Cyrus Mistry (left), who took over for legendary businessman Ratan Tata, offered this with regard to the investment climate there in India:

“The recent emphasis on policy clarity and a renewed thrust to economic reforms by the Government of India is encouraging. With a sustained focus on policy stability and implementation, I believe that India would continue to be an attractive investment destination.”

ata Housing Development Company Limited

Tata Group owns some 100 plus companies worldwide already including legendary auto maker Jaguar, and
It seems safe to assume at least some of this new investment will be earmarked for real estate, given the group’s past interest in the sector. The conglomerate has Tata Realty and Infrastructure Limited and Tata Housing Development Company Ltd., as well as several key investment arms in the real estate space.

Just last month Tata Housing announced the expansion of developments for affordable housing in India via “Smart Value Homes Limited forays into Bengaluru”, and high end real estate ventures have been in the news for Tata of late as well. On the demand side of the real estate equation in India, the New York Times reported last month on a coming construction boom fueled by the lack of appropriate real estate space for International brands like Walmart to expand into there. The point being, there is little quality commercial space in all India for stores to take up business in. New construction would seem a logical investment avenue for any conglomerate.

Tata has almost half a million employees worldwide, and one of the most valuable brands in the world. It remains to be seen what path the new CEO will blaze to extend the empire Ratan Tata created. Manufacturing to services and beyond, $8 billion almost seems like a puny sum when all Tata’s assets are weighed. Still, forward momentum is always positive news.

Energetic entrepreneur and Asia-file – Patrick Grove

Whether you want to buy or rent a property, iProperty Group probably has you or your business covered for finding, investigating, and making choices for the Asia real estate market. With sites covering locals from the Philippines and Indonesia, to Hong Kong and Malaysia, a score of portals show off the best of Asian properties. Let’s take a look at just a few of these, and more importantly, the organization behind them.

thinkproperty.my

This niche portal (below) is aimed at the home owner intent on listing their own properties. it is interesting to note, that while this Asia market is a relatively new one online, that iProperty has built and scaled a fairly cutting edge site here. At least compared to many, many North American counterparts. News, forums, blogs, and some key resource leads, the site is not a full on full up repository yet, but it does seem to be the “go to” FSBO site in Malaysia.

thinkproperty.my – a clean and efficient locator

GoHome

GoHome Hong Kong dot com is a multilingual real estate portal akin to one of the American listing aggregators. The Chinese language version may not be the cup of tea of interested English speaking house hunters, but English and shows off a vast information port for anyone in the market. I do not personally like sites of the type, they seem too cluttered, but the point is – iProperty has covered the niche where others have not. By contrast, Hong Kong Homes may have a cleaner site, but it is two dimensional by comparison with the listings at GoHome. The screen below shows the look of the landing.

GoHome.com.hk – not loveliness, unless listings count

Get A Rumah

We could show all the websites iProperty Group operates, but domain names and site design (even proliferation) are not all there is to engaging a market. Taking a deeper look into Indonesian rumah123.com (yes, people in Asia love colorful), you’ll also find a fairly massive social media engagement. The Twitter feed is almost constant and responsive, even though @rumah123  does not quite follow enough, it’s easy to see the company focus is spot on. Ditto for Facebook, the company has 123,000 plus likes and they talk it up every single day. The images from this Facebook profile tell all. People, properties, execs, sales folks, buyers, and pretty parts of the countryside, you name it – I would go to these people to buy. No questions asked.

Rumah123.com – somebody knows how to do social

There’s no real need to dig deeper, companies like iProperty are all about capitalizing on successes, using success as a template. Where you see one superb engagement, sooner or later you’ll see the others fall in line, like ducks in a row. As soon as I saw how this company did social media, it was clear somebody there uses his or her brain.

Mobile sites, commercial and residential, social media, even the upcoming iProperty Expo tells of a company moving forward fast, a company some other regions could emulate. And where one finds leaders, one also finds sponsors, in case you’re in need. The Expo has a leading lineup of developers and other industry entities like; UEM Land (Malaysia),  Property Barrons (low high conversion), Bright Heritage (engineering), Bina Puri (construction), and many others.

Led by Simon Baker and Patrick Grove (image top), iProperty is vested with experts across a wide array of fields. Baker, for instance, is an online revenue driving machine. He is also CEO of Classified Ad Adventures, as well as the decision maker for several past key online developments. As for Grove, he is Co-Founder of iProperty, but that’s just for starters. He is also the modus behind Catcha Group, a leading media investment company in South Asia. The due make for a powerful skill and influence set, marrying ad and online reach with events and media, the results can be seen.

Now add in still more key execs, like CEO Shaun Di Gregorio (above left), and the term “Team” takes shape. As a last professional accolade, Di Gregorio former head of the Australian operations of the REA Group, Sean is the field general in the trenches. For a lesson in team building, here we have great and enthusiastic soldiers (evidence the real people in SM), and segmented expertness in command (leaders in online, events, media, real estate).

While we make special note of the leadership here, the real tale of a good company story resides in their chosen employees, we leave you with Nazrin Mohd Nasir, one of the company’s enthusiastic partners who won an iPad for contributing. We can learn a lot about contributing, growing, and success from watching such companies. Read the financial at Bloomberg, for other clues.

Nazrin Mohd Nasir & the iPad won for contributing

Most Indians prefer older homes, shows new study © WONG SZE FEI - Fotolia.com

Out of the remaining 25% choosing to purchase new property due to discounts offered, an incredible 82% were regretting their decision, mainly due to delays in completion of the project. The study was carried out in major cities including Mumbai, Delhi, Bangalore, Chennai, Patna, Ahmadabad, and Patna.

It found around 68% of those choosing to purchase previously owned homes cited tax reasons as being one of the major influences, as tax benefits are only available once the buyer has possession of the property. Those choosing to buy property and construction are faced with having to pay rent and EMI, and cannot get any tax benefit until the property is finished.

More than half of the respondents surveyed were prepared to pay slightly more for a property which was already finished, as it gave them the chance to see who their neighbors would be, and to get a feel for the local community.

Around 70% of buyers are scared of purchasing homes under construction due to the worries over faulty design, and this group prefer to see what they’re paying for upfront. A massive 92% are reluctant to book projects recently launched due to the risk of delays. Another 78% feel the finished project didn’t replicate the show home, and 72% felt developers didn’t deliver on amenities such as gyms and clubs.

However the same percentage were worried about taking the developer to court due to legal costs and the sheer hassle of doing so.

With these kinds of concerns is easy to see why more than 60% of buyers would be happier to purchase a previously owned home where they can see exactly what they are getting, rather than go through all the hassle and worry of waiting for a project to be completed.

Image courtesy Adam_T4

Apparently the final draft of the bill is now ready, and the housing ministry is hoping it will be heard during the monsoon session. Changes made to the final draft include clauses on compulsory registration and imprisonment.

In the final draft, imprisonment will only be applicable in cases of non-registration with the regulatory authority, as it is mandatory for certain types of projects, and for certain sizes of projects. The maximum prison sentence is three years, and penalties totaling up to 10% of the total cost of the project can be applied.

Other changes to the final draft include a reduction in the size of the area for compulsory registration from 4,000 square feet to just 1,000 square feet, meaning smaller developers are now included in this scheme.

The National Real Estate Development Council (NAREDCO) is happy about this inclusion as it feels it would help control ‘fly by night’ developers who generally only build smaller projects. However they have pointed out that this inclusion will substantially increase the load on the authorities, as there are many more smaller projects that will need to be registered.

The Confederation of Real Estate Developers Association of India (CREDAI) thinks registration should go even further, and that there shouldn’t be any limit. They feel all developers should have to be registered.

The aim of the new legislation is to try to regulate and control developments, as well as the construction, sale and management of residential buildings and apartments. It is also intended that a website will be set up that will contain all project details.

Bihar's rapid growth is causing problems for the rest of India. Courtesy yumievriwan @ Flickr.com

This is one of the fastest rates in the whole country, and while it’s been good news for Bihar, according to a report in the Economic Times, it’s not being quite so great for the rest of the country. In fact it is creating quite a problem for real estate and construction firms, as traditionally migrant labor supplied around 50% of unskilled workers nationally. However since the Nitish Kumar government came to power in 2005 migration levels have fallen by a third, and this has not only caused labor shortages, but has also increased wage bills by as much as 50%. The shortage of labor is causing some projects to be delayed, as well as increasing costs, and construction companies face a hard time trying to juggle labor between projects.

Expenditure in Bihar has increased from Rs18,000 crore in 2010 to Rs24,000 crore in 2011, and this extra money is being spent on hospitals, schools and building roads. Construction in the area has grown by 20% year-on-year, and more people are choosing not to relocate to large cities such as Mumbai and Delhi. In the past entire families used to migrate to cities in order to find work, but nowadays just one or two family members are choosing to move away while the rest are managing to find work in Bihar. These people are either finding employment in state government projects or in the National Rural Economic Guarantee Act program. The NREGA program guarantees a minimum of 100 days employment each year to every adult member of a rural family, and this has had a significant effect on migration.

Real estate projects in the National Capital region were previously seeing delays of up to 8.9 months, but this has increased to 12.8 months during the last couple of years, with much of this increase being down to labour shortages. Although this lack of labour might not be welcomed by the construction companies, economists have pointed out that it shows the country is developing, and that has to be encouraging news.

Indian developers facing tough new rules © Oleksandr Rozhkov - Fotolia.com

According to an article in the Hindu Business Line.com, these latest amendments are all part of the draft Real Estate Bill, and the Ministry of Housing and Urban Property Alleviation is looking for public comments on the draft within the next week or so. The first draft of this bill was prepared back in 2009, and has substantially changed after many consultations with stakeholders. Apparently the government is hoping to table the bill during the winter session of Parliament, and hopes to get it passed by the monsoon session next summer.

The Real Estate Bill would only affect property transactions, but all states would be required to adhere to these regulations. Government officials have plans to set up a Real Estate Authority in every state, and there are intentions to put a dispute settlement mechanism in place to resolve any conflicts between purchasers and developers.

These new amendments would also mean a developer will first have to register with the authority and will be able to upload relevant information to the authority’s website, which will include the registered sales deed, and additional information about architects and engineers. It could also include useful documents for potential purchasers such as the title deed and approval certificate.

Developers contravening these rules could be asked to pay up to 5% of the total project cost, and failure to pay could result in this penalty being doubled. Developers are concerned that these new regulations only affect them, and point out that if a local authority delays occupancy certificates they could be held liable for the subsequent late running of the project.

IndiaProperty.com wants to cement its place as the number one online portal for new homes in India © maigi - Fotolia.com

It is increasing its focus on Tier II cities and is launching a separate segment listing properties in these areas. IndiaProperty.com has launched new pages on its portals listing over 800 new properties and 50 new projects across Tier II cities including Jaipur, Mysore, Nasik, Gurgaon, Vijawada, Trichy and Coimbatore. Since April this year the site has seen a 100% increase in traffic, and has over 3,000 new properties and 450 new projects listed throughout India. The site has crossed the 2 million mark in registered users, and receives around 150,000 unique daily visitors, with more than 2 million page views a day. These figures firmly establish it as the number one property portal and India. IndiaProperty.com is intending to increase its customer base, and plans to have 5 million registered users by March next year.

In addition the company is planning to embark on a number of marketing initiatives and has just announced its first property show, Chennai-Grahapravesham 2011 which will take place between November 4th and 6th at the Chennai trade centre, and is being organized in collaboration with Jones Lang LaSalle. The show will feature leading builders such as Embassy, TVH, Unitech, Arun Excello and Hirco, and will showcase ongoing and upcoming residential projects ranging from studio apartments to villas. The three-day show will also feature panel discussions where industry experts and senior professionals will debate a range of topics, which will hopefully address most questions asked by property buyers today.

Ganesh Vasudevan, Vice President and Business Head of IndiaProperty.com said “We have increased focus on new properties and further expanded our reach into Tier II cities seeing the healthy growth in new projects launched in these markets. We are the only real estate portal in India to specifically address the new property markets in Tier II cities. Grahapravesham will provide a one-stop solution for property buyers as it connects buyers and developers at an opportune time when pricing is right and interest rates are looking likely to have maxed out.”

Mr. Sivaramakrishnan A.S. Associate Director-Residential Services, Jones Lang LaSalle said, “We at JLL are excited to co-host this event along with India Property. This unique event in partnership with India Property, will provide an excellent platform for homebuyers to gain unbiased advice on property related issues.”

Are India's real estate markets overheating? Courtesy of nancyarora2020 @ flickr.com

It’s no secret that many builders are in a bit of a fix, but in spite of this real estate prices are not dropping significantly. According to a report in Money Life, a 1000 ft.² flat in Mumbai costs Rs98 lakh, which equates to more than Rs9,716 per square foot. Areas such as Noida have been hard hit by land scams, resulting in the majority of deals which have taken place over the last year and a half coming under close scrutiny. The supply has increased from 5 million square feet to an incredible 105 million ft.², but nobody is buying, and some experts now expect a sharp correction in prices.

The latest data shows builders in Mumbai have sold just 8.17 million square feet of property from a huge inventory of 116 million square feet. Other cities such as Hyderabad and Pune have had slightly better sales, and after all, Mumbai is one of the costliest places in the country. If property continues to sell at its current rate, Mumbai has an inventory of 40 months as it is currently showing a 22% year-on-year increase, while receipts for money received from sales show a 13% year-on-year decline. Delhi is faring even worse, as even though property in the city is much cheaper than Mumbai the value of real estate being sold is low.

While most of the cities in India are overpriced, Pune is proving to be slightly different as it is one of the least overheated and properties here are relatively reasonably priced, with sales figures being the highest out of the six major cities in India. An average flat costs Rs48lakh. Hyderabad and Chennai are also faring relatively well, and Hyderabad is still seen as being a good investment as flats tend to be larger than average.

In general sales volumes have been poor this year which might lead to expectations of falling property prices. At the moment this isn’t happening, but rising unemployment may eventually force the hand of developers seeking higher sales figures.

India increases policy rates; housing expected to be hit © Anna Polishchuk - Fotolia.com

The RBI took the decision to raise policy rates last week in order to fight inflation in the country, which is threatening to reach double digits. Rates were hiked by 25 basis points, meaning that borrowing rates (reverse-repo) and short-term lending rates (repo) are now at 7.5% and 8.5% respectively.

Pradeep Jain, the chairman of the Confederation of Real Estate Developer’s Association of India (CREDAI), said that although he understood the situation, the Reserve Bank had put developers in a sticky situation and that they had no choice but to pass on the costs:

“It is a vicious circle of higher input cost, higher borrowing cost and higher property prices. We are bound to pass on the increased cost of borrowing funds to our customers.”

The increase in policy rates would make it harder for people to obtain credit to buy homes in India, added Jain. However, he did say that demand is unlikely to be impacted despite the increased costs, as the fact remained there is a huge shortage of housing in India:

“But we urge the apex bank…not to hike rates any further as that will certainly choke industrial output, thereby putting a halt to economic growth.”

The president of CREDAI, Lalit Kumar Jain, expressed similar sentiments to his colleague, reported the Times of India:

“Frequent rate hikes would prove to be counterproductive, as the move will have a cost-push impact rather than proving to be an inflation control measure.”

Kumar Jain added that interest rates in the country are sure to rise, something that would weaken demand for property even further. He called for the government to launch reforms in real estate, including a single window clearance system and more transparency.

Meanwhile, Gaurav Mittal, MD for CHD Developers, one of India’s biggest property companies, said that negative sentiments about the country’s real estate markets had been fuelled by numerous rate hikes in recent months.

He added that monetary measures would not be able to correct the rise in input costs, which he said was a supply side issue. However, he also saw reason for optimism, saying:

“Certain segments of real estate market especially the luxury segment has been slow. However, the mid-segment residential sector is strong and will continue to show growth in the time to come.”

Earlier last week, Sanjiv Saddy of the Emaar MGF Land Executive had urged the RBI to refrain from hiking up rates as “such an action will not help real estate to get out of the quicksand it’s in.”

He cautioned that, contrary to helping the economy, the extra burden faced by the real estate industry could well lead to a financial collapse and recession in India.

Indian property markets are not looking good © Anna Polishchuk - Fotolia.com

All these factors have negatively affected sales volumes, and some analysts are predicting a drop of as much as 25% to 30% in transaction volumes for the country’s six top property markets between now and December. If their gloomy predictions come true it could mark the beginning of a period of heavy discounting in order to improve sales volumes and cash flow.

At the moment builders are reluctant to drop their prices, while buyers are proving equally reluctant to purchase flats at their current prices, especially as interest rates are so high. Some property developers have introduced special festive incentives to try to tempt buyers, but these aren’t looking too successful at the moment, and it looks as if buyers are waiting to see significant price reductions as opposed to sales gimmicks. This is likely to prove difficult for many developers to accept, as the festive season is generally when prices firm up and new projects are launched. However this year has seen few new launches, and prices and properties are failing to move.

Some towns within the National Capital Region which previously enjoyed good sales volumes are seeing constraints upon supply due to continuing action over land acquisition. Experts think sales volumes for mid-income housing should remain steady in these towns, but sales are likely to be hit wherever there are questions over land title.

A number of property developers say they are unable to cut prices significantly due to increase taxes and labour costs, and most feel that it is still far too early to predict how this season’s sales will progress, remaining confident that demand for new homes is still there.