Indian industries expect more rate cuts from RBI, says ASSOCHAM

Ahead of the Reserve Bank of India (RBI)'s credit policy review on Tuesday, an ASSOCHAM survey pointed out the overwhelming expectations of Indian industry for a minimum 50 basis point to achieve falling inflation and a lower build- up of price rise. 

The survey showed that majority of Industrial leadership who participated in the study, want RBI to cut interest rates. 

“This shows that while there is a strong demand from the industry reeling under slowdown to see lower interest rates, their expectations are muted given the  track record of the central bank in staying over-cautious and conservative when it comes to a choice between growth and inflation," the chamber said. 

It said the industry expectations for a rate cut are not unrealistic and based on more than expected decline in the retail inflation which is currently hovering at 5.52 per cent (for October) , much lower than the RBI target of eight per cent by January, 2015 and six per cent by January, 2016. 

Helped by a sharp reduction in the crude oil prices which have dropped by about 30 per cent in the last six months, retail prices of several essential items of use to the common man like vegetables, cereals, milk and milk products have seen a moderation in inflation. In fact, there are items like vegetables which are selling at lower prices today than six months ago. 

“What is more significant and a point to be taken into account by the Reserve Bank is that even the outlook for the crude oil prices rising again look dim  as is evident from the latest meeting of the OPEC where it was decided to maintain the production levels at the current levels. 

Instead of any increase in oil prices, there is a talk about the prices further dropping to USD 60 per barrel. Thus, at least on this count, there should be a great comfort level for the RBI to go and announce the rate cut,” ASSOCHAM Secretary General Mr D S Rawat said. 

The interest rate cut, will help several sectors of the industry in a twin way. For one, it will boost consumer demand and induce higher production. Secondly, it will reduce the interest burden for hundreds of large corporates and lakhs of SMEs which are under heavy leverage and are battling the debt burden.

Even the banks will significantly gain as lower interest rates should at least ease concerns over the non-performing assets. Real estate, telecom, automobile are among   the sectors which are highly leveraged and the consumer durables and non durables are highly interest rate sensitive.    

“India is today the best performing among the emerging markets on expectations of revival in the economic growth and on the rising performance index of the new government. It is time the RBI added to this optimism and built on it,” the ASSOCHAM said. 

The GDP data in the second quarter is far from pleasing and thus, for the real breakthrough a number of initiatives must be taken in a combined manner by the government, RBI and Parliament to take the growth to the fast track. “If we can get the Insurance Bill passed in the current session of Parliament and interest rates are cut, these two measures themselves will see further pick up in the business confidence,” the chamber said. 

Boost for Delhi Real Estate: Govt approves more FAR and ground coverage

NEW DELHI: Urban Development Ministry has approved to enhance Floor Area Ratio (FAR) and Ground Coverage in Delhi.

The Floor Area Ratio with respect to the plot sizes of 750-1000 sq mt has been increased from the present 150 per cent to 200 per cent while for the plots of 1000 sq mt and above, FAR has gone up from 120 per cent to 200 per cent, a senior Urban Development ministry official confirmed.

The minister for Urban Development Venkaiah Naidu on Monday approved the proposal of Delhi Development Authority (DDA) in this regard, the official said. 

While maintaining the Ground Coverage for plot sizes ranging from 750-1000 sq mt at 50 per cent, the same has been enhanced from 40 per cent to 50 per cent for ground of 1000 sq mt and above. 

Earlier, DDA has proposed an amendment to this effect to its Master Plan Delhi-2021 and firmed up the same after inviting objections and suggestions from the public.

Reacting to the current enhancement of FAR in Delhi, Anuj Puri, Chairman & Country Head, JLL India, said, “Providing higher FAR is a good move, which will make the apartments bigger. With no change in density norms, ticket-sizes may rise as well.”

He said, though no clarity has been given on an increase in the dwelling units allowed on the larger plots, there is a provision in the draft Delhi Master Plan 2021 which allows for an increase in the number of dwelling units.

Puri, however, cautioned that the provision should be used judiciously with the increased FAR to increase the housing stocks. Only then we will see reduction in housing prices.

With height restrictions for individual residential plots not being increased from the current 17.5 meters along with stilt parking provisions, developments are likely to remain of same height, he said.

Predicting that the increased FAR will have a positive impact on group housing plots, Puri said, the ground coverage that was previously 33.3% will now be 50% for such societies. This will allow for bigger apartments to be built, though FAR here is already 200 under the master plan. No height restrictions were applicable for group housing plots, and hence there is no issue for such developments with regards to height provisions.

Affordable housing to get tax breaks: Naidu

NEW DELHI: The minister for Urban Development and Housing M Venkaiah Naidu has said that the government is considering to introduce tax breaks for affordable housing to make achieve the BJP government’s proposed plan of securing housing for all by 2020.

Acknowledging that the present slowdown in the real estate sector was due to the overall economic situation, he said the government has plans to see a turnaround of the sector soon.

He said that to make housing loans available for every citizen of this country,  the government will soon announce a subvention scheme on home loans for middle and lower income groups.

Underlining the need of the revival of housing sector to boost the overall economy, Naidu said at a function in New Delhi that, "We need to relook at urban India and economic development, which will lead to advancement of India. We understand that we cannot progress in achieving our Housing 2020 plan without the support of private sector.'' 

He said with the help of various government-aided schemes he was confident that the contribution of the real estate, which is now 6 per cent to the GDP, will go up to 13 per cent by 2022.

While addressing a conference of real estate developers, Naidu said, "Housing sector has tremendous growth potential and the second largest employer in the country."

Providing Modi’s remedy for economic recovery, he said, "3D Modi is the remedy for economic recovery and rapid growth. Since Narendra Modi is dynamic, decisive and dares to think big, these dimensions are making him popular both within and outside the country."

Lalit Jain, chairman of real estate body CREDAI, said the government should streamline approval processes which will help revive the real estate sector.

Rejecting the claim that the proposed real estate regulatory bill will affect private investments, Naidu said, the bill would instead enhance the credibility of the sector. He also said his ministry has given top priority to pass the bill in the current session of Parliament. 

Puravankara enters Pune residential market with a bang

Pune: Bangalore-based leading property developer Puravankara Projects Limited has entered into a joint venture with Pune's Oxford Group and Mumbai-based EKTA World, to develop a residential property at Mundhwa in East Pune.

Having close to 30 acres of prime residential land for development, the deal was closed with the help of Jones Lang Lasalle India (JLL India), a real estate research and consultant firm.

This joint venture arrangement, structured by JLL India, will yield about two million square feet of prime residential space for development.

Commenting on the massive residential project in Pune, Anuj Puri, Chairman and Country Head, JLL India, said, “Mundhwa is an exciting hotspot due to its proximity to Koregaon Park. Additional demand drivers in Mundhwa include EON IT Park in Kharadi, Magarpatta IT/SEZ development and proximity to Pune's airport and railway station."

From a residential real estate viewpoint, Mundhwa is the choice of location for IT employees from Magarpatta, Kharadi and Kalyaninagar. Adding to the high strategic value of this micro-market are major malls such as Amanora Town Centre and Seasons Mall on Hadapsar-Kharadi Bypass, and Phoenix Market City and Inorbit on Nagar Road, a JLL India release said.

This project also marks the entry of Puravanakara, one of the most renowned developers of South India, into the thriving West India property market.  The partnership with established Oxford Group and EKTA World will bring their combined expertise on luxury living in one of Pune’s most promising micro-markets.

Indian developers look for new strategies to clear unsold inventory

Even as the Indian real estate market shifts into the second gear of recovery, developers whose operations had slowed down during the lull are still faced with multiple concerns. On the one hand, the very basis of their business is the launching of new projects (the only function that really defines a developer's viability as a going concern on the real estate market). On the other hand, it is vital for them to clear piled-up inventory in order to generate capital and enable clearances for new projects, writes Shajai Jacob, Director & Head - Marketing & Communications, JLL India.

Clearing unsold inventory is also extremely important from the point of view of retaining existing customers, as real estate investors show a high propensity for exiting projects which are not clocking up healthy sales. By all standards, many developers find themselves in an unenviable situation at a time when the market is headed into boom mode after a prolonged slowdown.

The Causes Of Unsold Inventory

When any business does not function efficiently, one of the most visible results of this inefficiency is lack of customers. In the services industry, this will be visible in reduced interest in the services offered, and little revenue-generating work on hand. In the case of product-oriented companies (such as real estate development firms), the evidence lies most visibly in piled-up inventory. Excess inventory happens when a company is left holding more of its products than the market is willing to absorb.

What Unsold Inventory Implies

Naturally, the visible evidence of excess inventory is regarded as bad for any business. It signals that the products are, for one reason or the other, not selling. In the case of Indian real estate, a very common misconception among buyers, investors and industry watchers is that developers saddled with a lot of unsold inventory are 'paying the price' of over-pricing their products. The assumption that follows is that reducing prices will catalyse sales.

In actual fact, this argument can fail to hold water. Many times, other developers' projects within the same price band, location and category are selling at a much better rate. The fact that some developers simply have better marketing strategies than others is either not perceived or not well understood. If a developer himself lacks insight on why his stock not selling despite good price points and the right location and specifications, it can have serious consequences.

Developers looking at piled-up, non-moving inventory may panic and make counter-productive decisions. A futile blame game ensues if the developer views the unsold inventory as evidence that his sales and marketing team is not performing optimally. While there can be a grain of truth to this, it is also true that sales and marketing teams are only as good as the strategy that guides them.

If a developer has invested heavily into a flawed or incomplete marketing strategy, he is too close to the problem to see it for what it is. Insight is further clouded if a particular marketing strategy worked well in the past, should logically continue to work now but is no longer cutting it. 

Real Estate Marketing: A Constantly Evolving Concept

For a real estate marketing plan to succeed in today's highly competitive environment, there are myriad factors that come into play. More marketing activities than ever before need to be deployed, and these new activities require specialized know-how and specifically trained and qualified manpower. Real estate is a product industry in which the rules of the game have changed drastically over the past decade, and will continue to change.

Today, maximizing engagement with the target market is everything. For a project launch to succeed, a developer's clients need to have top-of-mind recall for his brand and his product. In the past, the resources available to a developer were limited to print advertisements, radio jingles, hoardings, word-of-mouth promotion and, of course, brokers. Today, clients need to be wooed across a much wider spectrum.

Social Media Presence

Not to put too fine a point to it, a developer who does not have a well-defined social media strategy today is a dinosaur doomed to extinction. Neither long-standing reputation nor excellent track record will help if these elements are not reflected online across multiple channels.

Today, approximately 243 million Indians spend a significant part of their lives online, and use the Internet to access and receive information of every kind. With the advent of e-papers, news portals and blogs, the manner in which information about anything travels has changed both in terms of direction and speed.

Platforms like Facebook and Twitter may have started off as mere social networking media, but today the power they wield in the world of business is beyond dispute. Companies of every stripe and description are investing massively into making their presence felt on these and other online platforms. It is literally a battle to stay relevant in a world that does not acknowledge the existence of anything anymore if it cannot be found online.

Staying Ahead Of Real Estate Portals

While the practice of maintaining well-crafted, informative and responsive websites has been a norm in the more developed countries for over two decades, Indian developers have only woken up to the need for this all-important calling card over the last 6-7 years. In this relatively short period, aggregator sites specialized in real estate deals and offerings have carved themselves the largest share of the online pie by investing exhaustively in search engine optimization and highly professional social media outreach.

The proliferation of these portals certainly spells good news for end users, because it gives them a more detailed oversight of what the market is offering than ever before. However, it is a different story for individual developers. The uniquely democratic business model on which property portals thrive hinges on showcasing as many projects and properties as possible. While developers can (and do) pay for higher ranking within this avalanche of options, the scope for focused branding and project-specific marketing on these projects is very limited.

Today, forging a distinct and prominent online identity is very essential long-term function for developers; but more importantly, an effective online strategy plays a critical role in the success of a specific project launch. In today's market scenario, developers who lack a well-defined online marketing strategy invariably find their projects selling at a far slower rate than their competitors.

Vital Ingredients Of Online Visibility For Real Estate Developers

 Dynamic Website: It is definitely essential to have a good company website which provides oversight of the firm’s projects. However, the ‘fill-it-and forget-it’ approach no longer works – websites need to be user-friendly, informative and kept dynamic with regular optimization and updated content. A static website with no fresh activity to attract traffic is driven off the charts by competing websites, portals and other platforms      

High Social Media Clout: Good Facebook, Twitter and LinkedIn presence with impressive and focused followers is of prime importance, from a standpoint of visibility and branding as well as in terms of having a ready base of potential customers to address

Engaging Company Blog:  Blogs are an important tool in reputation management, and are different from websites by virtue of the fact that they speak to potential customers on a less formal and more interactive and informative level. On a company blog, a real estate developer can offer insightful commentary on the market and thus elevate the firm’s status beyond that of a mere product dealership. A company blog which is regularly updated with interesting information attracts high search rankings online. Importantly, content on a company blog must at all times find the perfect balance between useful information and overt promotion.