A sluggish economic growth rate seems to be directly impacting the growth of new jobs in the country. During the second half of the financial year 2012-13, Ahmedabad, among major cities, registered the highest decline in the new jobs generation-growth, states a latest report from Assocham.
The job scenario for the second half of the financial year 2012-13, reveals that Delhi and National Capital Region (NCR) topped as the job generation center with over 66,000 jobs, followed by Bangalore (over 40,000 jobs), Mumbai (over 35,500 jobs), Chennai (almost 21,000 jobs) and Hyderabad (20930 jobs), to round-up the list of top five employment generating centres in India.
“A total of over 5.38 lakh jobs were generated during the financial year 2012-13 across India, with 2.65 lakh jobs getting generated in first half of the year and 2.73 lakh jobs during second half of the financial year” stated the Assocham report.
Source: Indian Express
A Stable Outlook
In 2013, the availability of debt capital is likely to increase in real estate projects whilst the flow of equity capital will remain more or less stable, according to the JLL Pulse Monthly Real Estate Monitor – March 2013.
As there are additional cuts expected in cash reserve ratio (CRR) and repo rates that will infuse more liquidity into the system, the bid-ask spreads will also decrease, increasing overall transaction volume in 2013, the report says. Cross-border flow of capital will begin to make a gradual comeback in the year ahead. Cap rates for office and retail properties are likely to descend to 10.5% and 11.5% from 11% and 12%, respectively. Investors will focus more on transparency, governance and liquidity before investing.
Given the on-going challenges that the Indian real estate sector faces on these fronts, very few development companies will be successful on the public equity markets. Nevertheless, private equity (PE) deals volumes will increase, and there will be more M&A activity within the PE industry. A number of vintage funds who have invested during 2007-2008 will have to look at exiting in 2013, some of them at low internal rate of return (IRR). Given the overall uncertainties, these funds may look at postponing their exits to 2014.
Read more: The Times of India
Office space absorption to see 68 pc growth
The absorption of office space in suburban locations is expected to increase to 68 per cent this year compared to 60 per cent in 2012, a recent survey by property consultant Jone Lang LaSalle has said.
With the existing commercial business districts saturating, companies planning to expand their operations in the next five years may prefer to shift to suburban locations, the survey added.
“Suburban locations are home to the majority of office real estate occupiers and will have a growing role in determining the performance of the country’s office market,” it said.
By shifting to the location, they will be able to reduce their real estate costs and move into superior quality projects, which are available at lower rents and offer modern amenities, car parking and safety, the survey said.
Last year, the absorption of office space in the country totalled to 26.7 million sq ft, out of which, suburban locations accounted for more than 60 per cent or 16.6 million sq ft.
Read more: Tribune India
Loans could get cheaper by Dec: HDFC Bank’s Puri
Loans for corporates and individuals could become cheaper by about 50-75 basis points by December, HDFC Bank managing director and CEO, Aditya Puri, said on Friday. Speaking at Idea Exchange, Puri explained that the fall in interest rates would be a combination of several factors. As the government starts spending more from next month, the liquidity in the system would improve,which would then lead to a rise in bank deposits and allow banks to pass on rate cuts to customers — right now, with liquidity tight and banks fighting to mop up deposits, there was virtually no scope to lower deposit rates.
“Although, the Reserve Bank of India (RBI) has said that there is little headroom to cut rates; this is based on current factors,” the HDFC Bank chief observed, adding that as the government’s deficit came down, in the new financial year, it would also reduce pressure on rates. Puri believes that the problem today is not so much the poor accretion of deposits but the weak demand for loans. “If a company wants a loan, it can get it,” he said, asserting that for a viable project, there was no shortage of funds.
Read more: Financial Express
Easing infrastructure status rules will boost hospitality sector
The hospitality industry is set to get a major boost. The Government is considering extending the “infrastructure status” to all hotel projects with capital expenditure of Rs 250 crore and above.
The principal benefit of this would be easier access to long-term funding as well as lower interest rates.
The tweaking of eligibility criteria marks a significant relaxation in the current rules that prescribe only three-star or higher category hotels located outside cities with population of more than 10 lakh to be reckoned as infrastructure projects for bank finance.
According to the Federation of Hotel and Restaurant Associations of India (FHRAI), 95 per cent of the hotels were outside the ambit of this provision.
Vivek Nair, President of FHRAI, said that the rules were counter productive. He said that the idea of lobbying for infrastructure status was that it should benefit capital intensive hotels. These hotels would get the benefit of 15-year loans and avail themselves of infrastructure bonds issued by IIFCL and IDFC, he said. He expected a notification to this effect to come up in the next two months.
This will benefit hotel projects not just in rural areas but across the country as long as the project size is Rs 250 crore, he added.
Read more: Business Line
PPPs will remain essential
Between 2007 and 2012, $225 billion was invested by the private sector in infrastructure, much of it through public private partnerships. According to official figures, 758 PPPs, worth $70 billion, are under way or complete. These are contracted at both the central and state level and often involve multiple public bodies.
The popular view of the private sector’s role in infrastructure development is undergoing a transition. This is evident from the woes of several key PPPs.
The Delhi Metro Express, connecting the airport to the city, has been a financial strain to its operator and was kept shut for long. Tata’s huge new power plant is facing trouble due to soaring coal costs, prompting Tata to take a write-off on one of its biggest investments.
What went wrong? During the boom period, firms bid too much for the right to build roads and levy tolls on new projects. Many electricity generation firms wrongly assumed they could get cheap fuel from the state-run coal and gas monopolies. Red-tapism has meant that only one-fourth of all projects are on schedule.
Read more: Financial Express
RBI eases lending norms for infrastructure projects, but banks bigger beneficiaries in short-term
Till about two weeks ago, banks had no option but to treat a personal loan of a few lakhs and a Rs 300-crore loan for a major road project the same way. Both were ‘unsecured’ â€” there was no collateral against those loans, and this meant higher interest rates for the borrower and more onerous restrictions on the bank as well, in terms of how to account for them.
On the same day that the Reserve Bank of India (RBI) made its much-awaited move of cutting short-term rates by 0.25 percentage points, it issued a far less widely-noticed remark in a notification. In the long run though, it is this notification that could have a bigger and more long-lasting effect on growth. In its notification, the RBI allowed borrowers to treat the debt of infrastructure projects set up under public-private partnerships (PPPs) as secured.
Read more: The Economic Times