Industry welcomes rate cut by RBI, says will boost economic growth

The Reserve Bank of India (RBI)'s announcement to further reduce the Repo rate by 25 BPS and also the Cash Reserve Ratio (CRR) by 0.25% has been welcomed by industry, which termed the decision as a step towards easing out financial stress in the markets and also reversing the anaemic industrial growth observed over the last one year.

In the third quarter monetary review today the apex bank has announced reduction of  25 bps in repo rate from 8% to 7.75%, reduction of bank rate to 8.75% and reduction of CRR by further 25 bps to 4%.

Welcoming RBI’s move to go for rate cut, Naina Lal Kidwai, President of FICCI, said, “In fact the high borrowings under the LAF window seen in the recent past clearly reflected the tight liquidity situation. Release of Rs 18000 crores with CRR cut of 25 basis points will help in easing the funds flow situation. In the recently conducted FICCI Economic Outlook Survey participants also advocated the need to cut the repo immediately by 25 basis points and reduction by 75 basis points to 100bps in repo rate through FY14 if the economic growth has to be brought back to the higher growth trajectory.”

Vouching that RBI’s policy decision will boost the real estate market sentiment and send out positive signals to global investors, Shobhit Agarwal, Managing Director – Capital Markets of Jones Lang LaSalle India, a leading real estate research firm, said, “RBI has shown commitment to improving liquidity in a cash-strapped economy by reducing the CRR further in this policy coupled with reduction in repo and bank rates.” 

“Liquidity is expected significantly improve in the economy on the back of the reduced repo rate, CRR and bank rate.  Consequently, there should be a revival in investment and growth – including in the real estate space.  Industrial activity, which has been sluggish last year, should bounce back in the medium term,” he further added.  

However, there is one voice which sounded less esteem over the RBI’s policy decision. ASSOCHAM, the leading industry body, said, if RBI reduced the rate to 25 bps, it will be nothing but a ‘baby step’ which is quite inadequate to revive the growth momentum in the economy.

"It is time the Reserve Bank of India went in for a bold move and slashed the REPO rate by at least 100 basis points. Only then, the prolonged high interest rate cycle will be broken and the growth would get some breathing space for revival. The 25 bps cut will only be a symbolic and would not make much of a difference excepting, maybe a short-lived rally in the stock market”, ASSOCHAM President Rajkumar N Dhoot said on the eve of the RBI coming out with a credit policy review.  

Sanjay Dutt – Executive Managing Director, South Asia, Cushman & Wakefield, the commercial real estate brokers and consultants, feels that RBI’s move is expected to release Rs 18,000 cr to various financial institutions and thereby boosting the economic growth.,

“RBI’s populist decision to further reduce the Repo rate by 25 BPS at 7.75% and also the Cash Reserve Ratio (CRR) by 0.25% to 4% is a step towards easing out financial stress in the financial markets and increasing their liquidity. In the past, the Central Bank has been keen on keeping inflationary conditions in control which had led to stringent moves from RBI over the last 8 quarters.” 

RBI has also predicted that inflationary trend is expected to remain ‘rangebound’ therefore moderate infusion of cash in the system would be a positive move. This may be also help in creating a positive outlook for India amongst global investors who have been worried about depleting cash flow in the economy and thus may be setting the background for critical investment decisions in the upcoming economic policies and union budget, he said. 

S. Sridhar, Advisor, RICS South Asia, said, “RBI's action was on expected lines. The repo rate reduction will facilitate banks and housing finance companies to reduce home loan rates marginally which will benefit consumers. Of course, each lender will have to take a view based on respective ALM and margin position. However, one is not sanguine of increased funds flow to the real estate companies as the issue is not merely one of liquidity but portfolio quality related. Overall, a sentiment-lifter.“

Backed by relaxation in Repo and CRR in two consecutive quarters and contained inflation, institutions are expected to offer better rate of interest on loans, and may also increase their deployment in infrastructure and development projects. Meanwhile, the RBI has already allowed established real estate developers and housing finance companies to raise up to USD 1 billion through ECBs, helping entities to raise cheaper funds and tide over their liquidity issues, propelling the real estate sector on the whole,” Sanjay further added.

TVS group ventures into real estate business, unveils first project in Chennai

CHENNAI: After being in the business of auto components and two-wheelers for over four decades, the Chennai-headquartered TVS Group has unveiled its plan to diversify into real estate.

The auto major has promoted Emerald Haven Realty which has already launched a housing project in Chennai. The maiden project -- Green Hills in Perungalathur, just South of Chennai, has been conceived. In all, there are 448 apartments in the project, with a price range of Rs 25 lakh to Rs 45 lakh.  The apartments will be available in 2 BHK configuration, with option of 3 sizes.

While no financial details were available, sources said that the real estate foray is a significant strategic decision by the group, reports Times of India. 

"In the last 40 years, TVS has not created another mass market business after automobile components and two wheelers, particularly motorcycles," said a consultant with direct knowledge of the matter, who further added, "The group missed the IT wave which added significant value and size to companies like Wipro, M&M and . Real estate can be the game changer for TVS."

Though it is bit early to say that the venture would be the game changer for the Group, analysts feel that TVS again missed the time for entering into real estate when the sector is going through rough patch due to economic downturn for the last two years.

Well connected by road and rail links, and located before the start of the Chennai Bypass Road (which offers easy access to Porur, Madhuravoyal and surrounding localities), Perungalathur offers easy access to the rest of the city. It is currently the southern junction of choice for boarding on/off the south-bound long-distance buses. The proposed mono-rail facility linking Vandalur with Velachery, would also work in favor of this suburb in becoming a choice for those who might need to commute for work towards Velachery. Priced right, TVS Green Hills should be an attractive option for those looking into invest in this upcoming locality.

Mumbai to host Real Estate Luxury Show 2013

New Delhi: Mumbai is now set to host first-of-its-kind Real Estate Luxury Show (RLS India 2013) in March, which will serve as a platform for showcasing the properties of the country's real estate giants.

The two-day multi-city show, organised by Global Ventures Media in association with Indicom, will start from March 9 at Mumbai's Four Seasons Hotel. The show will also tour other luxury destination like New Delhi and Bangalore.

"Analysts predict that the luxury residential market has a potential to grow at a Compound Annual Growth Rate (CAGR) of around 28 per cent during 2011-2013. This show is a platform to share the affluence of our nation," Tejas Chhatriwala, director, Global Ventures Media, said in a statement.

The show is strictly by invitation only and will have some of the leading real estate companies, luxury interior and products designers exhibiting their brands.

"People who find luxury in garments and accessories certainly understand that luxury is an experience. It is at home that everyone finds luxury. This initiative will offer a luxury living experience," Chhatriwala said.

Jones Lang LaSalle launches first iPhone app for hotel real estate

SINGAPORE:  Jones Lang LaSalle’s Hotels & Hospitality Group announced the launch of its Hotels & Hospitality iPhone application which is the first comprehensive, all-encompassing hotel real estate app on the market. The app enables users to access the firm’s full inventory of global research and market intelligence and is available as a free download from the Apple iTunes app store.

“The launch of the Hotels & Hospitality iPhone app clearly demonstrates the firm’s continued commitment to world-class innovation and client service,” said Mark Wynne-Smith, Global CEO of Jones Lang LaSalle’s Hotels & Hospitality Group, adding, “It’s our continued goal to arm the hotel industry with our renowned research and expertise. The app will further enable our clients and the industry to stay on the forefront of hospitality trends with the touch of a button. We can deliver our deep bench of resources directly to our clients’ fingertips.”

The Hotels & Hospitality app caters to the growing hotel real estate industry’s demand for reliable investment information delivered in an efficient, easy to use format. The app provides on-the-go access to city profiles which include critical economic highlights, investment profiles, and hotel supply and performance trends. Additionally, it features properties the firm has on the market, services, direct contact information for Jones Lang LaSalle experts and access to research reports. Information is categorized by geography and date, and most can be downloaded directly, saving time for its users. 

Wynne-Smith concluded, “As our lives continue to be immersed by mobility and virtual work, it’s imperative that we streamline the volume of data we seek. Intelligence from this single app will be revolutionary for news-seekers, investors and operators who are constantly traveling. As the market evolves, our firm will continue to serve and lead the hotel real estate industry with tools and resources.”

The Hotels & Hospitality app models the functionality and convenience of the Jones Lang LaSalle commercial real estate app that launched March 2011. Both are also compatible with the iPad and are free to download from the App StoreSM.

Square Foot introduces Engineered Wood flooring in India

Bengaluru: Square Foot, a pioneer in flooring solutions, has introduced a new collection of 'Engineered Wood Flooring' to the Indian real estate market.

Suited for high traffic residences, hotels and commercial areas, engineered wood flooring comes with a special commercial Class 33 lacquer making it the toughest lacquer available in the market today with a classy 5" width and 12 mm thickness, the company said in a statement, adding, the product is scratch-free and normal wear and tear has no effect on the surface.

Square Foot has the history of introducing innovative flooring solutions for every sector ranging from residential, healthcare, retail and pharma, has launched this product in all the popular exotic species like merbau, sapele, walnut and teak. Available in colours ranging from dark chocolate brown color and walnut, the product allows easy maintenance and is ideally suited for a new house and office board room.

Gaurav Saraf, joint managing director Square Foot said, "Engineered Wood is an easy way to improve the look, durability and value of your home at absolute easy maintenance. With today's developing technology, it's possible to see a lot more Engineered Floors within the Hardwood flooring market that look stunning and showcases real warmth and beauty that until now were associated only with Solid hardwood flooring."

Engineered Wood flooring starts at a price of Rs 390 and is available across all Square Stores in Bangalore, Mumbai, Kolkatta, Kochi, Hyderabad and Delhi.

Turnaround in economy in six months: ASSOCHAM

India’s top industry body ASSOCHAM has predicted that country’s economic situation will become better in the next six months, but expressed apprehension about fiscal targets set by the government. 

D S Rawat, Secretary General, ASSOCHAM

According to an ASSOCHAM Business Confidence Survey, the mood for December 2012 seems to be improving at all the three – economic, industry and the firm levels.

“The latest round of the Bizcon survey connotes that economic situation has somewhat turned better in the last six months. Further, there is an expectation of situations to be much better in the short to medium term horizon at both industry as well as firm level. Survey results indicate that majority of the respondents expect their sales volumes to be higher in the following quarter. Investments are expected to be somewhat constant in the coming six months,” the chamber said.

However, the survey noted the concerns of the respondents over the precarious fiscal situation of the government.

“Rising fiscal deficit has been a major cause of concern for not only the policymakers but also the industry. The Bizcon survey’s assessment of the nation’s fiscal situation showed that majority of the respondents firmly believed that the fiscal deficit target set by the Union Government is not achievable in the current scenario,” said D S Rawat, Secretary General, ASSOCHAM.

In reference to the recent approval given to multi-brand retail the survey reveals that the industry feels that while the measure would have a positive impact on farmers, consumers, rural youth, employment and in reducing inflation, it would negatively affect small retailers & SMEs.

As for the macro picture at the economy level, majority of the industry feel (38.9 per cent) the present economic situation has more or less remained same to the situation that was back there around Sept 2012.

However, in the coming six months there seems to be more optimism as majority of the respondents (cumulatively 48.1) are of the opinion that economic situation would be better.

Even at the Industry Level, about 52 per cent of the respondents were of the view that not much has changed, but over 50 per cent felt that the performance shall be better in the coming six months.

At the Firm Level: about 46.3 per cent felt that the situation has improved at the firm level. But an overwhelming 68.5 percent said that the situation would be better in the coming six months.

For the business perspective, 48.1 per cent of the respondents feel that their sales volume will increase but majority of them also said that the manufacturers would not be able to increase the selling prices which will more or less the same.

The survey results indicate that majority (40.7 percent) of the respondents feel that their profits are going to be pretty much at current levels in short term. 

The industry at large feels (57.4percent) that the investment six months from now is bound to remain at levels that are there currently. However, the worrying aspect when we see the results of the September 2012 and December 2012 rounds seems to be the fallen in the percentage of respondents to 22.2 percent from 29.2 percent who believe that investments are expected to be lower.

For exports, a clear picture does not seem to emerge as the survey results shows that an equal percentage of respondents (29.6 percent) feel that exports will either remain at the same level or be higher, thus there seems to be uncertainty with respect to the demand emanating from the overseas market.

The factors affecting business were poor Infrastructure, high Cost of Credit and Increasing Raw Material Prices, said Rawat.