Pune Real Estate

Talking to presspersons at the PBAP exhibition, Jain noted that liquidity is bothering developers as most banks were not lending money to most developers even for construction.

He pointed out that this had severely affected cash flows and the only source remaining was customers.

FDI cash
The rates in the open market were also high as also the FDI, which is at 25 to 35 per cent internal rate of return. The FDI investment in the country is about $7 billion, of which only about $200 million to $300 million had been used up in Pune.

Jain also pointed out that the panic button pressed by the Reserve Bank of India to control inflation and reduce growth seemed farfetched. "The biased approach of the bank towards real estate is unwarranted and unjust. Making home loan costlier is only creating resentment among urban population," he said.

He noted that instead of increasing the supply of residential tenements through proactive policies, the Central and State Governments were making tenements costlier by introducing various taxes (37 per cent cumulative) and levies as well as interest on project loans, pushing developers to borrow from market or costly FDIs, ultimately increasing cost of tenement.

Cost factors
Jain said scarcity of skilled labour and recent developments to discourage outside labourers have also resulted in delays and increase in construction costs, 60 per cent year-on-year on labour cost.

The increasing material costs (barring small seasonal corrections) had made construction costs go up almost 40 per cent year-on-year.

The ongoing PBAP exhibition at the SSPMS grounds, which has 90 developers participating, is offering buyers interest rates at 9.55 and 10 percent for two years, in the hope that the interest rates will go down in the coming years. With the interest rates going up by 40 per cent in the last three years, the special schemes are offered at the exhibition on booking at the venue itself.

Announcing the scheme at the exhibition, PBAP president Lalitkumar Jain said that these tie-ups are with the ICICI bank, HDFC and State Bank of India (SBI). "With most banks not lending any money to most developers even for construction purposes, affecting the cash flow, the source remains the customers. Though the construction cost and land cost have not come down the developers will compromise on their profits and are willing to take some burden,''he said at a press meet highlighing the cash crunch faced by developers in Pune.

With the present rate of interest escalating upto 11.75, Jain said that on consultation with economists, it is understood that the rate of interests will go down in future. "After elections the rate of interest will definitely go down,''he said. Jain said Pune has never been an inverstors market and is surely isolated from underwriters. The only investment attributed can be to second home buying by IT professionals or NRIs for rentals.

The Project Parsvnath Pratishtha is located at Pimpri Chinchwad, is just 10 kms away from the Mumbai-Pune expressway and 25Kms from the upcoming New International Airport at Chakan. The project, situated amidst a major industrial hub, is surrounded by a number of large multinational companies. Also, Dow Chemical is setting up its state of the art R&D centre in the region nearby. The construction for the project has already started after performing the Bhoomi Pujan and is scheduled to be completed by 2010.

"Presence of educational institutes, universities, IT and major automobile companies has resulted in influx of population in Pune. This increase in population has lead to burgeoning demand for qualitative residential properties in close vicinity of their work places. Parsvnath Pratishtha apart from other state of the art facilities offers earthquake resistant RCC framed structure with brick-filler walls and making it one of the safest houses to reside in.", said Mr. Pradeep Jain, Parsvnath Developers Limited.

Parsvnath Pratishtha spread over an area of approx. 11, 000 sq mtr. is having a built up area of approx. 1.23 lac sq.ft. The project comprisingof 96 apartments having basement parking plus four floors would be equipped with two and three BHK apartments with an offering of forty eight houses each for two and three BHK apartments with a lucrative price tag of approx. 30 lacs and 42 lacs respectively.

• London-based banking major Barclays Bank created history in May when it took space at Cee Jay House, a landmark office complex in Worli, for Rs 725 a square foot (sq ft) per month. The building owned by Civil Aviation Minister Praful Patel is fully occupied with the likes of the now-bankrupt Lehman Brothers, Credit Suisse and Societe Generale, among others. The developers are building 80,000 sq ft of space next to Cee Jay House, and leading brokers said they are getting enquiries for Rs 300-350 per sq ft.
  
• Though property developer Indiabulls Real Estate is leasing office space at One Indiabulls Centre, an upcoming commercial complex at Lower Parel, at Rs 325 per sq ft per month and closed deals with big companies for Rs 275 per sq ft as anchor tenants, property brokers said they are now getting queries for Rs 200-225 a sq ft, 40 per cent less than the quoted price.

This depression in the commercial market is a potent sign of the fall-out from the financial crisis in the US. Companies, mainly IT and BPO service providers and finance firms, with significant US businesses are cutting back expansion plans and, therefore, the need for prime commercial real estate. Meanwhile, tighter liquidity at home is encouraging companies to defer their property bookings.

In the Bandra Kurla Complex, the city's second main commercial hub where rentals peaked at Rs 450 per sq ft a month, clients are now negotiating with developers at below Rs 300 per sq ft. Rents are expected to come down to Rs 200 a sq feet when three prominent buildings are completed in six months.

In a meeting today, the Maharashtra Chamber of Housing and Industry (MCHI), a trade body for realtors, has advised its members to adopt these measures to kick-start sales which are showing signs of a sharp deceleration in growth.

The decision, if implemented, will mean savings of 5-7 per cent for the home buyers. Stamp duty, or the government levies paid for buying a home in Maharashtra, accounts for 5 per cent of the value of the property. The buyers also have to separately pay a maximum of Rs 30,000 as registration fees, or for registering their property with the authorities.

The decision follows a slump in the real estate market with both buyers and sellers waiting for the other to blink first.

In the recent past, some developers have been individually offering similar incentives. The members had assembled to take stock of the current market development and discuss the impact of the global financial crisis and the ongoing economic slowdown. Most of the developers present in the meeting agreed to the MCHI advisory.

Reincarnation is Kallu Khan's stock in trade.

His workshop floor is a swamp of cardboard strips hacked from salvaged boxes. Laborers scoop them up, work them over and give them new life as smaller boxes, which Khan then sells to stationery and packing companies.

In another warehouse a few doors down, dozens of rubber soles cut from discarded shoes also await a second chance. Next to these, a mountain of plastic castoffs -- toys, computer keyboards, car parts -- is separated by squatting workers, to be melted down into tiny pellets before being reborn in some new form.

One man's junk is another's fortune in Dharavi, the largest slum in India. With the economy and consumption soaring, recycling is good business here, a source of jobs for thousands, from scavengers to sorters to manufacturers.

Their collective toil is just part of the daily bustle in this teeming shantytown in India's financial and entertainment capital. About half a million people live and work in Dharavi -- recyclers, tailors, leather tanners, laundrymen, potters, cloth dyers and shopkeepers, all jammed into a single square mile of narrow alleys and rickety buildings made from corrugated metal sheets.

They are some of Mumbai's poorest residents. They also happen to be sitting on some of the world's most valuable real estate.

In a boomtown starved for room to grow, Dharavi occupies a prime location at the junction of two commuter rail lines close to the heart of the city. One of Mumbai's swankiest new business parks, the Bandra-Kurla Complex, a diorama of concrete and glass that shimmers in the tropical heat like a mirage of order and progress, looms just beyond a fetid bog of mangroves used by many of the slum dwellers as a toilet.

Because of their location, Dharavi's residents have been locked for years in a tug of war with government officials who look hungrily at such choice land and dream their own dreams of reincarnation.

If the officials get their way, the slum will be demolished and reborn as a gleaming collection of high-rise apartments, office towers and manicured parks. Residents who arrived before 2000 would be re-housed elsewhere in Dharavi in small flats of 225 square feet -- smaller than a suburban American garage -- while an influx of richer folk and big companies would turn the area into one of Mumbai's fashionable addresses.

But many who live here take fierce pride in a community that they and their families built, for some over several generations, with little help from the state. They refuse to be uprooted without a fight.

"This is like my country now," said Ramakant Rai, a grizzled electrician who has lived in Dharavi for 35 years, most of them in a shack built right up against a massive water pipe laid down during the British Raj. "I say to the government, let us stay here and we'll build our own houses."

It is a war of wills, the outcome of which could have far-reaching consequences. What happens to Dharavi could presage the fate of the rest of Mumbai's many slums, home to half of the metropolis' population of 16 million.

The slums are the first thing many visitors to this city see. Arriving air travelers gaze down on the winking metal roofs of another large shantytown that has pushed right to the edge of the tarmac.

In many ways, the battle over Dharavi is a battle over how India sees itself and the image it wants to project as a rising power.

With a competitive eye on China to the east and an envious eye on developed countries to the west, India's leaders and elites are yearning to prove that their country belongs in the same league. They want Mumbai mentioned in the same breath as Shanghai, New York and London, a world-class city that embodies the new India of stock markets, cocktail bars and Bollywood glamour.

Under section 80IB(10) of the Income Tax Act, 1961, profits are exempt from tax if the project is on a minimum land area of one acre, approved by a local authority prior to March 31, 2007, and is completed within four years.

In the Pune region, surveys in five cases have resulted in detection of wrong claims of Rs 40 crore on account of non-completion of housing projects within the four-year time frame. Subsequently, some more companies have been found guilty of violating the norms.

Following the Pune findings, the Central Board of Direct Taxes (CBDT) has instructed field formations across the country to verify such tax exemption claims by real estate developers.

The income tax officers are looking at whether approval and completion certificates were obtained from local authorities or not for the housing projects.

"We plan to set up seven new luxury hotels at Udaipur, Jaipur, Delhi, Hyderabad, Agra, Pune and Chennai over the next three to five years," Hotel Leelaventure Chairman, CP Krishnan Nair, told reporters here.

"We will invest Rs 2,000-crore to add 2,000 rooms at these new hotels," Nair said, adding that it would be financed through internal accruals and bank loans.

"Over the last twelve months, we focussed on our dynamic growth and the expansion plans of our delux portfolio of palaces, hotels and resorts into key destinations of India. We will also focus on the improvement of our existing facilities," he said.

The Leela Hotel and residency in Gurgaon and Leela Palace at Udaipur are being prepared for opening in FY 09 while The Leela Palace at New Delhi would be completed before October 2010, he said.

"Our development in Chennai, Hyderabad, Pune and as and when we acquire an appropriate plot in Kolkata will complete our pan-India presence," he said.

The company is also planning to set up a 300 room hotel in Mumbai. The land for the same has been leased from the Airport Authority of India and work would start soon, he said.

Its floating casino at Goa has also become operational, Nair said.

The result: Sangli, Bhor and Satana (in Maharashtra) and Kodiakanal, Ooty (in South India), have emerged as the budding addresses of flower growers in the country.

In the last three years, the hot real-estate sector in Bangalore, Pune and Hyderabad has triggered withering in floriculture business in these cities. Flower-growers have preferred to take advantage of the land prices which have shot up 10-fold in the last three years.

The open tracts of land in the city which housed these floriculture projects have fallen prey to developers scouting for open-spaces in and around the city. Moreover, being a labour-intensive industry, the shortage of labour within the city also made it difficult for the units to hold fort.

"Due to the high real-estate prices in Bangalore and Pune, floriculturists have preferred to sell them to developers which have fetched them a higher price", said S Jafar Naqvi, president of Indian Flowers & Ornamental Plants Welfare Association (iFlora). "Of the 26-odd export units in Pune, only 10 exist today.

Similarly, in Bangalore only 10-12 units are functioning. The rest have either shut down or moved to newer locales like Kodiakanal, Ooty, Nigliris and Coorg areas where land is cheaper and is available in plenty", he said.

"However, as new areas have developed, the floriculture sector has not been affected due to the closure of units", Naqvi added.

According to sources, the horticulturists who used to get subsidy from the government to set up these units sold off the land after projecting them as "unviable". Most of the units which closed down were large export oriented units of about 3-4 hectares, sources said.

Triggered by the real-estate boom in the last three years, the property prices in and around Pune and Talegaon have increased from Rs 2.5 lakh to Rs 25 lakh per acre which has prompted flower-growers to sell off the prime land and move to cheaper locales. "The property prices have swelled 10-fold in the last three years, said Praveen Sharma, the chief consultant of Flora Consult, a Pune-based consultant for floriculture projects.

"As a result, places in Bhor taluka, Satana, Sangli have become new destinations for floriculturists", he said adding that Agricultural and Processed Food Products Export Development Authority ( APEDA) was in the process of reviving some of the "unviable" units in Pune.

"At the Talegaon floriculture park, floriculturists are also finding it difficult to find enough labourers for their labour-intensive units. The workforce which used to tend flowers now opt to work for higher wages in the manufacturing units of L&T, General Motors, Posco and others which have come up in the area near the park", Sharma remarked.

"Even in Hyderabad, the floriculturists are selling land to realtors", said M M Hussain, vice-chairman of Hyderabad Nurseries Consortium and former general secretary of Indian Nurserymen Association.

"Most of the units which were set up for exports have closed down within a space of three years. At present, only one is operating. Hyderabad which was second in terms of flower production in the country has fallen drastically", said Mr Hussain. "The state government has also been of little help. No new units have come up in Hyderabad during the last few years", he remarked.

In India, hospitality and tourism are the third largest net earners of foreign exchange and is expected to be numero uno by 2010. Hospitality is a 3.5 trillion dollar service sector within the global economy. According to a survey by HVS, Federation of Hotel & Restaurant Association of India (FHRAI), 25-30 hotels are expected to be launched in Pune in next 3 years and these hotels will require 10,000 trained professionals by 2011.

The consequence retaining employees is becoming a huge problem in the city's hospitality market. Throwing light on the issue, Saurabh Shroff, Head marketing of myJobsinPune.com says, "The staff requirement for various hotels ranges between 1 to 3 persons per room, depending on the hotel category. This is regardless of the fact that technology is replacing manpower in operations, since hospitality is a service-oriented industry. The challenge for upcoming hotels in Pune, especially the upper end ones, is to find enough skilled professionals to maintain the level of service standards that regular international travelers are used to."

The domestic hospitality industry is undergoing rapid transformation, with several hotel groups investing in new properties across India and the globe. Additionally, real estate players are entering the industry through management contracts with established hotel chains. This expansion in the hospitality business is taking place on account of the massive growth that India is likely to witness in the coming years.

To name a few, JW Marriott is also coming up with Courtyards, their budget segment in Pune by the end of 2008. Apeejay Surrendra Park Hotels Ltd, owners of The Park Hotels, will be setting up a five star boutique hotel in Pune. The company has already acquired 90, 000 sq ft at Shivaji Nagar in Wakewadi near Pune. The new property with restaurants and entertainment facilities will be ready by 2010. The project cost is estimated at Rs3bn.

The city-based Sayaji Hotels Ltd. (SHL) has chalked out an ambitious plan of opening up of a three star hotel in Pune, Maharashtra and setting up of 100 'barbecue nations' across the country. It has invested Rs1.35bn for opening up of 50 rooms three star hotel in Pune which is almost ready and it will be opened by December this year.

Many others have undertaken hotel project in Pune, which is humming up with industrial activities.

Quote from Avijit Chaturvedi, V.P. Operations, The `O' Hotel, "Hospitality industry, specially the high end Hotel segment derives value from the quality of service that can be provided consistently. Well-trained staff with the right attitude thus becomes the most important resource, as the vehicle, that would deliver the desired quality service. With the number of Hotels growing by leaps and bounds and other service industries like telecom, retail and BPOs looking at the Hospitality graduates for their recruitment, finding and retaining quality staff has become a big challenge."

Speaking to FE on the sidelines of a conference here on Saturday, Pang Yee Ean, senior vice-president (India Operations), Ascendas, said, "At the Indian government's invitation, we are looking at investing Rs 1,500 crore each near Mumbai and Chennai. This initial investment will go into industrial development and creating townships. The sectors that we are looking at are high-value engineering and electronics. Some part of these projects will be in new SEZs."

Ean said the Rs 3,000 crore investment is significant, as companies from Japan, Europe, Taiwan and China have evinced keen interest in being part of the projects. Without disclosing the names of the companies, Ean said, "these companies are quite optimistic about the Indian economy and are keen to tap the huge domestic market here."

Asked if Ascendas was concerned about the recent slowdown in manufacturing and overall industrial production as well as in the realty sector, Ean said, "though we are a little bit worried about it, our investment is part of our long-term commitment to India. We will develop these properties and then lease it out. We are confident that we will get good returns."

HCCREL is planning to invest Rs 1,000 crore in the initial phase of the project this financial year. Funds will be raised through HCCREL's forthcoming IPO, Rajgopal Nogja, its president, told FE.

According to Nogja, "We are acquiring 1,000 acres of land in Nashik apart from 300 acres in Thane in Mumbai and about 250 acres in Pune. Plans are on the anvil to enter into land deals in markets such as Panvel, Kolhapur and Nagpur as well."

Apart from this, HCC Real Estate is also planning an 80 acre slum rehabilitation scheme in Vikhroli East in Mumbai.

The company is currently engaged in constructing a 2 million sq ft IT park in Vikhroli. Nogja said, "The IT park will be a world class construction with gold rated LEED certification for green buildings. It will be ready for occupation in 2009. We hope to achieve very good valuation once the project is completed." He informed that Future Group's Pantaloon and Orange have already leased almost 30% of the park christened `247 Park'.

Companies that earlier took 36 months on housing projects are now completing them in around 30 months by boosting efficiencies and using modern technology. Commercial project developers are going a step further, completing projects in 17 months instead of 24.

In some instances, mainly in smaller commercial buildings, developers are trying to cut down the project completion time to a mere 9 months. Take Mahindra & Mahindra's upcoming special economic zone in Jaipur. The company has squeezed the construction time for a commercial building to nine months from the normal 12-15 months. It began the construction of a four-storey building in November last year and has already completed two floors with complete fit-outs that already house a BPO unit.

The construction work of DLF and Indiabulls in Mumbai, Parsvnath (Delhi) and Sobha (Bangalore) is progressing even during the monsoons. "Even if we cut the construction time by two months, we will save up to 20 per cent on labour and preliminary expenses, although the material costs remain the same,'' said JC Sharma, managing director of the Bangalore-based Sobha Developers, which is the main contractor for Infosys.

Sobha has prepared its own construction manual, an amalgamation of Bureau of Indian Standards and DIN (German Standards), which talks about the dos and don'ts of construction. Methods, safety-codes, tools and processes are photographed and filmed to show how construction could be speeded up. The company has also set up an in-house training school to train engineers, masons and architects on new technologies, processes and systems.

Despite the hiccup, the Mumbai-based realty company sold over 6,000 applications, each costing Rs 100, through its offices in Belapur and Karjat on Tuesday. The units open for booking are of 300 to 500 sq ft, in the range of Rs 3-5 lakh at Karjat, which is about 100 km from here.

Mr Pravin Banavalikar, CEO, said the company has now tied up with the retail chain Subhiksha to vend its forms from Wednesday.

Raju might not have to wait too long. Diwali might bring good news his way, as developers are expected to start correcting their prices in the festive season.

Pankaj Renjhan, managing director (Mumbai) at real estate consultant Jones Lang LaSalle Meghraj, said the realty market has fallen by 5-25% across India.

But developers still haven't directly cut the prices of their properties and resorted to freebies and add-ons to push their projects. The festive season may throw up some discounts for home-seekers, who may also up their budgets somewhat to cash in on the real estate slowdown, said analysts.

Among the developers who are betting big on the festive season is Oberoi Constructions, a Mumbai-based real estate player who has lined up three projects for sale during Diwali.

Jones Lang LaSalle Meghraj's Renjhen said he was expecting some selective stock movement in Diwali. "The movement will be driven by those who are being fence-sitters now," he said.

India's biggest property developer DLF will launch residential schemes in Kochi, Chennai, Hyderabad, Chandigarh, Lucknow, Gurgaon, Bangalore and Delhi for the season.

Ramesh Sanka, chief financial officer, DLF, said the company hopes to sell more units in the second half of the year. "The festive season is better for sales. It starts from
Ganesh Chaturthi, then Diwali, Sakranti and goes up to February," he added. DLF will unveil some of its mid-income projects in Hyderabad, Amritsar and Ludhiana in the period.

"We now have land in the cities of Pune, Goa, Nashik, Nagpur and Hyderabad wherein development work is expected to commence shortly and the projects will be completed over a span of 3 to 5 years," Peninsula Land Group Managing
Director Mahesh Gupta said at the company's Annual General Meeting.

Two residential projects are in the pipeline in Nashik and Pune, one commercial project in Nagpur and three SEZs in Pune, Hyderabad and Goa.

Peninsula Land plans to build two residential projects in Nashik on 112 acres of land. The Peninsula Tech City, spread across 100 acres, in Pune would be constructed in two phases and eventually added to the development of the integrated township, the company said in its annual report.

The company has already tied up with Leela Ventures to develop the seven-storey commercial project in Nagpur spread across 0.5 acres.

The Goa SEZ, Peninsula Life centre, is already a notified project and would come up over 30 acreas of land. The 31 acre Hyderabad SEZ, called Peninsula Technology Park, would be a combination of processing and non-processing zones.

The company had acquired the land from Rallis India recently. Peninsula Land, however, did not divulge investments that it would entail in these projects.

The company is currently developing close to four million sq ft in Mumbai and has a total of 33.4 million sq ft under development.

The cost of construction, at Rs 999 per square feet, is a fraction of the Rs 2,500-3,500 prevailing in other parts of the city as well as other major metros.

At this rate, the bigger flats in the township, in the size of 500 sq ft and 700 sq ft, are priced at Rs 5 lakh and 7 lakh respectively Matheran is a joint venture between Sterling Construction System and Eredene Capital, a London-based investment company, listed on the alternative investment market (AIM). Eredene has invested Rs 100 crore into the project. The project has been conceptualised by Sinclair Knight Mertz, an Australian firm with expertise in urban infrastructure planning.

"While we are subsidising the cost by selling a portion of the 100 acres township to commercial users at a premium, our main objective is to elevate the lifestyles of the low income groups by enabling them to own a house they can afford," said Pravin Banavalikal: CEO, Matheran Realty The project primarily targets families with Rs 10,000 a month income. For a housing loan of Rs 2 lakh for 20 years, the Equated Monthly Installment (EMI) would work out about Rs 2,000 - well within the budget of such a household.

The real estate boom in Pune may well be all but over as the market has started witnessing a lot of cancellations, with people even opting to forfeit the money given as booking amounts, rather than going ahead with purchase of the property. This was revealed by Jai Mavani and Prafull Jain, executive directors of leading market surveyors, KPMG India Pvt Ltd at a press conference here on Friday. They further added that by 2009 Pune will witness an oversupply of residential and commercial spaces vis-a-vis demand.

Mavani said, "Pune's real estate market has seen a pretty hectic business in the last few years. However, as seen in other cities in India, Pune too, has started witnessing a slowdown of about 15 to 20 per cent in the real estate sector. Though the top-tier developers may not be feeling the pinch as yet, the small developers have certainly started to."

Attributing this drop in the real estate to factors like reduction in the investors, Jain said, "One-third of buyers in the Pune market are investors who buy properties in anticipation of the assets appreciating. But this appreciation is not happening anymore."

Mavani advised developers to release their stock rather than get into trouble later on since operating cash-flows are more important than land-bank. ``It is better to take a prudent view of the land prices, rather than holding on to them," he said.

As per the projections provided by KPMG, Pune witnessed a supply of two million sq ft of commercial space in the first half of 2008, while approximately 3.5 million sq ft of supply is expected over the next six months.

As far as residential space is concerned, Koregaon Park and Kalyani Nagar continue to remain the most expensive residential markets with Wanavdi emerging as a new mid-ranged residential location. As for the retail properties, Aundh is emerging as a preferred choice because of the presence of a large number of residential properties available for rent. "Cautious approach adopted by retailers will help rentals stabilize in the short term," said Mavani.

He added that the IT sector, that has been the major growth driver for real estate in Pune, has started slowing down. A shift to SEZs will further lead to oversupply in IT parks.

Commenting on the rise of malls across the country, Mavani said, "Malls have been built indiscriminately without any applications of how malls operate internationally. At one point, we will see these malls convert into commercial spaces. Some of these malls will fail entirely. Therefore they will have to strategize themselves."

The progressive trends in the IT industry have benefitted businesses like real estate, hospitality and consumer services to a great extent. The business ventures of real estate and hospitality have directly and indirectly gained the optimum from the IT boom in Pune.

In the real estate market, there has been a visible growth where it has generated around 70,000 employment opportunities. Around 30,000 to 40,000 commercial buildings and residential dwellings have been constructed annually.

"Since 2002 in Pune, the IT industry has been prospering. In the previous year, approximately 700,000 square feet (of floor space) has been occupied by the IT industries generating around 70,000 employments. To accommodate these employees around 30,000 to 40,000 new buildings were needed. This has direct impact on the real estate market," said Murali Santhanam, Director with the Top Source, a well-known payroll processing service provider based in Pune.

In fact, the real estate developers in Pune are working round the clock to bridge the gap between demand and supply caused by the IT boom. "In Pune, there are approximately 30,000 to 40,000 new buildings and the gap between demand and supply is still there. The interest rates have also an impact on the growth where industrial sector is growing and employment in IT companies is growing with its direct impact on the real estate market. Till date, there is a positive effect on the growth," Murali Santhanam added.

Rs. 300 crore will be invested in commercial projects in Pune and Rs. 300 crore will be invested in affordable housing projects (Rs. 10 lakhs - Rs. 25 lakhs per unit) in Maharashtra (in Nagpur, Nasik, Pune and suburban towns/ districts of Mumbai). In addition, Milestone is also actively considering a few investment proposals from Nasik.

Rs. 200 crore is being earmarked for development of Logistics Parks across Maharashtra.

Elaborating on the choice of cities, Ved Prakash Arya, Managing Director of Milestone Capital Advisors said that Pune has emerged as a favored destination for the IT/ITES sector. This has led to an explosive growth in the real estate markets, with prices rising by almost 200 per cent in three years. "We therefore believe that in Maharashtra, Pune presents among the best opportunities for a good return on our investment. We believe Pune is ripe to have low cost (Rs. 10 - 25 lakhs) affordable housing integrated township projects," Mr. Arya said.

What are the challenges facing the real estate sector? Also, what opportunities and trends do you see in the property market?
The biggest challenge today is the interest rate on home loans. It has gone up from 7.5% to 10:75% and this has obvi-ously shocked the home buyers whose budgets have gone haywire. As a result,ments or waiting for interest rates to fall.There had been a slowdown for a while.But with the inflation going up, interest rates are not coming down and hence people have started buying again. Neither the land prices nor the construction costs are showing signs of any decline costs are showing signs of any decline and so there is no question of price correction. Building costs are high and there can be no lowering of prices. People are realizing this and are buying. I have noticed in the last two months that transactions have picked momentum.

The opportunities in the real estate sector are infinite. There is a huge growth potential and those who are worthy should take up the challenge.

With soaring real estate prices,there is much talk of affordable housing. You said you will consider yourself to be a professionally successful in true sense only when you are able to deliver houses with an EMt of Rs 750- toRs 4,000. Is this possible and practical?
It has to happen. Market needs have to be met. With support from the government along with right effort, right strategy and right research, this will hopefully be soon possible. Mass affordable housing is indeed very challenging. One has to work within the budget cost and deliver to the market what market wants. For all that,weneed to tightenour belts.

What is the USP and growth strategy of your group?
We have four verticals IT!retail, residential'townships and the mass affordable
housing. We are fully nurturing all the four and want to do better every year. I hope that my delivery exceeds the market expectations. We have been firmly grounded and have an excellent reputation of delivery. People have immense
trust in us.

What are the current projects that you're focusing on?
We are quite active in commercial real estate. We are coming up with a huge children's mall titled Kidopia near Saras Baug, Pune. Also in the pipeline is a large mall (1.6 million sq ft) on Karve Road. An ITSEZin the heart ofHinjewadi has been planned too.

On the residential front, we are launching three major townships near Hinjewadi and Kharadi and that is what is hot and happening for us this year. Also our existing projects like Kumar Kruti,
Kumar Shantiniketan and Sublime are doing well, along with our other projects in Mumbai.

Kumar Shantiniketan is a mega town- ship on Baner Pashan link road housing 375 luxury flats, Shantiniketan is built on the ethos of Rabindranath Tagore's world renowned Shantiniketan. A veritable green paradise with an abundance of water bodies, this modem edifice enjoys the best comforts in natural environs.

Kumar Kruti in Kalyani Nagar offers homes that have been culled from 39 years of our home building experience and Sublime has spacious three-side open terrace apartments in Kondhwa.

GTC Cyprus is the real estate company of the Netherlands-based Kardan Group.

The Kardan Group has real estate projects in western eastern and central Europe, and China. This will be the group's first venture in India.

"GTC will invest $90 million to acquire the land," a DS Kulkarni official said. "Any further equity contribution shall be made by DS Kulkarni Developers and GTC in their respective shareholding proportion," he added.

The total built-up area of the project is estimated to be more than 15 million sq ft and the total investment in the project is estimated at around $1 billion.

In 2007, GTC Real Estate had signed a "term sheet" with DS Kulkarni Developers for the development of a phased commercial and residential project in Pune.

The term sheet had stated that both the parties would set up a 50:50 joint venture. DS Kulkarni Developers will transfer to the JV a plot of approximately 1 million sq metres. In consideration for its share in the joint venture, GTC will transfer, in installments.

Kardan is an international investment company based in the Netherlands, listed on Euronext Amsterdam and the Tel-Aviv Stock Exchange.

"If you want to invest in property, this is the best time. Property prices are reasonable and the chances of an upside in the future are greater as compared to other asset classes," Maharashtra Chamber of Housing Industry (MCHI)'s President, Pravin Doshi, said today.

With the stock-market in decline and commodity prices volatile, property has emerged as the best asset-class for investment, Doshi said.

"Home loan rates are only marginally higher than inflation. Investing in property will give a better utilisation of the Rupee," he said.

Inflation today stands at a 13-year high of 11.42 per cent and with global oil prices flaring up, the chances of it rising further are high, he said.

"With inflation rising, every Rupee a consumer spends buys less than what it did yesterday," Doshi said.  In these circumstances, returns on investments in other asset classes cannot be assured, but investment in property will at least ensure that the investment does not get depreciated, he said.

Here it might be noted that even bank deposits are not proving as attractive as before, as the interest rates banks offer do not help investors in beating inflation.

It is only in the last week that several banks have started increasing their deposit rates.

Today, as a real estate development company honoured with people's trust and credited with transforming the skyline across India, IDEB constantly strives for perfection. The ultimate aim is to exceed customer's expectations. A proof of efforts is - Silver Ocean of Mauritius, the foreign invest partner of IDEB, has invested more than  Rs 33 Crores in Springdale, a residential venture from IDEB.

KTGY Inter-Associates, one of Bangkok's leading architectural firms, has designed the master plan of this idyllic, self-contained, mixed-use, integrated enclave. There will be mid-rise apartments, villas, twin bungalows and row houses, forming a pocket of orderly development, offering an escape from a world of chaos into an organized and well-managed world that has been created based on the best practices of modern town planning. The exquisite landscaping between and around the apartment buildings; parks; water -bodies; makes this enclave a pleasure to live in.

The launch event was held at the Le Meridien - Pune recently. Mr Bedi, CMD and Mr Rajiv Banga CEO of IDEB Projects addressed an august gathering of investors and business associates.

The fund would invest up to Rs 5 crore per residential project in Pune to help the small developers to complete their projects quickly and raise standards. The fund's first series witnessed investments from 84 developers, all of them attached to PBAP. The Rs 26 crore would be used to finance six projects initially.

PBAP President Lalitkumar Jain said, "Smaller developers do not get equity funding in the present scenario. Only those real estate projects developed on more than 25 acres are eligible for FDI. Funding from MFs and venture capital establishments is costly because of the heavy processing fee. This forces smaller developers to rely on private funding, which is also again costly. Considering this aspect, PBAP has decided to form its own fund that will buy stake in smaller projects to meet their financial requirements."

The first series of the PBAP Realty Investment Fund has a lock-in period of seven years. However, investors can transfer their stake to another PBAP member.

Nearly 240,679 registrations took place in five cities -- Mumbai, Thane, Pune, Nashik and Nagpur -- during the January-March period in 2008, a 10.53 per cent increase over 217,743 between October and December in 2007. Registrations were a tad less in the July-September period at 208,205.

The data were collated from the office of the state's inspector-general of registration and stamp duty.<center><img src="http://www.qbtpl.net/images/No_Slowdwn.jpg"></center>
The comparison of first three months' data in the last three years also shows that registrations have gone up substantially. The number of registrations increased by 13.54 per cent during

January to March this year compared with the same period in 2007, while it increased by a mere 4 per cent during January-March in 2007 compared with the year-ago period.

More property registrations also meant higher stamp duty collection for the state exchequer.

The government collected Rs 2,267.42 crore as stamp duty from January to March in 2008 compared with Rs 1,619.99 crore in the same period in 2007, registering a 40 per cent increase. It had collected Rs 1,374 crore in the first three months of 2006.

Though the property market in the country's financial capital has been rife with talk of a slump for some time now, this is the first time figures prove the extent of the slowdown. Information about residential and commercial property sales from the stamp duty registration office show almost 12,000 fewer transactions during the last financial year compared to the year before. From April 2007 to March 2008, 62,595 flats were purchased in Mumbai as against 74,555 in 2006-07.

Analysts said this could be just the tip of the iceberg as stamp duty registration figures indicate the trend only among genuine homebuyers. There could be more of a downswing in real estate investments as people are backing off from the sector in large numbers.

Sanjay Dutt, joint managing director of Cushman and Wakefield, said that annually there has been a 20-25% increase in transactions since 2001. "The market peaked in 2007. There were glimpses of market correction in certain cities by the end of 2007. But it was only in 2008 that realisation on the investors' part and the stagnation that was until now only a perception became a reality," he said.

Realty analysts say sales volumes are expected to dive further south as developers persist on holding on to their steep prices and buyers anticipate a further fall with current rates being beyond reach. According to Akshay Kumar, managing director of Parklane Property Advisors, the market is in a corrective mode and the downward drift will continue for another 12 months.

• Buy a premium apartment from Kumar Builders and go on an all paid week-long trip for a family of four to Switzerland .
  
• Despite the hike announced by the city builders DSK has offered 55 of its apartments in the current schemes at old rates.
  
• Mont Vert has offer for incentive customers who bring in another buyer.
  
• Many builders are offering free white goods - air-conditioners, refrigerators, washing machines, modular kitchens.

These can be as extravagant as a trip for four to Switzerland and as unassuming as lining up the housing loans. There is an array of freebies that can be pegged somewhere in between these two instances, ranging from free white goods and stamp duty waiver to even offers to pay the first couple of EMIs on behalf of the buyer.

Naresh Malkani, CEO indiaproperties.com describes the scenario of the last few months as a "no-deals time". Cushman and Wakefield in their latest report on Pune residential scene have also noted that sale transactions are expected to see a further slowdown which "may force certain developers to offer better deals or free amenities to incentivise purchaser and ensure cash flow for their projects." The point seems to have been well taken by the builders.

"We are offering a trip to Switzerland for seven days and six nights for two adults and two children for those buying a flat in our premium projects where the cost is over Rs one crore. In projects that are lesser in price we have the same offer with Malaysia being the destination instead," says Prabha Shankar, vice president, Sales, Kumar Properties.

Pune, over the last two years, has experienced a boom in the real estate industry. However, availability of land has remained a problem as the new Development Plan (DP) for Pune has not been sanctioned and executed for quite some time.

The city saw construction of 60 lakh sq.ft commercial space for the information technology (IT) industry last year, which has generated employment for more than 60,000 people. There has also been extensive recruitment in industrial areas like Ranjangaon, Pirangut, Chakan and Talegaon - an addition of close to 25,000 new jobs. The services and retail sector has recruited more than 25,000 new employees last year.

While more than one lakh new jobs were added in the city, the builders have developed only 35,000 new flats in and around Pune. "There is a huge demand-supply gap, which has led to the sudden price rise over the last two years. In addition, steel prices have gone up from Rs 32,000 per tonne to Rs 52,000 per tonne while the cement prices have been increasing consistently. PMC, too, has increased the development and premium charges for residential projects from 200% to 400%. All this has led to heavy cost escalation for Pune-based builders," Jain added.

PBAP, which represents more than 80% of Pune's real estate developers, has prepared a report that explains the possible ways to tackle the price hike. The report has requested the central government to take cost cutting measures for cement and steel prices.

Jain said: "There is resentment among middle class households over increasing real estate prices. The industry cannot sustain such a situation where costs are not coming down. If housing becomes more costly, nobody will buy a flat in Pune and the industry may come to a halt in the near future."

Yoo by Starck also plans to expand its presence to Gurgaon, Goa, Bangalore and Mumbai with an investment of approximately Rs 1,800 crore in next four to five years.

Yoo by Starck Chairman John Hitchcox announced this during a press conference on Thursday in Pune. Yoo, a design marketing and branding development firm, has presence in 21 countries. Yoo is presently constructing 41 projects around the globe at Rs 40,000 crore.

"India and China are probably the biggest real estate markets in the world now. As a concept, branded homes is fairly unknown in India. Yoo by Strack finds India as an attractive country to design and develop real estate projects," Hitchcox said.

The first project named "Yoo in Pune" is being developed by Panchshil Realty over 21 acres of land. The first phase of this project will have six 30-floor-towers.

Panchshil Realty Managing Director Atul Chordia said, "Residential service condominial is a new concept worldwide and hardly anyone has thought of replicating it in India. A service condominial offers much more that what a service apartment offers. At "Yoo in Pune", we will have companies like Oakwood Resorts and Mariott Hotels to provide services. The project would be launched in October this year and it would be completed within 30 months there after."

Chordia and Hitchcox jointly said that they would carry on this partnership to other prominent cities in the country. "Although, Yoo does not have direct investments in Pune project, it will act as a joint developer with Panchshil in future projects. It will spend around 25 per cent of the project costs," Hitchcox stated.

Elaborating the expansion plans, Chordia added, "After Pune, we are immediately launching a similar scheme in Gurgaon on an 18-acre piece of land. The design part of it has already started. This will be followed by projects in Goa, Bangalore and Mumbai."

When asked about Yoo by Strack's investment p