Keep HAL airport open: AAI

Can BIAL oppose the hand which feeds it. ? Just as BIAL used legal recourse to close the HAL airport AAI is now paying back BIAL in the same coin. Legally AAI or the government cannot open HAL unless BIAL is made to offer concessions . Using this newly found data they can turn on the screws on BIAL and Alfred Bruneer who is acting like the most incompetent Swiss national ever to set foot in India. Its about time the Devanhalli speculators exit. If they wait for HAL to open thats the end of all their paper profits and they would be stuck with illquid assets for years to come.

Keep HAL airport open: AAI
Recommends Move Till BIA Builds Additional Terminal
Anshul Dhamija & Sujit John | TNN

Bangalore: The new Bengaluru International Airport (BIA) has landed in a turbulent whirlwind with the Airports Authority of India (AAI).
The AAI has prepared a report that says that BIA’s capacity is less than what its promoters have stated, that the airport is already saturated, and that the promoters have violated a key clause in the concession agreement signed with the government. It has gone on to recommend that the old HAL airport be kept open till BIA builds an additional terminal.
The AAI report, a copy of which is with The Times of India, follows a directive by the civil aviation minister to study the capacity issues at BIA. The AAI had designated a 4-member team to conduct the study in June.
The report says that the Bangalore International Airport Ltd (BIAL) must take “immediate action...to create an additional capacity of 10 million passengers per annum to avoid further congestion and to handle the projected growth.” The report goes on to say, “In view of the saturation of the passenger terminal, import cargo, apron and runway, it is recommended that, in the meantime, the existing HAL Airport may be permitted to operate until the time of commissioning of proposed additional capacity at the new Bengaluru International Airport.”
As per AAI’s calculations, the terminal capacity at BIA can only handle 9.78 million passengers annually as against the city’s passenger traffic of 10.12 million passengers in 2007-08. This means that since the day BIA opened on May 24, the airport has been under capacity. BIAL, on the contrary, has claimed that the airport’s capacity is 11.4 million passengers, which could even go up to handle 14 million passengers annually.
As per recommendations of the International Air Transport Association (IATA), an airport which has to handle passenger traffic of 10 million passengers should have a terminal size of 1,50,000 sqm in area. BIA, according to the AAI report, has a terminal size of barely half that at 71,310 sqm.
The report goes on to state: “BIAL revised its forecast to 11.4 million in November, 2006, for the year 2015 which deviates from the actual traffic drastically. In fact the traffic was growing as high as 43.9% when the revised forecast was made in November 2006.
As per the concession agreement para 14.2 (page-61) BIAL was supposed to provide facilities as per IATA/ICAO standards and was to provide 27.3 sqm of space per peak hour passenger (PHP), whereas the actual area provided is 19.8 sqm per PHP, which is in deviation with the concession agreement.”
As per norms followed by IATA, the capacity of an airport terminal is calculated on the ratio between the total area of an airport terminal to the number of peak hour passengers, which for any airport should be a minimum of 25 sqm/PHP.
In fact the figure of 19.8 sqm/PHP at BIA is way below that of older airports in Chennai and Kolkata which have figures of 23.15 sqm/PHP and 24.15 sqm/PHP respectively. In the new Hyderabad airport terminal, it is estimated to be 35.21 sqm/PHP.
Further,taking the terminal building in its totality,the report states that the “basement area of 18,665 sqm is not used for passenger facilitation, it is used for storage, services and utilities. Therefore, basement area should be excluded from the total terminal area which will reduce area/PHP to 14.6 sqm.”
What AAI report also said
BIA’s peak hour runway capacity is 32 movements as against current peak hour demand of 25. With anticipated annual growth rate of 25%, runway is likely to saturate during 2010-11. Immediate action should be taken for construction of second runway
Existing number of parking bays are 42 as against peak hour demand of 41 bays (26 passenger aircraft, 5 freighter, 10 buffer for contingency). Addition of 30 more bays recommended
There is imbalance between import and export cargo area which needs adjustment, that is import cargo is saturated whereas export cargo and domestic cargo have adequate capacity. It is therefore recommended that an additional import cargo capacity may be created immediately.

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Consumer court ruling : Builders must fulfil promises mentioned in brochures

‘Builders must fulfil promises’
Consumer Forum Directs Them To Deliver What Is Shown In Brochures
TIMES NEWS NETWORK

Pune: Providing relief to flat owners deprived of amenities by builders, the consumer disputes redressal forum, Pune, in a landmark ruling, has held that a builder will have to provide all the required facilities to a purchaser which he had promised in the brochure.

Even if an agreement between the two parties was silent on providing the amenities, it will be binding on a builder to give facilities which he had promised in the brochure, observed forum president Pradip Gaikwad and member Sulabha Joshi on July 16.
The order was passed on a complaint filed by senior citizen Parshuram Redij of Vijaya Rashmi Residency at Warje Malwadi.
Redij had filed a complaint against M/s Vijaya Rashmi Developers and its partners comprising Marathi actor Ravindra Mahajani of Paud road, Arun Nikam and Harishchandra Nikam, both from Kothrud, for deficiency in service. The firm had published an advertisement in a Marathi daily for undertaking a project at S.No. 43/5 at Warje Malwadi, where it had assured several facilities. Lured by the promises, Redij booked flat no. 4 in the A wing of the building for Rs 6,14,250.
After Redij took possession of the flat on October 30, 1999, he discovered that the promises made by the builder in the brochure that he would construct an internal road, garden, club house, swimming pool and security cabin after the completion of the project were not fulfilled. On various occasions, the senior citizen took up the issue with the firm and its partners. He appealed to them in vain that the needful should be done. Moreover, the flat owners suo moto registered the society by shelling out Rs 75,000.
Arguing in person during the final hearing, Redij alleged that the firm had transferred the development rights to M/s Vaishnavi Shraddha Constructions. He said he had filed a criminal case against the partners, which is pending before the magistrate court here.
Redij appealed to the forum to direct the firm and its partners to execute the sale deed in his favour, provide basic facilities and repay Rs 35,000 as expenditure incurred on registering the society with 18 per cent interest with effect from the date of taking possession of the flat.
On the contrary, the firm had argued that the complaint was barred by the law of limitation and that it had transferred all its rights and liabilities to M/s Vaishnavi Shraddha Constructions. The firm contended that the amenities mentioned in the brochure were not part of the agreement. The forum held that the firm could not be allowed to absolve its liability merely by saying that it had executed a deed of assignment in favour of a third party. The forum further observed that the firm and its partners had induced Redij to purchase the flat on pretext of providing facilities.
The forum directed the firm and the partners to jointly pay Rs 35,000 to Redij with nine per cent interest from October 30, 1999. They were further directed to provide all the facilities mentioned in the brochure and register the conveyance deed and sale deed in his favour as per the provisions of the Maharashtra Ownership Flats Act, 1963. The firm partners have being directed to comply with the order within 3 months.

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Sabeer Bhatia's new flop investment

Its been 10 years since Mr Bhatia sold his company to Microsoft but ever since that he's been trying valiantly to build the next sucess story. Unfortunately this new venture like few of his others is a dud from day one. Trying to create a semiconductor fabrication enviroment is easier said then done. Skilled manpower, water, electricty and partnerships with bechtel or similar likes are needed before the groundbreaking crememony. Unfortunately in India lured by the hype of the Sensex and PE firms these morons think they can sucker local Indians into buying apartments in an SEZ mirage. As with other mega deals I expect this one to fail in times to come. Pasvanath has nothing to claim in expetise apart from oiling policiticans and babu's. If this was a sunrise industry Ratan Tata, Premji or the Ambani's would be right at the forefront with solid business plans, not with real estate development hype companies. The ecconomic times press release as usual with no analysis is below


Parsvnath Developers on Wednesday joined hands with Sabeer Bhatia, co-founder of Hotmail, to develop a 11,138 acres knowledge city near Chandigarh, where the company will initially invest Rs 400 crore.

The project, Parsvnath Nano City, valued at Rs 50,000 crore (12 billion dollars), is promoted by the former Hotmail innovator Sabeer Bhatia, whose company holds the majority stake of 52 per cent. The Haryana government holds 10 per cent stake.

"We have already made an investment of Rs 41.5 crore for acquiring 38 per cent stake and the remaining will be invested as debt in future," Parsvnath Developers Chairman Pradeep Jain told reporters here.

To be developed in Panchkula, the project would be completed in two phases over the next 10 years, where the company would develop 5,000 acres in the first phase.

"We have already acquired about 1,500 acres and we are talking to various land owners for acquiring the rest," Jain said.

The realty firm would invest Rs 400 crore initially in the form of equity and debt in the project, he said.

All the stake holders of the project has formed a new entity, Nano City Haryana Ltd, which would raise funds from the capital market within 18-24 month for completing the project.

"We plan to take the company public in 18-24 months, but we have not finalised how much stake will be diluted or how much money we are going to raise," Jain said, adding the company would also dilute some stake to private equity investors.

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Pune builders touting townships.

CNN -IBN has become a builders mouthpiece for touting the Pune builders. All project costs seem to be bogus running into thousands of crores of rupees. Where is the money going to come from for all these mega projects. One success in magarpatta city and all these marketing fellows are trying to ape it.Even in Magarpatta the apt building quality is average whereas the commercial buildings are above par. The reason for the difference is simple. The commercial buildings were constructed by reputed construction firms like JMC/Vascon whereas the apt buildings were constructed by builders who had proximity to the politicians. Lalit Kumar says "how long will be buyer wait ?" Mr Kumar he will wait till the cows come home and he is not going to get carried away by projects built in the boonies. Pune is not a metro city like Mumbai/Chennai therefore it lacks funds for development. Already has a load shedding problem which is getting acute.

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Unitech receives Rs 740 cr from Lehman

Lehman has stuck a sweet deal for themselves with this low valuation for development on 97 acres. Unitech has/will pay off the slum dwellers under the SRA scheme with all their black money and will get an FSI of 2.5 . Lehman will bring in the brand name and the bear half the construction cost and receive a 50% stake. With 18 million sq/ft under development with an average price of 15000 per sq/ft ($350 per sq/ft roughly) that translates to a sale price of $6B dollars with $3B for Lehman. With Lehman's cost price being $170M , the profits can be staggering. I wouldn't be suprised if they setup their HQ in this complex and so do other Wall Street and European/Asian firms. This could be the Wall St of Dalal Street.

Fantastic deal here for Lehman. Here is the wikimapia location of the SRA(Look for Dawri Nagar), Right on the intersection of Nehru road and the Western Express highway. Excellent location for business as Bandra Kurla complex (BKC) is 10 mins away southbound, and the domestic airport 10 mins driving north. If my guess is right, major slums on the opposite side of the freeway too will become prime property.


DNA link here .
MUMBAI: Unitech Ltd on Thursday said it has received Rs 740 crore from global investment bank Lehman Brothers Real Estate Partners for a 50 per cent stake in the country's second largest realty firm's project here.

"On satisfactory completion of all the conditions under the transaction documents, Unitech Ltd on Thursday received subscription amount of Rs 740 crore," the realty major said in a filing to the Bombay Stock Exchange.

Lehman Brothers Real Estate Partners have been allotted 50 per cent stake in the initial phase of a master-planned project on the Western Expressway of Mumbai.

The construction cost for the initial phase would be borne by Lehman Brothers Real Estate and the Western Expressway JV, a joint venture of Unitech Ltd and its local partners, the filing added.

The initial phase entails development of one million square feet of office space out of the total developable area of around 18 million square feet.

Lehman Brothers' Real Estate group is a capital and advisory services provider to the real estate firms.

The group has presence in all of the major international markets, with investment bankers in New York, Los Angeles, London, Milan, Tokyo and Hong Kong.

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Redevelopment deals fall through in Mumbai

Several deals to rebuild old housing complexes have fallen through. DNA reports

MUMBAI: With the property market showing bearish tendencies and liquidity crisis plaguing developers, redevelopment projects in the city are being dropped like hot potatoes.

The once headline-grabbing deals, including Vivek society, the Kalina complex where 550 sq ft flat owners were offered upwards of Rs2 crore per flat, have fallen through with developers backing out of MoUs with housing complexes.

The schemes involved pulling down old housing complexes and rebuilding them, with the enhanced FSI, so that the existing flat owners get bigger houses and the builder benefits by selling the excess houses. A seemingly win-win situation till a few months back, there are no takers for it now.

Wadhwa Builders is learnt to have cancelled plans to redevelop Vishal Nagar in Borivili (east). A MoU signed by Pune-based Kumar Builders to redevelop Khira Nagar on SV road at Santa Cruz (west) has fallen apart. Revoking his earlier offer of Rs300 crore, a developer is now willing to pay barely Rs220 crore to a cooperative housing society on a 7,000-sq yard plot at Vile Parle (east).

A well-known developer is learnt to be now renegotiating the redevelopment deal with two societies: Flying Carpet and Tirupati located near Khar Gymkhana. Turn to p12

Instead of his earlier offer of providing an additional space of 35% to every flat owner, the developer now does not want to part with anything over 25%. Similar is the case with Navyug Nagar Cooperative Housing Society on SV Road at Dahisar. Five reputed builders have now offered to provide additional 25% space to the 200-odd residents occupying flats admeasuring a little over 500 sq ft.

“Developers do not have the money power,’’ said a Santa Cruz-based broker-turned-developer, adding, ``With the result, they are unable to pay the exorbitant rate they offered earlier.’’

There is another reason, says Harendra Pandya, vice-president of Real Estate Agents Association of India. ``Redevelopment of societies has not taken off as developers are finding it unfeasible to pay the current stamp duty rate to convey (transfer) ownership of land from a society constructed in the 1980s to its name,’’ Pandya said.

“The already dipping sales are affecting their cash flow and if they have to pay high stamp duty for redevelopment, it would make a big dent in the developers’ calculations. No wonder redevelopment deals are going slow,’’ he said.

On 11th Road, Khar, a society of 14 members have grudgingly accepted a developer’s bid to give only 20% additional space to its existing 1,000 sq ft flats. ``Negotiations had broken down between us as a well-known developer had offered to give them a huge corpus. Six months later, they came back to me as the developer had started making excuses,’’ said a suburban developer.

Said Kalina-based estate broker Umesh Lad, “Redevelopment deals of societies like New Vinay, Shanti Niketan are learnt to have not materialised as a developer backed out from his earlier promise of purchasing the flats at an outright rate of around Rs35,000 a sq ft. The societies had earlier got an offer from reputed developers including Kalapatru.’’

Other redevelopment deals that fell through include Vivek Society near Mumbai Unversity, Kalina, with Sterling Biotech backing out from its offer of over Rs40,000 a sq ft, Parkbay Society and Kirti Society where residents have been offered roughly Rs35,000 a sq ft.

Though Boman Irani of Keystone Developers was unavailable for comment, brokers say there are problems in the redevelopment scheme at DN Nagar police station, Andheri (west). Keystone is developing nine ground-plus-four buildings jointly with Vaidehi Akash, a small-time builder, who reportedly raised funds by pre-booking at rates that were roughly 35% less than the market rate

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Vijay Mallay's skyscraper to rival Ambani's

The ego battles seem to soar with each billionaire trying to outdo the other. Having a rich dad does seems to help when building empires and castles. 25000 per sq/ft on Vittal Mallya road. Now this is some price to pay to be in the league of the rich and famous

Econonmic times reports
BANGALORE: Is Vijay Mallya doing a Mukesh Ambani in Bangalore? The word is that the ‘King of Good Times’ is set to build a massive multi-storeyed complex for himself in Bangalore on his ancestral property on Vittal Mallya Road, adjacent to UB City.
Sources say the plan is to have a designer skyscraper apartment with possibly even a helipad on the fouracre property.
Real estate sources said that the UB Group chief has roped in global consultancy firm DTZ to do the ground survey and planning. DTZ’s professional advisory services include the management of real estate portfolios, building consultancy and valuation.

Mallya’s plan sounds similar to what Mukesh Ambani is doing: building a $1 billion 60-storey place in Mumbai that sports a helipad, health club and six floors of car parking.

Named Antilla, after a mythical island , the complex will be Ambani’s new home.

For Mallya’s project, several leading Indian developers are said to have approached the UB Group chief to be part of his home-development plan. However , sources said Mallya is keen to hire an overseas developer. It is believed that a Singapore-based developer will undertake the construction.
However, it’s not clear what the height of the apartment would be. While one source said it would be 16 floors, another said it could be closer to 30, while yet another said Mallya was thinking of a 37-storey building. When TOI contacted Mallya on the matter through the UB Group’s media relations officer, the response was that Mallya wasn’t planning to build a 37-storey apartment.
But he didn’t deny or confirm the plans for a makeover of his ancestral home. Real estate developers say that with the FSI (floor space index) in the area having increased in the recent past, Mallya could go well beyond 30 floors. At present one can get anywhere between 2.5 and 3.25 FSI on Vittal Mallya Road. In terms of value, the land prices on Vittal Mallya Road range between Rs 20,000 and Rs 25,000 per sqft.

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Indian Real Estate May Witness Weeding Out, Fitch Ratings Says

Bloomberg.com article on slowdown. Now the SBI chariman and the HDFC Vice-chairman are calling for lower prices. Will the dodo bulls go extinct ??

By Sumit Sharma

July 10 (Bloomberg) -- India's real estate industry may witness the exit of weaker developers as a rise in interest rates and property prices deter buyers and crimp sales, Fitch Ratings said in a report.

Mumbai recorded a 16 percent drop in registrations in the year to March 31, and sales may fall further across India's major markets if developers hold on to prices, Fitch said. Fitch has rated its short-term outlook on the industry as negative.

``The slowdown will also aid the process of weeding out some of the weaker entities within the sector, and increasing the relative strength of some of the larger, more established developers,'' Sandeep Mulik and Roopa Raman, analysts at Fitch Ratings, said in the report in Mumbai today.

Some developers face fund shortages and may tap buyout firms as investors sell real estate stocks on falling sales. Still, a prolonged slowdown may damp the appetite of private equity funds, forcing smaller developers to either borrow at higher rates or default on their obligations, Fitch said.

The central bank on June 24 raised interest rates to the highest in six years to contain inflation that accelerated to 11.63 percent in the week ended June 21, the fastest in 13 years.

Bankers including Om Prakash Bhatt, chairman of State Bank of India, the nation's biggest, and Keki Mistry, vice-chairman of Housing Development Finance Corp., predict an end to the five-year rise in property prices.

Shares Drop

Real estate shares have led a drop in Indian stocks this year. The 14-stock Realty Index has fallen 62 percent since Jan. 1, compared with a 31 percent drop in the benchmark Sensitive Index. A dozen of the 14 property index stocks including DLF Ltd., Unitech Ltd. and Indiabulls Real Estate Ltd. have more than halved this year.

A decline in demand prompted DLF and Unitech, the largest developers, to delay selling shares in investment trusts in Singapore. Indiabulls Properties Investment Trust, which raised $258 million in Singapore last month, traded 22 percent lower at S$0.82 a share.

``The sharp increase in construction costs, driven by increased steel and cement costs, could also impact margins and hence liquidity,'' the Fitch analysts said. ``The risk would be higher for real estate companies with a limited track record and limited cushion for debt financing.''

Fitch also expressed concern at the high prices paid by some developers for acquiring land.

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Prices correcting in Hyderabad - Maytas

Here is something I received in the mail.The slowdown is coming. The combined offer translates to over 15% drop in the cost of the house. Not bad for a start. Last year this property was quoted at 3200 which means there is no appreciation over the past year, Actually people who have bought have lost 10% of the down payment. Also such big projects get delayed by atleast 1 year.

For the long term resident, 2800 seems a good entry price. still 15% lower then what is quoted.

Fabulous offer for top tier corporates employeesMaytas Properties has developed 400 acres of land at Bachupally, which is located just 10 km from Hi-tech city. The name of the venture is Maytas Hill County. In this spectacular venture we have a world-class township spread over 85 acres which has a decent mix of Villas, Independent Bungalows & Semi-furnished Apartments. Government has approved to develop an IT Special Economic Zone in 75 acres adjacent to the Residential Township, this helps the residents can ‘Walk to Work’ in the IT SEZ. As the bookings are going berserk we have come up with a COMBO offer for top tier corporates.

Here is COMBO offer which comes in with:
PRE-EMI offer & Corporate offer

PRE-EMIis a fantastic mode of payment where the EMI need not be paid till the property possession is taken ovev, the Interest to the banker during this period will be borne by Maytas. Infact the interest component will be paid on behalf of the customer. (This is applicable for applicants who avail Bank Loan for purchasing the property with us).

Corporate offercomes with Rs.200/- less than the regular price (per square feet). This is offered to the Employees of Corporate companies which have been listed by us.

Regular Price : Rs. 3699 per sft

Corporate offer : Rs. 3499 per sft

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Springfields apt owners face eviction

the builder in collusion with Corrupt BDA officials along has violated all building norms. Now BDA officials are expressing surprise. They should be sacked for their incompetence. Seven towers don't spring up overnight. I hope the residents bring the builder to book. Add IDEB builders to the list of builders to be avoided. Deccan Chronicle article here. As per the latest news the builder has to pay 25 rs sq/ft to BDA as a penalty to get the commencement certificate and then apply for the occupancy certificate. With 697 apts in the complex and 7 wings illegal (A,B.C are legal and D-J are illegal) the builder needs to cough up roughly 697 * 7/10 * 1500 (avg flat size) * 25 which is 18,296, 250 (1.8 crores)

1,300 residents left in lurch

BENGALURU

More than 1,300 residents including software engineers, bank officials, doctors and expats who have invested crores of rupees for a flat in Springfields Apartments will soon be homeless if the builder does not sort out the issue of occupancy certificates within seven days.

Springfields Apartments on Sarjapur Road which is said to be one of the few residential projects in the city with 82 percent lung space and just 18 percent of built up areas has built seven wings which includes nearly 50 flats in each wing without the commencement and occupancy certificates.

The residents who went to BDA authorities with complaints of the discrepancies are now facing a tough time running after the builders, advocates and the BDA authorities.

“The officers at BDA who promised to deliver justice to us have now sent an order asking us to vacate immediately. The builder in turn has been given seven days time but what about our woes? Who will listen to us,” said a techie on condition of anonymity.

Meanwhile, the residents told Deccan Chronicle that everyone had relied upon the BDA’s sanction plan and had together paid several crores of rupees to the developers towards acquisition of their respective apartments.

The directors Mr H.S.

Bedi, Mrs Avneet Bedi, Mr Pradeep Kumar Tewani and Mr P K Gajra have not only violated the statutory provisions but have also conducted criminal breach of trust, the residents of the apartment allege.

“The builder also said that BDA had issued occupancy certificates to all these buildings and only then hundreds of families occupied these apartments. Now, we learn that BDA has not issued occupancy certificates to many of these blocks,” said another resident, an expat.

The residents who actually started this protest to show a violation have now been rendered homeless.

“Where do we go? And why should we go? It was not our mistake. Why are we being targeted for no mistake of ours,” cried a doctor, who is residing in one of the wings and has been asked to vacate. The residents have now planned to approach advocates to make sure there is some way out of this situation.

Who is to blame?

It is surprising to know that IDEB and Parkway Venture could manage to construct seven wings, each consisting of about 13 floors without even obtaining the commencement certificate.

The BDA officials, interestingly have not even inspected the area to find out the discrepancies of the builders.

The builders who have been constructing the building from the past three years, as per the orders, have not only violated the BDA rules but have also separated about 1,710 sq m of area on the North West Corner from the main premises by constructing a compound wall.

The order also states that the entry to the premises from the north west side is blocked and the Set Back Line of 13 m is not maintained on the western side by changing the orientation and location of the basket ball court/tennis court. This modification has resulted in reduction of surface parking.

This is not all, while BDA had claimed ignorance all this while, even some of the major nationalised and private banks have sanctioned loans to almost 80 percent of the owners who have bought the flats.

“The banks have given loans to all of us without even checking? It’s ridiculous. For all these days we were only fighting for that land which has been taken to construct a hotel but now we have to fight for our own homes,” said a resident.

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Its slowdown everywhere

We need some anecdotal evidences of these happening. Readers can add to the comments to in one or two lines about their experiences.

Here is an article from Indian Express

Grappling with a slowdown across segments, the Indian property market is heading towards the next phase of consolidation. Liquidity crunch in the real estate market is beginning to drive many mid-sized and small developers to scrounge for cover.

Many want to liquidate their land and incomplete projects by selling them to bigger developers or private equity players even at lower valuations. What's forcing them to take this step is a stagnant market, with property rates undergoing major correction in some cities. Around 15 deals in real estate sector have fallen through in the past two months with investors developing a cold feet, said industry officials.

Consider a few cases. A mid-sized builder at Chembur in Mumbai has put its 14-floor commercial property in central Mumbai on the block. The developer wants to raise around Rs 150 crore which would help him complete his upcoming project.

A Hyderabad-based real estate group has started advertising to attract high networth investors to generate Rs 50 crore against bulk purchase of its housing project in the city. A small developer in Mumbai, pushed to a corner on account of mounting payables for construction material, is now offering its project at Juhu-Versova in Mumbai at about 35% discount to the current market price. In Delhi, some developers have approached property consultant to sell their income generating commercial properties to finance some of the unfinished projects.

Click on "Full Story" for more..."

Real estate funds and established developers admit that they are working on various proposals. "Even in the normal circumstances we used to get offers from mid-sized developers to buy out their projects. But now, the numbers have increased considerably," said Hiraandani Developers chairman Niranjan Hiranandani.

The Bangalore-based developer Nitesh Estates said that it has received similar proposals, mainly from markets like Pune, Nagpur and Bangalore. "Every second day we are getting a proposal either to pick up equity in the project or to buy out fully. We have not concluded any such deal so far," said Nitesh Estates chairman Nitesh Shetty. Industry observers said that the commercial property market, stagnant for the past few months, is showing signs of crack, especially in suburban Mumbai and many tier-II & III cities. The volume of commercial property sales has dropped by 30% in the past two months in the wake of rising interest rates.

"Developers, specially small developers, are under pressure now. Fund flow into this sector has begun to dry up. Selling incomplete projects to big developers or private equity firms is an option explored by many such developers," said a senior official with KnightFrank India, a property consultant. Thanks to tigher fund raising norms and a weak stock market many developers are knocking the ddors of private equity investors who are driving hard bargains on valuation and. Even on a reduced valuation, PE firms are putting various clauses to safeguard their money.

In last May, the finance ministry had said that all foreign funds raised by Indian companies through partially convertible, non-convertible and optionally convertible preference shares, would be treated as debt and would be subject to guidelines applicable for external commercial borrowings (ECBs).

This had made it tough for developers to access foreign funds, since ECBs are allowed only in large real estate projects and the conditions are far more stringent than FDI. "The developers are ready for a compromise on valuations. The risk adjusted returns have gone up by 20-25% during the past few months,"said Starwood Capital India head Balaji Rao.

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