Three biggest banks of China will provide fundraising support to Vanke and Midea Real Estate Holding Ltd. Bank of Communication Co Ltd issued two separate agreements on Monday.
To support China‘s embattled property sector, three of the country’s biggest commercial banks have agreed to give fundraising support to the property developers including industryVanke.
A quarter of China’s economy comes from the property sector.
According to the two statements issued by the Bank of Communications (BoCom) on Wednesday, the bank has agreed to provide a 100 billion yuan ($13.98 billion) line of credit to Vanke and a 20 billion yuan line of credit to Midea Real Estate Holding Ltd.
The agreement will ease pressure on debt-laden developers and reverse a housing slump.
The bank stated that the agreement is a part of BoCom’s effort to endeavor 16 significant measures marked by the Chinese regulators that aim to boost liquidity in the property sector.
BoCom is supposed to offer loans for M&A deals and bond investments under the agreements.
BoCom said, “it will continue to fulfill the responsibility of a state-owned bank, (and) accurately promote high-quality economic development with high-quality financial services.”
Strategic agreements have been signed by the Agricultural Bank of China to provide credit support to five companies, including Vanke, Longer Group Holdings Ltd and China Resources Land Ltd.
Also the Bank of China Ltd said that it agreed to provide credit support of around 100 billion yuan to Vanke, the country’s second-largest developer by sales.
During the first nine months of 2022 at least 68 separate land deals, accounting for 1,656 acres were being closed across top eight cities as against just 20 land deals for 925 acres in corresponding time of the last year.
Property consultant Anarock group said, real estate developers of Delhi are expanding their business resulting in an acute rise in the number of land deals which increased over three times to 68 in this year during the month January to September.
The land transaction accumulated by the Anarock included outright purchases by developers and joint development agreements (JDAs).
Anarock said that almost 68 separate land deals were closed in the first nine months of 2022, accounting for 1,656 acres compared with just 20 land deals for 925 acres of last year.
Maximum nine deals were either JDAs or on revenue sharing basis out of 68 deals in January-September and the remaining were outright purchases.
Anarock noticed that land has been seeing urbanization with limited and valuable resources after the COVID-19 pandemic.
Renowned real estate firms like Macrotech Developers, Godrej Properties and Prestige Estates are buying properties and coming in association with the land owners.
Vice Chairman of Anarock Group Santhosh Kumar said, “In terms of land area transacted, Hyderabad has seen the biggest land transactions so far this year.”
Additionally Santosh kumar said, “In terms of total number of land deals, MMR (Mumbai Metropolitan Region) clocked the highest number of deals; while the total area transacted was unspectacular, one must also consider the steep prices in this land-starved city.”
There were 40 deals accounting for 590.54 acres to develop residential projects while the industrial and logistics parks held four land deals spreading over 147 acres.
Four land deals were set out for development of data centers for 118.8 acres.
Five deals of land for 115 acres were for diverse projects while the commercial projects comprising the other four transactions for 25.73 acres.
Retail and other real estate assets comprising eleven land deals involving 658.94 acres for the development.
Consultant said that there is still uncertainty about the development type that will be there along with some of the larger deals.
Sixteen land deals involving 233.83 acres were noticed in Delhi-NCR from January-September in 2022 among the cities including 197 acres in Gurgaon and seven in Delhi, Faridabad, and Noida.
17 deals have been seen in the Mumbai Metropolitan Region comprising 198.62 acres.
Bengaluru had witnessed nine land deals comprising 223.2 acres.
Hyderabad had seven land deals comprising a total area of 769.25 acres.
Eight land deals have been seen in Pune accounting for 123.7 acres and Chennai witnessed seven deals involving 92.21 acres.
There was only one land deal reported in Kolkata comprising 5.6 acres.
Three land deals were witnessed in Ahmedabad involving 9.6 acres during the first nine months of 2022.
After the COVID-19 pandemic, housing demands came round strongly resulting in major builders heading to launch more projects.
Housing sales increased to 2,72,709 from 1,45,651 units throughout seven major cities during January-September in 2022 in the corresponding period of the last year.
2,61,358 units sold during January-September in 2022, which is higher than the sales of the entire 2019 calendar year.
The economic offenses wing (EOW) of the state Crime Branch had registered a case in 2015 against Sarala Realcon Pvt Ltd, its managing director Gayadhar Jena and other directors for cheating investors.
The company apparently collected around Rs 17 crore during 2010-2013 from 238 people for the sake of providing them homestead plots in supreme locations of the city and later the company retracted from the deal.
According to the report, an EOW officer said that Jena got arrested along with other directors of the company and EOW attached assets for requisition and the court directed the District administration to auction the attached assets and functionaries of a real estate company which is worth around Rs 15 Crore, including 95-acre land frozen bank balance of Rs 13.10 lakh, seized cash of Rs 3.25 lakh and four SUVs worth around Rs 1 crore.
Court has asked the District Administration to auction the assets and distribute the money among the investors who were cheated by the company.
An investigation reported that the company had invested a huge amount in a film acted by Papu Pompom a Bollywood comic actor aka Tatwa Prakash Satpathy was interrogated by the EOW for his apparent involvement in the fraud on which the actor denied his involvement.
Gurgaon is considered the Millenium city of India and has attracted some of the enormous corporate houses in the world including Google, Amazon, and Microsoft. The city offers colossal space and better quality amenities and infrastructure from Grade-A office spaces compared to Delhi NCR’s areas.
Below are the top commercial projects in the city that would be good to invest in.
Cyber City, DLF Phase-2, Sector 24
Cyber City is the largest Grade A commercial project that has been built by one of the
largest real estate developers, DLF in Gurgaon, occupied by 500 companies and other top corporates.
The project has become one of the landmark commercial projects in the entire country. Metro connectivity further increased the attraction of the project by making it more friendly and accessible.
Cybercity has a number of cafes, restaurants, and dining sections along with banks and ATMs apart from the corporate spaces of the project.
M3M Cosmopolitan, Sector 66
M3M Cosmopolitan commercial project located in Sector 66 on the Golf Course Extension Road, which is the huge commercial hub for corporates with around 3 lakh executives. Lower office rents along with superior infrastructure make the project more attractive to the companies.
The project includes one tower with 12 floors with office space, shops, serviced apartments, and a decently landscaped central lobby and plaza.
The office space holds the second to the eleventh floor and the ground floor is for the shops and large storefronts. The project has worldwide elements in the design.
Spaze Business Park, Sector 66
Spaze Business Park is a large commercial project spread over 2.35 acres, in Sector 66. It includes two towers with eight floors in each. It has a huge entrance double-height atrium and all major facilities serve all kinds of working professionals. Conference room for organizing meetings along with other available conveniences such as a Food Court, ATM, Cafeteria, CCTV Camera Security, 24/7 Power Backup, multilevel car parking, etc.
Vatika Town Square 2, Sector 82
Vatika Town Square 2 is a grand commercial complex at Sector 82 in Gurgaon, which is spread over an area of 1.605 acres and includes both office and shop areas. The project has modern construction including various features such as a fire fighting system, a huge car park, and good security.
All the civic amenities are nearby to the project and have fairly good connectivity offering large floor plates.
Indiabulls One 09, Sector 109
Indiabulls One 09 is an upcoming project spread over a vast area of 6 acres and has two towers with 22 floors on each. The project has a total of 469 units, constructed with robust quality.
The project includes office spaces, commercial shops, and multiplexes with modern architecture. The project will include duplex shops, anchor stores, and small bouquet spaces as well as there is zone out for offices and shopping areas. It has huge green areas with corporate houses and boulevard-styled pedestrian plazas together with sit-outs.
M3M Urbana Premium, Sector 67
M3M Urbana Premium is a collective of office and retail spaces, located in Sector 67. The project includes restaurants, and shopping centers, located nearby to various amenities. The project has good connectivity which makes it the best commercial project for investment. It has eco-friendly features such as a fountain, and a landscaped garden
DLF Corporate Greens, Sector 74A
DLF Corporate Greens has good connectivity to domestic and international airports in Delhi. The project is located in Sector 74A and offers the best office place in Gurgaon with a massive floor plate for big companies.
The project includes a multipurpose court, video door security, fire fighting, and a gymnasium along with the swimming pool.
JMD IT Megapolis, Sector 48
It is a modern commercial project with one tower which includes 14 floors and a mechanically ventilated basement. The project is located at Sector 48, Sohana road, Gurgaon.
The project offers ready-to-move customized office spaces for the IT/ITes sector, the project is spread over 10.025 acres of prime land in Gurgaon. The building has an accommodation of 13 beautifully structured floors within.
The project is far away from the sight and sounds of the big and dense cities yet close to all the amenities such as pharmacies, banks, and schools.
Godrej Properties, the real estate development arm of the Godrej Group, has inducted six new projects with a total saleable area of 6.34 million sq. ft. and total estimated booking value of Rs 6,025 crore and is likely to surpass its own bar of projects with total revenue potential of over Rs 15,000 crore in the current financial year, the company‘s executive chairman Pirojsha Godrej told ET.
“We are witnessing a lot of momentum in business development and hope to deliver Godrej Properties’ best-ever year in terms of new project additions through strong momentum in the second half of the year,” Mr. Godrej said.
With bookings valued in excess of Rs 4,930 crore, the Godrej Properties has achieved its highest-ever sales for the first half of any financial year. Of this, the second quarter witnessed total booking worth Rs 2,409 crore with total booking volume of 2.71 million sq. ft.
“The current quarter is also looking good… we have not seen any major impact of the hikes in interest rates on our bookings. Even now, the home loan rates are relatively lower than the earlier highs. We are on track to achieve and even top bookings worth Rs 10,000 crore in the current financial year,” Pirojsha Godrej said.
The Reserve Bank of India has been increasing the repo rate since May in a bid to tame inflation and provide support to the currency. The cumulative hike in repo rate since then now stands at 190 basis points and housing loan rates have already moved upward of 8%.
“We do not see home loan interest rates turning out to be a major dampener until it reaches the double-digit number,” Godrej told ET. The company has been able to achieve price increases in the range of 5-10% across its projects in the last 6-9 months and the homebuyers have responded well to that as indicated by the bookings.
Industry experts believe the ongoing market consolidation in favour of large and established developers will gain momentum owing to their better execution ability and access to liquidity in the current market environment than that for smaller developers.
The Godrej Group company is looking to leverage its brand and financial position to tap consolidation opportunities through distress situations arising in the real estate sector.
These new additions will be made through its existing model of forming alliances and even direct land acquisitions supported by its robust balance sheet.
The company has also been raising funds to drive consolidation with the use of additional capital and to significantly strengthen its development portfolio. Currently, it has a war chest of $1 billion to support its growth plans.
The company’s corporate loan book share reduced to 10 per cent with an exposure of Rs 5,708 crore in the second quarter ended September 2022. The retail segment loan book stood at Rs 52,124 crore, constituting 90 per cent of its overall loan book.
NEW DELHI: PNB Housing Finance wants to bring down the delinquency levels before it starts financing the sector again. In order to achieve this they are going ahead with its stated objective to downsize its corporate loan exposure, its MD and CEO Girish Kousgi said.
PNB Housing Finance, the housing finance company, promoted by state-owned Punjab National Bank (PNB), has been shrinking its corporate loan exposure over the last few years and has adopted a retail-first strategy to fuel growth.
The company’s corporate loan book share reduced to 10 per cent with an exposure of Rs 5,708 crore in the second quarter ended September 2022. The retail segment loan book stood at Rs 52,124 crore, constituting 90 per cent of its overall loan book.
The company’s gross non-performing assets (GNPA) at the end of Q2 FY23 stood at 6.06 per cent. While the retail sector GNPA was at 3.39 per cent, that of the corporate book stood at 30.37 per cent.
“It is not about bringing down the percentage but to bring down the delinquency in corporate loans. Today the corporate loan book is over Rs 5,700 crore, it is less than 10 per cent of the portfolio.As of now the focus would be on the retail segment and may be in the next few quarters, once we bring down the delinquency in the corporate book, then we will restart (financing the sector),” Kousgi told PTI in a post-earnings interview.
“So we are not looking at what should be the mix. We would be very, very keen on the right kind of customers so that the portfolio behaves well in the future,” the official said, adding that corporate is a depleting book and “we are not doing too much of corporate loans.”
In the first half ended September of the current fiscal year, retail constituted 98 per cent of the total disbursements at Rs 6,992 crore, up by 54.4 per cent from a year ago. Corporate sector disbursements were at Rs 123 crore, down by 48 per cent from the year-ago period.
The assets under management of PNB Housing Finance stood at Rs 65,730 crore as of September 30, 2022. The company reported an increase of 12 per cent in its net profit at Rs 263 crore in Q2 FY23.
“Putting all these things together, I feel that the demand is robust and we are witnessing this. If we look at the performance of the entire housing industry for the last four to five quarters, the sector is performing extremely well. We are very positive about growth for the coming quarters,” Kousgi said.
He further said PNB Housing Finance is keen to look at the top 20 markets.
“Going forward, we are keen to look at the top 20 and then the next 50 because we are also getting into affordable housing now. Affordable housing opportunities are there in tier III, IV cities…so I think the focus should be on the top 20. If you take the top 20, it will account for 70-75 per cent or 70-80 per cent of the business,” he noted.
Besides, the company will bring down the gross NPAs or bad loans as it is a key focus area alongside growth.
“Our focus is growth and asset quality, so you will see growth (going up) and GNPA coming down on our book and incrementally we will build a book which is pristine and has quality,” said the MD and CEO.
Founder-cum-managing director Kajal Ilmi told ET that Aviom India Housing Finance backed by Japan’s Gojo & Co., with Rs 990 crore in loan assets, is in talks with a global pension fund and a domestic private equity fund for fresh capital infusion,
Aviom, a Delhi based lender focused on financing small dwelling units, is in the process of raising $30 million through share sales.
The new capital infusion investor would get a 30% stake for $30 million investment, valuing the six-year-old lender around Rs 800 crore.
The funds are proposed to be used for onward lending as the company is looking to to grow its loan assets to Rs 1,300 crore by March 2023 and Rs 2,500 crore by March 2024.
The loans are being offered to women, mostly from rural areas, without income proofs or any income documents. The average lending ticket size is to the tune of Rs 2.7 lakh.
Gojo & Co currently owns 39% stake in Aviom, while Sabre Partners AIF Trust and Capital 4 Development Asia Fund Cooperatief UA hold 12.8% and 7.43%, respectively. While the promoters led by Kajal Ilmi hold 38.7% share.
“We have been providing loans to women borrowers who do not have any formal income documentation. Affordable mortgages enable women to build homes they could otherwise not afford and to establish a credit history,” Kajal Ilmi mentioned in a comment.
Over the next six months, Aviom aims to raise its disbursement to Rs 70-80 crore a month.
The company operates in 14 states through 120-odd branches and has a customer base of more than 40,000.
“We want to cater to more people in low-income households across semi-urban and rural areas who need home loans for home improvements, renovations, and sanitation,” Ilmi added.
The US International Development Finance Corporation (DFC), BlueOrchard Impact Investment, Water Equity Impact Investment, Triple Jump Impact Investment, Symbiotics Investment are Aviom’s lenders, besides State Bank of India, HDFC Bank and other local entities.
Aviom’s sourcing model, known as Aviom Shakti, has created earning opportunities for over 55,000 women, who serve as referral agents for housing loans in lieu of commission. Going forward, it plans to add 3,000 women as agents every month.
According to Colliers International Group Inc. the office leasing volume rose 27.6% to 9.23 million square feet a heavy quarterly gain since the end of 2019 in New York
NEW YORK: As compared to last year same quarter, the New York City’s office market rebounded, though leasing figures remained below against the rise of remote work during the COVID-19 pandemic, and higher interest rates and a strong dollar dampened new investment in the sector.
So far this year leasing volume has totalled 24.17 million square feet, or nearly 50% more than the same period in 2021 and less than 4% from passing last year’s total. Volume remained below the quarterly average of about 9.1 million square feet in the five years through 2019.
Frank Wallach, executive managing director of New York research at Colliers said, “We’re still hearing of large pending deals,” adding that leases in the works for months typically close by year’s end.
“Not all but a good number of them come to a close as we approach the post-Thanksgiving, pre-New Year’s Eve rush because there’s usually that desire to get everything wrapped up and taken care of,” Wallach said.
The availability rate for office space went down by 0.8 percentage points and stood at 16.4% in the third quarter, the sharpest quarterly decrease in eight years, Colliers said.
The drop drove availability to its tightest since March 2021, but still far above its 10.2% level in the first quarter of 2020, at the start of the pandemic, Wallach said.
The latest data on potential future leases for New York office space from View The Space Inc, a multidimensional commercial real estate platform, last week showed a 22.8% drop in August for new leasing demand in New York.
VTS expects leasing activity to be “pretty good” for coming months, but if more new demand is not seen by year’s end, leasing can be expected to decelerate in 2023, VTS said.
“The next quarter or two will be really telling because we’ll get to see people who’ve been in the market, do they end up transacting or not?” said Nick Romito, VTS chief executive.
The sale of office buildings fell 71% in the third quarter to $1.2 billion, an amount that often accounted for single asset sale during red-hot 2015 and 2016. Rising interest rates was the most significant factor for slower sales, Colliers said.
Knight Frank India study shows, although the interest rate this far has not had a significant impact on sales, with the deterioration of affordability, this could become a factor soon.
The Reserve Bank of India’s (RBI’s) fourth successive hike of the repo rate last week by 50 basis points (bps) may defer prospective homebuyers to invest immediately in property and opt for rental accommodation over the next few quarters.
As expected, the central bank hiked repo rates on Friday in an effort to contain inflation and provide support to the currency. With this hike, the rates have gone up by 190 bps, cumulatively, in the last five months. This was followed by the two biggest mortgage lenders, Housing Development Finance Corporation and LIC Housing Finance revising interest rates upwards immediately.
Since the rate cycle changed in May the affordability has worsened by 2% across cities. Higher interest rates are expected to increase the equated monthly installments (EMIs) for homebuyers, further affecting housing affordability and slowing the pace of growth in residential real estate.
Amarendra Sahu, founder and CEO, NestAway Technologies was quoted as saying, “The home mortgage rates are now back to pre-Covid levels or even higher. This is likely to increase traction in the rental segment. A higher home acquisition cost and interest rates will make renting far more affordable. Also, homebuyers will likely wait for the current cycle to get over,”
Experts also believe two more hikes till March will push rates further above 9% and may adversely affect demand.
“The impact on residential sales can already be felt, but the long-term prospects remain positive. After Covid, there was a sudden boom in demand from investors and end-users driving the market. The market will stabilise and will be driven by the end users now,” said Sumanth Reddy, vice chairman of the National Association of Realtors, a body representing over 50,000 property brokers across the country.
Some property brokers are also seeing increasing demand from homebuyers who are rushing to close the transaction due to the constant increase in repo rate. “We have seen a 50% present rise in demand from prospective homebuyers as there is a fear of further rate hike,” said Bhavesh Kothari, founder of Property First, a luxury property broking firm.
The central bank will likely continue increasing the policy rate to narrow the gap with the consumer inflation index and reduce the extent of the negative real interest rate in the economy The recent hikes in housing loan rates have started pinching existing borrowers whose savings are crimped by rising inflation. Four rounds of increases in policy rates have raised housing loan rates to 8.4% from the decadal low of 6.6% just five months ago, impacting second home purchases too.
The real estate sector has been on a strong recovery path after surviving the worst of the pandemic. Annual residential sales in 2022 have surpassed pre-Covid levels, and recent monthly sales trends indicate strong momentum.
As stated in the regulatory filing, the company shows projections of estimated developable potential of approximately 0.6 million sq. ft. of saleable area under the project and will have an estimated booking value potential of approximately Rs 750 crore.
Godrej Properties, a known name in Indian real estate has acquired a land parcel located in the vicinity of Indiranagar, Bengaluru. Spread across approximately 7-acres, the project is estimated to have a developable potential of approximately 0.6 million sq. ft. of saleable area, the company said in a BSE filing.
Mohit Malhotra, MD & CEO of the company said, “Availability of land parcels and infrastructure development has turned Bengaluru into a mature real estate market with increased demand for high-end residential development. This will further strengthen our presence in Bengaluru and complement our strategy of deepening our presence in key micro markets across India’s leading cities.”
The company had recently acquired half acre of land parcel from the Karam Chand Thapar (KCT) Group to develop a luxury project near Carmichael Road, Mumbai. This project has an estimated booking value potential of approximately Rs 1,200 crore.
The company recently reported 154 per cent growth in its net consolidated profit during the quarter ended June 30, 2022. Its profit after tax (PAT) stood at Rs 43.30 crore in Q1 FY22 as against Rs 17.03 crore it registered in the corresponding quarter in the previous fiscal.
Its net consolidated income stood at Rs 426.40 crore in Q1 FY23, a growth of 62.75 per cent from Rs 261.99 crore it recorded in the similar quarter last year.
