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Builders & Real Estate Bulls Theory Proved Wrong

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Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
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  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    Sales dip, inventory rise



    Spectre of bubble-burst looms over housing sector | Business Line
    If you are happy, you are successful.

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    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Another dark spectre.

      Economic Times.


      NEW DELHI: Economic data in coming days will likely offer further evidence of weak growth and high inflation, complicating the central bank's mission of cooling prices without worsening the slowdown and adding to the government's difficulties as it heads into an election season.

      The Indian economy, which is Asia's third-largest, has been caught in a situation which some analysts define as akin to stagflation for the past three quarters -- with economic growth stuck below 5 per cent and prices rising at a fast clip.

      Industrial output data due later on Friday and inflation numbers to be released on Monday will show the same trend, two Reuters polls of economists showed.

      That's a worry for the Congress as it campaigns for five state elections starting in November, a warm up for national elections due by next May. The opposition Bharatiya Janata Party has gained momentum in recent months thanks in part to the weak economic performance of the government headed by Singh, a veteran economist and reformer.

      The government is hopeful the economy will start to recover by the end of the year on higher farm output and exports. But Friday's data will likely add to the Prime Minister's woes, showing production from mines and factories grew by just an annual 2 per cent in August, slower than July's 2.6 per cent rise, according to one of the surveys.

      Output contracted 0.2 per cent between April and July, the first four months of the fiscal year 2013/14.

      More pain is expected on Monday, when another set of data is likely to show wholesale prices rose 6 per cent in September, a tad below a six-month high of 6.1 per cent in August. Consumer inflation, also due on Monday, probably quickened to 9.60 per cent last month from 9.52 per cent in August, the poll showed.

      The government will release the data on wholesale prices around 06:30 GMT. Consumer price data is due at 1200 GMT.

      "India is likely to face low growth and high inflation for some time," said Daniel Martin, Asia Economist at Capital Economics in Singapore, who expects the Reserve Bank of India ( RBI) to increase its repo rate by another 25 basis points later this month.

      "A higher repo rate will hold up the economic recovery. It is a difficult situation for the central bank."

      Economic growth has averaged 4.6 per cent between the fourth quarter of 2012 and the second quarter of 2013. Headline inflation, measured by wholesale prices, averaged around 7 per cent in the same period -- way above the central bank's perceived comfort level of 5 per cent.

      Inflationary worries

      Worries over high inflation led new Reserve Bank of India chief Raghuram Rajan to surprise markets in his policy review last month with an interest rate hike. Economists are now split over whether Rajan will hike rates again at the next review on October 29.

      If inflation data does come in line with expectations, the odds for another hike at the October review will only increase.

      Even though India is stumbling through its worst economic crisis since 1991, Rajan has clearly signalled he would focus on price stability, which he sees as a necessary condition for lifting economic growth from a decade low.

      Inflation is expected to come down in coming months as a slowing economy is likely to keep demand-driven price pressures in check and as this summer's strong monsoon rains may eventually cool food prices.

      Yet, price risks persist. The benefits of a sharply weaker exchange rate and adjustments in administered prices of fuel are still incomplete.

      Although the rupee gained 5 per cent last month, it is still down around 10 per cent this year against the dollar, meaning higher import costs for items such as oil, fertilizer, pulses and edible oil in rupee terms.

      The rupee hit record lows in late August, pressured by the country's gaping current account deficit and a general exodus of global investors from emerging market assets.

      Recovery in sight?

      In its bid to revive the economy ahead of polls, the government has decided to inject capital into banks so they can offer cheaper loans for purchases of items such as bikes, fridges, washing machines and televisions.

      The move is aimed at boosting production in the consumer durables sector, which has failed to register growth since last November.

      A pick-up in merchandise exports, aided by a recovery in global economy along with the rupee depreciation, has bolstered the government's hopes for an economic rebound in the quarter to end-December.

      The government is also counting on the prospect of strong farm output for an economic boost. The sector is expected to post annual growth of about 5 per cent this fiscal year, which should lift rural incomes and increase demand for goods and services.

      "Strong exports and a rebounding farm sector will only help at the margins," said Martin of Capital Economics. "India's recovery largely depends on a revival in investments."

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Market regulator Sebi is soon likely to allow real estate investment trusts, or REITs, in India to provide investment avenues for investors. REITs are trading units similar to mutual funds and Exchange Traded Funds for stocks, bonds and other securities. They also serve as financing instruments for liquidity-starved developers. The timing of this move is important keeping in mind the prevailing paucity of funds and the ongoing slowdown in the real estate sector. Like stocks, a REIT unit is listed and traded on a stock exchange. However, REITs primarily invest in completed, revenue-generating real estate assets that are less risky than investing in under-construction properties. They can provide regular incomes to investors from rentals received. The Securities and Exchange Board of India has released its consultative guidelines for the operation of REITs in India after five years of delivering its first draft. Realty stocks surged, but this could also be in line with the general bullish sentiment today. REITs are beneficial to both investors and the real estate industry. On the one hand, it provides an exit route for the developer/industry; on the other, it offers investment opportunities in property for retail and high net worth investors. REIT sponsors, usually developers or private equity funds, allow developers to gain liquidity by passing on ownership to unitholders. “This is a welcome move. Once in place it will provide an additional exit route for investors and enable retail money to be channelised into India’s realty sector through a regulated network,” Anshuman Magazine, chairman and managing director of CBRE South Asia, said in a statement. What the trust is all about

        Read more at: REITS: Sebi throws a lifeline to developers, realty stocks perk up | Firstpost

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        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          REIT introduction can really push the bull market even further. What's this news doing in this thread?

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            sweet and khara [hot] should go together otherwise it will cause nausea.

            Originally posted by TheTruth View Post
            REIT introduction can really push the bull market even further. What's this news doing in this thread?

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              What the trust is all about AFP A REIT would have to be set up as a trust and wouldn’t be allowed to launch any schemes. ( You can view the entire consultation paper here) Such an entity would have to apply for registration with the regulator and would have a trustee, sponsor, manager and principal valuer. Once registered, it would be able to raise funds through an initial offer and its units need to be mandatorily listed on an exchange with the net asset value declared at least twice in a year. The regulator broadly has applied a framework similar to that of an initial public offering (IPO). The eligibility criteria for REITs says only large and established asset management firms can participate. For an IPO, the minimum asset size of REITs should be Rs 1,000 crore. As per draft rules, only entities that have at least 90 percent of the investment in completed revenue-generating projects can issue REITs. REITs will be able to invest in properties directly or through special purpose vehicles. REITS will thus not be allowed to invest in vacant land or agricultural land or mortgages other than mortgage-backed securities, thus bringing more transparency into the sector. All REIT schemes will have to be close-ended real estate investment schemes that will invest in real estate with an aim to provide returns to unit holders. Returns will be derived mainly from rental income or capital gains from real estate. The minimum size of an initial public issue will not be less than Rs 250 crore, of which at least 25 percent has to be publicly floated. The regulator said that REIT may raise funds from any investor, resident or foreign. However, initially, till the market develops, it is proposed that the units of REITs may be offered only to HNIs /institutions. Consequently, it is proposed that the minimum subscription size would be Rs 2 lakh and unit size shall be Rs 1 lakh. According to industry experts, participation by foreign investors in REITs will depend on necessary clarifications in the FDI policy and also consultations with the RBI. To ensure that the underlying assets of REIT are valued accurately, full valuation, including a physical inspection of the properties, has been specified at least once a year. Further, a six monthly update in the valuation, capturing key changes in the last six months, has also been specified. Detailed disclosures have been specified for the annual and half-yearly valuation reports. Moreover, investors will have the right to remove the manager, auditor and principal valuer, seek delisting of units, apply to Sebi for a change in trustee, etc. Bhairav , associate director, PwC India, in a statement said: “Sebi seems to have taken a very pragmatic approach on REIT regulations. Lot of emphasis has been given to transparency and disclosures.” “The good news is that the regulator has clearly expressed its willingness to kick-start REITs in India at the earliest. The cautious approach adopted by Sebi during this initial period is acceptable and appreciable. One concern is with regards to the strengthening of our legal framework surrounding real estate in India, which is a pre-requisite for REITs to thrive here. The Real Estate Regulatory Bill, which was approved by the Union Cabinet in June 2013, was therefore a move in the right direction,” said Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India. The consultative paper on REITs is open for public comments until 31 October 2013, after which experts expect the first set of guidelines to set the ball rolling. According to Morgan Stanley, one of the important hurdles in introducing REITs in India has been lack of clarity on taxation of REITs income, which may not have been addressed in the draft regulation. “We remain uncertain on the timing of REIT introduction. As and when REITs are introduced, we expect them to benefit developers (easy liquidity) and investors (new investment option),” it said in a note. According to the investment bank, DLF, Phoenix, Unitech and Raheja are the largest rental asset owners and likely to be the key beneficiaries. “Given DLF’s high leverage and limited success in monetising its non-core assets, REITs could provide new avenues to raise funding to help it reduce debt. However, this might take a few months to a couple of years to play out,” it added. Shares of real estate majors Unitech (up 7.54 percent), DLF (up 4 percent), Phoenix Mills (up 1.69 percent), Sobha Developers (up 1.25 percent), HDIL (up1.5 percent), Indiabulls Real Estate (up 1.6 percent), , Oberoi Realty (up 1.2 percent) and Godrej Properties (up 0.44 percent) edged higher

              Read more at: http://www.firstpost.com/business/re...ce=ref_article

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              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Demand slowdown forces realty developers to reduce property rates

                Festive season or not, the demand slowdown has forced developers to reduce property rates. While 'official' price corrections are few, developers have started providing backroom discounts by waiving off expenses such as preferential location charges (PLC), one-time parking costs and club membership fees. PLC charges are levied by developers on certain properties (within a project) which have a better location than most other apartments such as those facing a park, road or swimming pool, or close to the ground floor.

                Residential prices across all major metros and several smaller cities have fallen in the first quarter of the current financial year. According to National Housing Bank's Residex, an index developed to capture the price movement in residential housing across 26 cities, 22 cities have witnessed a drop in property prices in the first quarter as compared to the earlier quarter.

                Real estate research firm PropEquity says that new housing launches fell by 38-59 per cent across different markets such as Gurgaon, Pune, Noida, Navi Mumbai and Kolkata. Noida in the Delhi NCR region saw the biggest fall in new launches.

                Demand slowdown forces realty developers to reduce property rates - Business Today
                If you are happy, you are successful.

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                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Discount in lacs from builders

                  > GM Kenjale builders is offering cash discount of INR 10L,

                  > Paranjape schemes is giving discounts of lacs on all their projects.

                  Both the above are official discounts given as 'Festive Offers'.
                  If you are happy, you are successful.

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Real estate research firm PropEquity says that new housing launches fell by 38-59 per cent across different markets such as Gurgaon, Pune, Noida, Navi Mumbai and Kolkata.
                    For 9 days of Navaratri, 9 different projects were launched using the front page of Maharashtra Times. Many were launched on the inside pages, and even many were not advertised. STILL this is a 38-59% fall!

                    On the other note, I noted that this year we don't have the usual 'This Diwali rates will be down' thread.

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by TheTruth View Post
                      On the other note, I noted that this year we don't have the usual 'This Diwali rates will be down' thread.
                      Perhaps the end user buyers have given up looking at such high rates which are out of their reach !!

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