News & Views on Indian Real Estate

Monday, June 30, 2008

EmaarMGF to showcase its Indian projects in Dubai

EmaarMGF, a joint venture between the United Arab Emirates (UAE)-based real estate giant Emaar Properties and India’s MGF Developments, will showcase its Indian projects at a three-day event called ‘Indiascapes’ starting here Monday. The showcase in Dubai will give Indian expatriates in the UAE an opportunity to buy the joint venture’s properties in India, according to an EmaarMGF statement. There are around 1.5 million expatriate Indians in the UAE. Emaar remain committed towards making a difference to the Indian lifestyle with their master-planned integrated townships. “Significantly, Emaar Properties’ competency in developing iconic structures globally is now visible in the Indian real estate landscape through EmaarMGF’s projects. This provides UAE customers an opportunity to own developments that are benchmarked against the best in the world,” he added. EmaarMGF is building a series of integrated master-planned townships across a number of Indian cities like Hyderabad, Chennai, Gurgaon and Mohali. The joint venture is also building the athletes’ village for the 2010 Commonwealth Games in New Delhi.

Boom continues in smaller cities in India, China

World’s two fastest growing economies China and India will continue to witness boom in the real estate segments in smaller cities as both countries are expected to record strong growth in residential demand in the coming years, says a report. Further, investments volume in the two neighboring nations is projected to go up in the next few years. According to a report prepared by the research group of Germany’s Deutsche Bank, the long-term growth prospects for both countries “remain very good.” An important growth driver for the real estate market would be the increasing urban population in both countries. According to the report, another growth driver for both countries would be the rising population of working age. The working age population in India is projected to be on the upward curve in the coming years and would be above 65 per cent by 2050. Globalisation has helped the emerging economic giants to post double digit growth in recent years. Both countries have immensely benefited from increased trade and capital imports.

Parsvnath secures order worth Rs 125 cr

Real estate firm Parsvnath developers today said it has received a Rs 125-crore order for constructing a park in Bihar. The company has received a Letter of Acceptance from Buddha Smriti Udhyaan Development Co (BSUDCL) to develop a park at Patna in Bihar, Parsvanath said in a filing to the Bombay Stock Exchange. The project, scheduled to be completed in nine months, is being implemented jointly by the Government of Bihar and India PPP capacity Building Trust. For this, a special purpose firm BSUDCL has been rolled out to develop the park, Buddha Smriti Udhyaan. With this Parsvanath has embarked upon its first offering in the emerging markets of Bihar thereby strengthening their pan-India presence. Shares of Parsvnath closed at Rs 131.70, down 3.59 per cent on the BSE.

Friday, June 27, 2008

The trappings of a city

It’s not just fancy roads and buildings that make a city livable. There’s a lot more by way of amenities that add life to it. By focusing on infrastructure that enhances quality of living, like parks, play grounds and thoroughfares, a city makes the grade. A city is more about the people that live in it. And while planning a city, it’s the people that should be thought of first, then the infrastructure needs to be developed. Similarly, the relatively new areas of Gurgaon, New Mumbai, Pune and Bangalore may have witnessed a deluge of real estate investment over the last decade, but they have failed to create livable urban spaces that really work. Gurgaon, a flashy boom town that has emerged almost overnight with shopping malls, condominiums and swank office towers, despite it being touted as ‘planned’ development, is hardly people-friendly. This is because it neither has a meaningful municipal waste disposal system nor a proper public transport network. As a result, the city, still half-built, already suffers from serious traffic snarls, power shortages and water-supply constraints.

Real Estate to feel the Heat as Inflation Soars

The recent fate of real estate stocks on the bourses mirrored the first signs of trouble ahead for the industry. Fuel price hike and lower IIP (Index of Industrial Production) numbers were recent setbacks to the sector and now with a 11.05% growth in WPI (wholesale price index), inflation has emerged as a serious threat to the sector, which has been cooling off in recent times.Market experts predict further softening of prices. "Even though prices have corrected by 10-20% and even beyond in some regions, it has not yet touched the bottom. It is advisable to wait till at least the year-end to buy homes," says Jai Mavani, real estate practice head, KPMG.However, since many developers are holding onto prices and even operating as a cartel in some prime pockets like Mumbai, postponing purchase decisions may not really be a solution. Despite the fact that volumes have fallen sharply, established developers are clearly unwilling to drop prices. According to Kotak Institutional Equities' research report, home prices in Mumbai market continue to rise since last October.

Rs 8,000 Crore Premium Realty Projects Face Delay

India's largest real estate company DLF bought the 17.5 acre Mumbai Textile Mills land for Rs 702 crore from the National Textile Coporation (NTC) and announced a futuristic retail-cum-entertainment centre in Lower Parel. The project, which was earlier expected to be completed this year, is unlikely to be over before 2010.The same year, Shiv Sena leader Manohar Joshi's Kohinoor Group and Raj Thackeray's Matoshree Realtors bought the Kohinoor Mills land in Dadar from NTC for Rs 421 crore. The land was expected to be converted into a plush retail mall, but the property was put up for sale following disagreements between the retailers and the developers over rentals. So far, no one has bought the land. According to industry estimates, around Rs 8,000 crore of real estate projects covering over 40 million square feet are facing delays. Analysts said the construction cost for large commercial projects was Rs 2,000 per square foot, on average. In the process, developers are facing huge cost overruns. According to analysts, construction cost is growing 20 per cent every year and the developers are carrying a compounded interest burden of 30 to 40 per cent after three years. Real estate observers believe that cost of the projects has doubled in the last three or four years owing to the rise in input and construction costs, and increase in interest rates. Steel and cement prices, which are the main components in property projects apart from labour, have risen nearly 50 per cent since December 2005.The reasons for the delays are varied: tardy government approvals, stop-work notices from the municipality, construction delays, labour unavailability and so on. Though developers maintain that their projects are on schedule, in private they blame the delay in getting government approvals.

Thursday, June 26, 2008

Lesser deposits, higher rentals for real estate players at Delhi airport

The real estate developers wanting to develop the hospitality district in the airport land may now pay lesser security deposits and higher lease rentals according to the latest proposal from the GMR group that heads the consortium developing the Delhi airport. This development is a shift from an earlier proposal and the issue has essentially taken a full circle. The new plan of GMR brings down the deposit amount and raising lease rentals. It will be partly funded by equity infusion from the stakeholders.

CDC to invest in Indian property

CDC Group, the UK-based private equity fund-of-funds operator, is to invest $250m (£126m) in to three Indian infrastructure and real estate funds, joining a growing list of foreign groups targeting the sectors.The UK government-backed emerging markets specialist is teaming up with two Indian groups – Kotak and Infrastructure Development Finance – and UK-based Actis, to make its foray into the market.

Britannia likely to sell Bangalore HQ

Britannia Industries, a food company, is likely to sell its corporate headquarters located in Bangalore, revealed The Economic Times. It is understood that the firm has already asked real estate consultants to quietly look up for potential buyers. The Nusli Wadia-led company may shift office to Mumbai where the Wadia Group is based. Britannia's joint venture partner Groupe Danone is expected to exit from the partnership. It was on a condition placed by Danone that the Wadia Group had to locate Britannia headquarters in a city away from its home turf, Mumbai. When Danone will cease to be a partner, the company may have no compelling reason to continue with a head office in Bangalore. However, according to sources, if the property is disposed off, the company might take for lease new property in Bangalore or move to Mumbai. Denying any plans to sell the headquarters in Bangalore, Vinita Bali, managing director of Britannia, said: "We have not even thought about it, and there is no point in even asking me this question." The newspaper further added that in order to generate funds, the group may be selling properties. The money thus received is likely to be invested in purchasing Danone's stake in Britannia and also put into the group's aviation business, GoAir.

Wednesday, June 25, 2008

Services, real estate biggest FDI magnets

FDI is a means to supplement domestic investment for achieving higher level of economic development and providing opportunities for technological upgradation as well as access to global managerial skills and practices. With India allowing FDI up to 100% in many sectors, power, petroleum and natural gas, services, construction and real estate have emerged as the preferred destinations for foreign investors, who have pumped in $20.8 billion in these areas in the last four years. The real estate sector which was thrown open in 2004-05 saw FDI picking up slowly in the initial two years, but grew substantially in 2007-08 to $2.17 billion. The government has eased FDI norms for a host of sectors, but has kept areas such as retail, (except single brand retailing), atomic energy, lottery, gambling and betting, business of chit fund and trading in Transferable Development Rights (TDRs) out of the ambit of foreign investors.It had allowed 100% FDI in sectors such as titanium mining, maintenance, repair and overhauling facilities for aircraft.

Star, Era Group in talks for Multiplex Biz

Star TV and engineering and construction major Era Group are reportedly in talks to enter into the multiplex management business. Era will see the construction and management of multiplex properties while Star will lend its name, says a PTI report.Era Group reportedly has major plans of installing 120 screens by next three years. So far, it is running a few screens in Meerut and Agra in Uttar Pradesh. While the cinemas will be branded as Star, Era Group will invest and run them. Era is also planning to strike long-term deals with major real estate players which are developing malls and multiplexes to run all the screens coming up in their projects.

Moneylenders coming to rescue the builders in their hard times

They could be dismissed as a nondescript group of people chatting on the lawns of an exclusive club or strolling down Marine Drive. Their clothes are quiet, their gait without swagger. Indeed, it's hard to believe that these are the very men who have a vice-like grip over some of the biggest builders in the country. They are India's wealthiest moneylenders who, even as the banks tighten their belts, loosen their own purse-strings. With financial institutions and banks increasingly restricting loans to developers, these moneylenders primarily belonging to the Sindhi, Marwari and Kutchi communities have stepped in to play their part. These moneylenders are mainly active in three cities Mumbai, Bangalore and Chennai. The loans are given to builders for short periods, from three to six months. The amounts could range from a couple of crores to as much as Rs 100 crore. If the amount is substantial, about 10 to 15 of those in the group are believed to come together to fund the project. But many diamond merchants have burned their fingers because of the crash in the stock market. Then there are the politicians. It's widely believed that many builders are being backed by politicians, including ministers, from different political parties. One construction group has seen its fortunes steadily rise over the last five years because of its political connections.

Tuesday, June 24, 2008

Old Havelis, Palaces making way for Apartment Complexes

Regarded as the most ancient living city in the world, Varanasi evokes exotic and spiritual feelings. The fact that the city is a maze of narrow lanes and bylanes makes the real estate sector follow its own typical pattern. The traditional mindset of the people here has resulted in only the properties in established and old areas witnessing a surge in prices. Buyers are still reluctant to move to new areas. However, the influx of population in the city due to its thriving business and tourism activity is leading to real estate growth on the outskirts of the city in a well planned manner. The new growth areas are Shivpur, Sarnath, and Rohania. Though the flat culture is slowly catching up in the city it is preferred mostly by the service-class people, majority of which have shifted from other places. Old havelis and palaces which dot the city are making way for apartment complexes and realty majors have slowly started taking an interest in the city’s development.

Mega Realty Deals dot Delhi’s Golf Links

The real estate sector might have hit a rough patch of late, but that has not stopped India’s rich and mighty from striking housing deals in Delhi’s elite areas at fancy prices. Three low-profile but high-value transactions worth Rs 300 crore have been closed in Central Delhi’s posh Golf Links locality, where infrastructure major GMR, a prominent auto dealer, former prime minister IK Gujral’s son Naresh Gujral and a politician have each bought a house in the past two months. According to property consultancy firm Cushman & Wakefield, the average prevailing rates for Golf Links could be one of the highest in Delhi at Rs 7 lakh per sq yard, marginally lower than Chanakyapuri’s Rs 7.25 lakh per sq yard. Prices in both localities have shot up four-and-a-half times in the past three years and by over 50% in a year. Limited availability of properties in the area and rising demand from the rich-getting-richer clientele has resulted in such price appreciation. Besides the strategic location, this area has a certain snob value attached to it. Buying a house here means announcing to the world that one has arrived in life. The past few years have seen quite a few deals in these localities, one rivaling the other in terms of value.

Builders Pull out of Hotel Ventures as Profits Dry up

Real estate developers with presence in National Capital Region (NCR), Bangalore, Chennai, Pune, among others, are opting out of four and five-star hotel projects. As cash flows in the real estate sector are slowing. Realtors are reconsidering plans to enter the hospitality sector. Developers are looking at realising their money through any alternative means and are thus in the exit mode. The developers are facing cash crunch and have either put the property (unfinished buildings in some cases) on sale or have asked the hotel companies to find them partners who can invest in the venture. To be sure, players in the field believe that this slowdown could benefit the big players in the market and hoteliers will look to acquire land in areas where it was otherwise difficult for them to make purchases. Builders could be putting the land to commercial use as the land rates (FSI cost) are too high (more that 50 per cent of the cost of the project for a hotel), and the commercial market is bullish. Also, a particular micro market may see many hotel rooms coming up, as a result of which a non-hotelier developer may develop cold feet. Feasibility studies to that effect have a tendency to scare a developer as it is easy to predict supply and difficult to predict demand for hotel rooms.

Monday, June 23, 2008

Kolkata heating up

The real-estate market in Kolkata has been largely unaffected by the soaring inflation and the US economic crisis. While the sales and price figures in other metros and cities have shown signs of cooling down, the prices in Kolkata have increased by 7-10 per cent over the last four months. The city has managed to avoid a crisis because prices here had never reached ‘unrealistic’ proportions. Kolkata’s real-estate market is also relatively stabilized since the number of speculative investors here is much less compared with end-users.

Developers plan to build low-cost airports

The financial turbulence that airlines are experiencing these days due to soaring fuel cost is pushing airport developers to think on lines of building low cost airports. Such airports would mean lower charges for airlines, helping their survival and also no extra charges for passengers that would help reverse the trend of lower demand. This thinking comes shortly after airlines are bleeding heavily due to high global oil prices and delayed payments to airports by them have become common. Recovering costs of fancy airports through levy of user development fee (UDF) has also become a touchy issue in these times of high surcharges and taxes. Fancy airports can either be built with government support or levying very high charges on airlines and UDF on passengers. In the current scenario, this is increasingly becoming a difficult option for cities where traffic is going to be less than 10 to 20 million. So low cost but ultra efficient airports are the need of the day Creation of low-cost airports with economical charges has been a major demand of Indian LCCs as they offer relatively cheaper tickets while paying the same amount as airport charge as full service carriers.

Need for relaxing FDI, PE norms for small city builders

With land and construction material prices skyrocketing, bank finance hard to come by and bookings slowing down affecting the cash flow, the real-estate industry in Coimbatore wants the Centre to tweak the FDI and foreign Private Equity (PE) investment norms in real estate in small cities so that these fund sources are able to extend them a lifeline. The industry also emphasizes the need for classifying the real-estate sector as an industry so that it becomes eligible for bank finance at reasonable interest rates. Due to the opening up of the real-estate sector in India to FDI and PE investments; the sector has witnessed huge funds flow. This has benefited mostly large builders based in metros and big cities and most of the real-estate developers in small cities such as Coimbatore have not been able to access funds from these sources because of the stringent norms. So there is a need for relaxing these norms as the size specified for FDI investment is very large for a city of the potential of Coimbatore. The Government should also accord industry status to the real-estate sector that would make bank funds available at reasonable rates.

Friday, June 20, 2008

High Real Estate Prices hit Adidas India Plans

Expansion plans of footwear and apparel major Adidas India has been hit by high real estate prices ruling in the country. The company’s was planning to increase the number of retail stores from 325 at present to 450 by the end of 2008. It operates the stores through franchisee route. Talking about real estate prices, the prevailing rentals were not realistic. Since the rentals at the moment were more than 20 per cent per square feet. In some cases it was around 40 per cent per square feet. Adidas was not keen to spend that high an amount since the brand was not new to India. They have been in India for the last 13 years.

Prudential forms JV to Invest in Indian Real Estate

Prudential Real Estate Investors announced that it has launched a joint venture with Beekman Helix India Partners LLC (BHI) to invest in real estate in India. Through its new private equity real estate platform, the venture plans to embark on a strategy to create real estate funds for institutional clients. Prudential Real Estate Investors is the real estate investment management and advisory business of Prudential Financial Inc. The joint venture, operating as Pramerica BHI India and headquartered in Gurgaon near New Delhi, will invest in middle-income residential development projects and office parks on behalf of institutional investors around the world. The strategy may also include other sectors.

Foreign Architects Rush into India

The profession and practice of architecture in India has undergone a complete transformation in this decade. The last eight years have been a boom time, not seen since the heady days of Post Independence India. The booming economy and the burgeoning middle class has prompted developers to bring in foreign architects with foreign fees to design everything from airports to residential and office towers and bungalows and resorts. Foreign architects bring in the tried and tested processes and function precision to bring about a complete turnaround in the way projects are designed and built. They pair up with Indian firms who have the expertise on the ground to get things done and built. Foreign architects for the most part are bringing in foreign solutions and design principles which may not all work in India, but the public does not think a second before lapping it all up. We are literally bringing New York, Chicago, Tokyo or Shanghai to Bombay, Delhi, Calcutta, Madras and countless other towns and cities. Only time will tell if this is successful in the long term. India is not the only place in the world where this is happening. China is way ahead of us in transplanting urban fabric from the West into their cities.

Thursday, June 19, 2008

Ace Tennis Player joins hands with a Realty Player

Ace tennis player Leander Paes today joined hands with real estate developer Omaxe Ltd to design and manage fitness centers in latter’s five townships in North India. ‘Leander Sports’, the company promoted by Paes, today signed a memorandum of understanding to provide the concept and design of health clubs, spas, meditation centers, yoga cells, gyms, sports complexes in the upcoming five townships of the developer. According to the MoU, ‘Leander Sports’ would design and manage the health and sport centers in Omaxe’s integrated townships coming up at Ludhiana, Indore, Yamuna Nagar, Noida and Faridabad. It is not a revenue sharing tie-up, but ‘Leander Sports’ would only charge a consolidated fee for all the five projects, the ace tennis player added.“This partnership would help us in providing healthy living designs to our residents. Though we have tied up only for five projects, but we are looking forward to other projects also,” Omaxe Chairman and Managing Director Rohtas Goel said. Besides, ‘Leander Sports’ is also constructing two sports centers- one at Bangalore in 20 acres of land and the other at a 20-acre area in Pune, Paes said.

No More 'Jhuggis' and 'Jhopris'

Buoyed by the success of co-operative housing for the middle class, the government now wants to do the same for the urban poor. And if this works out, jhuggi-jhopris in Delhi could make way for neatly-planned, permanent shelters for the poor. The plan was originally mooted by the Delhi government to solve the problems of slum colonies but has now been taken up by the Urban Employment and Poverty Alleviation (UEPA) ministry. With the objective of making Delhi a 'slum-free city, the Delhi Cabinet has decided to invite applications in June for allotment of low-cost houses under the Jawaharlal Nehru National Renewal Mission (JNNURM) scheme. Chief Minister, Ms Sheila Dikshit, who presided over the Cabinet meeting, said, this decision is a major step to provide a respectable address to the residents of slum and 'jhuggi' clusters in the city. The residents with an annual family income of up to Rs 60, 000 would be eligible for the low-cost dwelling units which are being constructed under the JNNURM scheme. These houses would provide all basic amenities such as schools, parks, transport, drinking water, electricity and shops for daily needs.

Deepak Parekh proposes real estate regulator

HDFC chairman Mr. Deepak Parekh has advocated the need for a real estate regulator in an attempt to protect the interest of property buyers in the country. The real estate sector has been growing rapidly and is a sensitive sector given its strong inter-linkages to other industries in the Economy. Mr. Parekh feels that developers rarely offer any warranty for the flats and in case of disputes, consumers have only the consumer or civil courts as recourse - both of which may take ages before a case can even come for hearing. Delays in handing possession of the property to a purchaser have become the order of the day. Needless to say, the developer community is free from any liability in case of any delay. Parekh conveyed that the subprime crisis has also brought to light the fact that there is no substitute for cautious and prudent lending. The basic tenets of home financing are simple - lending must be done according to earning capacity, which is on a cash flow basis and not on asset values.

Wednesday, June 18, 2008

Leading Bahraini Islamic Bank to Invest in Indian Real Estate Sector

Khaleeji Commercial Bank (KHCB), one of Bahrain’s leading Islamic banks, has announced that it has raised $163.5 million for a real estate investment company focused on India. The fund - named Danat India Investment Company - will invest in an unnamed real estate development project near New Delhi, India’s capital. The development is targeted at the expanding middle class of India. India, currently one of the leading emerging markets is expected to be the world's third largest economy by 2050, ahead of Japan, the UK and Germany. The economy has posted an average annual growth rate of more than 7% in the decade since 1994, with 2007-2010 growth estimated to be maintained at over 8%. The demand for quality real estate in India is seeing unprecedented growth, adding to the existing gap between demand and supply across all segments of realty, providing tremendous opportunity for property development.

Banks turn choosy on realty loans

Sensing a correction in the real estate sector, commercial banks have become selective in lending to new residential and commercial real estate projects. Besides increasing the lending rates, some banks have asked the promoters to increase their share in project funding in an attempt to mitigate the associated risks. Banks have already turned selective in taking up new funding proposals. The Reserve Bank of India has already declared the real estate space as a sensitive sector under its prudential norms. The sector thereby attracts higher risk weightage (banks have to set aside higher amount of capital for real estate exposure) and the lending is closely monitored. Keeping with the rising cost of funds and the need for additional capital for risky assets, the banks have increased the lending rates for real estate projects. The real estate companies are now paying prime lending rates (PLR) for new projects. The growth in loans to commercial real estate remained high, notwithstanding some moderation, RBI said in its macro-economy report for 2007-08.

Zoom Developers gets contract to build budget hotels

Real estate firm Zoom Developers has bagged a contract from the Indian Railways to build four budget hotels.In a press statement, Zoom said the company has won the bid for IRCTC Ratna Budget Hotels at four places. The Indian Railway Catering and Tourism Corporation, a sister organisation of Indian Railway has today opened tender for budget hotels at four sites. The places are Chennai, Pondicherry, Manglore and Coimbatore. However, IRCTC sources said PTI that nothing has been decided yet. The tender committee is yet to submit its report and decision could be taken only after submission of the report.

Tuesday, June 17, 2008

HDFC takes stake in Acme's housing project

HDFC Property Fund international has picked up a nearly 50 per cent stake in Mumbai-based Acme Group's housing project at Thane in Mumbai. Though the fund has bought the stake in a special purpose vehicle (SPV) to develop an eco- township, the exact financial details is yet to be known. The township - Acme Ozone - will spread over 1.1 million sq.ft and will have 760 residential apartments along with a small commercial space based on the eco-living theme. Work on the township project is underway and expected to be completed within four years.

DDA to Come up with 6, 000 Flats in North and South Delhi

The Booming real estate prices and the mounting rentals in the city have left the middle-income families dumbstruck. The only option often left for them is the Delhi Development Authority (DDA) flats, which are available at a reasonable price. The Delhi Development Authority (DDA) is all set to launch its biggest housing schemes since 2004 in July 2008. According to the officials, about 6, 000 one and two bedroom flats will be on offer. Thought the final cost of the flats is yet to be decided, the senior officials of the civic agency said it would vary between Rs 12 lakh and Rs 22 lakh, depending on the locality and carpet area. These flats will be mainly located in north and southwest areas like Narela, Vasant Kunj, Dwarka, Rohini, Shalimar Bagh and Bakkarwala. The registration amount of the flats will be Rs 1.5 lakh and it would allot the flats through a draw of lots.

Rs 300 Crore Housing Project to be developed by Elpro Estates

Elpro International’s real estate arm Elpro Estates plans to invest around Rs 300 crore in developing a mall and a housing project in Pune. A part of the investment will be through internal accruals and a part through debt. The mall would be known as Elpro Mall. It would be of seven and half lakh sq ft and be operational by the first quarter of 2009. The mall will be developed on 1, 50,000 sq ft of land and will have more than 50 brands apart from a multiplex and a food court. The housing project of the company, 'Metropolitan' will be developed on an area of five lakh sq ft. In the phase I, there will be around 350 apartments. Later, they may come up with similar projects in the area. The projects have been planned keeping in mind that there is an IT park nearby and hence there would be ready buyers for the apartments.

Monday, June 16, 2008

Clinton Climate Initiative joins hands with Indian group to retrofit buildings

Marking the biggest and first of its kind tie-up in the private sector, Real Estate major K Raheja Corp is working with former US president Bill Clinton-led Clinton Climate Initiative (CCI) to retrofit their buildings across the country to cut greenhouse gases. Work has started in Mumbai and Hyderabad, and according to the company, 50 lakh square feet of built space (in over 20-odd buildings) will be retrofitted. For the process, smarter glass varieties (which let in light, not heat) and better suited air-conditioning systems are used. Sewage treatment is also done to conserve and recycle water. While some government buildings have been retrofitted for cutting carbon emissions, the concept is still picking up in the private sector.

MAN Industries to diversify into real estate sector

MAN Industries India, a line pipe manufacturer and part of UK's MAN Group, today announced its foray into real estate with a newly formed subsidiary MAN Infraprojects in Mumbai, where property prices have almost doubled in the last two years. It plans to invest 10 billion rupees over three years to develop seven real-estate projects in Mumbai, Navi Mumbai and Indore. The company expects realisation of 40 billion rupees from these projects which will have a total built-up space of 10 million square feet. In Phase I, MAN Infraprojects Limited plans to develop three projects two in Mumbai and one in Navi Mumbai with a total built-up area of over one million sq ft. In Mumbai, the company is planning two commercial projects in Bandra and Vile Parle. In Navi Mumbai, MAN Infraprojects Limited will develop a mixed-use township complete with a five-star hotel, a IT-cum-commercial centre besides a luxury residential block. The site is located opposite the D Y Patil stadium.

Peninsula widens Portfolio with IT Parks, Townships

Peninsula Land Ltd, the Ashok Piramal-backed real estate company, is diversifying into integrated townships and information technology parks in Pune, Nashik and Hyderabad. It also plans to enter Ahmedabad, Chennai, Mysore, Bangalore and Coimbatore by next year. Peninsula is developing five projects, which includes one residential and one township project in Nashik, and integrated townships and IT Parks in Pune and Hyderabad. The company is taking a very risky decision by putting up five huge projects during the same time, because looking at the present conditions it is unsure whether it will be able to sell the residential units. Secondly, these are IT Parks not special economic zones where IT companies would rarely tread as the tax benefit scheme will get over by March 2009 even before the project is ready.

Friday, June 13, 2008

Visakhapatnam - Upcoming Real Estate Destination

In Indian real estate today, the only constant is change. Hot destinations of the last year are not assuredly the best options this year, and the next year brings its unique set of emerging investment destinations with it. Forget about the survival of the fittest. When it comes to real estate, the thumb-rule is simple — survival beyond saturation. The idea is that once a tier-one city’s emergency light goes red (indicating overload), start spreading into nearby tier-two cities. While north India has already witnessed this phenomenon, it is now the south’s turn to spring up architectural delights in the shape of housing projects which promise an entire city within a city. Topping the list of development and for investment, say experts, are Visakhapatnam (Vizag), Kochi, Mysore and Coimbatore. Visakhapatnam, one of the fast-emerging tier III cities of India is expected to be one of the next growth drivers over the decade, according to Jones Lang LaSalle Meghraj (JLLM). The city is witnessing fast growth in the residential sector. Large residential projects are being developed in areas such as Madhurawada and Rishikonda. These include KSR-Jurong Sunny Isles comprising 54 villas and another integrated township project with villas and apartments in Yendana. On the retail front, there are no operational malls in the city currently, but there are six malls under various stages of construction expected to be operational by 2010.

Orbit Plans to Foray into Beachfront Projects

Orbit Corp is in talks with two international developers to form an alliance for a Special Purpose Vehicle (SPV) to develop beachfront projects. Orbit is currently looking to acquire land in Alibaug, Uran and Mandwa near Mumbai aggressively and is likely to invest up to Rs 2,000 crore in these projects over the next three years. The total investment is likely to be funded via a combination of private equity at the project level and contribution of the joint venture partner. The company is likely to develop villas, bungalows and luxury resorts under the beachfront development. Currently, Orbit Corp has 16 projects under development, out of which 13 are in the redevelopment segment, while three in the commercial segment. All the projects are in the premium segment and spread in the southern and south-central part of Mumbai.

MagicBricks.com awarded the 'Best Property Portal' 2 years in a row

Times Business Solutions Limited’s leading real estate portal, MagicBricks.com, has won the Real Estate Excellence (REE) Award for the “Best Property Portal” for the year 2008 for its outstanding contribution to the real estate sector. This is the second time that MagicBricks.com - India’s No.1 Property Site, has won this award. The REE Award not only recognizes the contribution of MagicBricks.com in developing the Real Estate sector in India, by bringing in an unparalleled level of interactivity and transparency with its innovative online solutions to the sector, but has also identified and honored MagicBricks.com as a team of professionals who have envisioned and created path-breaking products and services to serve the sector, creating benchmarks for Indian real estate. The REE Awards 2008 were also bestowed upon Parsvnath Developers for the Company of the Year, DLF for the Best IPO and Jaypee Greens for Overall Achievement & Project Award of the Year-2008. The REE Awards have been constituted to recognize developers, builders and the real estate related organisations for their outstanding achievements in developing infrastructure facilities and promoting state of art designs & architecture. The REE Awards 2008 honored and saluted entrepreneurs involved in building and developing the new India.

Wednesday, June 11, 2008

LIC Plans To Acquire Land Worth Rs 2, 000 Crore

Life Insurance Corporation of India (LIC), which is among the largest property owners in India, is planning to acquire land worth Rs 2,000 crore this year to develop commercial and residential complexes. This will be in addition to the Rs 1,100 crore it spent last year for purchasing lands across the country. The public sector insurance giant has identified Kolkata, Jaipur, Agra, Vishakhapatnam and Bangalore as possible cities where it may acquire land and develop it. The insurer is next only to Indian Railways in terms of property ownership in the country and, at present, it holds 1,708 properties in the country which are estimated to be worth around Rs 20,000 crore.

Saffron aims to make it big in Realty Funding

India-focused real estate private equity firm Saffron Group has chalked out a two-pronged strategy to become a leading player in the burgeoning market staying put for a minimum of five years in upcoming properties and buying out assets with assured rental income. There strategy is to be a leading player in the field. They believe that the industry is growing and it will yield better results for another 10-15 years. Saffron is planning to come out with more funds and invest in real estate and related areas like infrastructure, logistics, warehousing, hospitality and healthcare.

Trikona TC extends its partnership with German fund manager

Trikona Trinity Capital PLC , a fund created for investing in Indian real estate and infrastructure, and managed by Trikona Capital, extends its strategic partnership with SachsenFonds Holdings GmbH ("SF"), a leading German fund manager with €4.7 billion of assets under management, by signing a Memorandum of Understanding (MoU) with a transaction value worth approximately £80 million. Under the terms of the MoU, SF will acquire certain assets from Trikona TC and co-invest in new projects. As part of the $150 million deal, Sachsen will join Trikona as co-investors in a $40 million investment in Mumbai to refurbish four acres of middle-class housing and build high-end luxury homes as part of Trikona’s urban rejuvenation platform. Sachsen will contribute 55% of the investment cost.

Hiranandani Upscale Chennai

Hiranandani Upscale, true to its name and character, is a community that's a cut above. An icon of elegance, Hiranandani Upscale is for the discerning, who have seen life from close quarters and in all colours.Envisaged to change the life and standards of Chennai, Hiranandani Upscale is quality presented to you in its most pure and pristine manifestation that uplifts your senses.Located on the OMR - Old Mahabalipuram Road, Hiranandani Upscale Complex in Chennai offers plush Apartments with excellent amenities and efficient Facility Management. Hiranandani Chennai OMR Project has generous luxuriant greenery and brings life closer to nature. Hiranandani Constructions have always followed a very distinct way by offering the creations that exceed expectations.

Tuesday, June 10, 2008

Rs 350 Crore to be invested by Lohia Group

Amidst correction in the country's real estate scenario, diversified business house Lohia Group is planning to invest up to Rs 350 crore in developing three projects in the National Capital and Uttar Pradesh by 2011. The group's subsidiary - Lohia Developers Pvt Ltd plans to develop two townships in Lucknow and Moradabad, and a commercial complex in Delhi. The company has already bought a 10-acre commercial land in Delhi, which have about 1.5 million sq ft saleable area. Besides, the company has also acquired 100 acres of land in Lucknow and 50 acres in Moradabad to develop two integrated townships there. Funding of the projects would be a mix of internal accruals and debt.

Unitech in final round of talks with Lehman

Real estate major Unitech Ltd is in final stages of negotiation with Lehman for a $500-million PE investment in its two commercial projects in Mumbai. The two sides have signed a non-disclosure agreement. According to sources, the investment may come into two SPVs floated by Unitech for the projects in Santa Cruz, and Lehman could pick up stake in the SPVs. Unitech is planning to sharpen its focus in the Mumbai market over the new two years. Unitech already has a land bank of 350 acres in Mumbai and in next two years the financial hub is expected to contribute more revenue for the company than the National Capital Region.Both the Mumbai projects would have a combined developable office space of 2 million sq ft in the initial phase.

ERMS for real estate segment

Of all industries, real estate and property developing are the last that one could associate with computers and software. But, it seems the ‘brick and mortar’ business is increasingly in need of Enterprise Resources Planning solutions than others, given its rapid growth and the pressure developers undergo to design and deliver projects on time. Indeed, Enterprise Resource Management System (ERMS) is different from the traditional ERP system. ERP is an ideal solution when it comes to analyzing business and administrative processes – to learn the strength and weaknesses and work out ways of fixing the holes from things gone by. Whereas, ERMS helps real-time access to information that enables taking decisions that has a bearing on the present. Bangalore-based In4velocity Systems, India's leading Real Estate and Property Development software firm, announced that Mumbai-based Kanakia Spaces, a renowned name in the Real Estate industry, has successfully implemented its market leading ERMS application, In4Suite, across its various construction projects over the period of 6 months. The overall deal value is expected to be above US $ 100,000.

Monday, June 09, 2008

Emaar MGF launches Boulder Hills at Gachibouli in Hyderabad

Emaar MGF Land Ltd, one of India's leading real estate developer, announced the launch of ‘Boulder Hills Golf and Country Club', its signature master planned integrated world class Leisure and Residential Community in Hyderabad. The launch of this project with a capital outlay of US $ 1.4 billion (Rs 5,610 crores), is the first amongst a significant cache of EmaarMGF projects in South India. This launch marks the roll out of Emaar MGF‘s ambitious project plans spanning residential, commercial & retail, IT parks & SEZs, and hospitality sectors over the next few years at ten locations across South India. Boulder Hills is replete with an 18-hole championship golf course, luxury residences, large format retail facility, luxury and boutique hotels and an IT Park. The project will be constructed by Multiplex Construction India Pvt Ltd., an equal partnership joint venture construction company between Emaar MGF and Multiplex Ltd.

Alok Ind Resumes Talks to Sell 20% In Realty Arm To PEs

Alok Industries, the Rs 2,200-crore Mumbai-based textile firm, has resumed talks with private equity players to dilute about 20% equity it owns in its unlisted unit, Alok Infrastructure. A realty company, Alok Infrastructure has been looking at options to raise around Rs 600 crore for developing its large land bank, said sources. Alok Industries plans to sell part of its stake in its realty unit to 3-4 private equity firms by August end. The company’s chief financial officer Sunil Khandelwal is currently in the UK for negotiations on this issue. They are working out different options and strategies for there realty venture. Alok Industries had initiated talks with private equity firms in October last year, but had to discontinue after crashes in the stock markets led to a steep correction in valuations. According to analysts, Alok could be looking at increasing the valuation of the realty company through a private equity deal and subsequently list it. Alok Infrastructure plans to invest large amounts in real estate development and is also developing over one hundred eighty acres in its textile SEZ in Silvassa. It has already acquired two hundred twenty acres at Silvassa. The company has also acquired one hundred thirty acres at Panvel at the rate of twenty five lakh rupees per acre in a 50-50 joint venture. According to India Real Estate sector report Global Research, the Indian real estate market is expected to grow at a CAGR of 20 percent, driven by an 18-19 percent growth in residential real estate, 55-60 percent in retail real estate, and 20-22 percent in commercial real estate, over the next five years

Insurance cover for real estate deals coming soon

Risks associated with property transactions in India could reduce with at least three insurers submitting details of the property title insurance products they wish to launch to insurance regulator Insurance Regulatory Development Authority, or Irda. ICICI Lombard, National Insurance Co. Ltd, and HDFC Standard Life have filed details of their products with Irda, while others are working on their products. The new products are a sign of the growing maturity of the insurance and real estate businesses in the country. Several real estate firms have sold shares to the public in the past two years, becoming accountable to a larger group of shareholders for their dealings. For insurance firms, the products are a way to increase their portfolio of offerings and start tapping an area where there is likely to be no dearth of business. Property transactions in India are inherently risky because the government doesn’t guarantee ownership of land. It merely endorses property transactions and earns revenue from them. Experts say six out of every 10 court cases filed or waiting to be resolved in India relate to property. Not all buyers, however, will be able to benefit from the new products being launched.

Friday, June 06, 2008

Real estate: Ground realities

Indiabulls extends its Singapore issue, a sign that money is not easy to come by. Real estate stocks have been seeing a sell-off for some weeks now: on average, the bigger real estate stocks are off anywhere between 45-65 per cent off from their January highs. In the first place, most property stocks didn't deserve the kind of adulation and prices they were getting from investors. Now almost all of them are quoting way below their estimated net asset values (NAV). While current prices are now at much lower than the discounts of 10-15 per cent that analysts believe property stocks should trade at, they could yield further ground before they move up again. That's because with the economy slowing down demand for homes has been flagging and transaction volumes are down sharply as reflected in falling home loans. A recent report by Credit Suisse notes that despite developers' assertions that prices remain at all time highs, recent land auctions, discounts being offered by developers, cancellations and prices in the secondary market all point to an impending price correction. Moreover, property firms are not recovering their dues quickly enough. If they cannot mop up funds, whether through equity or debt, it could slow down execution. Before Indiabulls, DLF delayed its Singapore listing. Omaxe, say industry watchers, may not be able to execute projects on time.

Kolkata goes green

The city is poised to get what probably is its first green housing complex, to be developed by real estate major Siddha Group, with guidance from a state government agency. The project, Xanadu, will have 'energy efficient equipment', as suggested by the West Bengal Green Energy Development Corp, a government enterprise set up to promote environment-friendly projects. The project will be unique in a sense that it will install green energy equipment in the building following the guidelines of the Green Energy Corp. WBGEDCL will provide all technical assistance. With the completion of Xanadu, the housing sector could see a major shift towards energy conserving clean technology. It will be energy efficient, nature-friendly and using energy-saving passive and active solar devices. There will be facilities like rainwater harvesting, solar lighting and solar water heating system in the project.

India Property Road show in USA & UK

The much awaited event of the year begins tomorrow. After the tremendous success of last year’s Road Show of Indian Property, real estate consultant ‘Axiom Estates’ are organizing a similar event in USA & UK this year. Last year’s event saw more than 5000 footfalls, comprising NRI and HNI Investors alike. Keeping in view the consistent upsurge of Indian properties, investing in them is a pragmatic proposition. With Emaar MGF, Unitech, Parsvnathas developers and leading home finance providers coming under the same roof, Axiom estates are expecting a similar response from this year’s Road Shows.

Thursday, June 05, 2008

Indians Generating Demand for the UK Real Estate

Indians have emerged as the largest property buyers in the UK thereby contributing to economic development of the country, as per the data compiled by real estate firms and British Government research. Indian companies in UK has pushed corporate activity to a great extent and the Reserve Bank of India (RBI) move to allow investments abroad to the scale of $100,000 are some major factors listed by broking firms.In 2005-06, India emerged as the third largest investor after the US and Japan. The country moved ahead to 2nd position with the $7.6 billion takeover of Corus Steel by the Tatas in October 2006.Real estate projects from India increased to 76 per cent from mere 11 per cent thereby making India the UK’s third largest investor.Today, the UK houses more than 400 Indian companies. Of this, around 23 per cent have begun their UK operations in 2006. Officials estimated that India’s business operations in the UK are now worth nearly $35 billion.Parking money in London real estate is serving as a status statement for most successful Indian entrepreneurs. Rich Indians prefer to invest in exclusive central London areas since its financial climate is more stable than India.

Banned from buying houses, foreigners opt for long lease

With the Goa state government ‘banning foreigners from buying properties in the state’, local builders have fine tuned their strategies and are promoting five-year leases among tourists. There are no official figures to prove the trend, but lawyers and builders agree that this is definitely increasing, with several builders from the state organizing road shows and exhibitions in UK to attract customers to Goa. But something needs to be done as houses are being leased to foreigners at a huge price, making it difficult for Goans to invest in homes. Purchasing of property by foreigners has come to a standstill and it’s difficult to execute any deed of sale as the procedure is no longer simple, thus forcing them to seek options like lease, if they intend to stay for long periods in the state. Non-residents require permission from Reserve Bank of India to purchase a house or property in Goa. “But if the foreigner stays 182 days in India and shows the intention to reside for indefinite period, then they are considered a resident of India and they don’t require RBI permission to acquire property in India. The risks for the foreigner are high, as there is a possibility of being cheated and some do complain of fraud. In case a foreigner pays a high amount of security deposit then the safety of that deposit is at a high risk as the foreigner doesn’t have any legal sanction to occupy the house for more than five years.

Squeeze on Tech Firms could pull down IT Office Rentals in NCR

An anticipated oversupply in information technology or IT office market is, expected to push down rentals of these buildings in the National Capital Region (NCR), which includes Delhi and its environs. The US is still the largest market for Indian information technology companies contributing to as much as 45% to the total IT and back office services outsourcing business in India. The demand for IT office space may come under pressure due to a slowdown in outsourcing from US companies. This could lead to an oversupply in such space in Gurgaon and Noida in NCR. Interestingly, while IT office building rentals are expected to come down, non-IT office buildings in Delhi and its suburbs command higher rentals, because of a lack of supply. Non-IT office rentals have also been growing at a faster pace than IT office rentals. Over the past six years, rentals have been growing at 9.4% and 16.5% for IT and non-IT office space, respectively. This is largely on account of the significant increase in IT office space over the past several years. The sealing of illegal buildings in Delhi has also created a shortage in the non-IT office space in Delhi and its environs. Hence, developers who have gone ahead and built non-IT office space will benefit from the rising rentals and high occupancy rates in the non-IT office market.

Wednesday, June 04, 2008

EmaarMGF to invest $3 bn in South India

Real estate firm Emaar MGF Land, the Indian joint venture of Dubai's Emaar Properties EMAR.DU plans to spend $3 billion in developing properties in south India over the next few years. Besides a residential property in Hyderabad with an outlay of $1.4 billion, Emaar MGF will invest in commercial and retail properties and hotels spread over 31 million sq ft in 10 south Indian locations. Emaar MGF in February called off a $1.6 billion initial public offering because of tepid investor interest.

Real Estate Mutual funds REMFs: Fresh Avenue for retail players

The Sebi recent move to allow mutual fund firms to play in realty space has opened up a new avenue for individual investors.It was a month ago that Sebi had approved the inclusion of real estate and issued a set of guidelines. Prior to that, only high net worth individuals were allowed to invest in realty directly. Now with realty brought under the MF guidelines, it will be much more transparent and regulated. It will encourage middle category investors to participate in the realty growth story with minimum investment. The timing is quite opportune as the real estate sector is currently experiencing strong winds from sub-prime bruised western markets, general fund crunch and a lull in the Indian IPO market. Allowing retail participation in real estate mutual funds (REMFs) will enhance liquidity and create a healthy secondary market for realty assets, observe industry analysts. The success of REMFs to a great extent would depend on how well the sponsors and fund managers voluntarily embrace the guidelines required for a successful introduction and sustenance of this kind of investment product.

Stars ride realty 'brand wagon'

Bollywood celebrities don't just peddle dreams but also dream homes. Real estate developers are now banking on the star power of the likes of Shah Rukh Khan, Amitabh Bachchan and Aishwarya Rai to endorse their projects. Deepika Padukone is the latest to join these marquee names. Aspire Real Estate, a Dubai-based developer, has signed up the actress as its brand ambassador. 'We are targeting India, and Deepika will add to our brand equity,' said an Aspire spokesperson. The trend of celebrities - from tinsel town and outside - endorsing real estate projects started around two years ago. So while big banner draws such as Shah Rukh, Aishwarya, Bachchan or even sarod maestro Amjad Ali Khan and his sons represent the likes of DLF, Sahara and Omaxe, a host of smaller developers too have started signing up celebrities to cut across the clutter. There are many who aver that stars are being signed up more in an attempt to build brands than to propel sales. A project sells on its own strength, so basically celebrities are adding to the developer's brand equity.

Tuesday, June 03, 2008

Top realty players set to enter warehousing

It’s a road less travelled but real estate developers are revving up. After building luxury homes and corporate offices, top-of-the-line property developers such as Akruti City Ltd, Emaar MGF Land Ltd, K Raheja Corp., and Nitesh Estates are planning to build warehouses as organized retail booms and traditional realty market slows. With land prices in Indian cities having shot up many times, real estate firms are using their land banks that cannot be currently utilized for residential and commercial development to develop storage spaces. Though analysts said that returns in warehousing may not be immediate, they could be 18-20% on investment if the rentals are around Rs15 per sq. ft, say property consultants. Developing warehouses needs a bit more work than just building four walls and roof, which was typically how old warehouses were built in the country. The business is a lot like developing a property but to certain technological specifications. In fact, higher and better the quality of the specifications, higher would be the rentals. Developers admit that joint ventures and strategic partnerships with global warehousing companies are the best way to go about this new business. With international companies coming to India, warehousing is set to change from old-fashioned storage sheds to planned hubs that are designed to serve as inventory management and storage spaces for retail chains.

37,000 hotel rooms to be added in the next three years in India

According to my estimate, around 37,000 hotel rooms will be added in the next three years in India. First and foremost, Best Western will establish 100 hotels and 10,000 rooms under its umbrella in India. Berggruen Hotels has already announced $100 million investment to set up 38 hotels in India. Hilton is going to invest $143 million to set up 70 hotels in association with DLF. These are just some of the headlines that have hit the newspapers in the recent past. There are dozens of other investors, existing and new, who have announced plans of plunging into India's booming hospitality industry. In fact, there's so much money coming in-at least on paper-that investors would be mad to think that there's room enough for all. The economy's growth rate, at 9.4 per cent, eventually had to have a cascading effect on investments in the hospitality sector and it's not just the foreign players but also the Indian hospitality companies who are getting into high gear

Dubai-Based Real Estate Major Looks to India

Dubai-based real estate major Majid Al Futtaim (MAF) is likely to enter India for which it is in the process of identifying a local partner. MAF is looking to tie up with a local player to build shopping malls, residential properties and other commercial spaces. The company intends to set up operations in India in next one or two years. A team of senior company officials visited India in the month of March to evaluate various options and held talks with companies here. They will visit India again in June to organize roadshows in major cities, including Bangalore, Delhi, Mumbai and also Goa.MAF also operates hypermarkets, in joint venture with the world`s second largest retailer Carrefour, in the Middle East, North Africa, Iran, Pakistan and other markets.