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US Bank Completes $77-M Investments In Convertible Debentures Of Indian Realty Co

US-BANK Wachovia could pick up a significant equity stake in Hiranandani Realtors, part of Mumbai-based property developer Hiranandani Group. In the last one year, Wachovia has invested Rs 304 crore into the Indian firm through financial instruments that will be converted into equity.

A source involved in the transaction said Wachovia had entered into an agreement in August 2007 to invest $77 million in Hiranandani Realtors. The investment was to be in multiple tranches through debentures. As per mandatory documents submitted to the RBI, the debentures were issued in three phases starting October 2007 and the last tranche of Rs 106 crore came in May 2008.

“Thereafter, the two partners entered into a debenture subscription agreement on September 18 that laid out details of a phase-wise conversion of the debentures into equity,” the source added. The exact quantum of equity that Wachovia will pick in due course is not clear as it would depend on the portion of debentures that Wachovia converts into equity as per its deal with Hiranandanis and the value of the firm at that time.

While Wachovia can potentially convert the debentures into equity, the agreement gives the Indian promoters an option of purchasing them back. In such a scenario, fresh equity will be issued to the Hiranandanis.

Real estate sector has been facing tough times due to the credit crunch in economy. It has been one of the worst hit in the stock market meltdown which has hit the domestic bourses in 2008 with the BSE Realty index dropping more than 88% since hitting its peak in January this year. The inflow from Wachovia happened before the fresh round of selling in the domestic stock market which began in September. Hiranandani Realtors is part of the Hiranandani Upscale led by Surendra Hiranandani, one of the cofounders of Hiranandani Group known for its luxury townships in Mumbai. Hiranandani Realtors is developing a new township in Chennai with a project cost of Rs 3,500 crore. The project is spread over 108 acres and includes residential apartments, a hotel and some commercial area.

Besides completing existing projects, Hiranandani Realtors is also looking to pick an equity stake in another group firm—Lake point Builders—that has its own existing township project in Bangalore. This is expected to be financed through surplus cash with the firm currently parked in banks.

Wachovia, which is into banking, asset management, wealth management and corporate and investment banking products and services, is being acquired by Wells Fargo. Wells Fargo, the largest US bank by market capitalisation, had announced a $15.1-billion deal last month after Citibank failed to buy out Wachovia.

                                                               Courtesy:- ET dtd:- 1st Dec. 2008

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To attract more and more foreign exchange from Non-Resident Indians, the government of India is encouraging home loans to NRIs with liberal norms. Non-Resident Indians are to comply with the following formalities to avail the home loans:-

 Eligibility

Any Indian who has been living abroan for employment, conducting business or pursing a vacation is eligible for a NRI Housing Loan. Personnel deputed abroad on short term or long term assignments with foreign governments or international agencies are also eligible to avail NRI Housing Loan.

 Purpose

NRIs can avail home loans for purchase, construction, extension or renovation of a new house or flat. Home loan can be availed for purchase of a plot of land for residence use.

 Loan Amount

Loan can be availed upto 85% of the total cost of the property subject to the minimum of Rs5.00 lacs and maximum of Rs100.00 lacs.

 Tenure of Loan

Salaried persons                       : upto 15 years

Self Employed persons : upto 10 years

The tenure of loan is subject to retirement age or 60 years of age whichever is earlier.

 Margin and Repayment

NRI should pay for the acquisition of property by funds received in India through normal banking channels by way of inward remittance from outside country.

While availing home loans, margin money should come from abroad by normal banking channels.

Repayment of EMIs should also come through inward remittances through normal banking channels. Repayment of EMIs can be opted in step up repayment facility which facilitates to pay lower EMIs in initial years and higher EMIs in later years when income of NRI borrower increases with the coming years.

 Documents required to process the home loan application :- 

Property and related documents:

• All receipts for payments made by individual towards purchasing the house.
• Copies of approved drawings of the property, including extensions.
• Copies of Agreement for Sale and sale deed.
• Document containing detailed cost estimates from the architect/engineer for the house.
• Allotment letter issued by the association of apartment owners.

Employment and related documents:

• Copy of the work permit.
• Copies of the Visa stamped on the passport.
• Copy of the existing/current employment contract.
• Latest wage slip/ salary certificate or statement.
• Copy of the Identity card issued by current employers.

At intervals govt. of India reviews the procedures for grant of home loans to NRIs and issues the requisite guidelines to encourage the NRIs for availing more and more home loans and invest in properties in India.

Flats Aimed At Middle-Income Groups Are Being Snapped Up, Even In The Current Scenario Of Market Downturn As the merchants of doom are spreading canards that realty sector has touched the pit and is in a very bad shape, there is a rosy picture emerging that of buyers queuing up for flats in the range of Rs 25 lakhs to Rs 40 lakhs. Basically, they are the end users. They are buying flats for their own use. And as if that were not enough, banks are disbursing loans to them. It is also being reported that banks are taking time in sanctioning loans to those looking for houses that cost Rs 60 lakh and over.    P K Jain, executive vice-president of PNB Housing Finance Limited, says that even though the market was down even before the meltdown, which only hit it, further, they are still giving loans to those who are buying houses up to Rs 40 lakh. He, however, refused, to respond when asked if they were not giving loans for luxury houses.    What is the ground reality? Sunil Jindal, director of SVP Groups, says that they are selling houses in different projects. They are the flats, which they have made especially for middle-income group. I don’t say that there is a scramble for houses. But, people are coming in to purchase houses in our Gulmohar Green project in Mohan Nagar and Gulmohar Towers in Ghaziabad. Flats in these projects range from Rs 25 lakh and above, but definitely less than Rs 50 lakh, says Jindal.  Those who are closely associated with realty sector say that these flats are generally purchased by those government employees who can not buy houses in Delhi. As Delhi has slipped out of their reach, they settle for houses in NCR town. As they have been living in Delhi for decades on end, they can not return to their hometowns. Hence, they buy houses in NCR towns.  Devinder Gupta, CMD of realty advisory Century 21 India, says there are also many people living in other cities or abroad who buy houses for their parents, and that the quantum of such purchases is very high. As joint families are breaking up due to various factors, the breakaway factions of the families are also buying houses according to their budget. They are pushing the realty market in its own way, says Gupta. Kailash Chandra is a classic case referred to by Gupta who has recently shifted to a house built by a known builder. Kailash Chandra, who retired as an assistant editor of a leading news agency, says very candidly that he managed to purchase this flat only after his London-based son fully financed it.  Pankaj Tyagi, director of Bhanu Infrastructure, is a little measured in his views, in so far as the current market situation is concerned. Tyagi says the market has seen setbacks over the last couple of weeks due to various factors yet people are buying houses for their use. I feel the middle-income group is the engine of realty sector. And, it is very important that they remain in the market, says Tyagi. He, however, says that the market is far from being in the pink of the health. Meanwhile, there are some realty experts who feel big time realtors are making luxury and high-end houses for the simple reason that the margin of profits in those segment are very high.    And after buyers for their projects disappeared from the market, they are allegedly painting a wrong picture that realty market has touched the nadir. A senior functionary in HDFC Bank confirms that banks are extremely weary of lending money to those loan seekers who look for a huge loan.   

The last word comes from Sanjeev Shrivastava, CMD of Assotech. Sanjeev says: We are selling our flats for middle-income groups regularly at our The Nest project, on Crossings Republic on National Highway-24, easily. The rates of these flats are reasonable and middle-income people can buy them.

                                                                                                                         Courtesy: - TOI dtd: - 22nd Nov. 2008

Commercial real estate has been hugely successful for many people. Big names that come to mind are Trump and Zell are just two names that come to mind who have made billions in commercial real estate. The question becomes, with all of the complexities involved in large property transactions, where does someone go to train to be a commercial real estate broker?This article will talk about some of the sources for training in this field that will help people get practical experience and understanding of how the commercial real estate market works.Your best source of training for commercial property is to find entry level work in a successful commercial real estate company. It doesn’t really matter if it is a receptionist position or working in the mailroom. Just being surrounded by the conversations involved the buying and selling process will give you a first class education in the intricacies of a transaction. It is a great way to get first hand experience while you complete your formal training and will help build your resume for future jobs in higher level positions.Degrees to consider for future commercial brokers are law degrees and MBA programs with a focus on finance. Commercial transactions require extensive detailed contracts concerning the exchange of incredibly expensive property or multi year leasing agreements. With that in mind, an understanding of the law or the ability to structure beneficial financing packages will have a huge effect on your success as a broker.For those that do not wish to go the formal education route, sales experience is a must and can be much more highly prized than a degree. The truth is that several people can handle the technical side of a commercial transaction, but the ability to bring parties together and reach amicable agreements is a talent that will make a commercial real estate broker very successful. Take a sales training class to sharpen your skills and get out in the real world of sales to learn how to overcome objections and make a deal work.Finally, you need to find a professional commercial real estate training center that will educate you and take you through the licensing process. Continuing education is the name of this game as will not only need a commercial broker license, but need to constantly keep up to date on new best real estate practices, so that you can be a leader in your field.Commercial real estate training is a constant and evolving process that once starts will never stop. As you learn to become a broker, your understanding of the business world will grow as your income increases. Take the time for serious training early on and you will reap the rewards for years to come.Any further info log on to http://www.zameen-zaizad.com

The real estate sector is waiting for some good news and positive moves from the banking sector — to move into high gear again Rakesh Pathak is an MBA and works in Tata Forum. He is planning to buy a house in the range of Rs 30 lakh to 40 lakh. When he calculated the EMI on a loan for the prospective property, he cancelled the plan.  A house that suits his requirements is way beyond his budget - he is waiting for the home loans interest rates to come down. Like Rakesh, many middle class salaried people would like to buy a property through home loan — while others put money in shares, rather than invest in property.   Dr Mamta Chaubey, reader in Delhi University, wishes to buy a house through home loan. Though she is of the opinion that for middle class people a home loan is affordable, she is nevertheless reluctant to take the plunge as high interest rates have put a dampener on everything.    Sakshi Malhotra, working in an MNC, has been planning to buy a house for a long time she used to wait for prices to come down every year and would keep deferring her plans each year. This year, she was determined to buy property but the thought of paying a hefty EMI dampened her spirit.    One wants property price or interest rates to go down because real estate market is uncertain. With the worldwide financial crisis showing no signs of ending, India too, is keeping its fingers crossed. Tremors are being felt everywhere - from the volatile stock market to the unpredictable rupee, and from the spiraling inflation to rising home loan interest rates.    Property is of two kinds — movable and immovable property. While movable property, also called chattels, such as money, securities and goods, which can be moved from one place to the other, immovable property such as land and the objects permanently attached to it such as buildings, constitute immovable property. There also exists another property called intellectual property, which refers to the right over artistic creations or inventions.    Immovable properties have the essential characteristic that only the title to the property changes by virtue of the transfer, whereas, the physical location of it does not change. Property investment is usually referred to as real estate investment or investment in immovable properties or assets.    The investment in property essentially depends on the risks associated with it, that is to say, even if the venture succeeds when the future stream of income will accrue to the investor and the alternative investment opportunities.    Real estate investment can be attractive if viewed as a business opportunity; it can generate rental income, using it as collateral to secure a loan for a business venture, to offset otherwise taxable income through cash savings on tax-deductible interest rate losses, or simply from the profits garnered from its resale.    Investment in property is treated as a long-term gain and investment professionals argue that 5%-20% of investment portfolio should be directed towards property or real estate. So, everyone in this sector is waiting for some good news, to pick up the threads from where they left, at the beginning of the year.                                                       Courtesy: - TOI dtd: - 22^nd Nov. 2008

US based INC Developers has entered the heavily slowed Indian real estate market with a super luxurious apartment’s scheme worth Rs 100 crore, which it would jointly develop in Pune with Amar builders over next 24 months. The super luxurious apartments with 6,500 square foot size each would be priced between Rs 5 crore and Rs 6 crore.

INC Developers, incorporated three years back in California, have completed more than 30 residential projects worth more than $ 400 million. The newly announced project titled ‘Manhattan’ is its first entry in the Indian real estate sector. Speaking to reporters, INC Developers executive director Jay Kinra said, “Although the Indian real estate market has slowed down, it will have a temporary effect. And we are building super luxurious apartments, which would be sold very easily.”

The Manhattan project would have 18 apartments altogether, which would be customised as per the needs of the buyers. “We have already sold ffour apartments as people prefer to buy a Rs 6 crore flat as against a Rs 10 crore bungalow,” Kinra added.

The INC Developers are also setting up a 50,000 suqare foot huge commercial complex in Baner region. The complex would be launched in another six months and would be ready in 2011.

“The commercial complex would also be in the hi-tech luxurious segment. Considering the services and IT sector growth in Pune, this project also would receive a good response,” Kinra added.
Courtesy: Indian Realty NewsNovember 20, 2008

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  Finance minister P Chidambaram assured realty firms that government will impress upon banks to accelerate lending to realty, which is facing one of the worst slowdown in the recent times. A delegation of builders under the Confederation of Real Estate developers’ Association of India (Credai), met Chidambaram on Wednesday to complain against banks’ reluctance to disburse loans to the real estate companies.

A source, who was present in the meeting, said the government accepted that real estate is an engine of growth. At a time when the economy is facing a threat of slowdown, the sector could be used to revive it. Chidambaram, it is learnt, told the delegation that the government will not only help infusing liquidity in the system, but will also work to bring down the interest rates.

In the last couple of years, realty has been affected adversely because of rise in interest rates, which went up from 8% to around 12%. The interest rate was increased because of the sharp rise in prices of real estate assets, which RBI thought could create a bubble. To discourage the price rise, RBI tightened the provisioning norms, making loans to the sector costlier. At the same time, in the last nine months, when the inflation shot up to cross 6%, level RBI started tightening liquidity to keep price rise under check.

Such a steep rise in the interest rates increased the equated monthly instalment (EMI) of a loan for the same period by almost 40%. This has affected affordability factor of buyers adversely and in turn brought down buying of houses. According to the source,FM said the situation has now changed and the policy would also be tweaked accordingly, so that the interest rate on home loan comes down, making it more affordable.

It is learnt that RBI is considering removing the high risk weightage on the home loan to enable banks to lend at lower rates. At present, banks have to make provisioning of higher capital against the home loan of more than Rs 30 lakh. Because of this, the interest rate of home loan above that slab is around one percentage point higher than that of less than Rs 30 lakh.

                                                                Courtesy November 14, 2008 Indian realty

  Investing in real estate is a good idea to hedge against inflation, Which is a better option if you have some excess funds to invest - stocks or real estate? The most sincere advice you get from friends is real estate. But how accurate is this advice? Traditionally, a house was an asset, usually inherited by a son from his father. Often, it was towards the fag end of his career that a salaried person could afford to buy his dream house. However, easy availability of home loans at attractive rates has changed this scenario. It has become an essential ingredient of a well-diversified portfolio and indispensable in financial planning.  Benefits of investment in real estate  Real estate investment helps in diversification, yield enhancement and hedging inflation. If you have enough endurance to withstand the current interest rate turbulence, it may be the right time to invest in your own house. Property prices are at reasonable levels. With our population growing at a phenomenal pace, the demand for commercial and residential space is bound to go up. This sector is bound to see tremendous growth in the coming years. Real estate funds  Wouldn’t it be nice if an investor could own a share of the property, for a fraction of the investment? Real estate mutual funds and real estate trusts provide an opportunity to own a part of the property that would otherwise be unaffordable. Be it a shopping complex, or a commercial space or a luxury apartment - these investment products make investing, selling and profit sharing extremely simple. The fund manager takes the responsibility of evaluating the asset, maintenance of property, tax implications and rent collections.  Benefits of investment in stocks  Following the global meltdown, the stock markets have taken a tremendous beating. The markets have wiped away huge money, plunging many small investors into a nightmarish debt traps. Despite Washington’s approval of a 700 billion dollar bailout aimed at forestalling a global financial meltdown, the inevitable doom couldn’t be averted.    Volatility is an accepted and inseparable part of stock market investments. Invest regularly with a long-term perspective in mind. If you start investing early, you can benefit from the power of compounding. If you are uncomfortable with the stock markets, professionally managed mutual funds are an option. In the current scenario, experts advise that investors keep away from the turbulent markets. Do not indulge in buying stocks that has hit rock bottom, or contemplate selling at a loss. It is believed that the markets will rebound in full vigor and investors must wait for it.  Between stocks and real estate  

Stock markets are associated with volatile returns. Bank deposits are known for their limited or low returns. Investment in property is perceived as low risk and high yield alternative. Today, a real estate investment is poised more favourably.

                                                                                   Courtesy: - ET dtd: - 14^th Nov. 2008

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