Who Bought The Real Estate Fall ?

It makes perfect sense to go bargain hunting, especially in the Indian Realty space which corrected more than any other industry vertical in the recent crash. Here is the data on who bought into recent the fall.

• Pan Atlantic in Sobha Developers $10 mn invstment in SPV developing residential project in Bangalore
• LTG International pumped $12 mn in Subsidiary of Prozone Enterprises, Provogue's real estate arm
• Samara Capital invested $12 mn in Shriram Land Development
• Kotak Realty Fund & Sun- Apollo Ventures bought 50% stake in Janapriya Projects and 65% stake in Janapriya Townships respectively. Funding details was not disclosed.
• AIG Global Real Estate pumped into 8.5 mn sft Velankani Tech Park which is a notified IT SEZ in Sriperumbudur, Chennai
• Orient Global bought 1.2% stake in HDIL through the stock market route

Stay tuned for Red Hot updates on the Indian realty sector.

AIM Listed India Realty Funds in Trouble

Indian Realty developers moved to London Stock Exchange's AIM offering part of their Realty cake. Investors bought these funds as if there was no tomorrow and now these scrips are quoting at deep discount to NAVs.

• Unitech Corporate Park is trading at 75% discount to its NAV
• K Raheja's Ishaan Real Estate is quoting at 65% to NAV
• Hiranandani promoted Hirco is quoting at 80% discount to its NAV

Laxey Partners one of the main shareholders in Hirco is asking promoters to Buy-back shares and bridge the difference. In some cases investors are asking companies to liquidate their portfolios / land holdings and BUY-back the shares.

Neerav Investments - Niraj and Ravi Raheja's investment arm has picked up 35% stake in Ishaan Real Estate.

It is time to go and pick up Realty from distressed Sellers if you believe in Realty or want your Dream House.

Kolkatta Property Market Review

In the residential sector, prices are stagnating at Rs2,500-3,000, while resale prices are down 15-20%; volumes are end-user-driven and are down 30-40% and the pace of pre-sales slowed sharply in Aug-Sep 08. Most projects are running 6-12 months behind schedule, and Phase-II time-lines are being pushed back on demand slowdown.

Demand for IT and non-IT space has cooled off over the past 2-3mnts, following the Singur episode and downturn in global markets. Rentals are holding at Rs32-38/sqft for IT Parks and Rs38-42/sqft for IT SEZs, but absorption has fallen significantly. Most retail malls have been put on the slow track.

Land Prices Correct Sharply: Post the exit of the Tatas from Singur, land prices in peripheral areas have corrected sharply from 10-20 mn/acre to less than 3mn / acre. But prices in key development zones like Rajarhat are holding at Rs120m/acre, though transactions are down.

DLF Residential project of ~800 units was sold-out shortly after launch at Rs3200/sqft; construction started in Jun 08, exploring more launches but nothing immediately in the pipeline.

Unitech's Uniworld City, the company's flagship project of ~3500 units, has seen sales of ~2200 at an average of Rs3,000 - resale prices are down 12-15%; fresh sales have, however, slowed to mere 25 units vs. ~60 units 6 months back. Additionally, cash starved Unitech has delayed construction by 6-8 months. Kona Gateway project launched a year back has seen significant delays, sales and prices have stagnated; management expect s construction to commence shortly. Phase-I construction of row house at houses at Kolkatta West International City, Howrah is underway.

Residential - Buy 1 Get 1 Free

We have been shouting at the top of our voice how unrealistic residential real estate prices were. Developers have now launched BUY One House and Get One Free.

Cosmos Prime Projects Developers has launched the scheme in Mumbai for its projects in Thane. The Advertisement sent to us says,

With the Purchase of a Bungalow of a 2 BHK, a 1 BHK comes FREE, While with a 2 BHK Flat, a 1 Room Kitchen is FREE.

You can view the entire scanned copy of the advertisement here. Let realty prices crash and get a little bit REAL.

Incentives Offered by Real Estate Developers

Our Analyst tracking the Realty players is filing this report about various freebies and incentives offered by Developers across India.

• DLF Free gold coin on booking of 3-Bedroom apartment
• Unitech Free LCD TV on every booking
• Pal Infrastructure Free jewellery up to Rs100,000 & more than 6% discount on booking of flat at Gurgaon
• SVP Free 50g Gold Coin on booking of apartment in Ghaziabad
• Jaypee Greens Free Economy/Luxury car with every apartment
• Mapsko Free Economy/Luxury car with a flat/villa
• Tulip Free Solitaire Diamond worth Rs125,000
• Gaursons Rs100,000 off on all spot bookings
• Dhingra Developers Free 32" Plazma TV on booking of flat

However, we recommend First and New Home Buyers to squeeze the cash strapped developer and straight away negotiate for at least 25% discount.

India Realty Stocks - New Low

The Indian Realty Stocks representing the Absurd Builders and Developers have hit a new low as nobody wants to own them anymore. Here is how UGLY they look like.
We have been Realty Bears ever since these Developers started sucking blood of innocent and hard working middle class Indians.

Home Loan Customers Default at Vijaya Bank

Vijaya Bank has just a while ago informed in a flash to the BSE that it is witnessing increased defaults in Home Loans due to rising EMIs. The NPAs of Vijaya Bank in the second quarter jumped 131% to Rs 268 crore, against Rs 116 crore in the same period last year.

Retail loan portfolio is 25% of Vijaya Bank's books at Rs 9,000 crore. The Bank has said that it will continue to lend but very cautiously and try to negotiate with defaulters to make them regular customers.

Which Bank of Financial institution is next in the Queue ? ICICI or SBI ?

Realtors Face Downgrade - CRISIL

Before fingers can be pointed out at rating agency after the company collapses, CRISIL is playing safe and is set to downgrade all the Indian Realtors who are debt trapped and facing severe liquidity crunch.

Developers today have few options in terms of financing. Either they have to slow down construction or reduce property prices to catalyze demand. Crisil has assigned non-investment grade ratings to some of the developers, indicating weak financial profile of these companies.

In a related development, lenders - Banks and financial Institutions are constinuously mounting pressure on Developers to price the properties lower and SELL-off before its too late. Baanks are fearing defaults on interest payments in this quarter and hence are meeting the managements of various Realty companies on weekly basis. Banks have also asked the Realty companies to get their Land Bank re-valued due to the correction in prices as most of them are holding them as co-laterals.

Developers such as Parsvnath, Unitech, HDIL, Omaxe, Orbit Corporation, Sobha Developers etc have borrowed aggressively to support their unrealistic realty plans which are likely to come crashing very soon.