The Real Estate Crisis in the US will recover only by 2010

The US housing market bust may not bottom out until 2010, later than previously thought, and more home builders may fail before the housing market recovers, and this is understandable by the recent happenings in US.

Upheaval in the financial markets is making credit harder to get, both for home builders and consumers, raising the risk of more job losses, mortgage delinquencies and foreclosures. It is very clear from the crisis in the US financial system that the housing market and the broader economy will likely worsen before they improve, and is struggling through its worst period since the Great Depression after subprime borrowers, those with a high risk profile, defaulted on mortgages, thus triggering a slide in home prices and glut of unsold homes.

While some housing indicators may bottom out around the end of this year, its very unlikely to expect the overall housing market to show any significant improvement until at least 2010. Home builders would like to write down land holdings to distressed market values, pay down debt, or rebuild their equity and cash positions. Without doing these necessary steps, some or many of the home builders will not survive. Even some survivors will be poorly positioned to take advantage of a home building recovery, which now appears farther down the road.

Home builders have already written down the value of their land, options and joint ventures by $25.5 billion from March 2006 to June 2008. As land values fall, lots go unused and losses drag on, more home builders would likely violate terms of their loan agreements over the next year. Some home builders have already amended their credit agreements three or four times, and banks will take an increasingly tough stance as concerns mount about their own balance sheets.

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Funds and Investments by Foreign Venture Capital Investment Firms in India

The booming economy of the ASEAN Region has given countries like India a great future in developing their respective infrastructures and Housing facilities. Foreign Venture Capital Investments in India provides risk capital to various projects in different sectors stated under the regulations governing venture capital fund requirements. 

According to the Foreign Venture Capital Investment (FVCI) norms, the Securities and Exchange Board of India (SEBI) has approved 50 applications in the current year 2008.  According to the nature of the Venture Capital Investment, the RBI (Reserve Bank of India)  has proposed some guidelines with certain reservations on various aspects. The Finance Ministry has however advised the RBI to approve these Applications without much delay and procedures to avoid uncertainty among Foreign Investors and NRI’s. Considering the latest Real Estate crisis in the US and the Stock Market fluctuations, around  20 out of those 50 applications have raised some concerns about the expected amount of money invested into this particular sector.

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Affluent Posh Apartments in Chennai

Posh Apartments in Chennai has always been in demand with the Elite Rich of the city all through these decades and some particular areas in the city fair better than most others. What identify these apartments are the Locality where these are situated and its access to the city and its facilities. 

Luxurious build, Imported Expensive Floorings, Elegant Parking spaces for the expensive cars and landscaped garden spaces are just some of the features of these Posh Apartments. Literally, these ‘Designer Apartments’ are located in some of the up-market and Elite localities of Chennai which is a very significant factor for its exclusive status. Especially areas like Nungambakkam, Thyagaraya Nagar, Alwarpet, Gopalapuram, Raja Annamalai puram, Adyar, Besant Nagar etc belong to this category of prime areas. 

Some of the major factors in these Posh Apartments are the Location, the material that goes into these homes, the exclusive woodwork and imported flooring, the electrical fittings and every accessory that is fitted, and finally the size of these homes. In a city like Chennai, with sky-rocketing property prices, it is very difficult to acquire prime land in some prime locations. The value of the land determines everything else and such a property need to come from a reliable landlord. These Owners of lands in prime locations are often approached by many builders who propose to pay exorbitant amounts for their property and thus builders in this segment often feel the punch when they approach a landlord with a fixed budget land price. Land acquisition itself is a major factor of building such a Posh Project. The reputation of a Builder plays such an important role in this segment because these High class clients want the best in everything. 

The best part is the demands for these Posh Apartments from Rich Home Buyers. These customers can fork out something from 2-Crores to 6-Crores easily from their pockets for these Luxurious homes. Most of these customers are affluent business people and CEO’s of most corporates. At present the customer base also includes IT Proffesionals, Doctors, Engineers and Lawyers and few other small business people. 

These Apartments deliver a Royal touch to the owners and their social status and owning such a prime and exclusive home is something they really feel proud of.

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Commercial Retail Space Demand in India

The Ernst & Young estimates immense potential for growth in the commercial retail trading segment in India and expansions are expected in large proportions. The Demand for commercial retail space is topped by NCR (National Capital Region of India) with 20% which accounts to 19 million sq.ft of the total estimated retail demand which is followed by Mumbai with 16% which accounts to 15 million sq.ft with respect to the trend in higher incomes and high consumer spendings. 

Hyderabad and Chennai lead with 59% each in terms of aggregate growth. The reason behind these developments being the increase in the income levels of the middle class which is expected to overshoot 153 million by 2009 which in turn will provide ample opportunities to retailers to expand with the demands.

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Repatriation of sale proceeds in India (Part-1)

In the event of sale of immovable property other than agricultural land/ farm house/ plantation property in India by NRI/PIO, the authorised dealer will allow repatriation of sale proceeds outside India provided;

i) the immovable property was acquired by the seller in accordance with the provisions of the foreign exchange law in force at the time of acquisition by him or the provisions of FEMA Regulations;

ii) the amount to be repatriated does not exceed (a) the amount paid for acquisition of the immovable property in foreign exchange received through normal banking channels or out of funds held in Foreign Currency Non- Resident Account or (b) the foreign currency equivalent as on the date of payment, of the amount paid where such payment was made from the funds held in Non-Resident External account for acquisition of the property. 

iii) In the case of residential property, the repatriation of sale proceeds is restricted to not more than two such properties.

iv) In the case of sale of immovable property purchased out of Rupee funds, ADs may allow the facility of repatriation of funds out of balances held by NRIs/PIO in their Non-resident Rupee (NRO) accounts upto US$ 1 mio per calendar year, provided that the property has been held for a period not less than 10 years or for a combined period of 10 years partly as property and as sale proceeds in NRO account and subject to production of undertaking by the remitter and a certificate from the Chartered Accountant in the formats prescribed by the CBDT.

Everything seems to be focused only towards NRI's and PIO's mainly because according to this legislation, only NRI's and PIO's are allowed to buy immovable property in India (and even then excluding agricultural land/ farm house/ plantation property).

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