Properties in India

Arvind Mills unveils retail plan with launch of Megamart

noreply@blogger.com (Rakesh Malhotra) — Fri, 26 Oct 2007 11:22:00 +0000

Arvind Mills today announced retail plan to reach sales turnover of a billion dollars by 2012.

“The retail space is buzzing and we think the time is perfect for us to announce our retail plans”, says Mr. Sanjay Lalbhai, Chairman and Managing Director Arvind Mills. Adding further Mr. Lalbhai, said, “Our retail expansion will straddle several formats. We would like to be present across the entire spectrum - value retail, to premium retail to luxury retail. Various options for entry into these sectors are being considered. We are ready with our plans for Megamart. This will be our first leg of retail expansion.”

“We pioneered the value retail space with ‘Megamart’. Megamart currently is a 70 Outlet strong network and is available across 25 cities. Now we plan to aggressively expand this concept through the launch of Megamart Outlet Centre which will be 50,000 to 60,000 sq feet large format value stores”. He further adds, “We have already signed up prime properties in Chennai, Pune and Hyderabad for this expansion. These 3 stores will be operational during the course of this financial year”. The first store in Chennai is expected to open in December 2007. The company has an aggressive expansion plans to sign-up several more properties in the coming months. Megamart plans to have up and running 25 to 30 such Megamart Outlet Centres in top 20 cities over the next 4 years.

The Outlet Centre concept operates with the objective of grouping of a large number of brand outlet stores at the same location. An Outlet store, offers their merchandise to consumers at reduced prices. The model offers a wide range of high-quality brand-name goods in a concentrated space at value prices.

The Megamart Outlet Centres will house a select set of brands. Megamart Outlet Centre will bring in a great combination of international shopping experience at value prices along with ambiences at par with some of the best retail chains of the world.

To achieve this, Megamart engaged the services of reputed design house JHP - London; an award winning design consultancy firm to design their stores. JHP has designed and executed several retail projects throughout the world. JHP are the designers behind Selfridges, ASDA and many of the other leading retail destinations across the world, including the retail space of the upcoming Heathrow Terminals.

To provide best service to the customers, Megamart is investing heavily on training the Fashion Assistants who will man the Outlet Centres. The company is also making sizeable investments to support these plans in information technology.

-MoneyControl

India emerges second-biggest FDI magnet

noreply@blogger.com (Rakesh Malhotra) — Wed, 17 Oct 2007 11:03:00 +0000

India has emerged as the second most-attractive location after China, ahead of the US and Russia, for global foreign direct investment (FDI) in 2007. According to Unctad’s world investment report, released here on Tuesday, India’s ranking in inward FDI performance index has also improved to 113 in 2006 from 121 in 2005. China is the most preferred investment location, followed by India, the US, the Russian Federation and Brazil, the report said.

The share of India and China in total global FDI outflows has also risen. While both accounted for 10% of total FDI outflows in 2005 in the Asian region, it increased to 25% in 2007. While China’s outflows increased 32% to $16 billion in 2006, Indian outflows witnessed a four-time rise since 2004.

On the increased flow of FDI into India, the report pointed out that while foreign retailers such as Wal-Mart had started to enter the Indian market, a number of US companies such as General Motors and IBM are rapidly expanding their presence in the country. So are several large Japanese MNCs such as Toyota and Nissan. Global FDI inflows soared in 2006 to reach $1,306 billion, showing a growth of 38%.

Commenting on the rising outflow of FDI from the two countries, the report said both China and India are throwing up competition for countries like Hong Kong (China), the Republic of Korea, Singapore and Taiwan as the main sources of FDI in developing Asia.

Interestingly, while India’s outflows have been dominated by privately-owned corporates such as Tata group (Tata-Corus deal), in China FDI outflows are mainly driven by the international expansion of state-owned enterprises due to progressive government policies. Tata Steel acquired Corus Group in early 2007, creating Tata-Corus — the world’s fifth-largest steel maker.

In terms of locational choice for foreign investors, China polled 52% of the respondents in the Unctad survey, followed by India with 41%. The US received support of 36% and Russia 22%, followed by Brazil with 12%. China’s outward FDI stock reached $73 billion in 2006, the sixth-largest in the developing world, according to the report. China’s major chunk of overseas expansion involves considerable investment in other developing and transition economies, the report says.

The emergence of China and India as important sources of FDI, coupled with active M&A activities by investors based in the Asian newly-industrialising economies (NIE), has led to increased FDI flows from Asia to developed countries as well.

India was the fourth-largest recipient of FDI during 2005-06, with China and Hong Kong (China) remaining on top. Singapore was ahead of India at the third position. “India registered a substantial increase in FDI amounting to $17 billion,” the report said. Due to increased investments in India, FDI inflows to south Asia surged 126%, amounting to $22 billion, in 2006.

Interest cut by banks lifts realty stocks

noreply@blogger.com (Rakesh Malhotra) — Fri, 12 Oct 2007 04:02:00 +0000

Realty stocks got a boost with the State Bank of India announcing a cut in its rates by 50 to 100 basis points for new loan seekers from the period between now and the year-end. Borrowers with salary account with the bank would get an additional discount on the lower rate. A floating rate cut of 50 basis points by ICICI Bank also gave the additional fillip for the sentiment.

According to Ankur Srivastava, Managing Director, DTZ, a global property consultancy firm, real estate sale picks up during this time of the year, which also marks the festive season. Developers are able to realise better revenues. This move by SBI would bring about positive sentiment about rate-sensitive segment — low and middle income group urban housing — of the real estate sector. This trend of lowering rates is likely to be picked up by others in the banking sector and housing finance companies, industry analysts felt.

The growth of housing loan of smaller denominations slowed in the second quarter of the current financial year, according to bankers.

The prime property market had not been affected by relatively higher rates as its economics run on investment and speculative factors more than the shelter needs, analysts said. Mr Shailesh Kanani, an analyst with Angel Broking, said that SBI’s announcement was a positive development. According to Mr Gul Teckchandani, an independent market analyst, there are quite a few manufacturing companies with strong embedded real-estate play. BSE Realty Index today moved up 2.71 per cent, while the Sensex shot up by 0.84 per cent. In the past one month, the index gained by over 35.61 per cent and in the year-to-date it has returned 88.67 per cent. Among the 14 stocks in the index, only one — Anant Raj Industries, declined. DLF, which is also in the Sensex basket now, improved by 2.92 per cent. Akruti Nirman posted highest gain of 17.97 per cent, followed by Phoenix Mills (9.4 per cent).

-Business Line

NCR realty prices go down

noreply@blogger.com (Rakesh Malhotra) — Mon, 17 Sep 2007 10:02:00 +0000

Rising interest rates have pulled down the property prices in the National Capital Region (NCR) of Gurgaon, Noida, Greater Noida, Indirapuram and Charmswood Village by 10% to 20% in the past 6 months even as the prices have appreciated in the Capital.

And despite the reduced prices in the NCR, there are not many buyers. But this hasn’t forced sellers and builders into slashing the price further.

In many cases, the builders’ price in the primary market is higher than that of secondary market even though dealers have not been able to sell the old stock, says property consultant Abhay Poonia. Worst still is the case of plotted colonies, which have witnessed a sharper decline in their value.

Experts attribute the fall in property prices to the rising interest rates which have pushed up the cost of investment. A senior consultant says investors are wary of taking positions in the real estate market as the return in a short period of one year is almost nil in suburbs.

However, profits in the commercial space have gone up substantially because of huge demand for it. And that’s why investors have turned their attention towards commercial real estates in the past one year. Poonia says the investors are out of the residential sector and are now investing in the commercial sector.

However, those who have already invested in the residential properties, experts say, are holding on to their properties and are not willing to sell them off. "Those who have bought properties have now fixed a price to sell them. But the buyer is not ready to pay that price. So, they are holding on to the properties. It remains to be seen how long they can do so. The day they would start selling, there will be greater fall in property price in Gurgaon," says real estate consultant Sumit Bhaskar.

Experts say that investors are not selling their property at a lower price because they anticipate an appreciation in next one year. And this hope has been fuelled by the fact that the builders are launching their new projects at a higher price than that of the secondary market.

A senior dealer argues that the general perception in the market is that the appreciation in the medium term would be more than the cost of holding the property. Therefore, investors are ready to hold. The confidence also stems from the fact that the property prices in Delhi have been rising in the past six months.

According to global consultants Cushman and Wakefiled, property prices in posh colonies like Greater Kailash, Vasant Vihar and Chanakyapuri have risen by 15% to 30% in the past six months. In other areas like Rohini, Pitampura, Mayur Vihar, Patparganj, the prices have appreciated by around 10%. Therefore, the builders and dealers argue that the prices in the adjoining areas would also appreciate sooner than later.

Their confidence is also boosted by the high demand for commercial space in the NCR, which will create demand for residential space also. According to global consultancy firm DTZ, around 13 million square feet of commercial space will be absorbed in 2007. This will provide working space to around 1.5 lakh employees. Even if a fraction decides to buy residential apartments, a huge demand will be created. A senior builder says this kind of demand is likely to be created year after year for quite some time and this will push up the prices.

President of Gurgaon property dealers association Satis Kataria said that with the city getting Metro connectivity and Manesar coming up, the prices will rise. There is a significant increase in the rental of residential properties. Rental of three-bedroom apartments has increased to Rs 20,000 a month, he said.

Source:TOI

IL&FS, Milestone open door for realty investment

noreply@blogger.com (Rakesh Malhotra) — Tue, 11 Sep 2007 06:51:00 +0000

IL&FS Investment Managers and Milestone Capital Advisors have launched a real estate fund where investors can enter with as low as Rs 10 lakh. IL&FS-Milestone Fund-I is an yield-driven real estate investment fund based on a structure similar to the real estate investment trusts (REIT). Worldwide it is the most popular investment route for corporates and individuals to invest in real estate.

The close-ended scheme will have a term of four years, with an option to extend the term by a year and if required by one more year. The fund is targeting a corpus of Rs 1,000 crore, which includes a greenshoe option of Rs 500 crore. The fund will remain open for subscription till October 30, 2007.

IL&FS-Milestone Fund-I will be the first real estate investment fund in India to offer a low minimum investment commitment of Rs 10 lakh for individuals (in multiples of Rs 5 lakh thereafter) and Rs 1 crore for corporates, with the convenience of draw-down spread over 12 months.

“The fund is especially attractive for individual investors who want to diversify their portfolios without the complication of investing in real estate directly,” Shahzaad Dalal, vice-chairman and managing director IL&FS In-vestment Managers said at a press conference on Monday.

IL&FS-Milestone Fund-I will offer a quarterly yield distribution to investors and property appreciation benefits in the long term. The fund is targeting an annual yield of 11% (pre-tax) and an internal rate of return of 18-20% (pre-tax) with property appreciation.

“With an investment focus on completed properties that are leased for a long-term period to high-quality tenants, the fund does not carry any development risk,” said IL&FS-Milestone Fund managing partner Ved Prakash Arya. He also added that the fund will target greater geographical and sectoral diversification through investing in offices, IT & ITES buildings, hospitals, hotels, warehouses and shopping malls across India.

Individual investors can utilise this as a recurrent income source as well as accrue property appreciation benefits in the long term. The fund employs a conservative investment philosophy and a low-to-moderate leverage strategy.

Rentals@ Rs 450 a square foot, Mumbai sets record

noreply@blogger.com (Rakesh Malhotra) — Wed, 29 Aug 2007 09:01:00 +0000

Mumbai's property market has set a new record. A commercial property was rented out at a whopping Rs 450 per sq foot in the financial hub of Bandra Kurla complex.

Forget residential buildings, which are already above a crore for a standard 2-bedroom flat, the office spaces in Mumbai are now costing something next to one in Manhattan.

Corporates are literally struggling to find a reasonable deal. Over the past 9-months, rentals have shot by 40 per cent in the posh Bandra Kurla complex area in Mumbai.

Limitless Group, a sister company of Dubai based developer Nakheel has recently signed a $ 10 billion joint venture with real estate major DLF, to develop townships in Mumbai.

The Dubai based group has already snapped up 12,000 sq feet in the famous IL&FS building in Mumbai, which is now renting out space in the building at Rs 450 per square foot.

The Limitless Group will pay Rs 54 lakh a month for its own office space.

Rents in Bandra Kurla Complex have now crossed the rentals at Nariman Point and Lower Parel areas where they are at Rs 290 - 350 per sq foot.

Sources say this recent deal at IL&FS already has led the builders quoting sky high prices for mediocre properties. Anuj Puri, Chairman & Country Head, JLLM said, “It’s purely because demand is outstripping supply. 12 months ago the prices were at Rs 250 a sq foot, which though seemed high at that point have gone much higher now.”

Recently, the British High Commission pre-leased a space in the under-construction Naman Chambers for Rs 350 per sq foot.

The Fortune 2,000 building and Windsor Plaza are now quoting Rs 330 a sq foot compared to Rs 250 six-months back.

The Bandra Kurla complex has only 3 lakh sq feet of commercial space to offer at the moment. And that is a far cry from the current requirement.

Industry watchers say approximately 2 million sq feet of office space will enter this market in the next 2 years, and that's when corporates could find some respite from the soaring rentals.

Source: ibnlive.com

Parsvnath Ready to jump into Overseas Realty

noreply@blogger.com (Rakesh Malhotra) — Tue, 21 Aug 2007 05:13:00 +0000

Parsvnath Developers Ltd is now planning to enter the international real estate market now by forming offshore development companies in various countries to kick off projects overseas, even as the real estate in India starts to slow.

The companies would be set up as 100% units of Parsvnath.

The company plans to expand its footprint outside India to countries such as Sri Lanka, Mauritius, Singapore and the UK and in West Asia.

Parsvnath is present in 48 cities in India. While the firm is growing, Mr. Jain of Parsvnathsays that Indian real estate market wasn’t slowing despite showing signs of sluggishness.

The firm will foray into the offshore markets either on its own or through joint ventures with local developers or the government.

Parsvnath has already entered a joint venture with the Oman-based, Al-Hassan Group of Industries to enter the Oman realty market. Parsvnath is looking at developing stand-alone housing projects, retail projects and integrated townships in the offshore markets.

“The international market provides good opportunities as the real estate market there is more transparent. We also feel we will get better technological expertise in these markets,” According to Mr. Jain.

Parsvnath is also looking at bidding for airport modernization and management projects and is in talks with leading global airport operators to jointly bid for projects.

The company plans to tie up with a couple of airport operators. “We are in talks with some players. We are looking at retaining a majority stake in the joint venture,” Jain said.

source: Livemint.com

First Leisure Real Estate Symposium in India

noreply@blogger.com (Rakesh Malhotra) — Tue, 14 Aug 2007 03:44:00 +0000

Group RCI, the global leader in non-hotel leisure accommodations, today announced they would be hosting their first Leisure Real Estate Symposium in India. As reported by the World Travel and Tourism Council (WTTC), India is expected to be the third fastest growing country in the world in travel and tourism demand over the next ten years. That growth potential, coupled with the 19.8% increase in the number of Indians living in India with financial assets of more than US$1 million, vs. 6.5% growth worldwide, are important factors that lead to the selection of India as the venue for the Group 2007 Leisure Real Estate Symposium: India, Riding the Wave of Growth.

Day one of the event will feature Peter Giamalva, president of NorthCourse Leisure Real Estate Solutions, who will lead an educational forum offering attendees information from the ground up on the development of various leisure real estate models, including: fractionals, destination clubs, condo-hotels and traditional timeshare. In addition, profit models for each of the various areas will be presented and discussed. Closing out the day, will be a panel discussion of the latest information on legal issues of developing in India. The event also provides participants with ample opportunities for networking and the development of strategic business partnerships.

Day two of the event will open with a key note address from Ken May, chairman and chief executive officer of Group RCI, stressing the importance of aligning development plans with the Indian government's strategic objectives of positioning tourism as a national priority and expanding India's competitiveness as a tourist destination.

To be held August 23 to 24, at the Taj Palace Hotel in New Delhi, India, the two-day symposium aims to help owners, developers and operators of leisure real estate learn about the latest leisure real estate models and have the opportunity to be part of lively panel discussions and question and answer sessions with industry experts.

"The market for leisure real estate, continues to grow globally and should gain further momentum over the next few years," said Kenneth May, chairman and chief executive officer of Group RCI. "In particular, India and Asia are showing some of the greatest potential for growth. The success that our clients have had in developing shared ownership leisure properties in India has led us to believe that there is tremendous value in showcasing India as a country, not just as an attractive destination for tourists but also as an opportunity to explore new formats in the leisure real estate space."

About the Group RCI

Group RCI, part of the Wyndham Worldwide family of companies, is the global leader in non-hotel leisure accommodations with exclusive access for specified periods to more than 60,000 vacation properties in more than 100 countries.

Wyndham Worldwide Corporation is one of the world's largest hospitality companies with leading brands in lodging franchising, vacation ownership, vacation rentals and vacation exchange.

Singapore firm - Ascendus India launches India-focussed real estate IPO

noreply@blogger.com (Rakesh Malhotra) — Wed, 08 Aug 2007 10:48:00 +0000

Singapore-based Ascendus India Trust has scored a major first by launching the first ever initial public offering (IPO) which raised funds on the Singapore Stock Exchange with the aim of owning real estate in India.

The IPO size was 500 million Singapore dollars while the offer price was 1.18 Singapore dollar, officials of JPMorgan, the sole financial advisor and joint bookrunner for the mega issue, said today.

In a presentation made to the media, Kaustubh Kulkarni, Executive Director, Real Estate, JPMorgan said Ascendus India Trust (AIT) was set up in Singapore "with the objective of owning income-producing real estate used primarily as business space in India".

AIT's initial portfolio comprises four world class business parks in three IT centres in India. It plans to grow organically and also through acquisitions.

The investors were indicated that they could expect an yield of 4.75 per cent in FY08 and 5.81 per cent in FY09 on their investment in AIT shares. Incidentally, the regulations there allow a company to indicate possible returns on investment.

Meanwhile, in a research study on real estate scenario in India, JPMorgan has said the industry is in the foothills of a sustained growth period. It expects the industry to grow from $50 billion in FY07 to $90 billion by FY11.

Referring to rising property prices, it said the prices seem to be at risk given concerns about rate hikes and potential oversupply. The study said the correction in certain micro markets cannot be ruled out but "we are still not in a bubble zone and that a bust is unlikely".

Parsvnath: Net profit of Rs 1.02 billion in first Q of FY07

noreply@blogger.com (Rakesh Malhotra) — Tue, 31 Jul 2007 04:31:00 +0000

India's leading Real estate company Parsvnath Developers Limited has posted a net profit of Rs 1.02 billion (Rs 102.18 crore), up by 179.56 per cent from Rs 365.5 million (Rs 36.55 crore) in Q1 FY07.

The company recorded consolidated revenues of Rs 4.14 billion (Rs 414.46 crore) for the quarter ended 30 June, 2007, an increase of 66.44 per cent from Rs 2.49 billion (Rs 249.01 crore) in the corresponding quarter last fiscal. EBITDA was at Rs 1.52 billion (Rs 152.14 crore), an increase of 162.31 per cent as compared to Rs 580 million (Rs 58 crore) in Q1 FY07.

The operating margins increased to 36.70 per cent from 23.29 per cent in the corresponding quarter last fiscal. The net margins also saw an increase to 24.65 per cent as compared to 14.68 per cent in Q1 FY07.

After attaining leading place in real estate in India, Parsvnath also has strong plans to venture into international real estate development with its initial focus to captative markets of countries like the UK, Singapore, the UAE, Muscat, Bahrain and Mauritius. It may also go for tie-ups with the local partner for the real estate development. And following this plan of action, PDL has already tied up with Al-Hassan Group of Industries, Oman, Muscat.

“While we are strengthening our presence across various demographies and verticals in India, we are now taking PDL to next level of maturity by undertaking real estate development in overseas markets. This would help in risk and asset diversification, besides adding growth for company’s shareholders.” As per Mr Pradeep Jain, the chairperson .

PDL has also got plans to launch Parsvnath Pride Asia, an integrated township project in Rajiv Gandhi Technology Park, Chandigarh by mid-August 2007. This project will be covering 129 acre area, with developable area of 4.4 mn sq ft and realisable value of Rs 34 billion (Rs 3400 crore). The township would include shopping malls with multiplexes, five star service apartments, super deluxe club with resort, sports center with sports stadium and also have water sports.

Well.. You all are also aware that recently Parsvnath has also announced to to develop as many as 114 multiplex screens across India.

Ascendas rolls out India property trust

noreply@blogger.com (Rakesh Malhotra) — Thu, 26 Jul 2007 10:20:00 +0000

Ascendas India Trust (A-iTrust) is launching an initial public offering (IPO) on Wednesday in hopes of raising $500 million Singapore ($330 million).

The Singapore-based trust has a tax-exempt dividend of about 4.75 per cent in its forecast year from April 1 to March 31, 2008.

It is the first Singapore-listed Indian property trust and has a portfolio comprising information technology parks in Bangalore, Chennai and Hyderabad.

A-iTrust is offering 423 million shares at $1.18 Singapore (78 US cents) each with 31 million shares for the public.

HUL Puts Prime Real Estate Assets on Block

noreply@blogger.com (Rakesh Malhotra) — Wed, 25 Jul 2007 10:38:00 +0000

Consumer products heavyweight Hindustan Unilever (HUL) has begun the process of selling its real estate assets across the country, including Lever House, its landmark Mumbai headquarters.

The company has put several residential properties in prime markets such as Juhu and Santa Cruz on the block. Property consultant Cushman and Wakefield have been appointed to sell these properties. However, a Lever spokesman did not respond to an e-mail sent by ET.

Lever is likely to generate big gains on the transaction as many of the properties are in prime localities where real estate prices are already high.

Realty prices in Mumbai and Bangalore have soared over 50% in just one year. The residential property value in Juhu and Santa Cruz areas ranges between Rs 14,000 and Rs 20,000 per sq ft. The 30-acre Brookefields property is likely to be valued at anywhere between Rs 3,000 and Rs 4,000 per sq ft.

The Lever House is likely to fetch about Rs 25,000 per sq ft. Besides being a landmark structure, it has several facilities, including ample parking space. According to sources, several top corporates have set eyes on the marquee Churchgate HQ and the Brookefields property, where its foods division is headquartered.

HUL is also toying with the idea of joint development with property developers, or a complete sellout of its Bangalore property. The company is negotiating with various real estate consultants to finalise the strategy for the property which includes about 30 acres of land at Brookefields.

Hindustan Unilever is drastically cutting costs across operations and moving all employees to a single umbrella unit. The sale of prime property would not only generate large sums of money but also reduce operational costs, said a company observer. The selloff is part of a drive within HUL to unlock value from its real estate assets and invest it in its core businesses.

HUL has relocated its senior managerial staff from Brookefields to Lever House in Mumbai. The support staff will now move to leased premises in Bangalore. HUL is understood to have opted to pay higher rent (HRA) allowance to its employees. The cost incurred will be significantly less than owning prime real estate on company books.

A hefty compensation package has also been worked out for employees, especially in the top managerial cadre, sources said.

Developers want self-regulatory body with punitive authority

noreply@blogger.com (Rakesh Malhotra) — Thu, 12 Jul 2007 09:48:00 +0000

The National Real Estate Development Council, a trade group, has proposed the formation of a self-regulatory real estate authority to try and avoid government controls.

The proposed authority will operate at four levels—centre, state, district and town level, said R.R. Singh, director general of the council. It will have representation from stakeholders such as the ministries of urban development, and housing and urban poverty alleviation, as well as real estate developers and other land managing bodies such as the Delhi Development Authority.

The proposal comes even as the government has also talked about a watchdog.

“The lack of a regulatory authority is affecting the real estate sector,” Singh said. “We want self-regulation and not a government controlled regulatory body.”

As per the Council’s proposal, though the body will operate under the ministries of urban development and housing and urban poverty alleviation, it will be an autonomous body, which will set guidelines for developers and also prescribe punitive action.

“The authority should be set up under legislation. It will lay down rules for developers and if there are any violations, there should be punitive action,” Singh said.

Under the proposal, the Council suggested that a central real estate regulatory authority should be set up for the National Capital Region and this authority would, in turn, provide guidelines for state, district and urban real estate regulatory authorities.

Real estate in India is largely an unorganized sector. While there are reputed developers, the sector also has many fly-by-night operators whose practices range from unauthorized construction to building unsafe structures, or failing to complete projects on time.

“An independent regulator with a clear mandate to ensure fair competition and protection of the interest of consumer, investor and the developer is needed,” Singh said.

At the same time, the Centre is also working on setting up a watchdog for Delhi’s real-estate sector, which will make developers accountable to buyers. The urban development ministry is preparing a draft bill for Delhi. The Centre also wants all states to have their own real-estate regulators, as land is a state subject.

M. Ramachandran, secretary, ministry of urban development, says that self-regulation may not be effective in bringing transparency and accountability to the industry.

“The demand for a regulatory authority has come up because of certain practices in the industry,” he said. “If there was self-regulation in the industry, then there would have been no need for the government to set up a regulatory authority.”

Small developers, however, say they oppose a government-controlled regulatory body. In a government controlled regulatory authority, there is a danger of bureaucracy and red-tapism creeping in, said Raj Kaushik, chief financial officer, Vipul Ltd. “Dealing with bureaucracy is a headache,” he said.

“A self-regulatory body will be better as it will consist of my own people (developers) who can better understand the problems of developers.”

Recently, real estate agents across India came together to form a national association, the National Association of Realtors India, to self-regulate the unorganized sector of real estate agents. The association aims to protect consumers from rogue agents.

Large and established developers, who form 20% of the industry, have no issues with a government controlled body, said Kaushik Sengupta, vice president, sales and marketing, Eros Group. “But, the unorganized real estate sector is opposed to regulation, as most small developers do not follow international best practices.”

If a regulatory authority is set up, developers will have to comply with rules and regulations such as building earthquake resistant and environment-friendly buildings.

“Complying with rules will cost developers money. Small developers do not want to incur that additional expenditure,” Sengupta said.

Omaxe to raise Rs 550cr via IPO

noreply@blogger.com (Rakesh Malhotra) — Tue, 10 Jul 2007 09:03:00 +0000

Real estate developer Omaxe Ltd plans to raise about Rs 550 crore through its initial public offering (IPO). The price band has been fixed at Rs 265-310 per share for the issue.

The public offer will open on July 17 and close on July 20. Omaxe’s issue comes close on the heels of successful IPOs of real estate giant DLF and HDIL. The company received Sebi’s approval for its IPO on May 22. It had filed the draft red herring prospectus with the regulator in December. Omaxe proposes to enter the capital market with a public issue of about 1.78 crore equity shares of Rs 10 each through a 100 per cent book-building process.

About 1.75 crore equity shares are for the public, while the balance 2.96 lakh shares will be reserved for eligible employees. There will also be a greenshoe option of 17.5 lakh equity shares. The issue will constitute 11.20 per cent of the fully diluted post-issue paid-up capital of the company, if the greenshoe option is exercised and 10.30 per cent, if the option is not exercised.
The company will raise about Rs 550 crore at the upper band, much lower than its earlier target of Rs 1,400 crore. Omaxe has projects and land reserves in 30 cities and nine states. About Rs 500 crore of the proceeds will be used for payments related to land, Rs 236 crore towards repayment of loans and Rs 699 crore to fund development and construction costs.

New Delhi-based Omaxe has a land bank of over 3,000 acres and has 47 projects are under development. DSP Merrill Lynch, Citigroup Global Markets India and UBS Securities India are the global coordinators and joint book-running lead managers to the issue.

Source: http://www.indianrealestateforum.com/omaxe/t-omaxe-to-raise-rs-550cr-via-ipo-1397.html

Emmar MGF wins contract for C'wealth village

noreply@blogger.com (Rakesh Malhotra) — Wed, 04 Jul 2007 10:01:00 +0000

Emmar MGF has bagged the contract for building the Commonwealth Games village.

The Delhi Development Authority awarded the contract to Emmar MGF as it was the only company that qualified for developing the complex with a price bid of Rs 321 crore.

Emaar MGF is the joint venture between Dubai-based Emaar Properties and India's MGF.

The company cleared its last hurdle today with DDA accepting its bid for the prestigious games event.

Emmar-MGF had made a financial bid of Rs 321 crores against a reserve price of Rs 300 crores, a DDA spokesperson told reporters.

The company's name was earlier withheld when officials cited some legal "hurdles".

"There were some legal complications in the bidding," the official said. The hurdles have been cleared now.

"We are pleased to win this prestigious project and to have the opportunity to develop one of the most significant real estate landmark for a global event of this stature," Emmar-MGF managing director Shravan Gupta said in a statement.

Initially 14 developers had requested for qualification but only 11 qualified, of which DLF and Emmar-MGF had submitted bids for building the village, the official said.

DLF was disqualified for not fulfilling all the criteria in the tender.

The games village is to be completed by December 31, 2009, the official added.

Morgan Stanley Real Estate raises $8b realty fund

noreply@blogger.com (Rakesh Malhotra) — Fri, 22 Jun 2007 06:46:00 +0000

Morgan Stanley has raised the biggest property fund ever, an $8 billion warchest, to invest in established global markets including Japan and Europe as well as emerging countries such as China, India and Russia.

The Morgan Stanley Real Estate Fund VI, supplemented with borrowing, would have buying power of more than $30 billion, the US investment bank said.

Its portfolio would include real estate assets and companies from emerging markets including property investments in India, China, Russia, Turkey and Latin America, as well as developed markets including Japan, Western Europe and Australia.

Morgan Stanley became an active investor in Asia’s property markets by snapping up distressed assets in Japan and China, and has now moved into India by taking stakes in ambitious property developers.

Its deals are getting bigger. Morgan Stanley said last month it would buy Australia’s Investa Properties for $3.9 billion, picking up an office portfolio worth $3.4 billion.

In April, the bank’s real estate arm bought 12 hotels and two property management units from Japan’s All Nippon Airways for $2.4 billion. Property markets have climbed almost across the board over the past three years, with global direct investment last year jumping 38% to $682 billion, according to consultants Jones Lang LaSalle.

Morgan Stanley Real Estate has bought $83.5 billion of real estate assets globally through its funds. Its last fund, MSREF V, closed in September last year with $1.75 billion in equity.

8th India Property 2007 to be held in Dubai

noreply@blogger.com (Rakesh Malhotra) — Wed, 13 Jun 2007 04:36:00 +0000

The 8th India Property 2007 - Dubai being organized by The Confederation of Real Estate Developers Association of India (CREDAI) and Maharashtra Chamber of Housing Industry (MCHI) will be held at Dubai Renaissance Hotel, Dubai from June 14 – 16, 2007.

India Property 2007, Dubai will have some of the biggest names in the Indian real estate industry, showcasing both residential and commercial properties. Leading developers from places like Mumbai, Navi Mumbai, Pune, Nashik, Goa, Bangalore, and Hyderabad among other places would be participating.

This exhibition is supported by the Ministry of Urban Development, Government of India, with LIC being co-sponsors.

There are an estimated One million Indians residing in the UAE with Dubai being the hub of commerce and industry, and increasingly developing as a major hub for service industries such as IT and Finance. NRIs in Dubai are well placed in society and command the respect of the local people due to their industrious nature and diligence in duty. Asian expatriates account for more than 75% of UAE population with over 40% under 25 years of age. NRIs in Dubai are high net worth individuals, which makes them a potentially rich market for real estate investments in India.

Last years Dubai Property show 2006 was a huge success. The 3 day event saw some very serious and focused visitors at the exhibition, which translated into actual bookings rather than just enquiries. All exhibitors were delighted with the response they received and business generated at the close of the property exhibition.

CREDAI and MCHI ensure complete transparency and assurance to the customers throughout the entire transaction and guarantee them the amenities and specifications as promised during the deal. In the event of any dispute the consumer can approach CREDAI to assist them in resolving the same.

CREDAI: Confederation of Real Estate Developers Association of India (CREDAI) – is the apex body representing associations of real estate and housing developers from all over India. Its purpose is to promote housing and real estate developments in an organized and cohesive manner and provide a liaison with government bodies to effectively represent the views and needs of the industry. It has more than 3000 members spread over more than 17 states in India.

MCHI: MCHI is a member of CREDAI and India’s premier housing and developers associations in India. Established in 1982, in Mumbai, the commercial and construction capital of India, MCHI has a membership of 450 leading developers who account for 90% of the housing supply in Mumbai and its vicinity.

Source:clickpress.com

DLF to launch Rs 3,000 cr housing projects in B' lore

noreply@blogger.com (Rakesh Malhotra) — Wed, 06 Jun 2007 10:53:00 +0000

Real estate firm DLF Ltd will invest Rs 3,000 crore in two mega housing projects in Bangalore. DLF Commercial Developers Ltd chairman A S Minocha told FE that the projects would come up in prime locations in the city -- 80 acre in Beanerghatta and 120 acre in Electronic City.

Both the projects would house 10,000 apartments. The first phase of the projects with around 2,000 apartments would be ready for occupation in the next 24-30 months period.

Currently, the company is developing a mall with a budget hotel with an estimated project cost of Rs 1,000 crore in Whitefield area near Bangalore.

DLF is expected to raise Rs 8,750 crore to Rs 9,650 crore through its public issue of 17.5 crore equity shars this month. Of the net proceeds of the issue, the company would pump in around Rs 3,500 crore for developing existing projects while the same size of funds would be utilised for acquiring lands and developments rights for new projects.

A major chunk of money raised through the public issue is expected to be injected in its existing projects in Gurgoan, Chennai, Hyderabad and Bangalore. In addition to the two new housing projects in Bangalore, he said the company would also launch another apartment project in Chennai.

DLF has already acquired 130 acres in OMR Road in Chennai to construct 6,000-7,000 apartments with an estimated investment of Rs 1,800 crore.

Chandigarh real estate prices touching Sky

noreply@blogger.com (Rakesh Malhotra) — Tue, 05 Jun 2007 09:17:00 +0000

The scarcity of land along with the rise in demand for retail space has contributed in price hike of Chandigarh commercial properties by over 40 per cent in the last six-months. The hike has come as a windfall for the upcoming multiplex projects and a string of industrial and traditional movie theatres are lined up to turn into commercial complexes.

The city has come shoulder to shoulder with metros in terms of going rentals as that rentals are brimming Rs 600 per square feet at the prime locations. The realtors are seeing the place as the retail goldmine as the city leads in terms of per head earning and spending in the country. And most brands are ready to pay hefty rentals as the price of commercial properties is expected to remain firm in future as well.

The hike is clearly due to aggressive retail real estate expansion by majors like Reliance Retail, Subhiksha and the 'sought after brands' that are jostling to acquire additional retail space here. While most retailers are looking to lease the space, Reliance Retail is believed to be on hunt for outright purchase of space to avoid the high rentals. Some renowned hospitality groups are also believed to be on prowl to buy few properties here to launch hospitality projects here.

Sources in the UT Administration informed that the around 30 industrial units have already applied under the conversion policy and are altering into commercial businesses. Sources claimed that a number of industrial and commercial units in industrial area in Chandigarh are likely to benefit under the change of land use policy introduced by UT Administration due to warm response to on going projects.

Tremendous response of denizens to twho are more than ready to take up such projects in the city.he first multiplex in the city , Fun Republic, have interested many private developers

Sources informed that leasing price of the premier locations in the multiplex varies from Rs 550 per square feet to Rs 150 per square feet.

Apart from the two malls-cum-multiplexes are likely to come up an integrated housing cum commercial project being undertaken by Parsvnath, most of the traditional movie theatre owners are set to change to multiplexes, sources in UT Administration revealed.

FDI to develop township in Bangalore

noreply@blogger.com (Rakesh Malhotra) — Thu, 17 May 2007 09:52:00 +0000

Even as local real estate developers are mulling greener pastures in metros outside the state, Bangalore continues to be a star attraction for FDI-promoted township developers.

Fire Capital Fund Pvt Ltd, a global venture capital fund, plans to enter Bangalore in the next three months with an equity investment of $ 35 million on integrated township project near Whitefield in Bangalore. Fire Capital Fund Pvt Ltd plans to invest up to $ 250 million to develop integrated townships in 10 cities in India. By the year-end, the firm would also raise $ 500 million for dedicated real estate and infrastructure component development.

They made their first investment in Indore-based M Jhaveri Group on the 137-acre upcoming township Silver Springs being developed. It is Madhya Pradesh’s first Foreign Direct Investment (FDI) promoted integrated township, whereas in Bangalore it is one of the top five FDIs. They have also invested in the range of $10 million each for townships in Chennai and primarily tier II cities such as Nagpur, Bhubaneshwar, Indore, Jaipur and Dehradun.

The 500-acre township in Bangalore will usher international life style in the city. The township will be a new benchmark in quality development and people can experience a life style comparable to the best in the world. With Fire Capital as an active participant in development of the township, they assure timely delivery, quality construction, green, open township and the highest standards of maintenance to the customer.

The Bangalore township will have a shopping mall, an office with world-class facilities, hotel, and over 3,000 to 3,500 residential units including town houses, villas and apartments. To enhance the quality of living, the project will also have a club, health care facilities, a school, creche and places of worship. The project brings in best practices in design and master planning through a leading international architectural firm.

The township has been designed keeping in mind Bangalore’s potential for IT sector growth. The Bangalore township is expected to contribute greatly to creating quality urban infrastructure, generating revenue, fuelling the growth of IT and acting as a catalyst to attract FDI in the state, besides creating jobs for many.

The Bangalore project will be shortly announced with the completion of land assembly and convergence sale. The project will mainly be targeting people dreaming about owning a house near work place with all needed facilities.

Oversupply to bring down commercial rentals

noreply@blogger.com (Rakesh Malhotra) — Thu, 10 May 2007 09:31:00 +0000

The oversupply discussed in the last post is probably going to benefit in on way at least and that is a drop in commercial real estate (especially Grade A office space) rates upto 15%. The primary reason being oversupply. Pune leads the race in commercial realty with oversupply of 208% by the end of 2007, followed closely by Chennai at 200%. While Kolkata is expected to be 66% surplus, Bangalore will have 38% more supply than demand, and Hyderabad, 33%. In Delhi NCR, it is expected to be at 20%, among the lowest. Mumbai is the only exception with the demand projected to exceed supply by 8%, according to global property advisers DTZ.
Grade A leasehold office space across most cities is seeing the beginning of an oversupply situation that will continue in the short to medium-term, even though demand continues to be strong. Property experts opine that the first casualty would be rentals which could drop as much as 15% in the next few months.

“Our city-level demand supply analysis, seen in conjunction with the macro-economic fundamentals, clearly indicates that office space rentals are likely to hit a plateau in the next six to twelve months. Barring a few exceptions (primarily the central business districts), the oversupply situation will lead to a correction in office rental values. Or, very simply, this correction in Grade A office space rental values will not be driven by a lack of demand but due to an oversupply build-up,” says Ankur Srivastava, managing director, DTZ India.

For instance, the estimated supply of office space in 2007 in Delhi NCR is expected to be around 15.9 million sq ft (as against 10.6 million sq ft in 2006) with the estimated absorption being pegged at 13.2 million sq ft, resulting in a 20% excess supply. Bangalore is estimated to have 18.3 million sq ft of commercial space in 2007 (as against 12 million sq ft in 2006) with the absorption estimated at 13.3 million sq ft. This works out to 38% of excess supply in the city this year.

Chennai is expected to have the largest supply of commercial space this year at 19.5 million sq ft (which was only 5.3 million sq ft in 2006) with the estimated absorption pegged at only 6.5 million sq ft, resulting in an excess supply of a whopping 200%. Same is the case with Pune, which is estimated to have a supply to the tune of 17.9 million sq ft while demand could be just 5.8 million sq ft.

Kolkata with an estimated supply of 8.3 million sq ft (3.9 million sq ft in 2006) and an absorption of 5 million sq ft will have an excess of 66%. Hyderabad, on the other hand, is estimated to have a supply of 6.1 million sq ft (3.8 million sq ft in 2006) and an absorption of 4.6 million sq ft, resulting in an excess of 33%.

Mumbai is the only city, which is expected to be in the negative as far as oversupply is concerned. With its estimated supply pegged at 6.9 million sq ft (6.4 million sq ft in 2006), the absorption is estimated at 7.5 million sq ft.

noreply@blogger.com (Rakesh Malhotra) — Tue, 08 May 2007 04:45:00 +0000

Excess supply to hit real estate

Commercial real estate market, which has been witnessing a bull run over last couple of years, will soon face a bearish phase. Oversupply of office space in most of the grade A cities in last six to 12 months, may result in a fall in rental and capital values.

According to a report by global real estate consultancy firm DTZ, ctites like Delhi, Bangalore, Chennai, Pune, Kolkata, and Hyderabad, except Mumbai will have oversupply of 20% to 200% of estimated demand in 2007. Mumbai will continue to have supply shortage.

The city-level demand-supply analysis in conjunction with the economic fundamentals shows office space rentals are likely to hit a plateau in next six to 12 months. Correction in rental values will not be driven by lack of demand but due to oversupply. The leasehold office space markets are currently at an all time high — both in terms of quantum of space leased and rents. Lease rentals in NCR has gone up by over 200% in the last two years.

The study finds that rising capital and rental values and easy availability of capital have led to start of large number of projects at major locations. The increased pace of supply of quality commercial real estate is likely to outstrip demand in the short-to-medium term. It is expected that the oversupply position will reduce in long term as demand grows and supply tapers off. So, stakeholders like occupiers, investors, developers and intermediaries will formulate their strategies accordingly.

There are various factors that will define the degree and timing of this rental value correction. The threshold for this correction has been brought closer by the two recent interest rate hikes in the first three months of 2007. Degree of Inflation and consequent measures taken by RBI in the money market will play an important role in the real estate sector.

RBI tried to stem speculative interest and reduce inflationary pressures in the economy by curtailing availability of capital and increasing the interest rates.

noreply@blogger.com (Rakesh Malhotra) — Wed, 02 May 2007 11:00:00 +0000

Sebi chief unfazed by concern real-estate IPOs will slacken

India’s market regulator is serious about clamping down on manipulation by real-estate companies inflating their land banks to boost value and is unfazed by concerns that new disclosure norms will keep realty companies from tapping the market.

“I believe if that is the case then they should not be there in the first place,” said M. Damodaran, chairman of the Securities and Exchange Board of India (Sebi), while addressing a meeting organized by the Tamil Nadu Investors’ Association.

Sebi recently tightened disclosure norms for real-estate companies that want to raise money by selling shares. As per the norms, companies are allowed only to show land that they own, not the land they intend to buy in the future. Moreover, the valuations have to be based on the current market value and not on future projections.

Damodaran spoke of the extent to which land banks were manipulated and said the market regulator would not allow the practise to continue. Some real-estate companies are inflating landbank values ahead of a public offer of shares by temporarily acquiring land from farmers for a fee and then returning the land to them after the public issue, Damodaran said.

“I have seen documents shown to me by farmers which show that a certain plot of land has been sold to a real-estate company and a subsequent document simultaneously executed for a subsequent date which shows that it is sold back to that person,” he said.

He said the farmers are paid a “little money” for signing the documents. “The first set of documents is what is made available when you build up the landbank and having raised your money, the second set of documents becomes effective. That is, on non-existent landbank you would have parted with money,” Damodaran said.

As much as Rs4,000 crore out of a total of Rs20,000 crore raised through share issuances last year was by real-estate developers. That pace has slowed so far this year as several initial public offerings, including that of Purvankara Projects Ltd, DLF Ltd and Omaxe Ltd, have yet to be cleared by the stock market regulator.

noreply@blogger.com (Rakesh Malhotra) — Tue, 01 May 2007 08:25:00 +0000

Dubai real estate group launches 1st residential project in India

The first freehold real estate developer in Dubai to receive an ISO 9001: 2000 certification, has recently launched its first residential project, Jasmine Court in Chennai, India, representing the start of the company’s Dh11 billion investment foray into the Tamil Nadu region.

“We are very excited about Jasmine Court as we have already achieved major success with our two residential developments Binny Crescent and The Gardens in nearby Bangalore. Chennai is a great place for property investment at the moment as it is the third largest commercial and industrial centre in India and it attracts a large number of professional residents and also many tourists who come to visit the numerous sporting venues in the city,” said Abid A. Junaid, Executive Director, ETA Star.

Construction will commence within the next few months on the Dh800 million Jasmine Court residential development, offering investors mixed-size apartments distributed over 4.4 acres of landscaped property near the Chennai International Airport, with facilities including a children’s play area, a swimming pool, a gymnasium and basketball court. ETA Star has also recently announced its plans to invest more than Dh11 billion on five additional projects in Tamil Nadu, including an exclusive 1,200 acre integrated Township in Sriperumbudur.

noreply@blogger.com (Rakesh Malhotra) — Fri, 27 Apr 2007 07:16:00 +0000

Ansal’s Rs22,500 cr township to occupy 5,000 acres in Lucknow

Ansal Properties & Infrastructure Ltd has received preliminary government approval to more than double the size of its planned golfing and hi-tech city in Lucknow to 5,000 acres, making it one of the country’s largest township projects.

The Ansal township, which would house 3,50,000 people, will require an investment of about Rs22,500 crore. Ansal’s share would be Rs6,500 crore—the rest will come from the public sector and private investors. Ansal will fund the project through a combination of equity, debt and the sale of land.

The company has already purchased 1,500 acres directly from farmers and has had strong demand for the project’s houses and plots. The township, to be built in phases, will feature a championship golf course, three 5-star hotels, a medicity, a university, a Mahesh Bhupathi Tennis Academy centre, and 120 acres devouted to office buildings for information technology and biotech companies. Construction on the project began about two months ago. The company also said it has planned a 5,000-acre township for the Greater Noida area.