INDIA : Real Estate shows some recovery in 1st quarter 2009 - 03rd May 09
After witnessing an acute slowdown during the third and fourth quarter of 2008, the real estate sector has shown some recovery in the first quarter of 2009 ending March 31. If trends of absorption for the period January-March 2009 are any indication , a report prepared by PropEquity Research suggested there has been a surge in absorption in majority of the cities. A recent study conducted by PropEquity across Mumbai, Bangalore , Chennai, Hyderabad, and Gurgaon in NCR reveals that absorption has been high among the residential new launches in the first quarter of 2009 in Mumbai, Chennai and Gurgaon. The study attributes the success rate in absorption to the price correction and reduction in unit sizes introduced by developers in these cities. However, Bangalore and Hyderabad, which witnessed fewer new launches during the period, experienced a low absorption.

The real estate sector experienced one of the worst kinds of slowdown in demand because of rise in the interest rates in the January-March 2008, by almost 2 percentage points, to 12%. At the same time, the prevailing prices of residential apartments in most of the cities made them unaffordable for most buyers. The situation further worsened after global financial markets got affected due to the failure of banks and brokering houses in the US and Europe. This also affected Indian real estate market very badly and demand plummeted. According to the report , While October-December 2008 saw the nadir with absorption of only 1,113 units in Mumbai, the first quarter of 2009 witnessed the launch of over 14,478 residential apartment units and a corresponding absorption of 5,746 units. As against this, during October-December 2008, 3,096 units were launched, the report said. That means, in the first quarter of 2009, 40% of the launched apartments were sold, which is considered to be a good turnover. Similarly, in Gurgaon, during January-March 2009, 815 units were sold while 4,490 units were launched. As against this, in October-December 2008 quarter, only 587 units were sold from 3,708 units launched. Therefore, both the absorption and launch figure showed sign of recovery.

USA : A New Plan to Help Modify Second Mortgages - 30th Apr 09
Courtesy : New York Times

WASHINGTON — The Obama administration sought to expand its $50 billion plan to reduce home foreclosures, announcing a new program on Tuesday to help troubled homeowners modify second mortgages or piggyback loans.

Under the new plan, the Treasury Department will offer cash incentives and subsidies to lenders who agree to substantially reduce the monthly payments on second mortgages or forgive those loans entirely.

The goal of the plan is to plug a hole in the administration’s original program, which offered subsidies to lenders who agreed to modify the primary or first mortgages of homeowners who had fallen delinquent or were in danger of doing so.

But millions of homebuyers took out second mortgages to buy houses with little or no down payment or to finance home improvements and other purchases. Those second-lien mortgages have to be renegotiated separately, a step that often complicates efforts to modify the primary loans.

Analysts predict that at least 4 million homeowners will face foreclosure proceedings this year, up from about 2.2 million in 2008. Administration officials said about half of those people had second mortgages.

Under the new plan, which will be financed out of the same $50 billion set aside in March from the Troubled Asset Relief Program for homeowner bailouts, mortgage lenders that sign up for the program will agree to an automatic formula for sharply reducing payments on the second mortgage for any customers who have modified their first mortgage.

Under the original program, the Treasury offers cash incentives to lenders to reduce a borrower’s monthly payments to 38 percent of monthly income. The Treasury then shares half the cost of further reducing the payments to as low as 31 percent of the borrower’s monthly income.

Under the new program, which officials said would not get under way for at least several weeks, participating mortgage lenders would agree in advance to automatically reduce the interest rates and possibly the outstanding loan amounts for a second mortgage as soon as the first mortgage had been modified.

Lenders would be required to lower the interest rate to just 1 percent for any second mortgage in which the borrower was repaying principal as well as interest. On interest-only loans, the lender would have to reduce the rate to 2 percent. If the lender on the first mortgage agreed to forgive some of the principal loan amount, the second-tier lender would have to forgive the same share of its loan as well.

To induce mortgage lenders to participate, the Treasury is offering lenders a $500 cash incentive for each second loan they modify and additional payments of $250 a year for three years if the borrower stays current. The Treasury will also share the lenders’ cost of reducing the monthly payments.

It remains unclear whether mortgage companies will be attracted to the new offer. The second-tier lenders would be making much deeper concessions to borrowers than the first-tier lenders.

But holders of second mortgages are already junior to holders of first mortgages. In foreclosures and distressed sales of homes that have dropped in value, many holders of second mortgages recoup little or none of their money.

ITALY : Italian property prices expected to fall further in 2009 - 30th Apr 09
Following the worsening of the international economic crisis, housing demand significantly dropped in Italy, but Italians continue to see property as a good medium-term investment, according to a new report.

The Italian property market is now suffering the consequences of the global economic crisis, but Italians still perceive housing as a reasonably safe investment and the sector is expected to recover in 2010, the report from economic intelligence company Nomisma indicates.

Analysts found that residential property sale volumes decreased by 15.1% in 2008. However, the drop was particularly marked in the last quarter of the year, after the deepening of the financial crisis eroded consumers' confidence, it says.

In the other property sectors office sales fell by 11.7% and the commercial real estate market saw decline of 8.7%.

The report indicates that financing is harder to come by and those property transactions that are taking place involve buyers who do not have mortgages. The number of sales involving mortgages has dropped by 26.8%.

It points out that a lessening of stricter credit criteria is needed to boost the real estate market in Italy. 'The relaxation of the strict credit by banks could provide additional liquidity to re-start interest in the real estate market for families, investors and large operators,' the report says.

It is also taking longer to sell properties and the market has seen a substantial lengthening to between six and seven months.

Analysts expect further falls in prices in 2009 of around 7 to 8% with the market stabilising in 2010. Sales in 2009 are expected to decrease further by 8 to 10%.

UNITED KINGDOM : Plummeting property prices wipe billionaires off rich list - 30th Apr 09
Figures compiled for the Sunday Times Rich List 2009 reveal that the number of billionaires has fallen from 75 to 43 in the past 12 months.

Lakshmi Mittal, the London-based steel magnate, was the biggest loser among the billionaires after his fortune dropped by almost £17bn to £10.8bn. But he retains his place as Britain’s richest man for the fifth year running.

Roman Abramovich, the Russian owner of Chelsea Football Club, keeps his position at second on the list despite also suffering from the downturn. His fortune has fallen to £7bn from £11.7bn. The richest British-born billionaire is the Duke of Westminster. His fortune, mainly based on property, has shrunk from £7bn to £6.5bn.

Collectively, the 1,000 multimillionaires on the list are worth £258bn, down from last year’s record total of £413bn.

Other wealthy casualties include Sir Richard Branson, who has lost £1.5bn and is now worth £1.2bn, and the Formula One tycoon Bernie Ecclestone, who lost £934m this year, reducing his worth to £1.46bn. Sir Tom Jones, Phil Collins and Engelbert Humperdinck all lost substantial sums, while the personal fortune of Sir Cliff Richard is down a fifth from £50m to £40m.

The plummeting value of property investments and share portfolios are the main reasons behind the major hits taken by celebrities: Sir Paul McCartney saw £60m wiped off his fortune due to falling property and share values.

Sir Elton John’s generous charitable donations contributed to the fall of his fortune from £238m in 2008 to £175m.

It was not all bad news for the rich. The former head of supermarket chain Morrisons, Sir Ken Morrison, saw his fortune rise by 11%, making him worth £1.6bn, while Harrods owner Mohammed Fayed has added 17% to his fortune, which is now worth £650m. Peter and Denise Coates, owners of Stoke-based online sports betting website Bet365, have seen their fortune rise by a third and are now worth £400m.

Philip Beresford, who has compiled the list for 21 years, said he was struck by the scale of the losses suffered by many of the super-rich. “I am beyond being surprised except by the scale of the devastation. It is extraordinary how people have seen their fortunes whittled away.”

SPAIN : EU Parliament finds Spain guilty of widespread property abuses - 30th Apr 09
The European Parliament today approved a report slamming Spain for all manner of evils relating to the country’s property sector, including the ‘land grab’ and Ley de Costas scandals that have created so much misery for home owners in Spain.

The report, by Danish MEP (Greens) Margrete Auken, paints a depressing picture of developers and corrupt politicians trampling over private property rights and the environment in pursuit of their own enrichment, whilst the authorities look the other way. This is the 3rd EU report slamming Spain for foul practices in its property sector in almost as many years.

WORLD : Research & Markets: 2009 Worldwide Real Estate Property Managers — Industry Report - 30th Apr 09
DUBLIN, Ireland (Research and Markets) - Research & Markets has announced the addition of the “2009 Worldwide Real Estate Property Managers Industry Report” report to their offering.

The Real Estate Property Managers Industry report, published yearly, consists timely and exact industry statistics, forecasts and demographics. The report features 2009 current and 2010 forecast calculates on the size of the industry (establishments, sales, employment) for the 47 largest world countries, like Japan, China, Mexico, Brazil, India, Russia, Canada, Argentina, France, Germany, Italy, UK and U.S…

The report also contains industry definition, five - year historical flows on industry sales, establishments and employment and calculates on up to 10 sub-industries, including rental and leasing brokers, apartment managers, and condominium managers.
For further information visit

INDIA : Falling Rentals and fate of Organised Retailing Industry in India - 30th Apr 09
Shopping center is not for shopping in a financial crisis when customers visit to just appreciate its fine architectural design. No buying! Despite the downturn, many experts believe Indian Retail boom is here to stay. Lowering real estate prices can help retailers help them to continue with their planned expansions. In certain markets, the decline in rentals has been to the extent of 5 to 10% and some industry players foresee a further fall of 25 to 40% in the next few months.

Big Bazaar, Shoppers' Stop, Provogue, Vishal Retail are going ahead with their expansion as planned. A general slowdown, rising of interest rates for home loans and liquidity crunch indicate that the rental rates may dip further Big Bazaar will add 60 new stores by June 2009 from 91 stores.

Govind Shrikhande, CEO of Shoppers' Stop, agreed with the expectations of falling rentals. He said, "Logically the rates should come down by over 10 per cent in the next few months. We see a realisation among partners that business cannot sustain with such high prices." Shoppers' Stop plans to fund part of its expansion from its proposed rights is - sue of Rs 500 crore.

Provogue, which is planning to add 40 new stores this year is also on track with its plans and considers expansion necessary as it will give the retail chain access to new markets. Provogue's managing director Nikhil Chaturvedi, however, admitted to a slow- down, "There is definitely a slowdown and a 10 per cent reduction in same store sales when compared to last year's figures."

Vishal Retail will add 90 stores this year, of which 19 have already been opened. Manmohan Agarwal, CEO, corporate affairs, Vishal Retail said, "The rates have more or less stabilised in the past few months. We feel that they will soften further by 5 to 10% in the next few months when a lot of projects will be completed and the supply will exceed the demand."

For Megamart- the retail chain of Arvind Ltd the footfalls have dropped by 10% and hence, the chain is wooing consumers with discount offers and freebies to raise the average ticket price. However, it has already decided upon which properties to expand in the coming year. KE Venkatachalapathy, COO, Megamart & Retail, Arvind Brands said, "The rentals are down by 5 to 10% in some markets and we foresee a further drop of 15 to 20 per cent." There are 87 Megamart stores as of now, which will go up to 125 by March 2009.

INDIA : India Expected to Create Real Estate Investment Trust - 30th Apr 09
Following fellow Asian countries, India is expected to create a market for real estate investment trusts (REITs) this year. The step will make it easier for investors to buy into the country’s sparkli

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