Realty projects, home loans set to get costlier

The Reserve Bank of India's decision to revise repo rate and cash reserve ratio is expected to bite the realty industry, which is already burning under a slowdown and price correction.

Loans for housing will get dearer and interest sensitive sectors like real estate will be hit hard, said Mallinath Madineni of Arthaeon Financial Services.

"We expect banking and real estate stocks to under-perform in the near term," Madineni added.

Punjab National Bank on Wednesday raised its prime lending rate by 100 basis points or one percentage point to 14 per cent from August 1. Other public and private sector banks are expected to follow suit.

Nahar group chairman Sukhraj Nahar said an increase in the cost of borrowing would in turn raise the cost of a real estate project.

"The cost of borrowing goes up not only for builders but for all ancillary and input industries as well, leading to a higher price tag for the real estate product," Nahar told IANS in Mumbai.

He said the rate hikes would eventually hurt the balance sheets.

Sunil Malhotra, vice-president (finance) at real estate firm Omaxe Ltd, said the flow of money to the sector would be tighter than before.

"Developers will now have to look towards other sources of funds, which could be on higher rates," he added.

Agreed an analyst with a leading Mumbai-based brokering firm, who wished to be unnamed. "Developers will now have to look to other sources of funds like foreign direct investments and so on," he said.

Parsvnath Developers chairman Pradeep Jain said the cost of funds for the company's upcoming power projects would go up significantly.

"This will in turn be passed on to the buyer," he said.

Echoing a similar sentiment, Punjab National Bank chairman and managing director KC Chakrabarty said the pressure seems inevitable. "Bankers would pass on the burden to customers."

A 0.5 per cent increase in home loan rates - which appears most likely - will increase the tenure of a Rs 3 million, 20-year loan by nearly three years.

Real estate demand in major Indian cities has been hit this year as urban middle class buyers, fretting over a five-year high in property prices, have stayed away from investing in property as interest rates climbed rapidly.

"Demand has slackened 10-15 per cent since the beginning of the year," Sarang Wadhawan, head of HDIL, India's third largest developer, said last week.

However, a few real estate agents said the rate hike could cause a possible softening of property prices, even in markets such as Mumbai.

"Developers are sitting on unsold stocks of completed apartments. But potential buyers are sitting still in anticipation that prices will come down," said a real estate agent in Mumbai declining to be named.

(via Hindusthan Times)

Beyond Decoration

Educated in a monastery, poet, author and journalist P J Kavanagh’s early thoughts of becoming a monk were thwarted because he 'liked girls too much'. The Catholic influence though remains (he once appeared in Father Ted).

Kavangh said in an interview: ‘I want to express, without frightening the horses, that there is something about. It would be treason to deny it. Not something religious, that is a slippery word. Or spiritual. There is joy or hope. I think it's joy.’

The death of Kavanagh’s first wife, Sally, forms the backdrop to this poem’s description of finding grief mysteriously contained – and yet not removed. It is a wonderful, funny, poignant, but also hopeful piece about being met by this ‘something’.

Beyond Decoration

Stalled, in the middle of a rented room,
The couple who own it quarrelling in the yard
Outside, about which shade of Snowcem
They should use. (From the bed I'd heard
Her say she liked me in my dressing-gown
And heard her husband's grunt of irritation.
Some ladies like sad men who are alone.)
But I am stalled, and sad is not the word.
Go out I cannot, nor can I stay in,
Becalmed mid carpet, breathless, on the road
To nowhere and the road has petered out.
This was twenty years ago, and bad as that.
I must have moved at last, for I knelt down,
Which I had not done before, nor thought I should.
It would not be exact to say I prayed;
What for? The one I wanted there was dead.
All I could do was kneel and so I did.
At once I entered dark so vast and warm
I wondered it could fit inside the room
When I looked round. The road I had to walk down
Was still there. From that moment it was mean
Beyond my strength to doubt what I had seen:
A heat at the heart of dark, so plainly shown,
A bowl, of two cupped hands, in which a pain
That filled a room could be engulfed and drown
And yet, for the truth is in the bowl, remain.
Today I thought it time to write this down,
Beyond decoration, humble, in plain rhyme,
As clear as I could, and as truthful, which I have done.

(From Collected Poems, Carcanet Press 2001, and reproduced from here)

Foreign architects make real estate projects attractive

In their bid to score over their rivals, many developers are now going abroad to hire noted architects who can design their new projects. Not withstanding the fact that currently the realty sector is seeing downward trend, still some of the noted design companies from other countries are opening their Indian offices to cater the real estate market.

The likes of Godrej Properties, Unitech, Omaxe, Hiranandani and many more are hiring foreign architect firms. As recently as last year, Godrej hired DP Architects of Singapore to design their 50-storey residential project in Mahalaxmi area of Mumbai. US-based Hellmuth Obata Kassabaum Inc (HOK), has already worked with Indian builders such as Unitech, Hiranandani and many other big firms. Will Roes, programme manager of HOK India says that they bring a global perspective and diverse expertise to a project.

It is true that hiring foreign designers and planners have many advantages. But, the negative side of hiring them is that in some cases they do not understand the complexities of doing business in India, including tax laws and also cultural consideration , feels Devinder Gupta of realty advisory Century 21 India.

In an interview, Niranjan Hiranandani, the managing director of the Hiranandani group says that there is a big difference in approach between Indian and foreign firms that undertake design jobs. He feels that international firms are more empathetic to developers’ needs and aspirations. “

They find a solution which is required for a particular site, location and land. They are also more in tune with the land use demand ,” says Hiranandani. “They are more open to new ideas. On the other hand, Indian firms have a trial and error approach to design and planning. They also try to impose their ideas on the developers.”

Singapore based firms like RSP Architects Planners and Architects 61 Ltd are also designing projects in many big cities in India and are serious of winning more projects here. RSP has reportedly opened their offices in Mumbai, Bangalore, and Hyderabad. It designed the international Tech Park in Bangalore.

It has also designed offices for IT giants like Wipro, Satyam and Microsoft. Devinder Gupta informs that legendry Unitech group has taken the services of great golfer Greg Norman to design the lush green golf course for their prestigious Unitech Grande project in Greater Noida. Clearly, the Indian realty firms are taking the services of foreign firms and experts to make their projects attractive.

Meanwhile, some Indian architects feel that global firms are definitely good when it comes to designing projects. But, they are critical of some of the mismatch. On many occasions, the initial designs done by them don’t make any sense. Finally, Indian architects have to enter the scene to undo the damage. CMD of Omaxe group, Rohtas Goyal says that with money starting to flow into Indian realty sector, it has become necessary to bring global architectural practices and expertise.

Moreover, customers fancy projects designed by overseas firms. From the developers’ point of view, it becomes a good marketing and sales proposition. It may be mentioned here that Omaxe has recently hired Indian Davis cup Star Leander Paes company to help them design the tennis courts in their residential projects. Those who follow the realty market of India feel that as competition hots up and properties get bigger, developers going to hire global architects to design their projects will become more frequent.

Moreover, builders are entrusting the design work for commercial projects and master planning of a mixed use developments to foreign firms.

It is also learnt that several developers choose foreign architects only for their large projects. "It is affordable to hire an international firm to master planning if there is a big volume of work. Time is never an issue with them. They keep their words," says Anil Sharma of Amrapali group.

Meanwhile, there are some people in realty sector who feel that foreign firms will continue to win projects here, but they will be hired for a limited purpose. They would design the master plans of the projects, while the execution part would continue to be taken care by the Indian firms.

(via Economic Times.)

White on white decor

Anyone who thinks that white doesn't "count" as a color hasn't spent much time exploring the possibilities of using white on white decor. And anyone who thinks there is only one shade of white hasn't been in a paint store lately, where you can find hundreds - literally, hundreds - of shades.

So what tips can we give you about white on white décor?

First, recognize that whites come in a wide range of shades and tones. There is a bright, flat white that you find often on walls, and a bright, glossy white that is often used for trim to contrast against a bright or dark wall color.

There are eggshells and creams and off-whites.

The best way to get a handle on white on white décor is by simply going to the paint store and getting a fistful of white paint swatches. Bring these home and tape them to the wall, and you'll see how wide the range of whites there really is. Try looking at the swatches under different lights, from a bright overhead light to natural window light, to a faint light coming in the window at light. You'll see not only how many different whites there are, but also how they change depending on the light.

Here, let's look first at this all-white bedroom. This is an example of using one shade of bright white. Note how flat everything appears here; you can barely make out the line between the wall and the ceiling. The only color in this room is the doorknob and the edge of the dresser, and the room looks anything but inviting.

What could we do with a room like this? Even without painting the walls, an off-white spread on the bed would help, and then piling on pillows in various whites would also change the whole look.

The trick with using a lot of white on white décor in a room is to make sure you have a variety of tones, shades, and textures. A room with a a woven white rag rug, white ceramic lamps with handmade paper shades and slipper chair in brocade eggshell with a throw pillow in raw silk cream gives a room enough variety so that it looks elegant, not stark.

Take a look at this living room, which is done mostly in whites. The draperies have plenty of heft to them, creating folds which add interest. They contrast nicely with the smooth white rug, and the detailing on the mantel adds interest as well. The tones of this white on white decor blend nicely together, and yet they are slightly different from one another.

Having an all-white room also allows you to really make a statement with the color you do have in the room. Here, the potted tree and the piano are real eye-catchers. Any time you want to draw attention to something with color, such as a work of art or a special chair, just create an all-white room around it, and it will really stand out.

Of course, white living rooms must be reserved for people who can take meticulous care of keeping everything clean. Even with advances in stain-resistant fabrics and cleaning solutions, white furnishings will indeed show the strain of living with children and pets.

Asian cities go green

The question "Could we do better?" motivated New York-based SHoP Architects to take on one such project, the high-tech Sector 61 node of Gurgaon, India.

"We feel like if you can set a good example there, with all the building that's about to occur, you can have a much bigger impact than designing some LEED Platinum building here in New York," says SHoP co-founder Gregg Pasquarelli.

Sector 61 is one among a series of commissions in which internationally known designers are creating whole neighborhoods and cities to capture and direct Asia's sudden urbanization. Other examples include the Shanghai satellite city Dongtan, designed by Arup, and the competition for a 1.6 million-square-foot eco-quarter in Singapore, recently won by Foster + Partners.

"The millions descending on Shanghai or Seoul depopulate the countryside and exceed the city's capacity, with only one or two cities funneling the shift," explains Diana Balmori, principal of the New York–based landscape and urban design firm Balmori Associates. "So the effort is to deploy this growth to some place, give this new city a reason to exist, and bring population to it."

Balmori's in-house studio Balmorilab also is participating in that effort. Its design for Public Administration Town (PAT) comprises one district within the larger ring plan for Multi-Functional Administrative City, located in South Korea halfway between the capital Seoul and Busan, on the south coast. President Roh Moo-hyun is establishing the city in order to transplant several government offices from the capital. Balmorilab, with Haeahn Architecture and H Associates, won the open competition to design PAT and several of its key buildings.

Although PAT is the ostensible downtown of Multi-Functional Administrative City, Balmorilab has given it a keenly anti-iconic character. Buildings, totaling approximately 9.7 million square feet, will be open to public movement and nestle into the existing topography to create a continuous roofscape. The flat plane, dotted with plants as well as photovoltaics, also expresses PAT's commitment to sustainability; other green features include graywater recycling, titanium dioxide paving, and methane production from organic waste. "The city that uses living systems, rather than industrial-era systems, offers a better quality of life from day one," Balmori says. Construction will start next summer, and the project should be largely completed within two years.

Sector 61, in Gurgaon, India, will also break ground next year. This former agricultural village is transforming into a dense corridor of high-tech office campuses and apartment buildings as growth spills over from New Delhi. The multi-use, privately developed parcel will accommodate 73,000 people. SHoP is designing all of its 100 buildings. Pasquarelli says the plan will stress sustainable strategies including solar orientation and pedestrian movement instead of the deployment of green technologies. "The cost of construction in India is so much less that to purchase Western technologies throws the entire budget out of whack," he explains, adding that good planning can reduce carbon footprint more than technological supplements.

Whether Asia's future cities go green thanks to technology or to more passive principles, the newest generation of planners acknowledge that predecessors such as Arup and William McDonough, FAIA—who is expected to make an announcement soon about his Chinese eco-cities projects—have established a green standard for their own work. What observers should expect from the next wave, says Balmori associate and landscape design director Mark Thomann, is "a formal approach to sustainability that's really expressing itself."

(via Business Week.)

Eco-friendly home improvement

Just a few small changes to your home can make a big impact on the amount of energy and water you use. Take a few minutes to implement these easy energy adjusters, and you'll save money while helping to save the planet.

International real estate transactions dip 46%

Credit crunch and economic uncertainty have taken their toll on the global property market, with transaction volumes falling by 46 per cent in the first quarter, according to a property report.

Investment throughout Asia and other emerging markets continued to grow, as sales of major commercial properties globally totalled $154 billion (Dh565bn) in first quarter against $283bn of property that changed hands in first quarter of 2007, New York-based Real Capital Analytics said in its latest report.

Property sales figures for April and preliminary results for May show sales in Asia have started to weaken and drop in sales in the United States and Europe have become more severe.

The United Kingdom has led price declines with the United States following behind. Since September, the initial yield on acquisitions of commercial property has increased by more than 25 basis points in the Americas and by almost 40 basis points in Europe.

Cap rates in Asia have continued to fall, reflecting both the growing wave of capital and expected upside for its emerging markets.

Acquisition of land and development rights in Asia has totalled almost $29bn so far this year, making it the most popular target for investors.

Office properties in Europe are a distant second with just under $20bn of transactions, followed by offices in the Americas and Asia with each recording between $15bn and $16bn of transactions through April.

Developable land in Asia posted not only the greatest growth in transaction activity but also the largest gains in pricing in the first quarter. However, all other property types in Asia except apartments recorded gains in both volume and prices. Prices fell lower for all property types in Europe, but several did manage gains in volume. Conversely, no property types posted higher sales volume in the Americas although average prices in the industrial, retail and hotel sectors did increase modestly. Sellers in the United States in particular are opting not to sell at discounted prices, causing volume to plunge while prices for the few transactions that are successfully completed appear rather resilient. However, land prices in the US are falling quickly and have experienced the greatest decline in value so far this year.

EUROPE

Nearly $56bn of major commercial property sales were completed throughout Europe, Africa and the Middle East in the first quarter. In a significant turn of events, Europe surpassed North America as the most active marketplace for property transactions. However, since this status was achieved while suffering a 40 per cent drop in sales compared to the 70 per cent decline experienced in North America, this victory could be considered pyrrhic. It may also be short-lived, as property sales in Asia are not far behind and are growing fast.

Additionally, property sales in Europe are off to a very weak start in second quarter by plunging 71 per cent in April when compared to a year earlier.

Virtually all property types and most countries within Europe have recorded a sharp decline in transactions this year. This decline has been much more severe for large deals, including portfolios. Comparing the first four months of 2008 to 2007, the number of deals of more than $1bn dropped from 13 to just five while portfolio activity dipped 63 per cent and entity level deals have been slashed by 89 per cent.

Retail and hotel transactions experienced the sharpest drops, each down around 60 per cent. Sales of office buildings, Europe's most actively traded property type, decreased by 48 per cent, while industrial sites and apartment properties plunged by 41 per cent and 55 per cent, respectively.

Despite the slowdown in 2008, Britain still retained its status with the largest volume in Europe. Overall volume decreased by 61 per cent but activity in London was off just 42 per cent.

Germany, Sweden, Belgium, Denmark and Ireland have all posted even greater declines in property sales than Britain. France, Russia and Poland have faired slightly better with sales off by 40 per cent to 50 per cent compared to a year ago.

Finland, the Netherlands and Italy saw sales volume decline by 15 per cent or less while Spain, Turkey, Romania and Bulgaria were among the largest of the few countries in Europe that recorded a gain in transactions. Totals in Spain were elevated due to PropInvest's acquisition of the Boadilla del Monte Financial Complex on the outskirts of Madrid for more than $2.8bn, making it the largest single property transaction ever recorded.

In the retail sector, Italy's volume increased by 78 per cent in the first four months of 2008 over the same period in 2007, thanks to ING and Government of Singapore's Investment Corp joint purchase of the Roma Est Shopping Centre for $594m. Several emerging markets have posted significant gains recently. Office transactions increased in Poland and Bulgaria by 39 per cent and 198 per cent. And of course, land – the driving force of emerging market property investment – is up 325 per cent in Eastern Europe.

ASIA

The region, which includes Australia and New Zealand, posted largely positive trends in the first quarter but is starting to lose some of its momentum. Sales of major commercial properties in Asia totalled $48.3bn in the first quarter, a 27 per cent increase from a year earlier.

The Asia investment market is also being weighed down by the economic uncertainties and adverse credit markets that have caused property sales to plummet in other regions of the globe.

The gains in the first quarter mask a gradual slowing in activity that has become evident. In 2007 the average monthly volume was about $19bn; in the first four months of 2008 it was about $14bn. Volume reported in March represented a 25 per cent decline from a year ago and April's totals were even weaker. Less than $10bn of property sales were reported in April throughout Asia, a decline of 42 per cent.

Global market factors are certainly contributing to the slowing market, but new regulations on land deals instituted by China are also partly responsible, the report said. From October through January, auctions of major land parcels in China totalled more than $10bn each month, but since the new regulation, the monthly volume has sunk to $3bn.

There are still several dazzling growth stories in the first quarter of 2008. Property acquisitions in India and Vietnam in the first quarter were multiples of levels posted a year ago. Activity doubled in Malaysia and grew by 50 per cent in Japan. The office sector in Japan was very active in the first quarter culminating with the $1.55bn.

Despite the recent fall in land sales, total volume in China was still up 70 per cent in first quarter to equal $21bn. Sales in Hong Kong were flat in the first quarter, but a strong April has caused its market to be up 21 per cent year-to-date.

On the contrary, the sales volume in Australia and New Zealand has seriously decreased, by 47 per cent and 24 per cent, respectively. Both countries did poorly in almost every sector as a number of major listed property companies struggled with the high debt levels incurred from a binge on property in the United States, the United Kingdom and Japan in 2007.

The total volume in Singapore was down 36 per cent in the first quarter mainly due to the 85 per cent volume decline in the apartment sector as investors expect further weakness in housing; volume in the office sector still grew 18 per cent to reveal the strong demand of Class-A office.

Developed countries have seen property transactions fall by 25 per cent this year while acquisitions in the emerging markets are up a healthy 68 per cent. Emerging countries accounted for $102bn of property sales, representing 45 per cent of total volume in Asia.

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