An interview with Dharavi slum stars

In January 2009, some children from Dharavi, Mumbai, created music with Bappi Lahiri and DJ Paul Devro of Mad Decent. One of the songs produced was named ‘Slum Stars’, supposedly in reply to Danny Boyle’s acclaimed movie ‘Slumdog Millionaire’. This is an interview of the friends and family of the children taken during a party organized by Dharavi.org. This video was made by the students of CEMA (Center of Experimental Media Arts, Srishti, Bangalore) in association with Dharavi.org.

The magnificient Elephanta Caves

One thousand and five hundred years ago when craftsmen began cutting rocks and sculpting them into magnificent statues of Gods, little did they realize that in the second millennium the Elephanta Caves would not just be a major tourist attraction but would also be a World Heritage Site. The world's oldest island caves are now getting a new lease on life. The India National Trust for Art and Cultural Heritage (INTACH) has teamed up with the Archaeological Survey of India (ASI) to spruce up the caves and protect them from further decay and degeneration.

Elephanta Caves date back to the sixth century AD and boast of some of India's most magnificent rock-cut sculptures of Lord Shiva. Situated 11 kilometers from Mumbai’s Gateway of India, these caves are reached by small boats. Once on the island, visitors have to climb over 1,000 stone steps to get to the caves.

The caves were originally built during the reign of the Rashtraputa kings. They contain huge images of Brahma, Parvati, Natraja and Shiva. The best and most famous of these is 'Maheshmurti' - a three headed bust of Shiva which is about six metres high.

The great elephant structure in black stone, which gave the island its name, was removed in 1864 by the British to take it to England. However, it was later returned to India and now stands at the Victoria Gardens, a park with a small zoo in Mumbai. On top of the caves are two huge canons installed by the British to protect the Bombay harbor.

There are nine carvings in the main cave that depict the life of Lord Shiva in different manifestations -the dancer (Natraja), Shiva killing a demon Andhaka, marriage of Shiva and Parvati, Shiva's descent to the Ganges, Shiva as Ardhnarinateshwar, Shiva as Maheshmurti, Shiva lifting Mount Kailash, Goddess Parvati on Mount Kailash and Shiva as an ascetic.

Back in the mid-80s a team of leading international archaeologists, conservators and historians visited the site and forwarded a proposal to UNESCO to grant heritage status to the caves. The proposal was accepted in 1987 and Elephanta Caves were declared a World Heritage Site.

The deepest step well in the world

Chand Baori is a famous stepwell situated in the village Abhaneri near Jaipur in Indian state of Rajasthan. This step well is located opposite Harshat Mata Temple and is one of the deepest and largest step wells in India. It was built in 9th century and has 3500 narrow steps and 13 stories and is 100 feet deep. It is a fine example of the architectural excellence prevalent in the past.

India to observe 'Earth Hour' on March 28

India will join rest of the world by observing 'Earth Hour' to save energy as well as environment on March 28.

The people will be observing the Day by switching off all the lights and electrical appliances for an hour from 8.30 pm to 9.30 pm.

Began with one hour switching off lights at Sydney in Australia two years back, the 'Earth Hour' was observed in 35 countries last year in an attempt to reduce the carbon footprint, the World Wide Fund for Nature (India) Education officer Dr Goldin Quadros said.

This year India, especially Delhi and Mumbai will participate, he said adding that WWF was getting support from the government as well as the corporate houses.

Lights would be switched off or dimmed at 11 PVR cinemas in Delhi and Mumbai and corporate offices.

As per WWF this year, 50 lakh citizens of 377 cities from 74 nations are participating in this initiative.

Kick-starting the 'Earth Hour'campaign at the at green technology festival of the Chemical Engineering department at IIT `Azeotropy' , Mumbai Mayor Dr Shubha Raul said it was important to cut down carbon level and the municipality will be keen to help in the endeavour.

She has called for a meeting of all the corporators to brief them about the `Earth hour'on Monday and WWF will have a video show for them.

(via Economic Times)

India's light bulb phase out: setting a smart example

How many light bulbs can 1 billion people change? About 400 million wasteful incandescent bulbs, in India’s case.

Today, India has put in place a market mechanism that will phase out incandescent bulbs, making way for a cleaner energy future. The Bachat Lamp Yojana programme will replace 400 million incandescent bulbs with CFLs by 2012, which would save about 55 million tonnes of CO2 each year.

It's truly amazing how big the savings can be from strong action on energy efficiency. With this decision, India will be cutting the same amount of emissions that would come from four coal-fired power plants. If the whole world followed India's lead, eliminating wasted electricity from lighting, the cumulative effect would be equivalent to shutting down around 220 coal-fired power plants.

In this case, India has used a mechanism set up under the Kyoto protocol to bring down the cost of compact fluorescent bulbs (CFLs) for ordinary people. The more efficient bulbs were previously 80 - 100 rupees and will now be only 15 rupees, the same price as an incandescent bulb.

The funding comes via the cleaner development mechanism (CDM), effectively a way for developed nations to fund emissions reductions in developing nations. This programme sets an example of how nations can work together now to cut emissions, but a much bigger deal is needed urgently to stop runaway climate change.

Industrialised countries must agree to fund around USD 140 billion a year to help economies in the developing world cut emissions, protect tropical forests and adapt to the effects of climate change. Of course, countries too must implement tough domestic targets to ensure that global greenhouse gas emissions reach a peak by 2015, and start declining rapidly thereafter, reaching zero by 2050.

In India, lighting makes up 20 per cent of all residential electricity consumption, so this is a good first step. We at Snowcem Paints congratulate the Indian government, and hope it is going to carry out more actions in its plan, along with targets and timelines.

Energy efficiency is a really smart way to reduce demand and reduce CO2 emissions quickly, but it is only one half of the solution to climate change. The other is to quit coal and to replace it with non-polluting renewable energy sources like wind and solar - a real energy revolution.

India's rapid pace of development means its CO2 emissions are going up. It also faces peak power shortages even now, so a clean energy revolution will deliver big solutions to these big challenges.

(via Greenpeace.)

Instant offices: demand of a new age

With the geographical boundaries blurring, expanding businesses in new locations is being recognised as the best possible way to growth. However, setting up a new office in a new location is expensive and carries the risk of financial wastage in case the business has to be wound up.

To counter this, professionals and large organisations seeking a market presence, or looking for business expansion in another city or in India, are opting for serviced offices.

Compared to the conventional leased office space, a serviced office does not require furnishing or lease agreement and provides an ideal business environment in terms of immediacy, flexibility, location and cost.

Regardless of the fact that the company stays on for two years or for two months, the executives just walk in, fill out the agreement papers and start their business.

The offices come with complete fit outs, in spaces as small as 400 sq ft to one that accommodates 50 to 300 staff. Secretarial support,

Internet services, security and total EPBX support are available on demand. Most offer conference and meeting rooms for presentations and even virtual offices with complete internet and secretarial support, helping companies focus on critical issues like developing business, meeting clients, clinching deals and conducting business from day one.

The firms pay for services on 'pay as you use' basis. Additional space can be allocated at a short notice and companies have the option of renting additional space for a day to carry out brainstorming sessions, client meetings, staff interviews and other activities, saving significantly on overheads and capital outflow.

Says Anshuman Magazine, South Asia CMD, CB Richard Ellis, “The concept has taken off in the last couple of years as more business enterprises are coming up.

It is specially useful for small start-ups that want to start out with a small staff, or those who are absolutely at the initial stage of business, still looking out for clients and contracts. A serviced office space is the preferred way of working for people who need to stay in the location for two to three months and return to their base location.”

The concept of serviced offices or business centres has been around in the US and Europe for more than 15 years. In India too, business centres have been around for more than ten years, but it is only now that multinational companies have begun to set up such office spaces in India with trained staff and international standard services.

“MNCs specialising in serviced office spaces bring along the expertise of offering top class spaces, and services with leased Internet lines for speedy uninterrupted connectivity,” says Magazine. In cities like New York, serviced office spaces account for almost 10 per cent of the total office space. In India, the inventory is still small.

The other reason for such offices being in demand for the past few years, is the high rentals of office premises, say experts. Many MNCs looking to set up an office in the country, like to keep their expenditure to a minimum.

Meenal Sinha, GM, Servcorp, a multinational company which has tied up with K Raheja Corp to offer serviced office space says, “A typical serviced office of 1500 sq. ft., complete with fit-outs, staff support and technical personnel, communication system, connectivity and incidental, costs not more than Rs 2.9 lakh per month.

A traditional office works out at Rs 6.37 lakh for a month. Moreover the lease agreement is usually done on a yearly basis and winding up at a short notice becomes difficult.”

Anshuman Malik, vice president, Incube Business Centre says, “Setting up office in India for a person who is new to the country could be difficult, expensive and time consuming. Apart from the challenges of moving staff, files, furniture, other facilities such as telephone, internet, boardroom facilities could take time to set up and the actual business may take months to start.”

Malik adds, “Since the last decade, the revolution in information technologies and liberalisation of economy have created enormous opportunities for knowledge-based businesses as well as challenges for planners to create new jobs now needed the world over. The business centre helps tackle the obstacles faced by entrepreneurs and facilitates the venture creation process.”

Meenal Sinha, says, “This is an era of speed and efficient delivery. Businesses have to minimise gestation period and concentrate on their core area of expertise. A fully functional office with premium fit-out, classy reception areas, superior IT connectivity in a good location eliminates starting hiccups.

State-of-the-art technology like hot-desking allows online access to all the services anywhere and anytime, while dedicated leased internet lines ensure speedy download and communications. These redefine the method of doing business professionally with a local business number and dedicated trained receptionist to manage all calls.”

Sean Morgan, MD, Avanta,a serviced office located in a plush area, finds it hassle free. “India is a preferred destination, but its working ways and cultural fabric can be difficult to understand in the beginning. Moreover the recent terror attacks have created a kind of uncertainty.

Despite these, you need a plush address and an office in an instant with minimum wastage. A serviced office is the answer as you can actually get complete confidentiality of your business, high level of security, secretarial and administrative support on a shared basis. Winding up is easy.”

The clients feel this works well when the need is to deliver from day one. Dr. Kant Singh, of International Business Wales a UK based government agency says, “I save 30 per cent of my time by operating from a serviced office as most of my needs like internet, fax, photocopiers, couriers and dispatch are fulfilled in an efficient and professional manner. I get a total professional atmosphere to work from.”

Shardul Padhye of Top Source Infotech, who manages a sales and marketing office here, operates from a virtual serviced office effortlessly without courting hassles of maintaining equipment and office support.

“I work with a three-member team and all of us travel. One seat in the serviced office is enough to take care of our needs when we require a physical space. The rest are managed through virtual office which provides good connectivity, through hot-desk and leased internet line,” he says.

Surely, in these times of uncertainty, serviced offices are the best option. Not surprisingly, many companies are setting up such offices in India. After all, it pays to serve their residents who run their businesses from these premises.


(via Economic Times)

Villages hidden in Mumbai

Once an indelible part of Mumbai’s landscape, many gaothans are now struggling to exist in a city that is aiming for the skies. We do a realty check at four prominent gaothans.

Khotachiwadi: The cosmopolitan gaothan
Located in the commercial heart of Girgaum is the charming little village of Khotachiwadi, which has so far managed to resist invasion by Mumbai’s mind-boggling traffic. Declared a Grade III heritage precinct in 1995, Khotachiwadi is a web of narrow alleys lined by century-old bungalows with trellised balconies, open porches, curling staircases, and sloping tiled roofs.

Andheri Gaothan: Dying a slow death
Just a few feet from Andheri railway station is a narrow, dingy lane that leads to the Andheri gaothan. But those hoping to find ancient cottages and Portuguese-style bungalows here are in for a rude shock. Pale yellow Slum Rehabilitation Authority (SRA) buildings dot the area. If you look harder, you will find a few decrepit cottages made of stone and wood with thatched bamboo roofs. The area once boasted of as many as 50 magnificent cottages, but the number has come down to a mere 15, all thanks to rampant illegal construction.

Chuim Village: Where life comes to a standstill
Nestled cosily in Bandra’s belly is the quaint Chuim village with its matrix of wooden cottages and two-storey structures. The old bungalows still look robust and unique with their wooden frameworks, circular staircases, iron-grilled windows, and attics. Pot-bellied senior citizens relax in their verandahs watching life move by while the womenfolk break into small discussions with verve in the narrow by-lanes. People here continue to live their laidback lives, completely oblivious to the hustle and bustle of Mumbai.

Chembur Gaothan: Away from the bustle
Situated a short distance away from the railway station is Chembur gaothan. Another laidback gaothan within the maximum city, the place has a peculiar history of its own. At present, there are 150 structures, mainly old Portuguese-style cottages, in the gaothan. While most of the cottages are well-maintained, some appear to be just getting by. Lush green tress surround most of the bungalows. Big wooden windows, thatched roofs, and open verandahs add to the beauty of this gaothan.

(View slideshow via DNA)

Indian experts find bacteria to beat global heat

In a major breakthrough that could help in the fight against global warming, a team of five Indian scientists from four institutes of the country have discovered a naturally occurring bacteria which converts carbon dioxide (CO2) into a compound found in limestone and chalk.

When used as an enzyme — biomolecules that speed up a chemical reaction — the bacteria has been found to transform CO2 into calcium carbonate (CaCO3), which can fetch minerals of economic value, said Dr Anjana Sharma from the biosciences department of RD University, Jabalpur, who was part of the Rs 98.6 lakh project sponsored by the department of biotechnology (DBT) under the Union science and technology ministry.

CO2 is a greenhouse gas produced in the burning of fossil fuels and other industrial activities. The rising emissions of CO2 in the atmosphere is chiefly responsible for global warming. Reducing CO2 levels is the single most important strategy to fight global warming and the resulting effects of climate change.

"The enzyme can be put to work in any situation, like in a chamber fitted inside a factory chimney through which CO2 would pass before being emitted into the atmosphere, and it would convert the greenhouse gas into calcium carbonate,’’ Dr Sadhana Rayalu, the project coordinator who is from the National Environmental Engineering and Research Institute (NEERI), Nagpur, told TOI on phone from Nagpur.

This potentially means that the bacteria — extracted from a number of places including brick kilns in Satna, Madhya Pradesh — can be used to take out CO2 from its sources of emission itself.

Rayalu said the chemical reactions involved in the process have been successfully established while its economic viability, cloning, expression and single-step purification are under study. The team has published its findings in the Indian Journal of Microbiology and its paper has been accepted for publication in the World Journal of Microbiology and Biotechnology.

Sharma said the breakthrough was the result of marathon research work spanning more than three years. Other members of the team are Dr K Krishnamurty from NEERI, Dr T Satyanarayana from Delhi University and Dr A K Tripathi from Banaras Hindu University.

"Interestingly, it is nature that has come to the rescue of the human race from harmful effects of global warming. Investigators of the team have discovered as many as seven such micro-organisms that have the tendency to convert carbon dioxide into calcium carbonate at different natural locations,’’ said Sharma, who was on a visit to Allahabad.

(via Times of India)

Realtors see six month delay in revival

Any revival in the real estate sector is expected to be delayed by at least six months as the interim budget did not announce any sops to the housing sector as anticipated by many companies.

“Sentiments of home buyers have not completely improved yet. The government should have taken some steps to improve sentiments for Aam Admi, which has not happened. Now we have to wait for the new government to assume charge in June,’’ said Pradeep Jain, chairman of Parsvnath Developers.

Realty players, who are battling slowing sales, were expecting a two percentage points cut in home loan rates to 6-6.5 per cent, priority lending status for loans up to Rs 35 lakh from Rs 20 lakh earlier, increase in rebate on home loan interest from the current Rs 1.5 lakh to Rs 3 lakh, abolition of service tax on sale of units and rentals, reduction in excise duty on steel and cement among others.

Though most of the banks have cut home loan rates, realty experts said the home buyers were still deferring new purchases in anticipation of a drop in the prices and also due to stagnant income, which have led to slower sales. In the December quarter, sales of property companies have fallen by 70-80 per cent, putting pressure on their finances and execution skills.

“Though this was an interim budget, the government could have made an exception and announced some sops for reviving the market, given the adverse conditions in the market. Benefits for housing would have created a ripple effect and helped in giving a positive push to the economy,’’ said Rohtas Goel, chairman of Delhi-based Omaxe.

Both the government and the Reserve Bank of India (RBI) had already announced a slew of measures, including a refinance facility of Rs 4,000 crore available against the National Housing Bank’s loans and advances to the housing finance companies (HFC) at eight per cent for loans up to Rs 20 lakh, and capped interest rates for home loans.

But experts said the earlier stimulus packages have not helped much. “Though the government has come out with a stimulus packages in the past, they were not enough to revive the sector. A lot many things were expected, now the industry has to pass through 5-6 months in the absence of any new incentive in place. Falling interest rates and inflation are only the comforting factor for developers now,’’ said an analyst from Religare Securities.

Though the BSE Realty Index, which tracks realty stocks, touched a high of 1,650 points in the anticipation of sops to the sector, ended the day at 1,519 points, over 4.5 per cent lower, than its Friday close.

Indiabulls Real Estate (IBREL) fell 9.62 per cent, Ansal Infrastructure slipped 6.28 per cent, Orbit Corp was down 6.73 per cent were the major losers in the category.

“Though some government measures should have helped developers, in the long term, property companies should build houses that can be afforded by home buyers. Buyers should buy houses or private equity funds should invest keeping long term perspectives,’’ Subhash Bedi, partner of Red Fort Capital, which runs private equity funds, said.

(via Business Standard.)

Home loans get cheaper

Many prospective borrowers complained that while much has been said on the prospects of interest rate cuts, it hasn't been a reality for all home loan borrowers. Their anguish was understandable as till now the good news relating to rate cuts was only for fresh home loan borrowers. Those who have already taken a home loan were left to maintain their EMIs without the benefit of the interest rate fall. There is finally good news for this community too as the State Bank of India has made the first move by cutting rates even for old loans. It's a matter of time before others followed suit. In fact, the pressure will be higher on private sector banks which have not resorted to rate cuts for some time, and with many borrowers looking at the option of switching, these banks could come up with new downward moves in rates in the coming weeks. While the interest rate cut expectation is a thing of the past, the question is will it go back to the old levels of 7-8 percent which contributed to a property boom? Consensus is already building up for the fact that we are headed towards a low interest rate regime in the coming couple of years, in line with global trends. In the case of the domestic economy economy, the trigger for low interest rates has already happened on the deposit front with banks reducing the rate by 1-2 percent in the last few weeks. Now, the deposit rate has come down to single digit even with respect to long term deposits (on 3-5 years) and that would mean banks have access to cheaper funds. With inflation too sliding down at a rapid pace, there is hope for continuance of a cheaper rate regime. In fact, the biggest trigger for cheaper rates has been the inflation rate, and with the Reserve Bank of India (RBI) projecting that we are headed for inflation in the region of three percent, you can expect more support from the index. With the corporate sector being less than aggressive in its borrowing plans, it may take a while for rates to move up because of demand. Hence, for borrowers, there is absolutely no threat of rising rates and that is good news both for fresh borrowers and existing ones. Needless to say, floating rates should be the choice for all borrowers and those who are already sitting on fixed loans too can look at the choice of switching to the floating option. The change of plan makes sense even if you are required to pay charges as interest rates are unlikely to rise in the medium term. It is also the season for existing home loan borrowers to do some shopping as there is a significant disparity in the rate cards of different banks. If you find your banker slow in lowering the rate, try and shift your loan to a fresh lender. Unlike in the past, the shifting of a loan has to be viewed with respect to the amount too as the interest rate is dependent on the amount and tenure. For instance, a Rs 20 lakhs loan is significantly cheaper than a Rs 30 lakhs loan. For existing borrowers the slab becomes important, and hence you should take the option of closing the loan partly to take advantage of the slab. Even a saving of one percentage point would mean a saving of a few thousands in EMIs and the figure can turn attractive over the loan tenure. Hence, existing borrowers have plenty of options with respect to lenders, slabs and products (floating and fixed), and those who can take advantage of all three factors have a lot to gain. Fresh borrowers have little to worry as they are in a good market. (via Economic Times)

Walls of the Taj Mahal develop cracks

Crisis to hit business districts in India

India's well-established commercial business districts (CBDs) are likely to face vacancies this year, as the first impact of the global recessionary economy is being felt by the financial and other organisations, according to a real estate consultancy firm.

"We will also see a reversal of the trend witnessed over the past two expansionary decades where large organisations moved from owned to leased assets. Given the drop in prices and availability of choice properties, this will be a good time for surviving organisations to announce their new leadership positions through trophy purchases," Jones Lang LaSalle Meghraj (JLLM) said in a report Predictions for Indian real estate 2009.

The firm believes CBD vacancy rate, if triggered, can add significant pressure to the upcoming and newly developed premises in upcoming front-office districts such as Lower Parle in Mumbai and Nehru Place in Delhi.

While the sentiment in the US and Europe towards outsourcing is positive in the long term, the active decision-taking for expansion by business process outsourcings is totally suspended for the moment.

"We do not expect this to change in 2009. Hence, the pressure on upcoming and announced projects – especially special economic zones (SEZs) – will continue this year," the report said.

In 2009, IT SEZs will also experience further pressure from the fact that the software technology parks' concessions may be extended for another couple of years. While these concessions are important for IT companies' survival during the recession, they will adversely impact SEZ developments.

Moreover, the peripheral areas of metros as well as the tier II/III cities will need to compete with the central or secondary business districts for the same set of talents, thus dissolving the clear segmentation that was emerging and separating various micro-markets over the past couple of expansionary years. Newly developed or announced projects are especially going to suffer and may see continued vacancy.

"The year will also see practices in the real estate business become more organised and professional, as they did in the late 1990s and early 2000s with the introduction of foreign institutions, foreign money and the creation of government-supported large development formats. A similar professional approach may reach warehousing land acquisitions."

Residential properties

Much of the previously anticipated demand for 2009 will not see the light of day due to the confluence of various factors. According to JLLM, developers have only now begun to come down on their rates, and a lot depends on how many of them will follow suit in the coming year. The much-awaited drop in interest rates for home loans has happened, but not at a level sufficient to pull the residential sector out of the doldrums entirely.

In response to the considerable demand for such formats, the company anticipates more national players to launch affordable housing projects this year. However, since different cities will have different costs for land and construction of such homes, developers will have to define "affordable housing" on a city level.

"We expect that at least 20 per cent of the players in residential real estate will begin to think on a portfolio rather than project level. Developers have been pricing their projects according to their expected profit margins vis-à-vis the cost of land in different locations. Buyers are not prepared to consider the initial and appreciated cost of land as a valid component of the price."

According to the report, "portfolio level" means at least one fifth of the developers will now cross subsidise their construction costs internally and sell their project at prevailing selling rates.

Two scenarios

In terms of sales volumes and market recovery, there are two distinct scenarios: buyers who were waiting for rates to drop to levels they could afford will make their moves when rates fall into their budget range. Secondly, buyers will continue to wait for the time that delivers the best rates – a point that may come and go without them being aware of it.


Decisive time

The year 2009 will see a good number of capital markets transactions, but the period from March to December will be a "decisive" time.

All business sectors have been hit by the economic meltdown, and many will generate liquidity by divesting non-core assets such as real estate. Types of enquiries are likely to be in the higher risk adjusted return segment with greenfield opportunities seeing limited interest as most investors will be investing in Asia with chasing liquidity and not higher return. Residential projects in the middle-income segment are likely to see renewed interest with interest rates declining this year.

"In 2009, we will also see the decisive arrival of sale-and-lease-back deals, in which owners currently occupying their properties will sell them and continue as lease tenants. Corporates have to address liquidity issues in their core businesses and are now eager to unlock the value of their non-core assets," JLLM said.

The biggest buyers would be foreign direct investment-compliant India-dedicated funds, domestic funds, high net worth individuals and corporate houses.


Dynamics

The year will be guided by dynamics of two contradictory forces: recession trend guided by capital market slowdown, decrease in demand, caution in cost and spending and governmental and social efforts to regain growth momentum. "For the first three to six months the impact of point recession trend will be more significant while in the later half of 2009 support to growth from government and global community will be more visible," JLLM said.

(via Business Times)

4 degrees warmer, great cities wash away

Great cities could wash away if the Earth gets hotter by 4 degrees and the Ganges in India could dry up. India would be one of the most impacted countries by global warming.

Buying a house? Get your basics right

With interest rates on a downward spiral and prospects of getting a good deal on a house, the real estate sector could witness some buying in the coming months.

Though property consultants recommend waiting for a few months for the right price, some home-seekers may be tempted to kick off their house-hunting expedition soon

Time for shortlisting

While there is no need to rush into a decision, you can start looking out for a house right away. "Once the market bottoms out, home-seekers will start making a beeline for properties and loans. If you have identified your ideal home beforehand, you will be a step ahead," says KPMG director Ashish Shah. You can jump at the earliest opportunity available — in terms of price and interest rate.

Lack of buying activity means that the market is skewed towards the buyer at the moment. "You can start quoting a price that seems reasonable to you. Try quoting a price that is 50% less than the highest price of a property in the locality commanded in the past," suggests a financial planner Kartik Jhaveri.

Identify your needs and capacity

Your heart may be set on a plush residential complex replete with state-of-the-art facilities, but that should not make you lose sight of your basic needs. For instance, if the well-equipped complex is not close to a railway station/bus stop, and you do not own a private vehicle, then commuting could turn out to be a nightmare.

Hence, when you commence your house-hunting mission, it is advisable to keep a list of must-have attributes ready. In addition to quality of construction, evaluate the existing infrastructure. Finding a perfect house is nearly impossible, but comparing shortlisted properties will help you zero in on one that meets majority of your requirements.

"This apart, the present and future market drivers, financial ability and personal investment objectives should be borne in mind," says Raminder Grover, CEO, Homebay Residential, a subsidiary of property consultancy firm Jones Lang LaSalle Meghraj.

A ruthless assessment of your financial situation — current as well as future — is essential; factor in possible pay cuts and job loss. If you are planning to sell your old flat and buy a new one, it is better to do so only after securing the sales proceeds. Though bridge loans meant for such funding gaps are available, in the current scenario, it is better to steer clear of avoidable liabilities.

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SBI cuts home loan rates to 8%, other banks may follow

In a move that is likely to force other banks to bring down home loan rates, the State Bank of India on Saturday cut its floating home loan rate to 8% on all new loans, irrespective of the loan amount. The current rates range between 8.5% and 11%, depending on the loan amounts. The new scheme will be on offer from Monday till April 30. Those who take loans in this 12-week period are assured of an unchanged rate for one year.

SBI's decision means that for fresh borrowers, EMIs on home loans of Rs 30 lakh or more will drop sharply. The EMI on a Rs 30-lakh loan for 20 years will fall by 15% and that on a Rs 50-lakh loan by 18%. The maximum benefit will accrue on home loan amounts of over Rs 75 lakh, where the interest rate comes down by 3 percentage points from 11% to 8%.

That's the good news. The bad news is that the cut will not benefit most existing borrowers. It will, however, benefit those who have borrowed under the special scheme announced by the Indian Banks' Association (IBA) in December. Under that scheme, the interest rate on home loans up to Rs 5 lakh was fixed at 8.5% and for those between Rs 5 lakh and Rs 20 lakh at 9.25%.

For existing borrowers, SBI has offered a new personal loan scheme entitled `SBI Lifestyle Loan'. Under this, they can get a multipurpose loan of up to 10% of their home loan, subject to a maximum of Rs 5 lakh, at 8% interest. However, this loan will have to be repaid in one year.

SBI's decision seems to be a response to RBI's statement on Tuesday that banks have not fully passed on to their customers the benefits of the central bank's liquidity-infusing measures since October 2008. Following that statement, Punjab National Bank, the second largest government-owned bank, also cut its benchmark lending rate by half a percentage point on Friday. But floating rates on its home loans remain between 8.5% and 10.25%.

An SBI spokesperson said the decision was taken to kick-start demand in the real estate sector. However, real estate developers are not very optimistic, with most saying it was encouraging but inadequate.

Some bankers, on condition of anonymity, argued that it was a smart move by SBI. Interest rates, they said, were likely to fall even lower by March-April and the country's biggest bank was, in fact, hoping to lock in borrowers at 8% for a year before that happened, they said.

(via Times of India)

Taking a home loan? Beware of these facts

Sameer Tiwari, a Pune based mechanical engineer, thought he had made a "prudent decision" by opting for a fixed rate, home loan five years ago from a reputed national bank.

Three years after the date of disbursement, Sameer received a letter, which said it was time for renewal of his loan and that the interest on his fixed home loan had been increased by 0.5 per cent. On checking with the bank, he learned that there was a clause in the agreement that said the fixed rate was only for a period of three years and not for the entire tenure!

This letter brought endless, sleepless nights to Sameer and his family now, they had to recalculate and replan all their income sources and planned expenses because the "fixed EMIs (Equated Monthly Instalments)" will increase!

What is a loan agreement?

A loan agreement is a 'contract' entered into between the borrower and the lender (banks and financial institutions) that regulates the terms of a loan. The loan agreement comes into picture immediately after the bank appraises your credit and the property that you have identified.

The agreement and the fine prints...

In the euphoria to acquire that dream house, various clauses in the loan agreement are often overlooked. However, these clauses have a significant bearing on areas ranging from interest rates to repayment schedules. Reading home loan agreements is generally viewed as a sheer formality and one always tends to ignore points that the agreement mentions. Moreover, the legal language used in the document often seems more alien than human!

In any case, not reading a loan agreement thoroughly can land you in a soup. Here are some clauses, which should be searched for inside a loan agreement and be clarified with your HFC (Housing Finance Company):

Reset Clause on Fixed Rates: Banks have introduced the reset clause in their fixed rate, home loan agreements so that they can increase interest rates in case the market rates increase in future. This effectively makes fixed rate loans equivalent to floating rate ones. This gives the banks an escape from interest rate surges but is a disadvantage for the borrower who is mostly unaware about such content in their agreement. Typically, the period for such reset clause varies from two to five years depending on the bank or housing finance company you borrow from. So read this clause in your loan agreement carefully.

Force Majeure Clause: There may be certain loopholes in your home loan agreement that allows the bank or home loan company to unfix and raise the fixed interest rate under exceptional circumstances. This will be mentioned under the 'force majeure' clause of your agreement. However, the differentiation between 'exceptional circumstances' and normal circumstances is always a tough task.

For e.g. A cut in banks' prime lending rate is not automatically translating into reduction of all PLR-linked loan rates. The reason being cited is that the bank's margins are under severe stress due to lending rate cuts. They feel interest rates on some existing sub-PLR loans do not even cover their cost of funds and any further fall in those sub-PLR loans will worsen the matter. Therefore, some public sector banks have revised the existing loan contracts in case of select sub-PLR borrowers, by using the 'force majeure' clause, meaning a 'situation beyond control'.

Defining a Fault: A 'fault' for a layman often means a non-payment of an EMI during the loan tenure. However, your bank or HFC may have a different meaning for this term. The home loan agreement of few banks defines fault as a case when the borrower expires, the borrower is divorced (in case of more than a single borrower), or the borrower is/are involved in any civil litigation or criminal offence. Therefore, you must be clear what your lender means by the term 'fault'.

Security cover at times of falling property rates: This clause states that a bank is eligible to demand additional security when property prices fall. Even if you are loyal on your EMI payments, this clause demands a security cover in addition to your loan amount and if a borrower fails to provide such a security then he/ she may be declared a defaulter by the lender.

Floating is Fixed and vice versa: Floating rate as well as fixed rate home loans are linked to the Benchmark Prime Lending Rate of a bank or the HFC from which you take a home loan. Hence, if the BPLR is 13.5 per cent and floating rate home loans are at a discount of 1.5 per cent to the BPLR, then the interest rate on a floating rate home loan is 12 per cent. So whenever the BPLR is raised, then the interest to be paid on the floating rate home loan goes up. The vice versa also holds true.

However, banks and HFCs do not show the same alacrity to reduce the interest rates, which they might have shown when increasing it. When interest rates come down, banks and HFCs offer lower rates to new customers but existing customer continue paying the higher interest rates. Check with the bank or HFC regarding the details about such clauses.

These clauses are overlooked by most home loan borrowers and some of them eventually end up paying interest rates, fees, or hidden charges completely out of the blue. It is imperative that you have a thorough understanding of such clauses with your bank or HFC.

(Rediff.com)

2009 will separate men from boys in real estate

Global uncertainties arising out of the sub-prime meltdown, a slowdown in US and weakening of the dollar, the ripple effect has also been felt in India.

With inflation no longer a worry and with the threat of a slowdown looming large, the Indian government is going all out to give the necessary boost to the economy, including the real estate sector. Amir Hashmi, Correspondent, HT Estates speaks to Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj on what can be expected in 2009.

Since India is not isolated from the global meltdown, what more can be expected in the real estate space in 2009?

The recent measures taken by the RBI will need to couple with lowered property prices and further injections of liquidity to effect any significant changes.

Until then, domestic demand is likely to sink even further, and international interest will remain at cautious levels before the situation gets better. There has already been an overall drop of demand to the tune of between 45-50%.

We expect these figures to reflect a more positive scenario in 2009, at least with respect to residential real estate.

The fallout of the ongoing financial crunch and a justified watch-and wait stance by homebuyers will set some badly needed market adjustments in motion between January and March, 2009.

We also expect that, in 2009, the circumspection currently evident on both the domestic and international investor fronts will give way to cautious forays.

A decisive turnaround phase will come only in another 18 months to two years, but 2009 will see the groundwork for revival being put in place.

In terms of liquidity, we will definitely continue to have a challenge situation on our hands.

However, in 2009, we expect more innovative financial structures and liquidity mechanisms to ensure that delivery of the development pipeline is not affected.

Is 2009 actually the ”Year of Turnaround?” Or is the worst yet to come? If so, what can we expect?

The structural adjustment programme of the early 1990s initiated the liberalization of the Indian economy. High appreciation rates on India’s property market began with the reduction of interest rates that the NDA Government instituted after 2001.

In early 2004, home loan rates sank to a record low of 7.5% and this paved the way for the alarming spiking that previously typified the country’s property rates in many Indian cities.

The very amenable borrowing rates encouraged individuals to avail of home loans to buy residences, where actual property purchase had only been an option for the considerably rich before that.

This resulted in a huge demand for quality real estate all over the country post 2003. After March 2005, Indian real estate rates displayed an unstoppable upward curve - until the meltdown that began in late 2008.

No matter what it took to rationalize the market, we are still talking about a badly needed correction here.

Yes, 2009 will indeed be a turnaround year that will decisively separate the men from the boys, finally introduce new transparency parameters and keep the focus squarely on the end user.

Are government sops / stimulus packages enough to revive demand in realty - across residential, commercial and retail properties?

No. Players need to rationalize their asking rates, and end users must have the maturity to abandon their chronic watch-and-wait stance and make their move when the rates fall into their purview of affordability.

Only when Government initiatives dovetail with the positive actions of developers and end users will the market see renewed demand again.

What more policy initiatives can be undertaken in such a grim / dampened scenario for real estate sector to ensure more transparency in land / real estate dealings?

The introduction of a proper system for accreditation for those engaged in land valuations and a uniform stamp duty structure for all states in India would be a decisive step forward.

However, we are on the whole convinced that the Government is doing all it can under the present circumstances.

Is it a good time to invest in Tier-II cities? Why / why not?

Developers are currently focusing on market catchments that they are familiar with, and where there is established rather than projected demand.

This, in the current context, means the metros rather than Tier II cities. Certain Tier II cities such as Pune and Hyderabad continue to offer good investment potential, but investments must be done judiciously and in context with local market expertise.

MMRDA plans iconic tower at Wadala, Mumbai

With a height of 526 m (1725.28 ft), MMRDA mandarins say it will be the world's third tallest building after the under-construction Burj Tower in Dubai and Freedom Tower in New York.

The project, if it ever gets through with approvals, is expected to fetch the government an annual lease rent of Rs 1,800 crore. The project, to be submitted to chief minister Ashok Chavan for approval, will cost Rs 4,128 crore. The tower will have five floors reserved for parking and 16 for other essential services.

The remaining 80 floors will house office spaces and other commercial, recreational, academic and entertainment facilities.

"The one we have planned at Wadala will be bigger than that of Taipei's 101-floor structure; ours will have more height than that. While the cost of construction will be Rs 3,600 crore, that of developing infrastructure in and around will be Rs 500 crore," said an MMRDA official, adding that it would require no state funding and would be built on a build-operate-transfer basis.

The state is keen to rope in a global firm to attract MNCs and corporates to hire spaces in the building.

Proposed on a 1.4-lakh-sq-m plot, its built up area with 4 FSI will come to around 60,00,000 sq m. The concession period for the private firm will be a maximum of 35 years.

Anand Gupta, honorary general secretary of Builders' Association of India, said such structures were "feasible in terms of location and financial viability". Told that factories (such as RCF) were located nearby, he said such factors could not be constraints.

Aniruddha Paul, director of Raheja College of Architecture, said even though there was no need for high-rises to brand Mumbai abroad, the project was feasible. "Such skyscrapers can be green buildings as well. I will suggest that proper environmental care be taken," he added.

(via Times of India)