Archive for January 2017

Middle-class too will benefit from PM’s housing sop

The government may also release the entire interest subsidy amount upfront, which would help those struggling to make the initial payment.

Middle-class too will benefit from PM housing sopNEW DELHI: Those with annual income of up to Rs 12 lakh in urban areas would soon be eligible for 4% rebate in interest for a home loan up to Rs 9 lakh while 3% rebate can be availed on Rs 12 lakh loan by those who earn up to Rs 18 lakh annually, government sources said.

The government may also release the entire interest subsidy amount upfront, which would help those struggling to make the initial payment. The new interest subsidy scheme for home loans was announced by the PM Narendra Modi last week, but the details have not been unveiled so far.

Sources in the Union housing ministry said the benefits of the scheme will cover the middle class in addition to the poor, who are already eligible for higher interest rebate in urban areas. They said the details of implementing this scheme are being worked out and would be announced soon. An amount of Rs 1,000 crore has already been earmarked for meeting the expenses for the interest subsidy .

Till now, those with annual income up to Rs 6 lakh were eligible to get 6.5% interest subsidy for housing loans of up to Rs 6 lakh. So far only 20,000 people have availed this. In such cases, government releases Rs 2.3 lakh upfront as cumulative interest subsidy to the beneficiaries.This results in reduced effective housing loan and equated monthly instalment (EMI).

Housing ministry officials said the new norms announced by the PM would be applicable only in those cases where people go for fresh home loan under the Pradhan Mantri Awas Yojna (PMAY).Under PMAY, applicants can get interest subsidy only if they own no house anywhere in the country. “Effectively, the new norms will bring more income groups under the interest rebate scheme and will come as a relief for the middle class. For example, if you take a Rs 30 lakh loan, but have less than Rs 18 lakh annual income, you can avail the rebate in interest for the first Rs 12 lakh loan.For the rest you have to pay the full interest as charged by your bank,“ a source said.

The ministry officials admitted that the provision of having no house across the country to be eligible for benefits under PMAY is creating problem in cities such as Delhi where a large chunk of applicants are migrants, who have settled in the national capital. This has been one of the stumbling blocks why Delhi has not been able to forward many cases for approval from the ministry.

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The news and data posted here is from various sources, published and electronically available. We have taken all possible care to verify and crosscheck the accuracy of the same. However, despite due diligence, sources may contain occasional errors.www.noidapropertydealers.co.in will not be responsible for any errors in such an instance.

Yamuna expressway industrial development authority adopts Project Settlement Policy

Arunvir Singh, CEO, YEIDA said that the board also adopted the Project Settlement Policy, already in place for Noida and Greater Noida.

Yamuna expressway industrial development authority adopts Project Settlement PolicyNOIDA: The Yamuna expressway industrial development authority (YEIDA) in its Board meeting on Tuesday has sought permission from the Uttar Pradesh government to set up solar plants across nearly 100 hectares of land, which is not being used. While the YEIDA Board gave its approval for the project, the final nod from the government will set it in motion, said officials. The Board also gave its go-ahead for several other sops for the public.

According to YEIDA officials, green agriculture land and land earmarked for river front area in YEIDA as per Master Plan 2031 will be used for setting up solar plants as per the Uttar Pradesh solar policy-2013. “Chairman Sanjay Agarwal has asked us to prepare a proposal where this land can be put to use and also solar electricity generated,” Arunvir Singh, Chief Executive Officer (CEO), YEIDA told TOI.

Singh further said that the board also adopted the Project Settlement Policy, already in place for Noida and Greater Noida. The policy is focused on providing reprieve to thousands of home buyers rather than the builders. It intends to address issues concerning the realty sector, including delayed and sick projects besides addressing the angst of thousands of home buyers. “This policy will be implemented in YEIDA keeping in mind the ground coverage of the allotted plot,” he said.

On the demand of scores of allottees unable to get possession of their plots due to legal wrangles, YEIDA has also implemented a plot re-allocation policy. “Under this policy, allottees will be allotted land at other locations,” Singh explained. “The Board has also allowed allottees to surrender large plots allotted to them and convert them to smaller plots in view of economic slowdown. However, allottees will have to surrender 50% of the plot in such cases,” he said.

“173 residential allottees of the RPS scheme of March 2016 have also been provided relief. The last date for allotment money has been extended till January 31, 2017,” he added. “The Board has also allowed implementation of a zero period for realty projects, which had been stalled in the erstwhile Noida Extension area – now Greater Noida (west)-following National Green Tribunal orders in 2013,” he said.

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The news and data posted here is from various sources, published and electronically available. We have taken all possible care to verify and crosscheck the accuracy of the same. However, despite due diligence, sources may contain occasional errors.www.noidapropertydealers.co.in will not be responsible for any errors in such an instance.

Delhi BRT to be redesigned for Rs 80 crore

In February last year, officials had said that the entire work of dismantling and redesigning the Rs 190-crore corridor would cost Rs 10.97 crore.

Delhi BRT to be redesigned for Rs 80 croreNEW DELHI: Almost a year after work started to dismantle it, PWD is all set to redesign the controversial BRT corridor. The 6.2-km stretch from Ambedkar Nagar to Lajpat Nagar Metro station will be made a regular road at a cost of roughly Rs 80 crore.

In February last year, officials had said that the entire work of dismantling and redesigning the Rs 190-crore corridor would cost Rs 10.97 crore. “This was when the plan was to convert this stretch into an ordinary road. The work would have included redesigning of junctions, installation of a new signalling system, subways, foot overbridges, etc. Now, there is a plan to construct five half submerged or humped subways along the stretch and redesign it completely, which is why the budget has increased,” said a senior official.

The humped subways will include retail outlets, along with public conveniences, like toilets. Officials said that the stretch would not be given any new foot overbridges and that pedestrians would either use the subways, one of which already exists, or cross the road at-grade. “The subways will be less than 1m below ground level so that they are safe for pedestrians. All junctions will have demarcated crossovers for pedestrians and non-motorised vehicles while major junctions will have table tops to allow pedestrians to cross over quickly,” the official said.

The existing foot overbridge near the Ambedkar Nagar T-junction and subway near Defence Colony flyover will both be replaced by humped subways.

Sources said that the plans would be submitted to UTTIPEC shortly and once administrative and financial approvals were received, PWD would invite tenders. “Construction work itself will take about a year but the exact time-frame will be determined by utility shifting,” said the official.

Under the redesigning plan, some part of the slip roads will be converted into public spaces. Officials said this would be done at locations where the slip roads were used for parking. Meanwhile, special on-road parking will also be created between Chirag Delhi and Ambedkar Nagar.

The BRT corridor was made operational in 2008 but came in for major criticism due to poor planning. Traffic jams lasting for an hour or two were routine along the stretch.

 

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The news and data posted here is from various sources, published and electronically available. We have taken all possible care to verify and crosscheck the accuracy of the same. However, despite due diligence, sources may contain occasional errors.www.noidapropertydealers.co.in will not be responsible for any errors in such an instance.

Big corporate borrowers to benefit most from rate cuts

The move is also expected to revive credit growth as companies borrow to invest and thereby bolster growth in the wake of the November 8 demonetisation.

Big corporate borrowers to benefit most from rate cutsMUMBAI: The sharpest rate cut by banks in more than seven years is likely to benefit big corporates more than retail borrowers. Companies can renegotiate contracts immediately, taking advantage of reductions of as much as 90 basis points, while more than 60% of retail borrowers are stuck in the earlier baserate regime where the drop has been a much narrower 5-10 basis points, experts said. Corporate loans are mostly pegged to the marginal cost of funds based lending rate (MCLR), which came into force in April 1 last year.

“Banks will pass on the rate benefits to large corporates as they have been able to raise money from money markets, so the bigger game lies in the industrial sector. We will have to see how this plays out,” said Siddharth Purohit, senior research analyst at Angel Broking. A basis point is one-hundredth of a percentage point.

Indian banks slashed interest rates over the weekend after Prime Minister Narendra Modi urged lenders to meet the funding needs of poorly served borrowers ranging from the poor to the middle class. The move is also expected to revive credit growth as companies borrow to invest and thereby bolster growth in the wake of the November 8 demonetisation.

“The better-rated corporates have an option of going to the wholesale markets because they can bargain for better rates from banks, so they will be better placed to enjoy benefits of lower rates as compared to poorly rated corporates,” said Ajay Bodke, CEO, Prabhudas Lilladher.

Banks will pass on the rate benefits to large corporates as they have been able to raise money from money markets

SWITCH TO MCLR

Starting April 1 last year, all loans have been pegged to MCLR. Companies with loans from before that date would have mostly shifted to the new system as these get renewed annually but home borrowers would have stayed put because of the switching fee involved.

“Most of the corporate loans get renewed in the last quarter because the audited balance sheet comes only after September, so the main shift has happened during the last quarter and the rest of the corporate book will shift by the end of this year,” said Arundhati Bhattacharya, chairman, State Bank of India. “There is no credit growth now but we believe these measures will pump up the credit growth.”

Only 30-40% of total floating rate loans are linked to MCLR while the rest are still linked to the base rate. State Bank of India, which charges a minimum Rs 10,000 to switch, cut its base rate by just 5 basis points recently to 9.25% against its one-year MCLR rate of 8%, which was slashed from 8.9% on Sunday.

About 15%, or Rs 13,000 crore, of SBI’s home loan book is linked to MCLR while 40% of its overall loan book is linked to the new system. SBI’s retail book size is Rs 3.4 lakh crore and total loans amount to Rs 14.8 lakh crore.

PROFIT EROSION

Banks with high exposure to big corporates like SBI and ICICI Bank are expected to suffer a steeper erosion in profitability than the rest. Credit Suisse estimated that the unexpectedly large rate cuts will reduce earnings by 4-18% and lead to margin compression by 10-15 basis points.

“We therefore estimate a 10-15 basis points NIM contraction (assuming MCLR does not go up with withdrawal of excess liquidity) on the back of these rate cuts,” Credit Suisse said. “We expect bank earnings to be weak in 3Q as loan growth has moderated to just 5% and banks have seen a drop in fees and higher operating expenses post demonetisation.” NIM is net interest margin—the difference between interest income and that which is paid out.

Analysts said larger private banks will see a sharper moderation in earnings than mid-sized ones. “Prima facie, the cut in lending rates appears to be quite steep and does raise concern if this is simply a reflection of the decline in recent cost of funds or the bank is looking to avenues to restart lending in the economy,” said MB Mahesh of Kotak Institutional Equities. “Also, we are not too sure if the cut merely represents a function of the tight MCLR regime which offers very limited flexibility or if this move represents an aggressive call from public banks to restart lending.” MCLR, a reform put in place by the Reserve Bank of India, allows for more dynamic rate transmission compared with the slower baserate mechanism.

DISCLAIMER
The news and data posted here is from various sources, published and electronically available. We have taken all possible care to verify and crosscheck the accuracy of the same. However, despite due diligence, sources may contain occasional errors.www.noidapropertydealers.co.in will not be responsible for any errors in such an instance.

Banks expect cut in lending rates to help boost credit growth

SBI chairman Arundhati Bhattacharya said she expects her bank’s credit growth to be boosted after the cut in rates.

Banks expect cut in lending rates to help boost credit growthMUMBAI: Bankers are hoping that the sharp cut in lending rates in the New Year will give a fillip to credit growth, which is languishing near a 54-year low. For now though, demand is more likely from individuals to buy homes and vehicles and for personal consumption -corporate investment revival is still not in sight, bankers said.

Banks, led by State Bank of India, reduced their benchmark lending rates by up to 90 bps to the lowest level in a decade on January 1, taking advantage of the sharp rise in deposits after Rs 500 and Rs 1,000 notes were withdrawn from circulation. Bank deposits have risen 13.6% in the current financial year to Rs 105.9 lakh crore, compared with a credit growth of 1.2% in the same period.

SBI chairman Arundhati Bhattacharya said she expects her bank’s credit growth to be boosted after the cut in rates.

“Currently, the credit growth is around 6-7% as against our target of 11-12% for the full year. But we hope that with the measures that are announced today credit growth will improve to 8-9% by the end of the year,“ said Bhattacharya.

The bank announced bridge loans for home loan borrowers who want to buy new homes but were unable to find buyers for their existing homes and loan top-ups for non-salaried customers.

Kotak Mahindra Bank announced an up to 45 bps cut in benchmark lending rates on Monday. Joint managing director Dipak Gupta said expectations that interest rates on deposits below Rs 1 crore will also be reduced have allowed banks to “take the leap of faith“ and cut rates more sharply.

“The retail segment, being more sensitive to rates, is likely to be impacted more by the cuts as lower rates will coax customers to buy and spend more. But it is not come to the stage when companies will be nudged to invest more or start a new factory. That still looks a long way off,“ Gupta said.

So far this financial year, gross bank credit has credit has shrunk 0.8%, led by a decline of 5.5% in cre dit demand from indu stries. Lo ans to indi viduals ha ve grown at 8%, ahead the strongest at 8%, ahead of the 0.7% growth in socalled priority sector loans.

Jairam Sridharan, CFO at Axis Bank, said investment demand has also been hit by the after-effects of the currency withdrawal and other impending changes such as implementation of the Goods and Services Tax and the Real Estate (Regulation and Development) Act.

“Many businesses are in a wait-and-watch mode. One needs to see if these cuts are sufficient to revive demand.Small businesses are in the midst of an adjustment. For corporate demand to revive it will still take a few months,“ Sridharan said.

DISCLAIMER
The news and data posted here is from various sources, published and electronically available. We have taken all possible care to verify and crosscheck the accuracy of the same. However, despite due diligence, sources may contain occasional errors.www.noidapropertydealers.co.in will not be responsible for any errors in such an instance.

Reprieve to homebuyers likely after YEIDA meet

The Project Settlement Policy has already been adopted by Noida and Greater Noida authorities in their respective board meetings held last month.

Reprieve to homebuyers likely after YEIDA meetNOIDA: The Yamuna Expressway Industrial Development Authority (YEIDA) will hold its board meeting in Noida on Tuesday. The meeting will be convened by YEIDA chairman Sanjay Agarwal, who also holds the position of principal secretary, power and chairman of UP Power Corporation Limited (UPPCL). The adoption of the Project Settlement Policy, initiated by the state government to rescue sick realty projects in the area, is likely to come up in the meeting.

The Project Settlement Policy has already been adopted by Noida and Greater Noida authorities in their respective board meetings held last month. The policy focusses on providing a reprieve to thousands of home buyers, rather than the builders. It intends to rescue delayed and sick projects, besides addressing the angst of thousands of homebuyers.

YEIDA will also seek government’s nod for implementation of a zero period for realty projects, which had been stalled in the erstwhile Noida Extension area – now Greater Noida (west) – following a 2013 NGT order. Realtors have been demanding that the period during which work on the sites was stopped be declared as ‘zero period’.

The removal of certain road blocks being encountered by the 100-acre Greenfield Electronic Manufacturing Cluster for LAVA International Limited is also on the board’s agenda.

DISCLAIMER
The news and data posted here is from various sources, published and electronically available. We have taken all possible care to verify and crosscheck the accuracy of the same. However, despite due diligence, sources may contain occasional errors.www.noidapropertydealers.co.in will not be responsible for any errors in such an instance.

New real estate law may spell the end of pre-launch sales

Developers may be forced to shift from selling homes at a preliminary stage to a build-and-sell model

Madhurima Nandy | Bidya Sapam | LiveMint | Wed, Jan 04 2017. 11 14 AM IST

New real estate law may spell the end of pre-launch sales

Sales of ready-to-move properties have shot up significantly in the past one year. Photo: Ramesh Pathania/Mint

Bengaluru/Mumbai: Real estate developers may soon adopt a build-and-sell model for their residential projects—a complete shift from the current norm of selling homes at a preliminary stage.

A prolonged slowdown, coupled with the implications of the regulatory regime under the new real estate law, may compel realty firms to construct the project or at least a part of it before selling to customers.

With the Real Estate (Regulation and Development) Act of 2016 (RERA), currently being notified by various states, the entire pre-launch stage will be eliminated, and a project will be launched only after obtaining all approvals, which is a lengthy process.

“It makes a lot of sense to implement the build-and-sell model going forward. With RERA, pre-launches will not happen, and developers won’t be able to test the market in terms of pricing or product. Though they would need to arrange the financing, they would prefer to rather build a substantial part of the project and then sell it to buyers,” said Irfan Razack, chairman and managing director, Prestige Estates Projects Ltd and chairman, Confederation of Real Estate Developers’ Associations of India (CREDAI).

Sales of ready properties have shot up significantly in the past one year, compared with under-construction ones, as customers increasingly chose to buy completed projects due to growing uncertainty in the real estate market.

With RERA kicking in, the Mumbai-based Wadhwa Group is looking at restructuring land transactions in such a way that payments are less at the pre-construction stage of a project. In this way, developers can borrow more for starting construction and reaching a stage where they can confidently launch under the new guidelines, provided the approvals are in place, said a company executive.

“We will be looking at selling more at a brownfield stage where about 30-40% construction is completed than at greenfield stage. It is far safer to launch through a build-and-sell model. We are trying to achieve a structure where bare minimum is given before construction stage so that the cash flows can be used to execute the project quickly,” said Vrushank Mehta, head of corporate strategy and land acquisition, Wadhwa Group.

The developer plans to adopt this model in the two or three projects it has lined up for launch in the near future.

Interestingly, India’s largest developer DLF Ltd was the first to say that it will fully build its residential inventory before selling it to customers. In a subdued national capital region (NCR) market, this is a move that will also attract better premium on pricing for completed homes.

The company is creating finished, un-launched housing stock that will be sold when the demand scenario improves.

“In DLF’s case we could afford to hold on to the inventory, because we have a large rental portfolio to support. By this model, we get maximum value realization, avoid delays and other litigations that follow and delivery is not an issue,” said DLF chief executive Rajeev Talwar.

Under the RERA regime, developers will have to rely heavily on external financing as pre-launches of projects, through which builders collect 30-40% of their funds from property buyers before they obtain the required approvals, will stop.

Talwar said it shouldn’t be an issue if developers exercise discipline and manage their cash flows well. “Build-and-sell is going to be the best route. The size of the projects may reduce slightly as a result of it but whoever can afford this model, should adopt it. We would like to go for build-and-sell but to adopt it, we have to get our funding in place right from the beginning or have equity partners,” said Neeraj Gulati, managing director, Assotech Realty Pvt. Ltd.

The company plans to wait and watch for the next six months on how the real estate regulation is implemented and how the market shapes up in the next few months, Gulati said.

ASK Property Investment Advisors, the private equity arm of financial services firm ASK Group, for instance is raising a Rs2,200 crore special situation fund to invest in residential projects.

“Most developers believe that only if they complete or build significantly, will they sell. They want to focus on a few projects and capitalize them to sustain through the period of construction. The new fund is designed to give money for this purpose but ensure every penny goes into construction of the project,” said Sunil Rohokale, chief executive and managing director of ASK Group.

DISCLAIMER
The news and data posted here is from various sources, published and electronically available. We have taken all possible care to verify and crosscheck the accuracy of the same. However, despite due diligence, sources may contain occasional errors.www.noidapropertydealers.co.in will not be responsible for any errors in such an instance.

Home loan interest rate cut may drop further: Credai

On Monday, the SBI announcements of a slash of interest rates to 8.9% have not inspired any immediate impact from buyers groups or even builders.

Home loan interest rate cut may drop further: CredaiNOIDA: Even if the slash of interest rates in home loans has inspired little immediate impact from the homebuyers’ market on Monday, builders’ groups feel that the interest rates would eventually fall further over a period of time and settle down closer to 7% in times to come.

On Monday, the SBI announcements of a slash of interest rates to 8.9% have not inspired any immediate impact from buyers groups or even builders. While the builders claimed the slash in interest rates was too little to make any real impact at entry level traffic to primary market, the homebuyers claimed with builders already stuck with existing commitments, buyers’ sentiments despite slash of interest may be bleak at the moment.

“We were expecting interest rates to be slashed to about 7.5% to inspire any real interest from the primary market. But 8.9% is still too high to make any direct impact on the market with immediate effect,” Amit Modi, vice president Credai, western UP said.

The buyers who are already on a wait-list of builders in Noida or even Gurgaon feel the pressure on builders is now to deliver on existing bookings. “The builders have already slowed down following demonetisation, so we don’t think the buyers have any immediate enthusiasm to go and book apartments. The main homebuyers are the middle class, and they are now cautious about how they are going to invest their funds, or take up new financial commitments,” Shweta Bharti, general secretary, Noida Extension Flat Owners Welfare Association, said.

But other voices in Credai sounded hopeful that the slash in home loan rates by SBI could push the primary market in due course. “Of course, we think the primary market will get a boost with the cut in interest rates. We are now hopeful that the rates would eventually fall further and would settle down to around 7% in times to come,” Credai NCR president Manoj Gaur said.

However, just a slash in loan interest by SBI may not have any real impact, feel buyers until private banks follow suit. “Most buyers get heir home loans funded by private banks, so only when the private banks slash their home loan interest rates, would the market experience a shift.,” Bharti added.

DISCLAIMER
The news and data posted here is from various sources, published and electronically available. We have taken all possible care to verify and crosscheck the accuracy of the same. However, despite due diligence, sources may contain occasional errors. www.noidapropertydealers.co.in will not be responsible for any errors in such an instance.
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