Ravi Karandeekar's Pune Real Estate Market News Blog: indian fiscal stimulus package

Showing posts with label indian fiscal stimulus package. Show all posts

Tuesday, October 27, 2009

Interest rates unlikely to go up (immediately)

"Instead of focusing on policy rate change, take steps to arrest rising consumer prices"

RBI's policy rate change:

Industry and individual borrowers can rest assured that any tweak in the RBI's policy rate on Tuesday may not have immediate bearing on their pockets, economists and policymakers said.

Enough funds to lend:

"There is enough liquidity in the system while deposit rates in banks currently are quite high at 20% in comparison to the credit rate of 14%," said D H Pai Panandiker, head of think tank RPG Foundation. This alone will ensure surplus funds to lend and would also keep a check on the interest rates, he added.

Prime Minister's Office:

Sources in the finance ministry said the central bank was unlikely to make any changes in the current interest rate regime as the government had conveyed to RBI governor D Subbarao that it was not in favour of an exit policy on stimulus till global recovery was in sight.

To read more, please, visit The Times of India

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Friday, January 16, 2009

Severe cash crunch and falling sales bring more than 450 real estate projects in Pune to a standstill - Promoters and Builders Association of Pune

Is PBAP begging for your sympathy?

"Around 450 real estate projects in Pune and surrounding localities were at a standstill since developers do not have cash in hand. Since projects are held up, more than 5,000 workers have lost jobs and a number of engineers, architects and allied workforce too have received pink slips." Rohit Gera.

No! PBAP is threatening you!!

"Be ready to face the consequences,!!"

"Next year, most of you will be homeless!,"

Builders in Pune are warning you!

Because of this "standstill" by December 2009, only 16,000 new apartments would be ready for possession in Pune while the demand is more than 50,000.

You can take it as an advance intimation of "property price hike in 2010!"

Who is responsible for "No Booking, No Cash and No construction?":

Certainly not PBAP!

Not irrationally inflated property rates in Pune!

But...
the blame game continues!

Are builders unhappy about this?

Yes, builders are very much unhappy. In search of happiness, most of them have gone to Chinese gambling enclave of Macau!

Poor fellows!! What else they could do?
To read more, please, visit - Kaustubh Kulkarni-Business-Standard

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RBI’s relaxation provides builders with an opportunity to hold on to high property rates that were quoted before the market slump

Builders, reluctant to reduce rates, keep on blaming banks for causing the market slump and lower sales volumes by charging high rates on home loans

The banking system’s plan to bail out cash-strapped housebuilders by restructuring loans to help them survive a market slump is under strain, as builders have gone back on their promise to sell properties at reduced rates, according to senior bankers.

Some bankers have complained to the central bank that after making use of the relaxed rules, which permit banks not to classify loans to real estate firms as bad loans the moment they are restructured, builders continue to hold on to artificially-inflated prices.
To read more, please, visit - The Economic Times

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Wednesday, January 7, 2009

"What is come first egg or hen.?"

Does overall economic development stimulate the real estate or real estate stimulates the economic development?

In this world such questions r twist our minds:

An year ago, nish asked the question,"What is come first egg or hen.?" on Yahoo India Answers.

Out of 27 answers nish thought that Sherlock Holmes' answer "If you go by sequence in your question, egg.", was the best answer.

In his comment nish said "u r correcr .i ask simple Question,but people makes it complicated" and he declared that his question is resolved!

If belive God created the world, then hen comes first.

If nish had been from "Indian real estate sector", i am sure, he would have chosen the answer, "If belive God created the world, then hen comes first.", given by Smile- conquers the world.

Because, Indian real estate developers believe that they are here to complete the work of God. He created every thing, land, plants, animals, rivers and hills but homes. Builders are completing God's unfinished job by building homes and doing a great favor to human beings which otherwise would have lived in the caves or on the trees!

Considering the financial background of Indian Prime Minister, builders are not talking to him like they talk to their customers, the needy home buyers. They are talking about GDP, economy and employment to explain him what comes first, egg or hen, housing or economic development! Yes! read how Chairman of Hiranandani Developers and Chairman of Unitech are doing their best to explain the divine truth to ex-governor of RBI, International Monetary Fund (IMF) and the Asian Development Bank (ADB) and ex-finance minister Dr. Manmohan Singh!

1) Joining hands for more homes

2) Real Estate: Correct time to innovate

By the way, what is your opinion about builders role in the economic growth of the nation?

Builders are not happy.
Builders are not given proper credit for their contribution in the GDP growth.
Government do not give them the status of an "industry".
Banks find them risky and do not lend funds freely.
Housing group of IT professionals, off course, working in Hinjewadi, complains about being "exploited" by the builder lobby.
Has it ever come to your mind that builders contribute a lot in creating wealth or do you think that they only live off the wealth created by you all?
Please, share your views in the comments! (Comments Policy)

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Tuesday, January 6, 2009

Government's intentions to help the industry should percolate to the banks, which are steering clear of the real estate sector - Lalit Kumar Jain

President of the Promoters and Builders Association of Pune (PBAP):

Lalit Kumar Jain said the liberal foreign investment norms, applied to township projects, should have been applied to any housing project eligible for foreign direct investment(FDI).

"Once the construction sector a major part of which is housing is on a roll, it will trigger a cascading effect to create demand for nearly 165 different industrial products," he said.

Jain added that the government's intentions to help the industry should percolate to the banks, which are steering clear of the real estate sector.

"The government seems to have allowed the interest rates to move according to the market dictats," Jain said, adding that there should not have been artificial categories created to determine the rates of interest.

R Vasudevan, managing director, Vascon Engineers:

Expressing happiness over the announcement of the relief package, R Vasudevan, managing director, Vascon Engineers, said, "The government is giving impetus to the housing sector. Developers can now show some innovation in the financial closures for their projects and complement the government's efforts."

Manish Kaneria, director, Mont Vert:

Manish Kaneria, director, Mont Vert Luxury Homes, said, "The size of the stimulus package is very small compared to the size of the Indian economy. The steps are welcome, but they should have come much earlier, in much larger proportion and across the entire segment of industries. Home loans from Rs 15 lakh to Rs 45 lakh should be promoted by giving preferred lower interest rates as most of the under-construction housing and potential buyers belong to this segment."
To read more, please, visit - 2nd boost good, could have been better

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Monday, January 5, 2009

Not Rock-Bottom for property buyers in (Pune) city - Ritu Goyal Harish

The real estate market in the country has dipped, but city builders say a Rs100-Rs200 fall is not indicative of a slowdown. It is part of the business policy!

Most of us will agree with Ritu! Property rates in Pune are not down by 15 % or 25 % like in Mumbai or Delhi - NCR. In her well researched article, published in DNA (page 4) on Jan 3, 2009, Ritu presents 'realistic' picture of Pune real estate market. You may not like to accept it, but it looks like that Pune property rates may not go down any further! In this situation, what are you planning to do?:

1) Are you going to give up the idea of 'waiting' for the property rates to come down? Are you going to forget job - economic uncertainty and take advantage of 'low home loan interest rates' and book a flat at the current property rates?

2) Are you just going to ignore the appeal of taking part in 'stimulating the Indian economy and achieving 7 % growth' because you do not want to carry the burden of loan liability for next 10 or 15 years?

3) Are you going to behave not as a property buyer but as a project financier who is ready to lend interest free funds to the builder and use 'low interest rate' as a trump card to negotiate property rates?

Please, share your plan in the comments. (Comments Policy)

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Sunday, January 4, 2009

Planning a home buy? Do it in first 3 months of 2009

If you had been flip-flopping over buying a home in 2008, then your best chance to get one at an attractive price is in the first three months of 2009. Here’s why:

1) Deflation = from a buyers’ market to a sellers’ market.... (?):

Firstly, experts feel that residential prices are likely to stabilise from April onwards with fears of deflation looming large over the Indian economy.

Moreover, the persistent decrease in the general price level of goods and services is likely to bring down interest rates to affordable levels, which will mean that the pendulum will shift from a buyers’ market to a sellers’ market, from April.

2) Price cut:

With real estate developers expected to further cut prices over the next three months, experts feel that this is the best time to let their indecisiveness work to your advantage.

Price Correction: 15-20% (2008) + 10% (2009)!

"2009 will open up opportunities for investment in real estate as property prices have corrected by around 15-20% in 2008. I expect a further correction of 10% over the next three months. Price stability should arrive by March 2009 and will not climb quickly. The first three months of the new year is going to witness a surge in residential sales." says Anuj Puri, chairman and country head of Jones Lang Lasalle Meghraj.

A buyer’s market!

"As a buyer if you have good negotiation skills and can avoid brokers, you might even avail an extra discount," says Arvind Mahajan, executive director of KPMG India.

"Owing to cash crunch, developers are under immense pressure and are looking for ways of funding their future projects. Prices have already dipped 15-20% and interest rates are also coming down. The amount of real estate inventory that we have now makes it undoubtedly a buyer’s market," he says
To read more, please, visit - Raja Awasthi & Aman Dhall-The Economic Times

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Would prices start rallying again?

Prices maintain the equilibrium between demand and supply:

"The stimulus package announced by the government will re-generate the demand cycle in the housing sector, which remained subdued on account of high home loan rates, high prices of residential and general economic condition," real estate consultants, Jones Lang Lasalle Meghraj chairman & country head Anuj Puri said.

"Prices maintain the equilibrium between demand and supply. The only fear is if realtors cut supply in accordance with slumping demand, prices would start rallying again. Hence, supply needs to come into the market and the government's move is a great step towards that," Puri said.
To read more, please, visit - The Times of India

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Real estate developers expect more people to buy homes now to reduce cost of funds for developers and ease the liquidity pressure!

Real estate companies were facing a tough liquidity situation as home buyers deferred new purchases due to high interest rates and banks stopped lending to real estate firms due to fear of mounting defaults.

Experts are still sceptical of banks passing on the entire benefit of the reduced rates to their customers. “The RBI has cut rates in the past but we have not seen much from financial institutions. Only when home loan rates come down to 8-8.5 per cent, can we see some difference,” said Anuj Puri, chairman, Jones Lang LaSalle Meghraj.

External Commercial Borrowings:

Developers said the government’s move to allow external commercial borrowings (ECBs) in development of integrated townships was a big step. Hitherto, realty developers were prohibited from raising funds through ECBs as foreign funds were considered the main trigger for the rapid increase in property prices.

"If we can raise money abroad, it will supplement bank funds and customers’ money," said JC Sharma, managing director of Sobha Developers.

However, Hiranandani Constructions Managing Director Niranjan Hiranandani said the relaxation in ECB norms would not immediately help property companies as the liquidity situation abroad was tight. "Not much money is available in the international market. The benefits will come after a couple of months when liquidity improves," said Hiranandani.

"I expect more people to buy homes now. It will reduce cost of funds for developers and ease the liquidity pressure," said Ravi Ramu, director of Bangalore-based Puravankara Projects.
To read more, please, visit - Property firms see buyers back in market

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Saturday, January 3, 2009

Managing liquidity will be the key challenge - Mona Chhabra, Ernst & Young

In an interview to Praveen K Singh, the associate director—real estate practice at Ernst & Young, Mona Chhabra, says that at the moment, a focus on project development (execution) of projects which are conceptualised on a rigourous demand-supply analysis is imperative. Excerpts:

How you foresee the New Year?

The challenges of 2008 will continue for some time into 2009. However, the good news is that the Indian economy is still a growing economy and is likely to grow at a rate next only to China’s in 2009. This along with demographic factors such as a growing population are inherent demand drivers for real estate. Hence, after some period of price stability at affordable levels and with an uptick in the economy, things are likely to gradually improve.

What are the major challenges in front of the sector?

The key challenge in front of the sector is managing liquidity. While a lot of capital has gone into acquiring land banks in the last few years, it will take some time to generate cash flows from these. Further, in case of projects under development, the economic slowdown is affecting sales. This along with the fact that a lot of companies have debt, has created a liquidity challenge for various players in the sector.

What about developers holding to the price line. Do you feel that it needs corrections to cope with the downturn?

In case of existing projects where some sales have happened, it is difficult for developers to reduce prices per se since the previous bookings can get affected. However, some players are offering discounts, easier payment structures, etc. without reducing the basic price.

In case of new projects, the need is even more apparent now for a better assessment of demand and the product price matrix.

Product positioning and differentiation would help since it would reduce the me-too product offerings and hence, protect against supply overhangs.

For instance, earlier we saw a plethora of premium housing projects with now everyone talking about affordable housing. In case of the latter, the good part is that the implicit meaning of “affordable” tends to vary across different players with the variations being across a relatively broad price spectrum.

Why banks are shirking away from lending and private equity shying away?

They have not really stayed away - both the banking sector and private equity funds have provided capital to real estate players as per their risk-return matrix. The banks have extended credit within the ambit of the RBI guidelines.
To read more, please, visit - expressestates

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Credit flow to developers - RBI's interest rate cuts and the fiscal stimulus package do little to address the realty sector’s main source of trouble

"Rate cuts will definitely have positive impact on demand for homes.
RBI’s actions in the past have eased liquidity in the system,
but credit flow to developers still remains an issue," says Kumar Gera, chairman, Gera Developers and
the chief of real estate industry body Credai.

The real estate sector has been in the grips of a sharp slowdown since the beginning of last year, with sales having fallen drastically in the last quarter.

Lower sales hit developers’ cashflows,
while unavailability of bank credit and funds from private equity squeezed them further,
forcing most of them to delay projects and
lay off employees.

The realty sector is a big employer and a key source of demand in a variety of other sectors, and the government has been keen to lift this industry to spearhead a wider economic recovery.

The RBI has repeatedly cut CRR and key rates in the past two months, but banks have not been very forthcoming in lending to developers because of the high risk perception of the sector. This is because several housebuilders find difficult to service debt and pay for the land already acquired amid slowing sales.
To read more, please, visit - The Economic Times

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Indian Real Estate Developers to meet the RBI Governor to demand more sops for the struggling real estate sector

Lower interest rates and restructured debt for the developers:

Representatives from the Confederation of Real Estate Developers Association of India (CREDAI) will be meeting the RBI Governor D Subbarao next week to demand more Government sops for the struggling real estate sector.

The developers are likely to push for lower interest rates and restructured debt for the developers.

Demands:

1) A restructuring of existing debt by way of Financial Institutions (FIs) granting a minimum moratorium period of 12 months

2) Reduced interest rates for home loan borrowers upto Rs 20 lakh should be increased to Rs 30 lakh for customers in metros only. (Pune is not a Metro!)

To read more, please, visit - indianexpress

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Overseas funding to boost real estate

The second economic stimulus package announced by the government has some good news for the troubled real estate sector.

The fund-starved sector would be now permitted to tap the external commercial borrowing route to raise money, subject to the Reserve Bank of India approval, provided the money is used for the development of integrated townships. (For example..Paranjape Schemes' Blue Ridge, Kumar Properties' Megapolis, Magarpatta's Nanded City Pune, Amanora Park Town)

There would also be a dialogue between the central and state governments to release more land for the low and middle income housing.

Coupled with these, the RBI's easing monetary stance, signalling a lower interest rate regime, also is good news for the beleaguered sector.
To read more, please, visit - The Times of India

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Return of animal spirits

Finally, the government has come out with a coordinated monetary and fiscal policy response to a slowing Indian economy.

The Reserve Bank of India has slashed the cash reserve ratio from 5.5% to 5% and has also reduced the repo rate to 5.5% from 6.5%. At the same time, the government has announced a second stimulus package.

Will it work? It just might. It is well known that pessimism, more than anything else, sucked the life out of markets. The problem, so far, was that government responses were only of the half-a-limb kind: Either too much emphasis was paid on monetary policy or stand-alone, badly designed, fiscal packages were put out.
Friday’s announcement is different.
To read more, please, visit - livemint.com

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Economists see robust growth in FY09

"This is a crisis that has been thrust upon us not because of internal developments, but because of truly exceptional circumstances in the world economy.
I think it’s also clear the crisis is not going to end in the current year.
We should expect from all the global projections that next year is going to be a very difficult one for the global economy, the year 2009."

That was Planning Commission deputy chairman Montek Singh Ahluwalia, announcing the second instalment of the government’s fiscal stimulus.

However, opinions vary on the subject; some other economists expect growth to be more robust next fiscal.

This is the final stimulus package, said Mr Ahluwalia. So the next package, if any, will have to wait for a new government to be installed at the Centre — by June 2009, that is.

The moot point is whether the growth momentum set off by the fiscal and monetary policies announced so far would sustain and build on itself.

Suresh Tendulkar, chairman, Prime Minister's Economic Advisory Council:

"If the government succeeds in pushing implementation of infrastructure projects,
cash-rich corporates, though bottom lines of some are hit, they are still cash-rich, keep the flow of services and goods moving and
economic agents (banks, investors and borrowers) take objective decisions,
the economy can grow at a rate of at least 7.5% in next financial year."

To read more, please, visit - The Economic Times

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Friday, January 2, 2009

RBI cuts key rates to stimulate economy

The Reserve Bank of India on Friday cut key policy rates. The repo and the reserve repo rate under the liquidity adjustment facility (LAF) has been cut by 100 basis points while cash reserve ratio (CRR) has been reduced by 50 bps.

Following this move, reverse repo stands at 4%, repo stands at 5.5% and CRR now stands at 5%. The cut in CRR will infuse Rs 20,000 crore in the system.

The market had widely expected RBI to cut the key lending rates. The cut in repo and reserve repo is with immediate effect while CRR cut will be effective from fortnight beginning January 17. Since August RBI cut CRR by 450 basis.

Repo rate is the rate at which banks borrow from RBI while the reverse repo is the rate which RBI gives banks for parking their surplus funds. These two rates are seen as the floor and the cap for daily call money movement.

The decisions would among other things infuse Rs 20,000 crore into the banking system.

Both reductions are effective immediately. The repo rate has been cut aggressively since mid-October last year as the central bank tried to minimise the knock-on effects of the global financial crisis.
The Economic Times

Equities to respond positively to fiscal and monetary measures

Indian equities on Monday are expected to positive cues from the combination of fiscal and monetary measures that are aimed at stemming a slowdown in the Indian economy.

Fund managers said while there are no major surprises in the fiscal stimulus package, the extent of measures used by the Reserve Bank of India to ease money supply in the banking system have been higher-than-expected.

Analysts said the CRR cut has come as a surprise, while the extent of repo rate cut has been has been higher than anticipated.

These measures are aimed at making loans cheaper and revive consumer borrowing in an economy that has been affected by a recession in major global economies.
The Economic Times

India Cuts Rates, Unveils Stimulus Package

Tuesday, October 27, 2009

RBI's policy rate change:

Enough funds to lend:

Prime Minister's Office:

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Friday, January 16, 2009

Is PBAP begging for your sympathy?

No! PBAP is threatening you!!

Who is responsible for "No Booking, No Cash and No construction?":

Are builders unhappy about this?

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Builders, reluctant to reduce rates, keep on blaming banks for causing the market slump and lower sales volumes by charging high rates on home loans

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Wednesday, January 7, 2009

Does overall economic development stimulate the real estate or real estate stimulates the economic development?

In this world such questions r twist our minds:

If belive God created the world, then hen comes first.

By the way, what is your opinion about builders role in the economic growth of the nation?

Subscribe for free to receive hot Pune real estate news, views and reviews:

Tuesday, January 6, 2009

President of the Promoters and Builders Association of Pune (PBAP):

R Vasudevan, managing director, Vascon Engineers:

Manish Kaneria, director, Mont Vert:

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Monday, January 5, 2009

The real estate market in the country has dipped, but city builders say a Rs100-Rs200 fall is not indicative of a slowdown. It is part of the business policy!

Related Stories:

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Sunday, January 4, 2009

If you had been flip-flopping over buying a home in 2008, then your best chance to get one at an attractive price is in the first three months of 2009. Here’s why:

1) Deflation = from a buyers’ market to a sellers’ market.... (?):

2) Price cut:

Price Correction: 15-20% (2008) + 10% (2009)!

A buyer’s market!

Related Stories:

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Prices maintain the equilibrium between demand and supply:

Related Stories:

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Real estate companies were facing a tough liquidity situation as home buyers deferred new purchases due to high interest rates and banks stopped lending to real estate firms due to fear of mounting defaults.

External Commercial Borrowings:

Related Stories:

Subscribe for free to receive hot Pune real estate news, views and reviews:

Saturday, January 3, 2009

In an interview to Praveen K Singh, the associate director—real estate practice at Ernst & Young, Mona Chhabra, says that at the moment, a focus on project development (execution) of projects which are conceptualised on a rigourous demand-supply analysis is imperative. Excerpts:

How you foresee the New Year?

What are the major challenges in front of the sector?

What about developers holding to the price line. Do you feel that it needs corrections to cope with the downturn?

Why banks are shirking away from lending and private equity shying away?

Related Stories:

Subscribe for free to receive hot Pune real estate news, views and reviews:

Related Stories:

Subscribe for free to receive hot Pune real estate news, views and reviews:

Lower interest rates and restructured debt for the developers:

Demands:

Related Stories:

Subscribe for free to receive hot Pune real estate news, views and reviews:

The second economic stimulus package announced by the government has some good news for the troubled real estate sector.

Subscribe for free to receive hot Pune real estate news, views and reviews:

Finally, the government has come out with a coordinated monetary and fiscal policy response to a slowing Indian economy.

Related Stories:

Subscribe for free to receive hot Pune real estate news, views and reviews:

Subscribe for free to receive hot Pune real estate news, views and reviews:

Friday, January 2, 2009

Equities to respond positively to fiscal and monetary measures

Related Story:

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