Why rents may head up

Ireo Skyon, Gurgaon

Ireo Skyon, Gurgaon

“Higher rents may not be welcomed by renters, but the higher monthly cash flow will bring cheer to investors.”

House price appreciation in the last five years has brought cheer to home owners in most metros. But the rent on the same properties hasn’t kept up with the property value. In fact, rental yields, or the ratio of rent to property values, have actually fallen from five per cent to three per cent over the last decade or so. Renters and owners may both be wondering if rents are expected to stay put, plummet through the floor or shoot through the roof.

While reliable data on house prices is available through sources such as the National Housing Board’s Residex Index, similar long term data does not exist for rents. But data from Savill’s, a global real estate service provider, offers a sense of how low rents are in relation to capital values in India. In Mumbai, buying a new property entails shelling out four times the annual rent, even with rents increasing in the first half of 2012 and prices falling. Similar data for London shows that you can buy property for a single year’s rental value, indicating higher rents relative to price.

Rents — demand-based

Comparing rent to capital cost may lead us to believe that rents move in step with house prices. But that isn’t true. House rent and prices march to different tunes.

One big factor that decides rent in a locality is the demand for rented homes relative to their availability. This is why it becomes important to know the proportion of owner-occupied homes.

Read more: Business Line

Economy

Investment demand reviving: BNP Paribas

Indian economic growth is likely to have edged up in the first quarter of 2013, after having bottomed out in the previous quarter ended December 31, 2012, global financial services major BNP Paribas has said.

In a research note on Indian economy, BNP Paribas said that the surprise upside in industrial production in February and some recovery in exports suggest that the GDP growth should have picked up in Q1 2013.

According to the report, the economy probably touched its bottom in the final three months of 2012 when GDP growth was about 4.5 per cent year-on-year.

“The trend reinforces the sense that investment demand, while still muted, is reviving and the economy probably touched bottom,” the report said.

IIP for the month of February came at 0.6 per cent year-on-year as against the street expectation of marginal decline.

“Indian industrial production surprised to the upside in February, trumping market expectations by almost 2 percentage points. Capital goods production was the prime source of surprise as other segments were weak,” BNP Paribas said.

Read more: Business Line

Inflation may go down further in coming months: Montek

A file photo of Commission’s Deputy Chairman Montek Singh Ahluwalia.

With inflation declining to below 6 per cent in March after over three years, Planning Commission today exuded confidence that the price situation would improve further in the coming months.

“The fact that this is the first time (in over 3 years) it is below 6 per cent, is very important and I hope that we will continue to see that often”, Commission’s Deputy Chairman Montek Singh Ahluwalia told reporters here.

Declining price of vegetables pulled down inflation to 5.96 per cent in March.

Inflation based on the Wholesale Price Index (WPI) stood at 6.84 per cent in February. In March, 2012, it was 7.69 per cent. The 5.96 per cent March-end inflation is much lower than Reserve Bank’s projection of 6.8 per cent.

“I have to say that monthly numbers can jump around but it has been our view that in a gradual way inflationary pressure is coming down”, Ahluwalia said.

However, the wholesale inflation for January was revised upwards to 7.31 per cent, from 6.62 per cent as per provisional estimates.

On the revision of January numbers, he said, “These monthly numbers, our systems are not so robust that you don’t get a correction.”

Read more: Business Line

Investment

Gold could continue to be in grips of bears

With investors in coins and bars looking to book profit and the cashing out of the exchange-traded products on the rise, gold could face bear onslaught.

Gold is likely to rule flat and come under pressure in domestic and futures market on Monday as wary investors and customers look at the yellow metal with suspicion.

With investors in coins and bars looking to book profit and the cashing out of the exchange-traded products on the rise, the precious metal could face bear onslaught. Improving prospects for economy will, on the other hand, reduce demand for gold’s haven status.

In early Asian trade at Singapore, spot gold was down marginally at $1,479.80 an ounce, while gold futures maturing in June dropped to $1,482.50.

In the domestic market on Saturday, gold for jewellery (99.5% purity) plunged to Rs 27,880 for 10 gm and pure gold (99.9% purity) to Rs 28,030.

Any marginal movements in the bullion market could also be swayed by currency movements. Any fall in the dollar against the rupee could make imports of commodities such as gold, crude oil and vegetable oils cheaper.

Crude oil heads south on concerns over slow economic growth. Crude oil supply is seen exceeding demand, thus turning bearish.

Read more: Business Line

Silver futures slip below Rs 47K level

Silver prices plunged over 5 per cent to slip below Rs 47,000 per kg level at the futures trade today as speculators indulged in trimming their positions, tracking weak overseas trend.

Besides, a weakening trend at the spot market due to subdued demand has put pressure on the white metal prices.

At the Multi Commodity Exchange, silver for delivery in May, plunged Rs 2,570 or 5.26 per cent to Rs 46,331 per kg after touching a low of Rs 46,079 with a turnover of 2,596 lots.

Similarly, silver for delivery in far-month July nosedived by Rs 2,898 or 5.75 per cent to Rs 46,979 per kg, with a business turnover of 57 lots.

Analysts said a weak trend in global markets, as investors reduced their holdings on hopes that the demand for safe haven assets would decline as the global economy improves, influenced silver futures here.

Meanwhile, in Singapore, the white metal prices tumbled 6.8 per cent to $24.24 an ounce, the lowest level since November 2010.

Source: Business Line

Oil & gas, banking stocks push Sensex up 115 points

The Nifty and the Sensex closed marginally in the green on softening inflation numbers led by banking stocks.

The Nifty closed at 5,568 up 40 points while the Sensex closed at 18,358 up 115 points.

“There are mixed signals for FY14 inflation outlook and monetary policy. Commodity prices are low and its impact on inflation will largely be governed by the movement of currency. Higher current account deficit in Q3FY12 suggests continuation of present monetary policy stance and even some tightening. The decline in the Chinese Q1CY13 GDP growth to 7.7 per cent from 7.9 per cent in Q4CY12 may lead to a softening of commodity prices in India; however, geo-political risks always have its clouds over oil prices” said D K Pant Chief Economist and Head — Public Finance, India Ratings.

FIIs sold equity worth Rs 418 crore while DIIs were net buyers of Rs 297 crore worth of equity.

Banking sector indices on the NSE and the BSE rose about a per cent.

Volatility was up one per cent and the volatility index, India Vix closed at 16.61.

BPCL, Bank of Baroda, ONGC, PNB and SBI were the top five Nifty gainers while Sesa Goa, Dr Reddy, TCS, DLF and Tata Motors were the top losers.

Source: Business Line

Infrastructure

Chidambaram to kick off India investment roadshows in Toronto

Finance Minister, P. Chidambaram, is being accompanied by top Finance Ministry and central bank officials to Canada.

Finance Minister, P. Chidambaram, is being accompanied by top Finance Ministry and central bank officials to Canada.

Finance Minister P. Chidambaram had arrived here yesterday on a two-day visit aimed at attracting Canadian investment in infrastructure sector.

He is being accompanied by top Finance Ministry and central bank officials, official sources said here on Sunday.

The Finance Minister will kick off the India investment roadshows in Toronto today. He has conducted similar roadshows in major global financial hubs that included Japan, Hong Kong, Germany and Singapore.

During the visit, Chidambaram will meet with his counterpart Jim Flaherty, Governor General of Canada David Johnston and other top officials in Ottawa and a team of Canadian CEOs at Canada-India Business Council (C-IBC) and Canadian Council of Chief Executives as well as leaders of some major Canadian pension plans in Toronto, sources said.

Peter Sutherland, President and CEO of Canada-India Business Council, said that there was a need to expedite the signing of Foreign Investment Protection and Promotion Agreement (FIPA).

Read more: Business Line

Gurgaon

Gurgaon may get investments worth Rs.1 lakh crore

A number of industrial projects entailing a total investment of over Rs.1 lakh crore are in pipeline for Gurgaon and its neighbouring districts and are expected to give a major boost to employment and the economic development of the region on completion.

According to the Haryana Industries Department officials, some of the major projects include Lotte (Rs.300 crore); Nestle (Rs.250 crore); Jaquar (Rs.200 crore); Kyo Bearing (Rs.500 crore); Fujitsu (Rs.185 crore); Kerry (Rs.100 crore); SJN Cylinder (Rs.150 crore); Denso (Rs.500 crore); Panasonic (Rs.1,200 crore) and Reliance Retail (Rs.500 crore).

Besides, an investment to the tune of Rs.21,000 crore is expected to be made by more than 4,150 entrepreneurs/projects which have been allotted plots by the Haryana State Industrial and Infrastructure Development Corporation. An investment of Rs.5,500 crore is expected from Maruti Suzuki/Suzuki Motorcycles alone.

Read more: The Hindu

Water

Harness rain water, tribunal tells Delhi Metro

Harness rain water, tribunal tells Delhi MetroThe National Green Tribunal (NGT) has issued notice to the Delhi Metro Rail Corporation (DMRC) and six other government agencies for non-compliance of water harvesting on its railway stations in Delhi and NCR towns.

Concerned over depleting ground water in Delhi and in the National Capital Region (NCR) of Ghaziabad, Gurgaon, Noida and Greater Noida, environmentalist Vikrant Tongad approached the National Green Tribunal seeking directions to Delhi Metro Rail Corporation Ltd (DMRC) to install rain water harvesting system at all its stations and depots in Delhi and NCR.

On its first hearing April 11, the NGT issued notice to the seven respondents to file their replies by May 6.

The petition states that the average rooftop area of each metro station is approximately 1,000 square metres. There are about 106 stations, where rooftop water harvesting can be installed, which would help collect at least 1.96 crore litres of water each year.

Read more: Daily News

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