The real estate scenario in Delhi and the National Capital Region is witnessing a stage of transition. Posting a recovery after the economic debacle that affected even the G-8 countries, it is presently showing signs of growth. There is therefore, a sudden spurt in the real estate markets of Delhi and NCR. There has been a number of transactions in the latter half of last year in comparison to the first half.
Therefore, there has been a rise in the real estate prices in the recent years and this has been highly affected the buyers in Delhi. Owing to the state of saturation that Delhi has attained, there is a huge dearth of vacant properties in Delhi. Delhi is presently witnessing a buyer polarization to the suburban areas.
The rush to the suburbs
There have been new projects that are coming up in the suburban areas of Delhi like Noida and Gurgaon. Gurgaon has always been the hallmark of planning and efficacy. This is among the very few cities in the country where development has been carried forward in a planned manner.
Gurgaon is the one of those few locations in India where there was sufficient real estate activity even during the slump. Investors therefore are well advised to look into properties in Gurgaon with long term gains in view. This is the one location where the investment that been made in the real estate sector does not go foul.
Read more: Silicon India
Post recent govt moves, where is the Re headed?
The rupee breached the low of 61.21 this week and touched 61.80, a record low. This, despite all measures taken by the central bank and other regulators to contain the surging rupee.
The rupee’s outlook for the near future looks bleak and it will not be surprising to see the rupee trade in the 65-70 levels in the coming months.
There are definite reasons for the rupee to trade around these levels (although we might see some corrections in the near-term). India is a net importer i.e. India’s import bill is always higher than its exports bill resulting in higher current account deficit (CAD) and this has resulted from cumulative action over the last few years. There is no short-term solution to contain CAD and its correction is going to take a couple of years if we start taking measures from now.
Apart from high CAD, another important factor looming ahead is repayment of India’s external debt which is close to $ 390 billion out of which almost 44 per cent or $172 billion is scheduled for repayment or maturity by March 2014. Repaying this external debt will result in more demand for the dollar and will thus weaken the rupee further to the levels mentioned above. Let’s assume that the Government and corporates who have piled up huge external debt are successful in postponing few of them. Even then quite a large portion of the $172-billion has to be repaid by March 2014. This will definitely create huge pressure on the rupee.
The Reserve Bank of India (RBI) has done almost everything that it could do to curb volatility and squeeze liquidity, even hurting the economic growth of the country just to contain the rupee. Currently there is not much ammunition left with RBI to contain the rupee’s slide due to limited forex reserves.
Read more: Business Line
Real estate Bill introduced in RS today
The real estate industry came a step closer to have a sectoral regulator with the introduction of the Real Estate (Regulation and Development) Bill in the Rajya Sabha on Wednesday by Minister of Housing and Urban Poverty Alleviation Girija Vyas.
Soon after its introduction, the Bill was referred to the parliamentary standing committee on urban development for reviewing and making suggestions, a government statement said.
The realty sector has been away from any sort of regulation till now. This is one of the reasons the industry has been opposing the Bill in its current form, which has proposed stricter penalties and even jail term for a maximum of three years for developers failing to comply with contracts .
The Cabinet in June had cleared the Bill, aiming at providing regulation in the sector, besides protecting buyers from erring developers and usher in an era of transparency. That time, Ajay Maken was the housing minister.
The Bill assumes importance in the wake of rising consumer complaints against developers for delaying projects by over four-five years, with no mechanism to curb the delays. On the contrary, if a buyer defaults on payment, he has to pay high interests while developers escape through loopholes in the sale agreements.
Read more: Business Standard
UK-India Business Centre ready for Gurgaon launch
The first UK-India Business Centre to facilitate British business entry and expansion in India is all set for its launch in Gurgaon next month.
The centres, with an initial investment of 1 million pound, form part of a global UK government initiative to strengthen British business networks in 20 overseas markets.
The creation of a pan-India network is being led by the UK India Business Council (UKIBC) with the aim of providing Britain’s small and medium enterprises (SMEs) a platform in the country.
“The centres, starting with Gurgaon, will provide a soft landing and incubation centre for British SMEs to access the Indian market.
“It can be quite a challenging process if you are an outsider and what we are going to do in India is to provide a service that is practical and useful,” said Richard McCallum, the managing director of UKIBC India Private Limited, who is spearheading the launch planned for September 19.
As the first centre of its kind, the Gurgaon hub will set the template for other such bases around the country. It will take a sector-specific approach to business activities and focus on three particular segments to begin with – advanced engineering and manufacturing, healthcare and life-sciences, and skills and education.
Read more: The Economic Times
Changed FDI housing norms to attract mid-level developers
The government has proposed easier guidelines for allowing 100% foreign direct investment (FDI) in real estate, hoping to attract mid-level overseas developers to invest in the country.
The housing and urban poverty alleviation ministry has sent revised policy guidelines for FDI in the real estate sector to the department of industrial policy and promotion, a top official in the ministry said.
“These are likely to be passed soon and have been sent by the minister (Girija Vyas) herself,” said the official, who did not wish to be identified.
The ministry has proposed reducing the minimum carpet area to be built in FDI-linked real estate projects to 20,000 square meters from its earlier requirement of 50,000 sq. m.
“We have proposed this because EIA (environment impact assessment) clearance is not required for a built-up area of 20,000 sq. m,” the ministry official said.
Also, such projects will not be restricted to metro cities such as Delhi and Mumbai; all class 1 cities having a population of more than 100,000 will be included, he said.
The ministry found that the criteria of 50,000 sq.m. was restrictive for developers, and the high cost and scarcity of land in cities also prompted it to lower the requirement.
Read more: Mint
India needs 4-5 equally large banks: D Subbarao
The Reserve Bank of India (RBI) feels there should be at least four or five large banks in the country to prevent monopolistic market power.
“Presently, (there is) significant skewness in the size of banks. The second largest bank in the system is almost one-third the size of the biggest bank. This creates a monopolistic situation,” D Subbarao, governor of RBI, said during his speech at the Ficci-IBA annual banking conference here on Tuesday.
State Bank of India (SBI), the country’s largest lender, is aiming to expand its size further, by absorbing its associate banks. It merged State Bank of Saurashtra with itself in 2008 and State Bank of Indore in 2010. And, plans to absorb one more associate bank in the current financial year.
“The task is to ensure that there are at least four to five banks of comparable size at all times, to ensure that consolidated banks do not acquire monopolistic market power, adopt predatory behaviour and force smaller banks into unviable models,” Subbarao said. However, he added, merely encouraging small banks without addressing the disadvantage of being small might not work.
“When small banks become successful, they naturally want to expand and grow. Should we allow a smooth transition from small to big? But if we do that, are not we defeating the very rationale for such banks – that they will be nimble and flexible and meet local demands?” he asked.
Read more: Business Standard