HDFC has been regularly organizing such events in India & overseas. The objective is to facilitate interaction amongst the NRI’s interested in buying properties, the developers and HDFC under one roof.
HDFC is a pioneer and leader in housing finance in India, and has assisted more than 3.3 million families to own a home of their own, through housing loan approvals of over Rs 2.45 trillion (Rs 2,45,000 Crores). It has consistently striven for and developed an excellent reputation for professionalism, integrity and an impeccable record of customer friendly services. It has turned the concept of housing finance for the growing middle class in India into profitable, professionally managed, world class enterprise.
HDFC is known for its advanced capabilities in the area of processing loan applications, a committed, specialist team of trained and experienced staff, technical guidance in respect of documentation, liaisoning with property developers etc., besides customised loan repayment options for its entire range of Home Loan products to serve its growing clientele.
HDFC has been described as a model housing finance company for developing countries with nascent housing finance markets. It has provided technical assistance in Bangladesh, Sri Lanka and Egypt and has undertaken consultancy assignments in various countries across Asia, Africa and East Europe.
It has been recognized among India’s Best Managed Companies and today has emerged as a financial conglomerate with presence in banking, insurance (for life and general), asset management, and a real estate venture fund. The HDFC group has an asset base of over Rs 3.75 trillion (Rs 3,75,000 crores) and a customer base of over 300 million
Property scene in India
Affordable housing. The new mantra.
Property prices across India have fallen sharply in the last six months as buyers virtually disappeared from the market. To bring them back, apartments in newly launched projects are being offered at hefty discounts – anywhere between 25% and 30%. Finished property became cheaper by 20% over the last year.
Many say it was a course-correction; an adjustment waiting to happen. Feverish speculation had pushed prices to unrealistic levels: for instance, they jumped three to four times between 2003 and 2007. “Such a steep rise made housing out of reach for end users”. The rise in interest rates by almost two percentage points from 10% in early 2008 added to the pain. In September 2008, as the global financial crisis erupted, transactions in the realty sector virtually ground to a halt. As the cash flow dried up, many builders were in a spot. Buyers, on the other hand, were still waiting on the sidelines. This is why a number of developers recently announced new projects at heavily discounted rates. As added incentive, many of them promised to pass on the benefits of any further fall in prices to existing customers. Developers say this has instilled confidence in the buyer who is ready to close the deal.
The strategy seems to be working. In the National Capital Region, for instance, developers such as DLF, JP Associates, Amrapali, Gaursons, Supertech, and Mahagun launched projects in west Delhi, Gurgaon, Noida, and Indirapuram in the past few months. In Bangalore, builders such as Purvankara and Shobha launched projects at a discount price of 20%. The response: DLF sold around 1,400 apartments in west Delhi in two days at Rs 4,500 and Rs 5,500/sq ft. It was much cheaper than the going rate of a Delhi Development Authority flat in the same area – Rs 6,000 to Rs 8,000/sq ft. Similarly, Amrapali and Mahagun sold a number of apartments in Noida at around Rs 3,300/ sq ft in a two-week period. The current going rate for a finished apartment there is upwards of Rs 4,500/sq ft.
Clearly, attractive pricing is the way to revive buyer interest. But timely delivery of apartments remains a concern. In a reassuring move, several developers have doubled the penalty they will pay buyers for delays from Rs 5/sq ft per month. A developer in Mumbai has assured a buy back at the current price if the price after three years is lower than current price. Also there are schemes where a buyer pays only 20% at the time of booking while 80% has to be paid on possession. A developer in Pune has come up with a unique scheme where rent payments by a tenant can be converted to his own contribution in case the tenant chooses to buy that particular property. All these special schemes are to instill confidence that it is a good time for a end user to buy a property.
Another reason for renewed buyer interest is that the apartments offered are smaller and hence more affordable. Apartments in newly launched projects are smaller by 20% now , to around 1,000 sq ft for two-bedroom and 1,200 for three-bedroom. This means the effective cost of buying a property is down by around 40% with lower specifications and overall correction in Property prices.
Spurred by price corrections, new launches, lowering of interest rates, increase in sales inquiries and, more importantly, the newfound mantra of ‘affordable housing’, the real estate industry has started showing signs of recovery. Industry body Assocham has gone to the extent of saying that the real estate recovery is possible in the coming three months. A recent Assocham Business Barometer (ABB) survey has found that anticipating strong policy measures for the real estate in the forthcoming Budget, embattled realty majors see positive signs of recovery taking place within the next three months as affordable housing projects rev up demand and improved cash flows address their liquidity concerns.
As per the survey, a whopping 92% of the respondent developers considered affordable housing as the most dominating segment to shore up the demand in real estate sector. And the policy actions supplementing the robust demand in the housing sector are likely to hold the key for a speedy recovery phase in the sector.
Although the findings of this survey may seem to be too optimistic, particularly in view of the prolonged slowdown in the industry, but taking the current positive signs in the property market into account, both industry majors as well as experts feel the real estate recovery is not a distant dream. And they have ample reasons to believe this.
After a gap of more than a year, some real ‘actions’ are being witnessed in the realty market, including the high-profile launches of some major projects coupled with increased sales inquiries. Along with that, some realty majors are also said to have recorded an overwhelming response for their upcoming projects.
For instance, the Jaypee group claims to have booked all the 3300 apartments of Jaypee Greens Aman, its new residential project in Noida, within 24 hours of their launch, while Capital Greens, DLF’s first residential project in Delhi, is claimed to have showed bookings of 1,400 flats on the first day itself. Similarly in Mumbai Nahar Builders sold 150 flats out of the 300 flats in a couple of days. Such instances only prove that buyers and strategic investors are once again warming up to the sector, though in a restricted manner. The Indian economy recorded a betterthan-expected growth rate of 6.7% in 2008-09. “The GDP growth rate, clocked in tumultuous times of global financial crisis, lends credibility to the presence of real domestic demand and consumption continuing to fuel the economy, though at a reduced growth rate.
There is a renewed faith of overseas investors also, stemming from the series of steps taken by developers to improve their financial position.” Unitech has, for instance, cut debt by Rs 2,000 crore while DLF has repaid Rs 1,700 crore of loans in the past year. And similar is the case with lots of other large and mediumsized developers,
Moreover, a general softening of interest rates has also helped developers cut their borrowing costs by as much as 300 basis points.
The present slowdown has made the developer community correctly identify end-user needs and keep affordability in mind before embarking on new projects.” The trend, therefore, is for developers to launch affordable housing in the NCR and other parts of the country. Developers are now connecting with ‘real buyers’ for the ‘real prices’ and are pricing projects more competitively by reducing their margins as well.
Should one buy now or wait?
According to “Ms Renu Sud Karnard, Jt Managing Director HDFC, “the slowdown is giving many the opportunity to own a home of their own. if one is buying for own use he should start exploring options, In times like this developers would be more than happy to negotiate and what’s more there are higher chances of getting a property of your choice which could be the best thing for him. We do not see prices going down much further from the current levels. We are also seeing renewed interest and return of confidence among buyers. HDFC Home loan disbursements grew by 17.5% at Rs 12,439 crore, in its fourth quarter ended March 31’09 and subsequently with each passing month we have noticed better numbers which indicates the actual demand for homes.