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News & Views on Indian Real Estate

Thursday, July 31, 2008

Heath Check-Ups for Buildings


With many buildings facing problems of ageing, there are housing societies and single property owners like clubs and hotels who have started hiring structural architects and consultant on full-time retainership basis. "The trend was earlier restricted to corporate houses and companies. Now, even housing societies and single property owners are hiring structural architects, either at a charge or on case-to-case basis," structural consultant and conservation architect, Mr. Chetan Raikar said. The retainee structural architects do work from periodical inspections, suggesting repairs, and reviewing the repair designs and plans. Structural architects are like the family doctors, who provide solutions for a better position and consistent evaluation.

Indiabulls Power Services to set up project in MP

Indiabulls Power Services, a subsidiary of Indiabulls Real Estate will set up a 2640 MW power project in Madhya Pradesh. However, the financial details were not disclosed. In a filing to the Bombay Stock Exchange, Indiabulls Real Estate said the subsidiary has entered into a Memorandum of Understanding (MoU) with the Madhya Pradesh Government. The power project would be set up in two stages of 1,320 MW each. According to the MoU, the government would facilitate and extend "all reasonable help and assistance to IPSL for setting up the project."
Shares of Indiabulls Real Estate closed at rs 299.65, up 13.48 per cent on the BSE.

RBI move adds to real estate sector's woes


With RBI announcing the hike in repo rate by 0.50 per cent and the CRR by 0.25 per cent, the real estate sector is likely to receive increased burden in terms of losses and will further result in a slowdown for the sector.Commenting on the same Mr Sunil Malhotra, Vice President-Finance, Omaxe Ltd mentioned, The hike in repo and CRR rate will impact negatively on real estate sector. Though we understand the current crisis and RBI's burden, but this hike will further dampen the spirit of the sector.
He further added, the real estate sector across the board is witnessing a slowdown because of paucity of funds among investors. The hike would mean flow of money to the sector would be tighter than before. The developers will now have to look towards other sources of funds which could be on higher rates thus impacting the cost benefit ratio of each company.However at Omaxe we may not feel slowdown in the company's investment plans and they stay as announced earlier.

Wednesday, July 30, 2008

Competition Motivates Developers to come up with more Luxury Projects


Competition is growing in the Indian real estate market and to grow up in the ladder, developers are building skyscrapers and partnering with worldwide spas and engineering companies. Shree Ram Urban Infrastructure (SRUI) is planning to partner with worldwide spa companies like Thailand-based Banyan Tree and Madrid of Hong Kong in order to set up a 10, 000 sq ft luxurious spa in its Palais Royale 50-storeyed skyscraper complex in Worli (Mumbai), on the lines of One Brand Square, a super luxurious residential skyscraper. Competitor, Lodha Group's new project, Lodha Bellisimo's (at Mahalaxmi) A and B wing will be ready by 2009-end, and C wing by 2011, where-in the elevator (with finger print access) opens directly into one’s residence. Along with that, there is an exclusive private elevator that connects the two levels of one's duplex home. The company has partnered with Kapadia Associate, Architects, Sitetectonix, Singapore for Landscape and Johnson Controls Inc (JCI), USA for facility management.

Andhra Pradesh Government looking for an International Partner


The Andhra Pradesh Government is looking for an international partner to design and develop an 800 acre integrated township at Kadapa district in the state. The integrated tourism and township project will be developed by the Andhra Pradesh Tourism Development Corporation (APTDC) under the public private partnership (PPP) mode. The company will be expected to design, finance and construct the integrated township. Besides this, the other responsibilities of the partner would be to operate, manage and maintain the proposed project, the APTDC said. The proposed township will be developed around Gandikota, on the banks of Penna river, situated amidst Gandikota Fort and would be within 350 km of important south Indian cities such as Hyderabad, Chennai and Bengaluru.

IFCI, Emaar MGF in Dispute


IFCI has taken real estate major, Emaar MGF to court, alleging non-refund of Rs 50 crore invested in a pre-IPO placement transaction with the real estate company. Earlier this year, Emaar MGF had approached the capital markets with an Initial Public Offer (IPO) of about Rs 6, 500 crore but had to withdraw it because of adverse market conditions. Sources in IFCI claimed that it had taken recourse to legal action as Emaar MGF was not refunding the money, but instead had offered shares at a price much lower than the price band. This was not acceptable to IFCI, which sought refund of the entire money with interest. An Emaar MGF spokes person said, "There is a minor issue with IFCI pertaining to the interest amount which is contractually and legally not permissible. We are committed to resolve this issue of interest amounting to a meagre sum of Rs 1.5 crore (approximately), and are in discussions with IFCI."

Dubai Realty Market still lacks Transparency


Dubai’s real estate sector still lacks transparency despite efforts to clean up its image, property and investment management company Jones Lang LaSalle said yesterday. Dubai’s real estate market now ranks as a tier three, or semitransparent market, up from a tier four, or low-transparent market in 2006. Dubai still has a long way to go before it can catch up with other global real estate markets, but it’s improving more quickly than BRIC (Brazil, Russia, India, and China) economies. Tier one real estate markets, which include cities such as New York and London, are classed as highly transparent, while tier four, or semi-opaque markets, include Middle Eastern countries such as Saudi Arabia, Oman, Kuwait, Qatar and other UAE emirates such as Ras Al Khaimah and Fujairah. Syria, Sudan and Algeria rank as tier five, or opaque markets. Dubai is at the center of the Gulf region’s construction boom triggered by the introduction of foreign ownership rights in 2002. In recent years, Dubai has tried to tighten up its real-estate regulations in a bid to attract more foreign investors from places such as the UK, Russia and India. Jones Lang says improved transparency has led to a 12-fold increase in sales activity in Dubai since the freehold property law was introduced. The emirate now has the most transparent property market in the Middle East and North Africa region, and the world’s most improved between 2006 and 2008, the property firm said. The value of real estate transactions in Dubai has risen from 38.7bn dirhams ($10.6bn) in 2002 to 462bn dirhams in 2007, according to the Dubai Lands Department. DLD estimates that the value of transactions will rise to 717bn dirhams in 2008. This isn’t just a flash in the pan. Dubai has been steadily improving. We are confident that by 2010 Dubai will be in the tier two of countries.

Tuesday, July 29, 2008

Realty Slump Spells Boom Time for Foreign Investors

Country’s real estate sector might be witnessing ebbs but the downturn is only making things attractive for foreign investors. The slowdown, in fact, has set in more realistic valuations and growth-oriented investment opportunities for biggies to close in on lucrative deals. The US slowdown and the fact that China is tightening its FDI policy is also aiding a remarkable shift in investment. Experts reckon that cities like Mumbai, Bangalore and the NCR region are hot investment destinations owing to their strategic importance. But Industry experts do feel that most investors have been cashing in on the domestic market over the last six months. Shobhit Agarwal, MD, Capital Markets of global real estate consultancy Jones Lang LaSalle Meghraj (JLLM) feels that most foreign finance institutions and funds sponsored by Wall Street banks are eyeing the Indian market at this time. Besides the slowdown, the US recession has made money move out into more suitable markets like India, while property valuations are amenable for investment at reasonable entry costs. In fact, government figures on the sectors attracting the highest FDI equity inflows further validate this claim. Till now, most of these investors were standing in the fence. Naturally so, as the earlier valuations were very high in terms of viability of projects…however, now they are much more feasible. There are some who view the slump in real estate as a necessary correction. Kanwar Deep Singh, Chairman, Alchemist Group sums up the trend: “All private equity firms that have invested in India in the last five years have made money at the rate of 30% per annum.

Want A Beautiful House? Get Married


If you are single and looking for a house, get married. As after the marriage, the housing finance company will consider the total income of the couple and you will end up getting a bigger loan than that available individually. Given this, you can buy a sea-facing flat in Mumbai. But if you are looking for something like this, take a loan for a lesser term. Usually, individuals take tend to take up loan for tenure of 20 years. And married couples (if both are earning) can take a loan of a lesser term for around 15 years, having a greater equated monthly installment (EMI). Also, under the joint loan scheme, both will be allowed tax deductions for the EMI paid to repay the loan.

South Delhi remains hot amidst the slowdown in realty


Growth of real estate in Delhi-NCR has not taken the sheen off the original best-seller, South Delhi. Despite a slowdown in the real estate market, prices in Defence Colony and Golf Links have only increased as their capital values have increased 15-20% over the last six months. According to a prominent South Delhi developer, people putting their bungalows up for redevelopment have also increased manifold and he expects rates to go up even further in coming months. While the chart of South Delhi is going upwards, South Mumbai seems to have stopped in its tracks. After a 300% growth in the last three to four years, the last six months have seen capital values in South Mumbai remain flat, said Cushman & Wakefield Director (residential), Ms Aditi Vijaykar. According to her, the value of transactions might have been higher in the last six months but the number has come down considerably.

Beware: You Might Get Duped


The trend of reconstructing old buildings and turning them into tall towers is slowly catching up in Thane, Mumbai. Quite often, people are cheated by developers during this process due to their ignorance. Mr. Srinivas Ghaisas, a legal advisor from Thane, recently held a discussion with those attending the Aatre Katta session in Thane, where he recommended the following steps to avoid getting duped:
•When you decide to reconstruct the building, call an architect to survey the place and estimate the floors that can be increased and other technical details
•Go for tendering process while selecting a builder
•Shortlist the tender and inquire into information given by the builder in the tenders, most of the work mentioned by them in these tenders did not exist
He also added that, “Take a written offer from the builder and then decide your terms in the society meeting. If the builder is building an extra six floors, it is your right to enjoy some profit earned by the builder. Make your own development agreement and shortlist the demands. Decide which demands are negotiable and which demands are non-negotiable and which could be negotiated. Make a final agreement based on the offer given by the builder and the final demands put forth by you. When the builder knows that he is dealing with knowledge able people he will agree to most of the demands put forth by you."

Monday, July 28, 2008

Real Estate in India is expected to Show Further Decline


The present time is not ideal for the realty market. The decelerated pace has affected the sector. The leading banks have increased the interest rates of home loans and the inflation level is also rising. Therefore, putting together, the probable property buyers are feeling dejected. But perhaps there may be a silver lining. The prospective buyers are delaying their home-buying decision to buy properties because of a widespread conjecture of probable price reduction in times to come. How long one should wait and watch is however not known. Anuj Puri, the chairman and country head of the operations of the international real estate consultancy Jones Lang LaSalle Meghraj (JLLM) in India, says that the correction will take 4 to 6 months depending on the local trend of the market and the holding power of the developers operating in that location. JLLM also makes a forecast of 5 to 15% probable price reduction in different hyped micro markets of Pune, Bangalore, Gurgaon, Noida, and other such locations. The real estate India appears to be going through a rocky period. The real estate markets of South Mumbai, several other places in Mumbai suburbs, and some locations in New Delhi may experience a price reduction of even up to 10%. These areas already have seen unreasonable price trends. As per Mr. Puri, the problems for the developers to finish the existing projects as well as initiate new projects will escalate which will result in reduced incoming supply. This will also increase the consumption time needed for the existing supplies. The prospective buyer of India property will reschedule the decision of purchasing property because of his or her limited disposable income. Sonepat and Ghaziabad property market however has been quite stable and has attracted a lot of investors.

Spice launches real estate service on SMS

Spice Telecom, the cellular service provider of Punjab launched Spice Real Estate LIVE on SMS service which makes commercial & household property related information from all over India readily available to Spice customers. This service offers Spice prepaid & postpaid subscribers the convenience of accessing real estate information & a wide range of real estate related services on Spice mobile, via a simple SMS. Mukul Khanna, VP– marketing, Spice Telecom said, “Spice believes in launching cutting edge mobile applications. It has tied up with hotpropertyindia.com to provide easy access to real estate information from across India.”

Milestone`s Rs 600 cr PE Fund on anvil

Milestone Capital Advisors, the real estate venture capital fund promoted by Ved Prakash Arya, is planning to launch a private equity fund with a corpus close to Rs 600 crore. The announcement will be made in a few weeks. The PE fund, the first from Milestone’s stable, will focus on sectors such as education and infrastructure. “Right now, I am bullish on these two sectors as there is lot of scope for companies to expand and reach a mass base,” said Ved Prakash Arya, managing director, Milestone Capital Advisors. Its fourth real estate fund — Milestone Domestic Fund Part-II — has raised Rs 430 crore and will close shortly. The fund house is proposing to raise Rs 500 crore from this fund. Despite the rough market weather, the fund house’s track record and investment strategy have helped in getting investor commitments, Arya said. Realty funds have been finding it difficult to raise funds from high networth individuals (HNIs) and institutions owing to a credit crisis in the US, the impact of which has been felt in India as well. Rising interest rates and curbs on external commercial borrowings have added to the woes of real estate companies as well as funds. A correction in the real estate sector has further soured the mood of investors like PE funds towards this sector. The company currently manages four real estate funds worth Rs 2400 crore.

Dubai no more just a shopping destination


World-class infrastructure, coupled with safe living and a facilitated business environment, makes Dubai an ideal place to live and work. Dubai is ranked first in global population and employment growth [National Statistics Office] making the demand for Dubai real estate even more viable. The fact is that Dubai has witnessed 13% growth year-on-year since 2000, which makes for a higher growth rate than both India and China, presently the two most powerful developing countries in the world. Dubai has been growing at a swelling speed. It's no more just a shopping destination. It is emerging as an international destination for property investors. The open nature of the society in Dubai makes it safe for people who want to retire, relocate or simply looking for a secure return on their money. As a good long-term investment, investors are increasingly tending to view housing and real estate in Dubai especially from Asia with a particular focus from India. Real estate in Dubai is expanding at a phenomenal rate in the last five years and continues to do so. Apart from this, the increase in population, flourishing tourism and readily available mortgage facilities from banks and financial institutions gave rise to an extraordinary real estate boom in Dubai. Real estate projects of over $360 billion are currently under development in the UAE. These projects include some of the world's most spectacular and awe-inspiring architectural wonders including the world's tallest building, largest mall, biggest theme park and indoor ski resort, among others. There is a large majority of Indians in the UAE. Due to the close proximity between the two countries there are large numbers of Indians who have bought properties in Dubai. It is extremely easy for Indians to own a property in the UAE. There is no restriction in the kind of properties one can buy - apartment, land or in terms of maximum or minimum size of the property one can hold. One can also sell the property at any time and repatriate the proceeds.

PE fund picks 40% in Amrapali SPV

Private equity fund SUN-Apollo Ventures has invested Rs 300 crore for 35-40% equity in an SPV of Noida-based realty firm Amrapali group. SUN-Apollo is a joint venture between Delhi-based Khemka family’s SUN group and US-based private equity fund Apollo Real Estate Advisors. Apollo’s development and investment portfolio is spread across US, UK, Russia and other European countries, besides India. SUN Group, which has interests in oil & gas, mining, real estate, infrastructure, food & beverage and technology, has been active in India, Russia and other emerging markets. The SPV will develop a 200-acre township in Jaipur and a 15-acre high-end housing project in Noida. Both projects are likely to be completed in two-and-a-half years. The Jaipur Township will have housing, retail, commercial and IT space. Amrapali group, which has developed six urban residential colonies in the national capital region, is at present executing real estate projects worth Rs 8,000 crore in several cities. The SUN-Apollo fund infusion is the latest in the series of PE funding in the Indian real estate despite a slowdown. Many PE funds had raised funds when the going was good for the realty sector as well as the financial markets. SUN-Apollo had closed a $630-million fund last year. Therefore, the PE infusions in Indian realty are mostly the deployment of funds raised earlier. But now with credit crisis gripping the globe, fund raising has considerably slowed. Meanwhile, demand has slowed down and bank credit is largely unavailable to realty firms, forcing them to seek cash from PE players at a not so favorable term. Real estate players are said to be settling for a project valuation of 30-40% less than what they could have got a year ago. Cash crunch has forced several real estate players to focus on executing existing projects, rather than expand into new areas. Some, however, are still exploring new themes. Amrapali group is foraying into hospitality with a 230-room hotel in Greater Noida.

Friday, July 25, 2008

Builders and Brokers join hands to form a 'Real Club'

Realtors like Akruti, Kalpatru, K. Raheja, and Nirmal Lifestyle have joined hands with about 200 brokers to form 'The Real Club'. According to Mr. Sandeep Sadh, realty consultant and founder-coordinator of the club said, "People associated with this industry are not looked upon favourably. Our attempt is to bring professionalism in this industry and offer good services." But housing activists have dubbed this move as a form of cartel to resist lowering realty rates. "Their aim is to form a pressure group so that realty rates are not lowered,"said an activist. However, Mr. Sandeep Sadh remarked that it is 'purely a business network'.

Developers now concentrate more on construction than buying land


These days, all is not well in the real estate market as property sales have gone down severely. The implications of the slowdown have resulted in developers facing a shortage of capital and plans to buy more land or come up with new projects have been put on hold until some recovery is shown. According to Mr. Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj,"It has its advantages. The builder has paid the acquisition cost and the debt has been incurred. With soaring inflation and increasing cost of steel and cement, the cost of construction is bound to increase. If the developer concentrates on the delivery of the project on time, cost overruns will be in check and he will stand to earn sooner – as the product hits the market." However, Mr. Niranjan Hiranadani, Managing Director, Hiranandani Group, disagrees with the notion that the liquidity crunch and the resultant slowing down of acquisition of land will bring down property prices. "If it continues, lesser housing stock will be constructed, which will result in property prices not coming down," he added.

Bahrain’s TAIB Bank shells out Rs 216 cr for 26% in Anant Raj

In the midst of a general slow down in the Indian real estate market, TAIB Bank, a leading private bank based in Bahrain, has picked up a 26% stake in Anant Raj Projects for Rs 216 crore. The deal, one of the first Shari’ah-compliant transactions in the Indian real estate industry, puts the valuation of the subsidiary of New Delhi-based Anant Raj Industries (ARIL) at Rs 831 crore. TAIB Bank has routed the investment through its real estate investment arm Acacia Real Estate. Anand Raj Projects plans to develop of 600,000 sqft of retail space which is expected to be operational by first half of 2009. The proceeds of the transaction will be invested in this project. DTZ India, the Indian subsidiary of DTZ Holdings, and International Property Consultant were the advisors to the transaction. Confirming the development, ARIL executive director Amar Sarin said: “Though the real estate market is passing through a tough phase, the investors are still keen to invest in bankable projects. Our deal with Acacia reinforces the fact that in real estate and, especially, in retail sector, location still remains the fundamental value generator.” India’s real estate market is experiencing a slow down. Developers are facing a cash crunch due to the slow down in sales as well as tight liquidity conditions. This has perhaps forced them to look at raising funds from PE investors. “This deal proves that despite prevailing market condition, investors are ready to pay a premium for participating in projects promoted by reputed developers with established track record, adequate experience and expertise in creating quality product,” Rajeev Bairathi, associate director, investment advisory, DTZ said.

Municipal Authorities in Mumbai to keep a check on 30-Year-Old Buildings


If you are living in a building which is more than 30 years old, municipal authorities will help you find out how safe the structure is. The corporation or council will suggest repairs and if one does not follow instructions, they might impose a heavy fine. The new provisions will make the first inspection for structural fitness mandatory after 30 years of existence of a building. All those owners and occupants of buildings deemed dangerous will be legally required to carry out repairs within six months, failing which the municipal corporation or council will carry out the repairs and recover the expenditure from the owners or occupants. Besides this, a fine ranging from Rs 10, 000 to Rs 25, 000 or an amount equal to the annual property tax (whichever is higher) will be imposed.

Developers rooting for NRIs seeking to come back home

Higher rate of returns in real estate investments in India, projects that comply with international standards, greater affordability, apart from emotional reasons like ‘owning a piece of homeland’ were driving the NRI segment growth in the real estate sector in the India. Today with more and more Indians looking at returning home and relocating themselves given better employment opportunities in India, NRIs are now looking at investing in the real estate in the country with a view to make India their future homes. Those who were making the transition from overseas to India, want to ensure that the transition is smooth, especially for their children, many of whom India would be a new living experience. A lifestyle match is what these people are looking for when investing in property here. While some preferred contemporary designs, others were searching for homes that were nostalgic and brought back memories of childhood or times spent in courtyard of a village, where just-rolled out papads lay toasting in the sun, or those ethnic porches where the family sat together enjoying the little ones tumble and roll at play.

Thursday, July 24, 2008

Yatra Capital to invest in Calcutta hotel project



Yatra Capital, a Jersey-based private equity firm, will invest 4.4 million euros in an upcoming Taj hotel in Calcutta. Yatra Capital will acquire a 40 per cent stake in Jalan Intercontinental Hotels Private Limited, the company which is building the 200-room property. The hotel will be managed by Indian Hotels Limited under the Taj Gateway brand. Built over a 1.9-acre plot, the hotel will be located at the junction of the Rashbehari Connector and EM Bypass. The hotel will cater to the needs of IT and ITeS companies located in Sector V of Salt Lake, Rajarhat and New Town.“The investment reiterates Yatra’s confidence in Calcutta as a business destination. I am happy to note that a long-term agreement has been signed with Taj Hotels for operating the hotel,” said Nigel Broomfield, chairman of Yatra Capital Limited. This is Yatra’s third investment in the city after it invested around 20 million euros in Riverbank Holdings and another 16.75 million euros in a joint venture with Forum Park for an IT special economic zone.Aditya Jalan, managing director of Jalan Intercontinental Hotels Private Limited, said, “We are delighted to partner Yatra Capital in this milestone development. We are sure the project will benefit enormously from the international experience that Yatra brings through its board of directors and Saffron, its adviser for investment in India.”At present, there are around 1,500 rooms available in the premium segment in Calcutta. Occupancy levels have increased at an average rate of 15-18 per cent over the last few years. The company has also signed an agreement with Indian Hotels for long-term management and technical assistance.

Shobhana Subramanian: Indian builders need Chinese rules

It's now quite evident that real estate companies are in for some difficult times. CRISIL not only foresees a delay in many planned and ongoing projects, it believes several players are over-leveraged and that the combination of sluggish demand and rising costs will lead to a shakeout. In particular, residential complexes, funded largely by customer advances, have been severely hit by the slowdown in bookings, which means it will be a while before the projects are completed. So it's going to be a long and painful wait for buyers who have paid up. Much of this pain could perhaps have been avoided if the government kept an eye on builders and subjected them to more scrutiny. Indian laws, it would appear, are far too lenient. In China, for instance, developers can pre-sell a residential property only when one-third or two-thirds of the construction is complete, depending on which province they're in. It's a far easier world out here where builders are free to pre-sell property even before they've started digging. Those who want to own a home of their own, and who doesn't, often have little choice but to play along. Buyers also have very little idea about how their hard-earned money is being utilized by the developer. In China, we're told, mortgage payments have to be utilized for a specific project. Maybe that's the way it should be done here too; builders would then not be able to divert customer advances for other purposes. Conditions in the real estate space in China today are pretty similar to those in India. Property markets there too have weakened and buyers are biding their time. A big difference, however, is that property prices in China are still considered affordable whereas back home even a modest home remains out of reach. That's the main reason why there have been so few transactions. It's time we changed some of the rules, home buyers deserve better.

International Real Estate transactions dip 46%


Credit crunch and economic uncertainty have taken their toll on the global property market, with transaction volumes falling by 46 per cent in the first quarter, according to a property report. Property sales figures for April and preliminary results for May show sales in Asia have started to weaken and drop in sales in the United States and Europe have become more severe. The United Kingdom has led price declines with the United States following behind. Since September, the initial yield on acquisitions of commercial property has increased by more than 25 basis points in the Americas and by almost 40 basis points in Europe. Cap rates in Asia have continued to fall, reflecting both the growing wave of capital and expected upside for its emerging markets. Acquisition of land and development rights in Asia has totaled almost $29bn so far this year, making it the most popular target for investors. Office properties in Europe are a distant second with just under $20bn of transactions, followed by offices in the Americas and Asia with each recording between $15bn and $16bn of transactions through April. Developable land in Asia posted not only the greatest growth in transaction activity but also the largest gains in pricing in the first quarter. However, all other property types in Asia except apartments recorded gains in both volume and prices. Prices fell lower for all property types in Europe, but several did manage gains in volume. Conversely, no property types posted higher sales volume in the Americas although average prices in the industrial, retail and hotel sectors did increase modestly. Sellers in the United States in particular are opting not to sell at discounted prices, causing volume to plunge while prices for the few transactions that are successfully completed appear rather resilient. However, land prices in the US are falling quickly and have experienced the greatest decline in value so far this year.

Wednesday, July 23, 2008

Sobha plans 3 projects in Mysore


Sobha Developers, a Bangalore-based real estate developer, is foraying into Mysore realty market with three projects this financial year. The company has lined up a villa project on 14.5 acres at Jattihundi village and 500,000 square feet each residential and commercial project on seven acre plot in Belvatha grama near Mysore. Sobha Developers' presence in Mysore for the last couple of years has only been through a contractual project for IT major, Infosys Technologies. They plan to take up 12 million square feet of development this financial year (2008-09) spread across six cities with a budget of around Rs 2,200 crore. This involves their entry to Mysore, Chennai and Gurgaon realty markets. The investments for these will be through customer advance, internal accruals and debt. Sobha Developers during financial year 2007-08, took up a similar scale of development (12 million square feet) of which 90 per cent was residential. Presently, the company has 28 ongoing projects and forthcoming are 20. In commercial development ongoing is three projects aggregating 1 million square feet and forthcoming is 20 projects aggregating 16 million square feet.

Actis invests in Vaishnavi group

Private equity (PE) major Actis has sealed the first investment in India’s real estate sector. The UK headquartered fund is investing $25 million into Bangalore-based Vaishnavi Group from its $300-million India-dedicated real estate fund. The investment will go into Vaishnavi’s special purpose vehicle (SPV) developing a one million sq ft mixed use project in the city suburb, Yeshwantpur. 03 capital advised Vaishavi on the private equity transacion. Last year, Actis set up its first real estate-focused fund for tapping into the rapidly growing sector. Actis has been active in ploughing investments into domestic services and consumer space, which has led to buyout of supermarket chain Nilgiris and taking 50% stake in Sterling Hospitals. The decade-old Vaishnavi has over one million sq ft of completed projects mostly in Bangalore, and has over 3 million sq ft under development. The Yeshwantpur project, involving residential and retail space, is one of the biggest standalone projects for the group.

Getting real about real estate

"Buy land, they are not making it any more," said Mark Twain a long time ago, surely not in India or anywhere else for that matter. But the asset bubble seems to have burst. Blindly investing in real estate thinking that land is finite in supply might not be advisable at the moment. While there will be corrections and recoveries and even growth in certain properties, the time for secular growth is behind us. Therefore, the need to be careful while investing in real estate is important. Now, you could choose the direct method or a via media through several private funds available in India and overseas. But the critical factor to remember is that transparency in India, for real estate deals, is still dismal. The 2008 Jones LangLaSalle transparency index made on a few key factors, namely, performance measurement, market fundamentals, listed vehicles, legal and regulatory environment and transaction process was recently released. While Indian players may have chosen to boost their egos over the fact that our tier 1 cities have shown some improvement, further scrutiny in the matter shows us where we truly stand. While agreeably transparency in these cities have increased over the last two years, where we rank in the world, or even among other BRIC or Asian countries leaves a lot to be desired. If you are investing in funds that are focussed on real estate, you might be presented with some amazing valuation numbers. A lot of land and property is being valued by future expected sales derivative modules. A property worth two crore will often be valued at 50, says an industry observer. If the supply were to improve and meet requirements like it has the potential to do so, the norms ease up and become more practical and sensible, transparency were to improve, which in turn will bring in larger investments, one might finally see the real estate sector coming to some sort of global standards. In a country where archaic laws, land banks, disappearing builders, high interest rates, ridiculous taxes, and swinging prices rule the roost, treading carefully in the world of real estate is advisable. So the need to be careful while transacting becomes important. Transfers through the 'power of attorney' route are increasingly common, and is another used trick by investors. This too only adds to the already opaque nature of our real estate markets since even tracking deals has become a challenge. In India, one never knows till the fat lady sings, if a property deal is finalised or not, says a real estate guru, not wanting to be named. Buyers very often invest money on undeveloped and developing projects of builders, as they are able to acquire the property at a cheaper rate, then when the project is complete. While this is essentially a punt taken by many investors, in the current scenario doing so is ill-advised. A multitude of approving agencies for planning permission also boosts costs and adds time to development. While this is one of the reasons to be careful, more importantly in today's real estate scenario, there are major changes taking place. With these changes, most of the smaller and medium-sized developers will be sidelined and may all together be eliminated.

Milestone Capital to invest Rs.1,000 crore in Maharashtra

Milestone Capital Advisors, a management venture fund house has decided to invest up to Rs.1,000 crore in real estate projects in Maharashtra. Of the total investments, around Rs.300 crore will be invested in commercial projects in Pune and Rs.300 crore will be invested in affordable housing projects in other cities such as Nagpur, Nashik, Pune and suburban towns/districts of Mumbai. In addition, Milestone is also actively considering a few investment proposals from Nashik. The company has earmarked Rs.200 crore for development of logistics parks across Maharashtra and will also invest over Rs.200 crore in warehousing in Mumbai.

Market slowdown to affect hotel development


With real estate stocks being hit adversely by the market slowdown, the phenomenon is expected to have a spiralling effect on hospitality development in India. Most real estate majors with a series of hospitality developments in their portfolio are affected by this trend. This may lead to a stall or delay in the completion of projects as well as a revision of the project expenditure. Over the past few months, real estate stocks have seen a major downfall, with an average of 60 to 65 per cent drop in the share prices during 2007-‘08. “There is not only a slowdown in the market, but also an alteration in project costs with the configuration of interest rates,” says Prem Subramaniam, Head, Infrastructure Development Finance Company (IDFC). While financial market analysts expect the decline in real estate stocks to continue in coming months, they also speculate that hotel projects will be stalled due to lack of liquidity and equity funding in the markets. On the contrary, hospitality consultants feel that projects that are already secured with funds will not be affected.

MDLR plans biggest hotel project in NCR


The Rs 2,500 crore Murli Dhar Lakh Ram (MDLR) Group has plans to construct the biggest hotel project over 11 acres in Gurgaon. According to its CMD, Gopal Goyal, it is making its debut into hospitality with back to back three hotel projects. He added that these hotels will have a tie-up with an international brand for marketing and are being targeted in the luxury segment with luxury villas, commercial complex, spas, etc. Informing about his second project, Goyal says, This project is coming up in the Manesar IMT located in the heart of the industrial model township with an elite neighbourhood with boutique fashion bars and lounges and a suspended glass pool, scheduled to have a soft launch in November 2008. The third project is coming up in sector 14 of Gurgaon which will be a high rise luxury hotel. MDLR has over the years expanded their activities from real estate development to high value construction areas. It has its business interests in commercial and residential real estate development, farmland development, facility management, shopping malls, resorts, hotel, multiplexes and restaurants. It even launched short-haul airline operations in few sectors starting from Chandigarh.

LIC Housing to enter Venture funding

LIC Housing Finance, the mortgage arm of Life Insurance Corporation of India (LIC), is set to foray into the venture capital arena. It intends to start Rs 500 crore real estate funds by the end of this financial year.LIC Housing Finance is reportedly scouting for a banking partner for raising capital and will soon approach SEBI to set up an asset management company. To invest in listed companies, companies usually register with SEBI. Based on the response to the real estate fund, the company will decide on whether it will expand its presence in the venture capital space. There are at least three major banks in the fray for a tie-up and a memorandum of understanding will be signed soon. While LIC Housing Finance would be the promoter of the real estate venture fund, LIC could also be one of the internal contributors of the fund.LIC Managing Director Thomas Mathew said the insurer has no plans to directly enter the private equity or venture capital businesses. The fund proposed by LIC Housing Finance will be used to finance real estate development and about fifty-sixty projects are likely to be funded over twelve to eighteen months.A large number banks and finance companies have recently entered the venture capital space and the existing players are expanding their footprints.

Donald Trump Jr Plans $1 Billion India Property Fund

Donald Trump Jr., whose father built a multi-billion dollar fortune in real estate, plans to set up a fund of as much as $1 billion to buy property in India, betting on the nation’s economic growth. New York-based Trump Organization Inc. also plans a residential and hotel project in Mumbai with a local partner to tap the growing wealth of middle- and higher-income Indians. The city is India’s biggest trading center for stocks, bonds, commodities, diamonds and gold, and home to some of the country’s largest companies including Reliance Industries Ltd. and State Bank of India. Trump said, “Our entry has to be in Mumbai and that’s where everything is going on right now in terms of the high-end real estate”. Further he said, “That’s the place where one is going to achieve the highest prices per square foot. It sets the tone for all of the other future developments”. India’s $912 billion economy grew an average 8.8% since 2004 and is forecast to expand as much as 8.5% in the year to March 31, according to the central bank.

Friday, July 18, 2008

Emaar to ramp up India investments


Emaar Properties, the largest real estate company in the Middle East, is set to inject $150 million for a 20-25 percent stake each in three real estate developments in India. Emaar and MGF Developments of India set up a joint venture in 2005 called Emaar MGF, which currently accounts for India's largest foreign direct investment in real estate through projects with a combined development value of US$1bn. Emaar is now considering establishing three separate special purpose vehicles which will then develop two retail properties and one office property in Gurgaon and Mohali.

Emaar holds 41% in the Emaar-MGF joint venture while MGF holds 56%.

Tishman to Acquire ICICI Venture's Fifty Percent Interest in TSI Ventures

A global real estate investment manager and developer, Tishman Speyer is planning to acquire ICICI Venture's 50 percent interest in TSI Venture India, a real estate JV company formed by the two in 2005. However, the Bangalore-based companies will remain equity partners in each of the joint venture's three current projects. Also, both companies are open to invest together in Indian real estate in the future.

Sainik Farm may not get a Legal Colony Status

The Delhi High Court's decision of legalizing the colonies only for poor has hurt Sainik Farm Residents. "The Delhi government's regularization of illegal colonies is meant for the poor and not for the rich who live in palatial bungalows," Chief Justice, Mr. Ajit Prakash Shah said. The court was hearing a Public Interest Litigation (PIL) seeking a direction to the Municipal Corporation of Delhi for immediate action to stop illegal construction going on in the plush south Delhi colony. Earlier, advocate Mr. Rajeev Awasthi said that ‘every brick in the area’ was unauthorized. As of now, the court has posted the case for further hearing on August 27, 2008.

Wednesday, July 16, 2008

Hotmale, Sabeer Bhatia to get a Partner

The Nano City project of the Hotmail man, Sabeer Bhatia will soon partner in Parsvnath Developers. The final decisions are yet to be taken about handing over 30-38% equity stake in the project to Parsvnath Developers. The project which is proposed to come up in Raipur Rani in Haryana, will be spread over 11, 000 acres with about 23 villages falling under it purview. The company plans to acquire about 5000 acres in the first phase over a period of 1.5 years with an investment of Rs 1, 500 crore. It is expected that the project will attract world-class companies involved in the creation of Intellectual Property. It is being viewed as a future hub for companies operating in areas such as Software Development, Nano Sciences, Next Generation Drug Discovery, Bio-Technology, Energy Research and Semiconductor Research.

One Lakh Free Houses for Poor

The Mayawati Government is planning to distribute one lakh houses to the urban poor. The apartments will be given either free or for a nominal price-this year. The houses will be built under the Kanshi Ram Shastri Garib Awaz Yojna, which Ms. Mayawati had announced last month on the anniversary of the formation of the first BSP Government in the state in 1995. The houses will be compact with two-rooms, a kitchen and a bathroom. "The Government will construct one-lakh houses for poor people every year. Each house, costing Rs 1.75 lakh, will be built in an area of 20 square metre," informed an official from the Urban Development Department. The priority will be given to Scheduled Castes and Scheduled Tribes with a special provision for the poor belonging to upper castes, shelter-less widows and the handicapped.

2010 Commonwealth Games Expected To Increase Property Prices in East Delhi

The Apartments coming up as part of the Commonwealth Games Village, next to the Akshardham temple, is all set to change the image of east Delhi. If real estate experts are to be believed, the prices of these flats will bring the value of new properties in east Delhi and satellite towns like Noida, Greater Noida and Ghaziabad at par with similar properties in central, west and south Delhi. During the games in October 2010, the apartments will be used to accommodate 8, 500 athletes. After the games, the developer, Emaar MGF, would hand over one-third of the total 1, 268 flats to DDA and the remaining 779 flats (for which bookings have already started) would be handed over to the buyers. In the last one month, there has been a good response with about 200 people booking apartments at the games village. Experts say that the games village has also impacted the existing realty market in east Delhi and its adjoining areas. The developer's insistence on maintaining exclusivity of the area can be gauged from the fact that the bookings of the apartments are through invitation only. At present, the apartments are being sold at Rs 12, 700 per sq ft but in future, they are expected to increase to Rs 15, 500 per sq ft. Prices of these flats vary according to the locations, while you will pay Rs 500 per sq ft extra for a river-facing and a temple facing flat, the extra charges for boulevard and sports complex facing flat is Rs 250 per sq ft. It's not only about the Commonwealth Games Village. The kinds of infrastructure like hotels, airport, flyovers, metro, railway connectivity, etc. that is coming up in the entire eastern part of the city to supplement the games has impacted the property price in the area.

Tuesday, July 15, 2008

Satellier Launches Broad Design Management Services for Indian Real Estate Developers and Corporate Building Owners

Satellier Inc, the global leader in work share solutions and pioneer in Building Information Modeling services (BIM) for the architecture, engineering, construction and building owner (AECO) industry, announced a broad set of Indian-based design management services (DMS). These first-of-kind services are available to domestic and international developers, contractors, and design consultants, and are designed to “fill-the-gap” between international design practices and onshore construction and practice realities for large-scale real estate developments in India. Satellier’s India DMS services are available in four areas critical to project success: design coordination, design localization, design documentation, and BIM management that will eliminate design and construction errors, reduce time-to-market, and increase quality of the building product. The Indian real estate market is experiencing a remarkable boom characterized by over 30 percent annual growth and forecasted to reach $90B by 2015. Primary contributors include recent GDP growth of over 9%, the entry of multinational companies into the country, global expansion of major domestic companies, increased spending power among the middle class, progressive government initiatives, wide acceptance of BPO/outsourcing business models, and strong foreign investments. The world’s top design firms are planning next-generation office campuses, shopping malls, complete new townships and housing complexes, medical centers, and hospitality sites for construction throughout the country. Satelllier is in a unique position to offer design management services for these aspiring new developments

'There’s a lot to be done before we compete in the international market'

Currently, there is a slowdown in the number of transactions happening within the industry. There is a shortage of funds and thus a lot of developers and buyers are all in the wait and watch mode. The rise in home loan interest rates combined with inflation has caused a slowdown in the middle level demand; however, the luxury level demand has not been as affected. There are some builders who are not yet compromising on their prices, and these builders with greater holding power are expected to hold out for another 6-8 weeks before yielding. Foreign investors too are adopting a cautious approach now and are waiting for developers to improve their own functioning before stepping in. Better locations for malls, high streets, commercial complexes are preferred. Since the traditional commercial mortgage spaces are too costly, alternative locations are being looked at. India tier 1 cities have increased in the transparency index; however there is still a lot to be done before we compete with the international market. Our standard policies need to improve, currently except for SEZs and townships; there is no single window format in place. FSI (floor space index) is also a major problem, coupled with cash transactions and speculators, the real estate sector is seen lacking. Currently, investors are also a lot more intelligent. Also, with the foreign interest Indian property receives, builders are put under more testing conditions. This a clear indication that there is still a lot of hope in the industry, investors are coming in too, but are more careful in terms of proper valuation and appraisals. While currently rentals are up and purchases are going down, things will hopefully turn around in the next few years. The government is planning to start a housing index, and builders are starting to follow international business practices. Even the low transparency in the finances of real estate is being looked into. Transparency was not so important an issue previously, as it is now. Policies regarding FSI are also clearing up and townships and large retrials are becoming more transparent. The markets are adapting to cater to the international investor and smarter buyers. Those companies that do not change will not survive.

GODREJ

Godrej Properties Ltd. (GPL), established in 1990 and is one of the leading real estate development companies in India. GPL entered in its first project in 1991 and started operating in the Mumbai Metropolitan region. Later they expanded its business to cities like Pune, Bangalore, Kolkata and Hyderabad. Recently, they have diversified into Ahmedabad, Mangalore, Chandigarh, Chennai, Kochi and Greater Noida. Their business focuses on residential, commercial and township developments. GPL is a fully integrated real estate development company undertaking projects through their in-house team of professionals and by partnering with companies with domestic and international operations.

Monday, July 14, 2008

Mall scare: Correction in realty sector hits retail too

Just sometime back, the ‘shop till you drop’ mantra of Indian consumers spelt nirvana in terms of business for real estate developers. But now, with boom time having become a thing of the past, the correction in the realty sector has hit the retail space too. According to latest figures, the top eight cities in the country are witnessing a 20% vacancy across 40 million sq ft of operational mall space. The twin reasons for this huge vacancy is rising rental values and lack of quality space. SundayET, along with global real estate services firm Cushman & Wakefield, conducted a survey in 112 malls across the top eight cities which have more than 8.5 lakh sq ft of vacant space. The study found that all the retail space that has been developed in the last decade has not been able to get the desired retailer patronage. Most of the supply has come in the same micro-markets targeting the same catchment and created an over-supply within respective neighborhoods. Of the 112 malls across these cities, only a handful is recognized as successful mall developments, the survey stated. Leading the pack of vacant malls is Ahmedabad — where there is 34% space vacant. Mumbai and Delhi follow with 23% and 22% vacant space, respectively. It seems Chennai is still a hot destination as far retail space is concerned, as it has no vacant retail space. With the influx of international retailers and growing urbanization in the country, the demand for retail real estate continues to remain strong. However, now it is focused on premium high streets and promising developments. Industry sources say initially most malls in the same micro-market had similar rental rates. But as they became operational, the rentals started to get aligned with revenues and footfalls.

Indian real estate sector's outlook negative in short-term - Fitch

Fitch Ratings said the short-term outlook for India's real estate sector is negative with slowing demand and growing liquidity concerns, coupled with the tightening bias of monetary policy, leading to a possible negative impact on the credit profiles of real estate companies. But in Fitch's opinion, this slowdown will also aid the process of weeding out some of the weaker entities within the sector, and increasing the relative strength of some of the larger, more established developers. The rating agency, however, warned that the liquidity risks on account of significant bullet repayments falling due during the course of 2008 remain a key challenge across the board. Larger, established and well-capitalized companies with access to banks/financial institutions would remain better positioned to manage this risk, while smaller players may end up either refinancing these at materially high rates of interest, or could default on their obligations, it said.

Real estate now braces facility management

Life is easy — when you have someone else do the cleaning up. “In commercial real estate, this aspect has garnered support in the last decade with the thought process: let the organization concentrate on its core business, and let someone else deal with day to day management of the premises. From just commercial properties to high-end residential, it was an obvious evolution. As ‘outsourced services’ become an integral part of the Indian Corporate lexicon, Facility Management has come in and occupied an important space. The role of facility management is ensuring that everything is available and operating properly for building occupants to do their work. The facility manager generally has the influence upon the quality of life within a facility. This business sector has matured considerably now from the earlier days, when facility management was little more than simple manpower supply. It now offers various value-added services, uses advanced levels of technology and offers many cost-saving measures such as energy conservation. Facility management companies now focus on being single-source solution providers to every requirement.

Vipul to build housing project in Haryana


Real estate firm Vipul Ltd on Friday said it would invest Rs 250 crore to develop a group housing project at Dharuhera in Haryana. The project - Vipul Gardens - is spread over 13 acres and would comprise 635 apartments with a total built up area of one million sq ft. The total investment in the project is about Rs 250 crore. Dharuhera is in the proximity to three industrial hubs - Manesar, Bawal and Bhiwadi that makes it a preferred destination as an economic hub. Apart from this, superb connectivity with Gurgaon provides an added advantage.

Property fair to draw expats

As many as 20 property developers from India are participating in an exhibition in Jeddah aimed at showcasing investment opportunities for NRIs living in Saudi Arabia, in the real estate sector of Kerala. The ongoing "India Homes Fair", which is presenting more than 40 projects to expats working in the Kingdom expects to achieve sales worth Rs 400 million. Eight builders from Kochi are participating in the fair which has been organised by Housing Development Finance Corporation (HDFC).

Friday, July 11, 2008

Citigroup may sell its India HQ

Desperate to repair its demolished balance sheet--and finding it harder to persuade investors to sign up for more losses--Citi is selling its Indian headquarters in Mumbai (as well as other properties) and leasing it back. The move will net about $500 millionThe company has appointed Jones Lang LaSalle Meghraj to do a valuation of the headquarters. It is also selling some corporate offices and prime residential properties in Mumbai, Delhi and Chennai. In Mumbai, it has already liquidated about 8 residential properties in the last one year. Recently, it sold a property here to a Bollywood actor for a whopping Rs 30 crore. Industry officials said the company plans to sell the BKC headquarters and lease it back.

Gujarat real estate heating up


When Chicago-based businessman Jack Patel came to Ahmedabad recently on a business trip, the first thing he did was book himself a 1,000-sq-yd plot of prime land on a golf course linked project in Aapnu Amdavad. For, though a local would have thought twice before coughing up Rs 5,000 per sq yd for the plot, Patel knew he was getting a prime piece of realty for just around $13 per sq ft, a fraction of what it would have cost him back home in the US. Like Patel, there is an increasing number of NRGs who are putting their money where the greens are. So much so that realtors point out that golf-linked realty is being lapped up by NRGs settled in US, UK and Africa. NRGs realize that owning a golf course estate in the US is a dream only millionaires can afford. Here, they can own a sprawling bungalow attached to a golf course for as cheap as Rs 60 lakh. Golf is always a star attraction which is why golf realty sells even in a slump phase. As land is very limited in India, it always appreciates quicker than realty in the US, which is why despite the sub-prime crisis sending property prices tumbling by nearly 40% in the US, NRGs are lapping up property in Ahmedabad that is still more affordable than other metros.

Realty MFs may bypass FDI norms

Even before the globally-popular real estate mutual funds (REMF) take off here, RBI has raised a red flag. It has argued that the funds would lead to circumvention of foreign direct investment (FDI) in real estate that places restrictions on foreign investors. Although 100% FDI is allowed in realty projects on the automatic route, the conditions have to be adhered to. The banking regulator has said it amounted to indirect flow of FDI in violation of the spirit of the conditions laid down by the government. RBI now wants the government to take up the issue with market regulator Sebi which had issued the guidelines on REMFs about two months ago. As per the Sebi guidelines, REMFs can directly invest in real estate, in mortgage-backed securities, securities of companies engaged in dealing in real estate assets or in undertaking real estate development projects and other securities. However, it has mandated that at least 35% of net assets of the scheme should be invested directly in realty assets. The much-awaited scheme has not found takers but some fund houses are working on the scheme. RBI’s concerns about flow of foreign investment in realty are not new. It had earlier written to the government to make Foreign Investment Promotion Board’s clearance mandatory for FDI into the sector.

Thursday, July 10, 2008

SBI hikes Interest Rates on Home Loans

Home loans from public sector State Bank of India would be dearer as the lender has decided to hike interest rates by 50 basis points on all credit linked to prime lending rates. SBI had earlier announced to hike interest rate on fixed deposit rates by up to 75 basis points effective from June 30.State Bank of India in which government has about 60 per cent stake is targeting 40 per cent growth in non-interest income in 2008-09, compared to 28 per cent last fiscal. The bank had lowered its PLR twice in February to 12.25 per cent but decided to raise by 50 basis points last week. The net profit of the bank is likely to be affected next quarter though there is not much on first quarter profits. The bank is expected to set aside at least 10 billion dollars (232.8 million) to provide for depreciation in its treasury portfolio as interest rate rise.

Real Estate TV appoints MQ Networks for ad sales

MQ Networks has signed an MOU to market air time on Real Estate TV. Real Estate TV is India's first 24x7 TV channel dedicated totally to real estate and infrastructure, which has been launched by Alliance Broadcasting. Team MQ focuses on synergies and dynamics of content creation, advertising sales, marketing and distribution. The brimming talent of next-gen media pros culminates into triple play success. Real Estate TV is poised to grow into a very popular niche channel by the nature of potential of the industry it caters to. MQ network is really excited at the opportunity to sell this channel at a pan-India level. They believe they could be worthwhile partners to the promoters.

Realty Dreams of Small and Mid-Size players Crumble

Grappling with a slowdown across segments, the Indian property market is heading towards the next phase of consolidation. Liquidity crunch in the real estate market is beginning to drive many mid-sized and small real estate developers to scrounge for cover. Many want to liquidate their land and incomplete projects by selling them to bigger developers or private equity players even at lower valuations. What’s forcing them to take this step is a stagnant market, with property rates undergoing major correction in some cities. Around 15 deals in real estate sector have fallen through in the past two months with investors developing cold feet, said industry officials.

Wednesday, July 09, 2008

Volatile market may benefit NRI investors

Are you always at a loss while planning your finances? Are you aware of the investment options available in the market? How best can you plan your finances? What are the crieria for evaluating an investment option? Are mutual funds profitable investment options? When and how should one buy mutual funds? Considering the current volatility in the equity market, what does an NRI investor do? For some, the knee jerk reaction would be to panic and start selling in anticipation of the market weakening further due to rocketing oil prices and spiralling inflation. For others, it could be 'Hold on!' The market can go lower and better bargains can be picked up for stocks, including blue chips. It all depends on how much lower will be the market decline and for how long. And as Indian stocks may get sucked in the global spiral of depression, the third option for some NRIs would be to buy right now, as the market seems to be heading to its bottom. Inflation in India is expected to come down after six months, according to the finance minister. So these investors are bullish on the long-term prospects of the Indian economy where the Risk-Reward Ratio is in their favour. Thus they can invest now to add low priced stocks to their portfolios for possible high gains later on. Finally, there are the extra-cautious NRI investors. They do not want to speculate in the market but want to safeguard their hard earned investment funds 100 percent and so go for fixed returns. With real returns from fixed income options turning negative due to spiralling inflation and uncertain equity markets in the medium term, they do not know what to do.

Lodha Group enters into partnership with Johnson Controls

Mumbai based leading Real Estate Development Company; Lodha Group announced its strategic partnership with Johnson Controls Inc (JCI) the New York listed global leader in creating smart environments. In an all exclusive agreement, Johnson Controls Global WorkPlace Solutions will provide end-to-end facilities management to Lodha Group projects. This is the first step towards implementing enhanced service oriented facility management of the larger portfolio, optimizing energy and creating operational efficiencies. This development comes at a time when the maturation of real estate in India has pushed the need for professional expertise in managing premium real estate. Conforming to the highest standards of international living and delivering the finest in customer delight, Johnson Controls Global WorkPlace Solutions manages more than one billion square feet worldwide, most of which is part of Fortune 500 companies. In line with their global operations, Johnson Controls Global WorkPlace Solutions will implement facility improvements, ensure safety, security and comforts for indoor and outdoor environment, optimize energy and create operational efficiencies at all Lodha projects. This exclusive agreement will enable Lodha to focus on its core business activities, whilst Johnson Controls Global WorkPlace Solutions will support its operations with world class solutions that deliver a superior service to its clients, and further our commitment to build better and greener communities.

NRIs home in on India, account for 10% of sales


Home sales in India might have turned slow but sales to NRIs are on boom continuously. According to Jones Lang LaSalle Meghraj (JLLM), residential sales to NRIs have tripled over the last half year, from 3% to 10% of the total business. Lodha Group senior Vice President R. Kartik said, “What would happen when one loses his job in the US? The downturn is scaring many NRIs who fear job cuts”. JLLM’s Raminder Grover said, “There is a renewed interest in selling abroad”. Sobha Developers has viewed the share of NRI sales go up from five percent to ten percent of its sales. Sobha Developers Managing Director J. C. Sharma said, “In the last six months, we have been selling about twenty five thousand square feet a month to NRIs”. Many NRIs have been planning of coming back to India and many of them are making safety investments. Over the last few months, Lodha has seen twenty-five percent rise in its sales to NRIs.

Monday, July 07, 2008

Axiom Road Show Offers One Stop Shopping For Indian Properties


Apparently the trend in investing in real estate in India continues to grow in spite of the downward trend in the US economy. This was more than evident in the fact that in a short span of 6 hours over a 100 interested or serious investors met 20 professionals representing Axiom and several builders from India to discuss their options at a road show organized by Axiom Estates at the Sheraton Hotel here on June 28.There were eye catching displays all round showing huge commercial skyscrapers and apartment complexes which are under construction or being developed in various parts of India in cities like Mumbai, Kolkota, Delhi, Bangalore, Jaipur, Chandigarh, etc. The purpose of the shows had been to bring awareness of the scope of investment in India and to bring builders directly in contact with the NRI community. There are many who are interested in buying property back home but do not know how to go about it. Axiom, provides a total package under one roof starting with assistance in purchasing, costing, layout plans, financing, renting, maintenance etc in virtually any location in the sub continent.

Warning bells ring over B`lore as BPO destination

Warning bells are ringing on Bangalore's future as a leading BPO destination. It is not a full-blown crisis yet but the portents are disturbing. Of late, we don't hear of too many companies coming to Bangalore, whereas we have seen many BPO companies starting operations in cities like Chennai, Noida, Kolkata and Kochi. I feel Karnataka is losing its advantage as a BPO destination. Industry sources say that BPO hiring numbers in Bangalore have been lower by up to 30 per cent in the April-June quarter, but these are expected to pick up in the current quarter. The decline in the number of new companies from the US or Europe setting up shop in Bangalore is the high cost of operations in the city, economic crises in their home country and 2008 being an election year in the US. Currently, it is only the existing companies located in Pune, Chennai, Hyderabad and Gurgaon that did not have a base in Bangalore are now setting up operations. On the other hand, large firms which already have 10,000 or more staff in the city are automatically looking elsewhere for expansion. It is not gloom all around. The primary reason cited by the industry for Karnataka's failure to attract new BPO investment is lack of infrastructure. Industry nodal body Nasscom has sounded off a warning that Bangalore has displayed symptoms of warding off investments on account of increasing cost of operations.

Increasing rental rates will not pay in the long run

After the "20:20" kind of price escalations in the real estate market in the first home sales or second sales, it seems that owners of apartments want to do the same with leasing as they are trying to increase rental values now; each new listing in a new building is coming at a different price. While there is no set indicator or a barometer for rental values, it seems that the Mumbai real estate market is set for another battle, and this time around it is on the field, with the licensor and licensee. Many companies who have operations in the financial capital of India give their employees a set amount, popularly known as HRA (Housing Rent Allowance ). Budgets are set keeping several factors in mind and companies do revise this annually. The maximum increase each year is not beyond 5 to 10%.However, with the real estate market jumping up in capital values, owners are now expecting a much higher return whenever they jump a tenant. This is creating a big problem with MNCs as they have to raise the HRA to suit market conditions. The large increase in rentals is also creating a dilemma for Indian executives as the rental rates are squeezing them big-time and they are often inclined to buy instead of lease for a long term. This will have a negative impact in corporate sector housing, which is in the range of rental values of more than Rs.50,000 per month.

Friday, July 04, 2008

World's most expensive luxury real estate markets


In the world's most expensive property markets, $1.5 million still doesn't go very far despite some softening in real estate prices. How much house can you buy for $1.5 million? Depending on where you look, it might not be very much. Despite global economic concerns, the credit squeeze, and rising commodity prices, properties in the world's most expensive neighborhoods are still commanding ferocious premiums. While $1.5 million in Cleveland or Tampa would probably purchase a substantial house, with four bedrooms, a multicar garage, and maybe even such amenities as a swimming pool and media room, in London's Belgravia or on Manhattan's Fifth Avenue, it would buy you little more than a glorified shoebox. The proximity to the worlds top business centers and a wonderful quality of life has made London the most expensive city for luxury real estate. And since they learned to cook, everyone wants to live there. Price growth is slowing even in Russia with its growing population of oil millionaires.

Realty players warm up to top business schools

Real estate developers like Lodha, DLF, Unitech and Raheja have begun ramping up their presence in B-school campuses in the past two years in a move to have a more professional image. The move coincides with the growing interest of B-school graduates in the real estate sector. The real estate firms have sold promising careers to the students by offering competitive compensation packages. They usually hire students with prior work experience so that within two years they are ready to hold fairly senior posts. Having had an experience with the Indian real estate majors, B-schools are now looking at luring foreign real estate companies. Many are looking at real estate companies based in Dubai and Singapore as potential recruiters. Some are already strengthening ties with existing players.

Property prices may not cool down

Worried that property prices may cool down? With India tipped to become the most sought after real estate market among emerging economies, you may not really have to fasten your safety belts just yet. In fact, just 10 land deals in India over the past 12 months were valued at over a whopping Rs 15,000 cr. Evidence enough to prove that reports citing office rentals in Delhi and Mumbai being costlier than more developed real estate markets such as New York City, Dubai and Singapore, are not off the mark. Although Delhi and Mumbai still held on to seven out of top 10 mega realty deals in the country, Hyderabad and Chennai too emerged as hotspots for big ticket transactions. With an acute shortage of land in metro cities and escalating land costs, it will not be long before other locations such as Hyderabad, Chennai, Bangalore, Coimbatore and Pune will grow as centres of major land deals in the near future. Real Estate Investing has probably made more millionaires than any other industry in Hyderabad. Real Estate Investing also offers many rewards including cash flow, security, long-term wealth and numerous tax benefits.

Thursday, July 03, 2008

Specialty housing for the elderly

Real estate developers in north are ushering in a new era of living for the senior citizens, by developing specialty housing projects for them. The developers are focusing on providing high end facilities for the people above 60 years of age. The concept is already present in the western world but the time has come to launch it in the Indian market as this sector has been largely neglected in India. Moreover there's a great scope of growth in this segment due to lack of organized players.

Real estate cos diversify into spas and resorts


Analysts say that despite existing demand, spas and resorts would be viable only in larger developments. A Swedish massage, a vigorous Kerala head rub or good old steam bath developers are offering all this and more at picture perfect destinations that are a good trek away from cities.After making luxury villas and apartments in the heart of town, property firms are now wooing people to exotic spas and resorts.From luxury to leisure, real estate companies such as Brigade group, Omaxe Ltd, Prestige group, Sobha Developers Ltd and Value Designbuild Pvt. Ltd, are entering into the leisure segment to build health resorts and spas in the backwaters of Kerala or amid the plantations of Chikmagalur in Karnataka. A lot of developers are looking at spas and resorts because it is revenue generating business line, says Akshay Kulkarni, Cushman and Wakefield Inc.’s, a property consulting firm. Residential developers normally develop, construct and exit a project. A residential asset does not generate consistent revenues whereas spas and resorts do. Dedicated real estate funds are eager to support such venspa and resort ventures. Developers agree there is a demand for such high-end products, and are looking at different locales in India.

India rises in real estate transparency index

The domestic real estate market, which is grappling with slowdown in demand and a tight liquidity situation, may have some reason to cheer. When it comes to the level of transparency in commercial real estate within Asia Pacific, both India and China have improved their position — moving up from low transparency to semi-transparency, according to Jones Lang LaSalle. The transparency has been measured on parameters such as availability of data on real estate market, data on real estate performance indices, accounting standards and regulations, governance, clarity in taxes, planning codes, land registry, ease of transaction (sale or lease), professional standard for agents, amongst others; hence an improvement in a market’s position in the index augurs well. In India, the issue of real estate transparency at a sub-national city level is gaining importance as real estate investors and corporate occupiers extend into new regions in their search for higher returns or cost-effective locations.

Tuesday, July 01, 2008

Impact Projects inks JV deal with South Asian Real Estate

Ludhiana-based realtor Impact Projects Pvt Ltd Monday signed a joint venture (JV) agreement with equity fund company South Asian Real Estate (SARE) to set up two luxury townships in Amritsar. The Isle of Man-based SARE has made investments in many housing projects in India through joint ventures with Indian property developers. The two projects will be set up at an investment of Rs.18 billion ($428.5 million) Impact announced here. Impact Projects is promoted by Harpal Singh, the non-executive chairman of Ranbaxy Laboratories Ltd.

Industry bets on long-term prospects for real estate

Rising interest rates and a falling demand may dent the realty market in India. However, the long-term prospects for the sector continue to be good, feels the industry. There are around 21 India-dedicated real estate funds that are raising money in the international market. In the next nine months, nearly $7 billion will be entering the country through various India-dedicated funds. While long-term players are looking at India, short-term players based in the US and Europe, such as the hedge funds and private equity players, are more interested in their local markets.

Axis Bank Invests Rs 250 Crore for a Minor Stake in India’s First Private Hill Station

Axis Bank (formerly UTI Bank) has invested Rs 250 crore ($59 million) in Lavasa Corporation, a real estate subsidiary of Hindustan Construction Company (HCC). The bank will get in return about 2.5 per cent stake in the form of convertible preference shares and convertible debentures. The deal pegs the valuation of Lavasa at Rs 10,000 crore. Lavasa is developing a 12,500-acre hill city near Pune. Axis Bank is not known to making direct private equity investments such as this. The bank also has a private equity arm called Axis PE, which is focused on infrastructure sector. It recently raised $150 million in its first closing.