MCHI Exhibition Live Pictures for All The Real Club Members

Banks scramble to cash in on festive demand for retail loans

 

Organise property expo, launch combo offers, cut processing fee to pep up demand

Banks are hosting property exhibitions, introducing combo products that offer further interest rate reduction on a car loan if a customer has already taken a home loan and are sugar coating home loan products, besides cutting interest rates and waiving processing fees to pep up demand for home and auto loans for second half of 2012-13.

Several banks such as Axis Bank, Central Bank of India and Corporation Bank are organising property exhibitions to sell more home loans, while a host of banks have launched combo offers where a home loan customer gets an additional 0.25-0.5 per cent interest rate reduction on an auto loan.

Axis Bank, which has co-organised MCHI-CREDAI’s 20th Real Estate and Housing Finance Exhibition, is expecting to get Rs 200-250 crore of home loan business from the property expo, said Jairam Sridharan, head consumer lending and payments, Axis Bank to Financial Chronicle. As many as 15 lenders have set up their stalls to offer spot loans in the MCHI-CREDAI exhibition.

The four day MCHI-CREDAI exhibition at Bandra Kurla Complex in Mumbai is the country largest real estate exhibition featuring over 15,000 properties with over 120 developers participating.

On the same lines, Central Bank of India plans to hold realty exhibitions in 100 cities of the country by March 2013, and is looking to cloak a total home loan business of Rs 10,000 crore by March 2013. The bank will be holding expos and trade exhibitions in association with industry partners in the auto loan segment also.

MV Tanksale, CMD of Central Bank of India, said, “Home loan business would remain our prime focus. As on September 30, our home loan business touched Rs 6,800 crore, and by March 2013, we are targeting to add the business of Rs 4,000 crore. Hence, we can achieve the target of Rs 10,000 crore by end of this financial year.”

Adds Ram Sangapure, retail head, Central Bank of India, “The first property exhibition was organised in Mumbai, Goregaon, which was visited by 4,000 people, out of which, 580 people have applied for a home loan from us, amounting to Rs 180 crore. Our entire focus is on growing retail business now and hope to do an incremental business of Rs 6,000 crore to Rs 25,000 crore as on March 31, 2013.”

Central Bank of India has completely waived off processing fee on home and auto loans, besides launching a combo product where a home loan customer applying for an auto loan, gets a 0.5 per cent rate concession. Both home and auto loan could be given at the bank’s base rate at 10.5 per cent without processing fees in the combo product. The auto loans portfolio stood at Rs 900 crore as on date, which is expected to grow to Rs 1,200 crore by March 2013.

On similar lines, Corporation Bank is aiming to provide Rs 7,000 crore home and auto loans by March 2013, and is organising property expos across the country, offering home loans at base rate (10.5 per cent) with no processing charges. The bank has also launched a combo offer under which customers who take home and auto loan together will get an additional 0.25 per cent reduction on auto loan.

SM Swathi, general manager (Delhi circle), Corporation Bank, said, “From September till now, we have disbursed Rs 400 crore of home loans in property expos. The retail book is 17-18 per cent of the loan book, which we want to increase to 20 per cent by March end. The bank expects to achieve 40-48 per cent growth in retail portfolio, including home and car loans during the year.”

Meanwhile, the country’s largest lender State Bank of India (SBI) last month lowered its processing fee on home and auto loan by 50 per cent up to December 31. In case of home loans, the processing fee has been slashed to 0.125 per cent for loans up to Rs 25 lakh or Rs 1,000, whichever is maximum, compared with 0.25 per cent earlier. Similarly, for auto loans, the processing fee has been reduced to 0.255 per cent for all loan amounts, subject to a minimum of Rs 510 and a maximum of Rs 5,100. The processing earlier was 0.51 per cent. The bank has also announced a flat processing fee of Rs 1,000 for all takeover loans.

With a base rate of 9.75 per cent, SBI’s base rate is one of the most aggressive in the banking system at present. Already the bank has cut lending rates to a low of 10.25 per cent on home loans and 10.50 per cent for auto loans as part of a festive offer valid till the end of December.

According to A Krishna Kumar, SBI’s MD and group executive, the bank is seeing the number of daily home loans applications more than double since the rate cut to 800 from 400 applications (before the rate cut).

“The number of home loan applications have increased by two times, more than the daily average two months ago… We expect a growth of 18 per cent in retail home loans, which is a good growth. We are growing across (income) segments. The growth is coming mostly from smaller towns and cities,” added Kumar.

In this race to acquire new retail customers, ICICI Bank, the country’s largest private sector lender on Friday launched a home loan product with cashback offer. Available with immediate effect up to December 31, the product offers 1 per cent cashback on every equated monthly instalment (EMI).

ICICI Bank had launched a festival offer in the second week of October by reducing home loan rates up to 1 per cent. The new rates are at 10.5 per cent for loans above Rs 30 lakh and 10.25 per cent for loans up to Rs 30 lakh. The bank has also done away with a special slab of over Rs 75 crore floating rate loans under this scheme. The offer, which is on till the end of December, also reduces the processing fee by 25 basis points to 0.25 per cent. Additionally the bank is also offering a personal accident cover with every home loan.

Rising non-performing assets (NPAs) have made banks risk-averse, forcing them to concentrate on smaller retail loans, rather than a large loan to a single corporate account. Home loans are considered the safest and account for nearly half the total of the retail banking industry.

According to latest data by the Reserve Bank of India (RBI), home loans grew by 11.2 per cent year-on-year up to September 21 to Rs 4,21,300 crore. However, there was a spurt in the growth of auto loans with total outstanding at Rs 1,02,700 crore, growing at the rate of 22.2 per cent over the previous year, up from 19.3 per cent growth recorded last year.

The central bank in its second quarter review of the monetary policy last month end cut the cash reserve ratio (CRR) by 0.25 per cent to 4.25 per cent of their net demand and time liabilities.

Property prices firm despite high interest rates

Housing prices remained firm following limited supply, despite the slowdown and high interest rates, according to a Nomura report.

“House prices remained on an uptrend despite weak transaction in volumes, high interest rates and slowing economic growth, as supply has been limited with fewer projects being added, especially in key markets such as Mumbai and Delhi due to delays in the government approvals,” Nomura said in a report.

According to the Reserve Bank’s latest housing price index, house prices remained on an uptrend, up 24.1 per cent in Q1, compared to an average of 20 per cent over the last two years, it said.

The metro markets of Delhi, Mumbai, Kolkata, and Chennai saw the sharpest price increases of 21-42 per cent, said the Nomura report.

The steady rise in house prices is one of the many reasons why consumption has remained well supported and inflation expectations have remained elevated, despite the stress in other segments of the economy, it pointed out.

The report further said steady gains in physical assets have also encouraged households to divert savings away from financial assets.

The RBI’s national house price index takes into account price situations in the nine cities — Mumbai, Delhi, Bangalore, Ahmedabad, Lucknow, Kolkata, Chennai, Jaipur and Kanpur — it said.

Housing prices in Mumbai grew at a tepid 3.1 percent in June quarter, while in Kolkata was the fastest at 28.9 percent, it said, adding Bangalore and Kanpur witnessed a fall.

Going by transaction volumes, there was a 6.4 per cent rise on a sequential basis, the quarterly index showed, while on a y-o-y basis it stood at 9.3 per cent, it said.

According to a report by property consultant Jones Lang LaSalle, seven major metros including Bangalore, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune, capital values rose marginally or remained more or less stable in September.

While capital value in Bangalore during the month ranged between Rs 3,000-6,000 per sq ft, the rentals fluctuated between Rs 8,000 and Rs 15,000.

Mumbai continued to top the list in terms of capital value in the range of Rs 4,800-32,000 per sq ft while the rentals touched Rs 95,000 per month for a 1,000 sq ft flat.

In Chennai and Delhi the capital value too saw a marginal rise ranging from Rs 9,000-17,000 and Rs 3,500-16,000 per sq ft, respectively. Similarly, the rents ranged between Rs 9,000 and Rs 30,000 and Rs 10,000 and Rs 23,000 (for 1,000 sq ft area) respectively.

In Hyderabad, Kolkata and Pune, capital values remainded stable ranging from Rs 2,000-20,000, Rs 1,800-15,000 and Rs 3,300-4,000 per sq ft, respectively.

Rents in these three cities ranged between Rs 5,000 and Rs 20,000 in Hyderabad, Rs 5,000 and Rs 45,000 in Kolkata and Rs 8,000 and Rs 12,000 in Pune.

 

Carpet and Built Up Area Saga – The old Story Continues….

Big names ignore code of conduct at MCHI- CREDAI property exhibition, quote rates on basis of super built- up area

VARUN SINGH varun. singh@ mid- day. com OF the 120 builders showcasing their properties at the MCHI- CREDAI exhibition yesterday, not more than a dozen were selling flats on the basis of carpet area. According to MCHI’s own code of conduct, a builder should disclose the carpet area to the flat buyer.

Instead, an overwhelming majority of builders at the exhibition organised at the Bandra Kurla Complex by MCHI- CREDAI — a representative body of real estate developers — were selling on the basis of “ saleable” area, which includes built- up and super built- up area.

Builders like the Ajmera Group, Hiranandani, Lodha and many other reputable players in the real estate industry were found sticking to saleable.

The chairperson of the Exhibition Committee of MCHICREDAI is Bandish Ajmera. His uncle, Rajni Ajmera, has been the president of MCHI. Niranjan Hiranandani, too, has held the post of president of MCHI in the past.

Representatives at the stalls, when asked whether they were selling on saleable or carpet basis, were prompt to reply: “ Saleable.” One even said, “… Else, how will a builder make profit.” In the sea of saleable, there were a few swimming against the tide. One of them was the president of MCHI, Paras Gundecha, who was selling his flats on the basis of carpet area.

Like him, Rustomjee also talked carpet while quoting its prices.

In September 2011, MCHI had come out with code of conduct, which specified that a builder had to clearly state the carpet area to the purchaser (‘ Now Code of Conduct to Govern Builders’, MiD DAY, September 16, 2011).

The exhibition, where a written sign loudly proclaimed ‘ MCHI hai toh bharosa hai’, saw most builders not following the code and selling flats on the basis of saleable area only.

On the question of why the code was not being followed, builders said the carpet area concept would take some time to settle in as a trend.

“ On the positive side, there are builders who are talking about carpet area at the exhibition,” Bandish Ajmera said. “ It will take some time; already within a few months builders have started talking to customers using carpet area rates. I am sure in the coming days all builders will disclose to customers the carpet area. Whenever a buyer asks for the carpet area, we do tell him the same.” Ajmera said as the paperwork always involved carpet area, the customer was not kept in the dark about it.

“ At the end of the deal, every flat is registered on the carpet area, the stamp duty and registration fees are paid on the carpet area, and thus the homebuyer automatically becomes aware of the carpet area,” he said. Niranjan Hiranandani of the Hiranandani Group said: “ All our deals on paper are only on carpet, however it’s the customers who want to know the saleable area along with carpet, and hence we tell them both.” S Karthik of Lodha claimed that none of his projects were sold on saleable, but when informed about what was happening at the exhibition stall, he said: “ I will have to check on this.” Another builder, who spoke on the condition of anonymity, said: “ It’s the customers who want to know the super built- up rate, so we tell them the saleable area. Anyway, there’s not much difference between the saleable and carpet area prices. The builder divides the total sale amount with the carpet area when he sells on carpet area basis and with saleable when he sells on super built- up. For example, if a builder is selling an apartment of 500 sq ft carpet at the rate of Rs 1 crore, the rate would be Rs 20,000 per sq ft.

If he sells the same on saleable basis, the area would go up to 800 sq ft and the rate would come down to Rs 12,500 per sq ft.”

Disappointed visitors

Prospective homebuyers at the exhibition complained that most builders showed them flats that they were selling only on saleable area basis.

R G Gulati, who came looking for an affordable home, said: “ Every time I come, the flat prices are high. This time, every builder showed us flats only on saleable. Why would a builder sell to us a flat on carpet area when he’s selling everyone on saleable? Why would he make arrangements for me alone?” Another home- seeker, who did not wish to be named, said: “ We know the final price won’t differ irrespective of whether the builder sells the flat on carpet or saleable area basis. But when the builder discloses the carpet rate, we at least know at what rate we are getting the home and how much area we will get to use.”

MINISTER SPEAKS

Minister of State for Housing Sachin Ahir said: “ It’s high time that the BMC and the revenue department start the process that we have asked them to. We are trying to ensure that the BMC passed building plans only on carpet area, and the stamp duty department should register flats only when it sees the passed carpet area plan.

The customer also should now ask the builder for sale only on the basis of carpet area.”