 96,701 crore. On the other hand, total non-bank food credit grew 13.3 per cent in the 12 months up to August 28, 2009, to a total outstanding of Rs 26,23,551 crore. In November last year, RBI had reduced the risk weight on loans for the commercial real estate industry to 100 per cent from 150 per cent and reduced standard asset provisioning requirements to 0.40 per cent. This was after the developers met the finance minister to express concerns over liquidity. Apart from drastic fall in property sales, developers were facing severe liquidity crunch as bank debt and foreign borrowings dried up and domestic stock markets fell sharply.

Analysts said developers would now find it difficult to raise funds. “It will be challenge for developers to get bank debt. Financial closure will become difficult for real estate projects,” said Ambar Maheshwari, director of investments at DTZ, an international property consultant. However, developers say since many of them have restructured debt or reduced their debt levels, the RBI move will have less impact on their existing loan portfolio. “If we go for additional funding, the cost will be higher. It will not have much impact on our existing debt,” said Sunil Malhotra, vice-president, finance, at Omaxe, a New Delhi-based developer.

Bankers also say the RBI move will not lead to any drastic rise in rates. “This (increase in provisioning) may not translate into a sharp rise in lending rates. The interest rates are already low and any small increase can be absorbed,” said a head of treasury with a private bank. A senior State Bank of India official said there could up to 40 basis point rise in interest rate on loans disbursed to builders. This would be done to offset the additional amount that banks would have to set aside for standard real estate assets.

The Dubai Municipality’s latest statement regarding the free-zone status of Jumeirah Lake Towers (JLT) has marred the hopes of several thousands of residents who were under the hope of gaining housing fee exemptions.

According to an official at the Municipality, the status of JLT needs to be clarified by a decree, and that free zone claims by a developer does not imply exemption of housing fee for its residents.

The Head of Housing Fee Section at the Dubai Municipality, Abdullah Hashim, confirmed that JLT is not officially a free zone.

The residents of towers in the ‘mini-Manhattan’ around the man-made lakes by Nakheel have been questioning about housing fee exemption to the developer.

“Although several areas have been claimed to be free zones, they are not free zones. Media reports had stated that the free zone areas are exempt from housing fee, and JLT has been wrongly named as a free zone. But, we never said that, and this has created lot of confusion. None of the buildings there are considered to be part of a free zone,” Hashim said.

He added that municipality is however, waiting for a list which could clearly stipulate the areas designated as free zones. The concerned authorities are likely to come up with such a list shortly.

It is evident that the latest hot spot for real estate Chennai market has been the flourishing Old Mahabalipuram Road (OMR). The place though a suburb is buzzing with activity through out the year being the IT hub of the city. Hence national and international builders aim at this area to start huge and sophisticated projects with contemporary amenities as per the taste of such young professionals. The townships here are high priced even though they are not within city limits.

There are many builders and groups investing thousands of crores in OMR projects at the moment, giving Chennai a new and refreshed look donning luxury apartments with comprehensive state-of-the-art facilities in them. A few of them doing really good are Indus Cityscapes, doing an environment-friendly ‘green’ rupees 125-crore worth project Navalur and the Pacifica Group with a promising 4500 apartments in the township worth rupees thousand crore. There are also the Hiranandani, Lanco and Purvankara groups that have invested hundreds and thousands of crores in their projects on OMR. Mantri builders promise to bring nature and its elements right into your house and make it a serene place to live in, taking you far away from the pollution of the city life and live in harmony. Arihant Heirloom, around 3 kms from Navalur is also ideal, considering that the construction is almost about to be completed too.

The bookings are always open and they sell like hot cakes among IT professionals with class in taste and the affordability for the same. Though the prices started around Rs.2000 per sq ft when these projects took off in 2006 and has grown a lot over Rs.4000 and can reach up to Rs.6000 per sq ft at the moment, it so happens that these townships save them the trouble of commuting from the city to the work place much outside the city, saving their precious time and money, keeping them close to home amidst their really busy around the clock schedules. While the lifestyle provided by such apartments, even when on rentals for the corporates, equal the lifestyle they are used to abroad on-site projects.

There is no doubt that OMR is the in-place for the fast-moving next-generation Chennaites seeking luxury and comfort at their disposal. It is a city by itself, only more convenient, comfortable, serene and a lot more desirable!