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Real Estate Sector

REALTY BACK ON POSITIVE INVESTOR SENTIMENT
Timsy Jaipuria, New Delhi
The Pioneer

A reason why the sector is back is – the rise in demand due to investors’ sentiments turning positive. “In the last one year the real estate sector has witnessed a rise in demand after recovering from recession. Further, we are hopeful that the industry will grow to new level of excellence. People have started investing in real estate again. The demand for residential projects has already started looking up. Majority of this growth is witnessed in the organised sector,” says Omaxe CMD Rohtas Goel.

Analysing closely, developers think what is boosting the demand, is actually the prices, as they haven’t touched the peak of 2007. “End-users and PSU sector are moving to the builders to buy property as the competitive market rates are very reasonable,” Gaur City Director, Sanjay Rastogi opines.

Apart from the rise in the demand, right time of project delivery is also another reason of it. “It is very necessary for a developer to provide its project at the right time. Nowadays every developer is aiming at the timing of the project delivery, which actually adds to the credential of a developer”, says Raheja developers CMD, Navin Raheja.

Real estate analysts also see it in the same perspective. “ There is a definite boom in the real estate sector due to culmination of a host of factors such as growing incomes, nuclear families, easy banking, better jobs, increase in trend of urban population, etc. In addition to this, an investor friendly environment also adds to this. There is also a paradigm shift observed in the real estate industry from the seller’s perspective to the buyer’s perspective. Today there is a need to design the products as per the requirements of the buyer’s,” says a real estate analyst.

Policy

TWIN CHALLENGE IN STORE FOR REAL ESTATE DEMAND
Vidya Bala
The Hindu Business Line

At a time when the real estate sector is hobbling back to normalcy, the central bank’s move to increase risk weights and asset provisioning for home loans may come as a dampener.

Of the three key areas in which the RBI has tightened real estate norms, the first is the ceiling for loan-to-value (LTV) ratio at 80 per cent. In other words, banks cannot lend more than 80 per cent of the value of the property as loan. This may not have a material impact on realty players.

This change is therefore unlikely to hurt property demand in a significant way.

Second factor is the increase in risk weights of home loans above Rs 75 lakh. Higher risk weights could translate into higher cost of loans in this category. Such a hike can upset demand in certain metros such as Mumbai and Delhi where the average cost of a property is high.

The third factor is the move to curb teaser loans by increasing the standard asset provisioning by banks for such loans to 2 per cent. This requires banks to set aside a higher sum as provisioning for loans where they offer short-term attractive rates.

If banks choose to curb teaser products as a result of this change, there is a risk of demand moderating, as the revival in demand in the residential segment in recent times has been driven by these fixed-flexi loans.

Information Technology Sector

EUROPEAN LAWMAKERS BAT FOR OUTSOURCING TO INDIA
The Economic Times

BANGALORE: Unlike US President Barack Obama , European lawmakers find outsourcing jobs , products or services to India mutually beneficial, creating a win-win situation.

“Outsourcing is now seen more as a partnership than losing jobs. Success of Volkswagen cars in India provides more opportunities for our firms back home in a big way,” European parliament member Barbera Weiler said here Wednesday.

Noting that the Indian IT industry had expertise in automation and was using information and communication technology (ICT) in the administration productively, Weiler said such domain knowledge would be of immense help to some of the European countries lagging behind in e-governance.

Echoing Weiler, British lawmaker Malcom Harbour said that outsourcing helped the EU countries in product engineering and design. “The whole process has matured and aerospace majors such as Airbus and EADS (European Aeronautic and Defence Space) are doing product engineering and design work using local skills in India,” Harbour pointed out.

PANCHKULA IT PARK FINALLY SETS SAIL
Preeti Parashar, Chandigarh
The Financial Express

Three years after its launch in 2007, Panchkula IT park is set to see some activity with the companies rolling out construction of its first phase. Around seven companies that were allotted plots, ranging between one to 10 acre and even smaller plots, have already submitted their building plans with the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC). Sources in HSIIDC said that some plans have already been approved and the companies are ready to begin construction.

Though IT bigwigs like Infosys, Tech Mahindra, Wipro etc had evinced little or no interest in setting up their campuses at the Panchkula IT park, about 22 plots were allotted to medium and small IT companies in May 2008. The first phase of the park will be spread over 75 acre. The proposed investment by the companies is estimated at Rs 1,100 crore with direct employment potential for about 50,000 trained professionals and an equal number of avenues for indirect employment.

Infrastructure: Greater Noida Metro

G NOIDA METRO PROJECT TO COST RS 5,000 CRORE
Purusharth Aradhak, New Delhi/Greater Noida
The Pioneer

Metro is all set to knock at the doors of Greater Noida. The Detailed Project Report (DPR) is ready and final survey will be conducted in January 2011 and work on the stretch will start in March 2011.

According to Greater Noida Authority CEO Rama Raman, all exercises pertaining to the Metro project have been completed. The DPR has been finalised and according to it the tentative cost of the project is Rs 5,000 crore. “If everything goes well, in March we will call tenders for the construction and after finalising the contractors, work will start,” Raman added.

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