Deutsche Bank has picked up close to 40% stake in Ramprastha Promoters and Developers, a group company owned by Delhi-based Ramprastha Group for $80 million. Ramprastha Promoters and Developers has been primarily engaged in developing housing projects in the national capital region(NCR).
Confirming the deal, Ramprastha group director Arvind Walia told ET, “We signed the agreement with Deutsche Bank recently.” Mr Walia didn’t specify the stake Deutsche Bank has bought, but he said it was less than 40%. Ernst & Young advised Ramprastha on the deal.
In the largest private equity deal in real estate sector, Deutsche Bank had picked up around 25% stake in a special purpose vehicle (SPV) owned by Mumbai-based developer Lodha Group for Rs 1,700 crore, last year. Currently, Ramprastha Promoters and Developers is developing a 200 acre township in Gurgaon. The land for the project has already been acquired.
The real estate group promoted by Balwant Singh and family has taken up several housing projects in NCR. The developer has completed two township projects - 110 acre Ramprastha Colony and 80 acre Rampuri - in Ghaziabad and is implementing another 100 acre township in the same area.
Last year, the group had received foreign funding from South Asian Real Estate (SARE), a private equity fund based out of the Isle of Man. The real estate developer formed a 50:50 joint venture with the PE fund to implement a 150 acre township. The project will develop 11 million sq.ft of residential housing, commercial and IT parks.
The Ramprastha Group has also entered into an equal joint venture with Gurgaon-based engineering company, Punj Lloyd. The JV company is developing over 29.5 acre township in Vaishali, Ghaziabad.
The group so far has been focused on the Ghaziabad region, but it is fast spreading its operations to Gurgaon. Despite global recessionary trends, the Indian real estate sector seems to be attracting investments from private equity. Currently, several big players like DLF, Unitech and Omaxe are also looking at raising money through PE route.
Saturday, March 29, 2008
Deutsche Bank picks up 40% stake in Ramprastha
Yatra Capital and Phoenix Mills invest in SPVs for real estate projects
Phoenix Mills Ltd has announced that the Company has through investments in Palladium Constructions Pvt Ltd and Platinum Hospitality Services Pvt Ltd., acquired, a parcel of land at Rajaji Nagar, Bangalore. The acquisition has been funded through equity contribution from Phoenix along with another larger Real Estate Investor.
Yatra Capital Ltd ("Yatra"), the first Euronext quoted, Indian Real Estate Investment Company, has co-invested with Phoenix in 2 SPVs. Yatra has invested Rs 109 crores in Palladium Constructions Pvt Ltd and Rs 62 crores in Platinum Hospitality Services Pvt Ltd.
Through this investment, Yatra has acquired a 30% stake in both these Companies and Phoenix will hold the balance 70% stake.
The Phoenix Mills Stock closed the day at Rs.395, down by Rs.4.30 or 1.08%. The stock hit an intraday high of Rs.400.50 and low of Rs.392.
The total traded quantity was 9782 compared to 2 week average of 24328.
Source: Equity Bulls
High rentals dwarf luxury brands’ India gameplan
For several avant-garde luxury brands hitting the Indian shores, high rentals are already spoiling the party. Most are forced to charge a higher price for their goods in India as compared to picking up the same product in a market elsewhere in the world. Rentals and duties remain the key factors behind pushing up costs. On Friday FE spoke to a number of luxury retailers on the sidelines of the Mint Hindustan Times luxury summit. Of the two, rentals were considered the key reason by a unanimous choice. The cost of renting premium real estate is already similar to that in many developed luxury Markets despite the Indian market for luxury goods being still in its nascent phase. This, too, in India comes without the necessary infrastructure for promoting sales.
At present, there are only a handful of developers that are getting into developing luxury real estate like DLF Emporio in Delhi, UB Mall and MBD Zephyr in Bangalore. As a result, most Companies like Armani, Ferargamo, Christian Dior, Piaget, Lieber among others have already booked these spaces. For the rest like Gas and Rivetti, these rentals continue to be inhibitive. “Luxury brands cannot pay luxury rentals, often up to Rs 6,000 per sq ft, unless there are returns,” says Vivek Kaul, national director, JLL Meghraj, who have provided consultations to some of the upcoming luxury malls. Says high-end apparel brand GAS Apparel’s Gautam Vazirani, “for us the choice is to open stores in five cities or open a space in Delhi's DLF Emporio”. Alessandro Raniolo, MD, premium menswear brand Ermenegildo Zegna agrees that “the rents are exorbitant, especially, as infrastructure is not as developed, squeezing margins.”
In November 2007, Khan Market in New Delhi was rated as the world's 16th most expensive retail high street in a report released by estate firm Cushman & Wakefield's annual global report. It ranks higher than Markets such as Moscow (Russia), Beijing (China), Kuala Lumpur (Malaysia), Amsterdam (the Netherlands), Toronto (Canada).
Developers in India justify the rentals given the high rate of procuring real estate in the country. “Developing such properties is also more expensive than making usual malls. One has to put in more details in architecture and interiors, both of which are labour intensive and costly,” says MBD ‘s director Sonika Malhotra. She adds that to achieve the look and feel of luxury in such properties, one ends up making investments that one would not make in a non-luxury mall. “All these factors add to the final costs and push up rentals,” she says.
She does see the rentals coming down by 25-30% as the supply of luxury retail destinations increases over the next two to three years. Her mall MBD Zephyr in Bangalore will be operational by mid 2011. While Emporio should open in a couple of months with the UB group’s Collection is preparing for 2009 launch.
For the moment, luxury retail should continue to be an expensive proposition....
Consumers rate Raheja Builders as the Pioneers in Residential Real Estate in West
'360 Degrees presents 2nd Annual Living Awards 2007', the biggest ever consumer rated awards in residential real estate, Raheja Builders has been rated as the Most Preferred Brand in Residential Real Estate for providing the unique experience of an ultimate home in the western India. The awards were presented by Hon'ble Member of Parliament, Mr. Rajiv Shukla, at Tivoli Garden, New Delhi. The awards were based on the largest brand rating survey conducted by AC Nielsen ORG MARG in residential real estate and other allied house related products/services targeting 5,000 respondents in India.
The awards were presented by 360 Degrees in association with Cento International Investments, Tivoli Holiday Village, Supertech Builders and D'Silva Productions. The other brands to win accreditation for their superior performance and setting higher standards in residential real estate - western region were Lokhandwala & Hiranandani in Economy & Luxury segment respectively. The eventful night was enlivened by the scintillating performance of Bollywood divas Aarti Chabbria, Mahima Chaudhry & Sweta Salve.
On the occasion, the other winners were Ansal Group, Merlin Group & Mantri Developers in northern, eastern & southern region of the country. Apart from residential real estate builders the organizers also felicitated the various brands in allied industries.
Mr. Sameer Sainani, Sr. Vice President, from 360 Degree "As a marketing organization 360 degree endeavors to establish Smart Living Awards as one of the most validated event which provide recognition to the growing real estate and household products and services .Since its inception we have been felicitating the people who have contributed to the Indian Real Estate Industry"
Mr. Anant Rao, Director of AC Neilson said "These awards are a true benchmark for India's most preferred real estate and other house related ancillary brands. We are glad to be the research partner company who had conducted survey of such a mega stature; covering 17 cities including the metros and the cities with the population of more than 10 lakhs. We received tremendous response from the people and on that basis the responses and awards were announced."
Instituted in the year 2006, Smart Living Awards is an independent platform that recognizes and felicitates the most preferred brand in real estate and other allied house related product/services covering the quest of the "Ultimate Home". Understanding that a jury can alone never feel the pulse of the house owner's mindshare these awards are entirely based on the proportionate admixture of house owner's verdict, intenders and opinion leaders from the industry ensuring transparency and un-biasness.
Source: Equity Bulls
The Online Finance And Real Estate In India
he post liberalized Indian economy is witnessing a significant growth in the real estate segment. The easy availability of home loans has acted as a catalyst of the boom.
Finance for real estate is now easily available in India. The property boom is not restricted to the national capital region but it has even transcended to satellite towns and remote semi-urban areas in and around the national capital. The number of transactions in the real estate sector has increased a number of times, making it profitable for the banks and other lending institutions to offer more finance opportunities to the buyers.
In India, the most of the borrowers in home loan segment fall in the first time buyer category. It means that they are either tenants or living with their parents in their ancestral house. As the salaried-class is spreading and emerging stronger than ever, more and more people are becoming capable of buying house. Their need to get finance from banks is being taken care of by all the major players in the market. Banks like ICICI, Standard Chartered, HDFC and all the nationalized banks are offering home loans at attractive rates.
The procedure for taking a home loan is rather easy. You can directly approach the bank or call for a meeting to be arranged with the bank’s loan executive. This can also be done over the Internet. The banks may ask for various proofs like those related to your residence, income, spouse’s income, number of dependants, etc. Based on a number of parameters, the banks arrive at your credit rating and offer you varying amount of loans.
Home loans in India come in various forms inviting fixed interest rate or floating interest rates. There are hybrid loans also that are a middle path between fixed and floating options. The borrower can put a part of his loan amount under fixed rate and expose the other part to the floating rates that depend on market conditions and the interventions by the Reserve Bank of India.
The Internet as a medium of loan arrangement is fast catching up in India. Many websites are coming up that take care of individual and corporate finance for various purposes like buying real estate, investments, business operations, etc. This medium of finance is growing rapidly although it is surely in its nascent age as far as the Indian market is concerned.
Author Bio: For more tips on finance community for you and your family. Addi Vardhaman works as a business writer for Paisawaisa. To find online finance community, India online community, www.paisawaisa.com
Thursday, March 27, 2008
Trikona Capital Announces Expansion of Investment Team
Leading Indian real estate and infrastructure fund manager adds investment expertise to scale institutional platforms in India
NEW YORK--(BUSINESS WIRE)--Trikona Capital Ltd., the leading fund management firm for institutional investment in Indian real estate and infrastructure, today announces it has expanded its management team as the firm prepares to scale its investment platforms in the country.
Trikona Capital has added six senior managers, averaging 25 years industry experience, to focus on investments and deal closings for large scale real estate and infrastructure projects in India. This brings the team to approximately 50 professionals dedicated to supporting the platform. Trikona Capital committed more than US $1.5 billion into projects in the country and intends to deploy US$10 billion across real estate and infrastructure asset classes in India over the next 5 years.
“Trikona Capital has demonstrated time and again the ability to execute across the entire investment lifecycle in this complex emerging market,” said Aashish Kalra, Co-Founder and Managing Director of Trikona Capital. “Fully invested well ahead of our original timetable and with returns of 108% from a recent sale of minority stakes in our holdings, we have proven our ability to realize value for our investors. The addition of these seasoned professionals will assist us in scaling our investment platforms and achieve continued growth and returns.”
Trikona’s London-listed fund, Trikona Trinity Capital plc (AIM:TRC), reported an increase of 82% on invested capital in the first 18 months since its admission in April 2006 and realized an increase in net asset value of 53% for the same period.
Trikona Capital recently became the first manager of a fund in this sector to realize gains by divesting part of its share holdings in several projects for more than $64 million to SachsenFonds GmbH, a subsidiary of leading German public sector bank Sachsen LB. The divestment created a gain of 108% over the holding period.
In January 2007, Trikona Trinity Capital plc (AIM: TRC) also acquired nearly 45.9 million shares in Pipavav Shipyard Ltd. (PSL), which is building the fifth largest shipyard in the world on the coast south of Mumbai. PSL later received an investment from Blackstone at more than three times Trikona TC’s per-share cost.
The expanded investment team now includes:
- Ashesh C. Shah is global head of corporate development, investor relations and UK operations for Trikona Capital and brings more than two decades in private equity, venture capital, and entrepreneurial experience.
- Chris Rode leads international strategy and partnerships at Trikona Capital. He has 23 years of real estate experience and has acted as counsel, principal, and broker in transactions totaling over $2 billion. Previously, he was Director of Development with Starwood Development Corp.
- Pravin Rathod leads capital markets and deal structuring at Trikona Capital. He brings more than 20 years of experience in investment banking, audit, tax, and financial consulting experience and has raised more than $650 million for the Indian markets.
- Sajid Malik is responsible for deal structuring and closing at Trikona Capital. He brings 12 years of investment banking and principal investment experience, most recently from Affinion Group, an Apollo Management Group companies, Lehman Brothers and Merrill Lynch and has worked on more than $20 billion of transactions.
- Umesh Luthria leads investments into Trikona’s Hospitality platform. Having owned and operated luxury hotels in India, he brings 23 years of hospitality and real estate finance and development experience.
- Rahul Malik is a senior member of the overseas business development team for Trikona Capital in India. He has more than 12 years in real estate acquisitions, development, marketing, and disposition across asset classes and has worked at firms such as DLF, Taj Asia and Pacifica Real Estate Group.
Combined with the expertise of the former CEO of Jardine Fleming asset management and head of Unit Trust of India offshore investment management, the team has experience gained from Lehman Brothers, Merrill Lynch, Prudential Securities, Starwood Capital, and ING Vysava, as well as leading Indian companies such as Unilever, ICI India, and Delhi Metro Rail Corp.
About Trikona
Trikona Capital is the leading fund management firm for institutional investment in Indian real estate and infrastructure assets. Trikona Capital has developed a unique and scalable platform that combines an experienced team in India, strong U.S.-based governance and investor reporting standards, and strategic partnerships with leading companies to invest in India's high growth industry sectors. Trikona’s diversified portfolio of investments span the residential, commercial, retail, infrastructure, industrial, hospitality, and urban rejuvenation sectors, creating a complete ecosystem of projects designed to capitalize on India’s surging economic and social development. With offices in New York, London, Delhi and Mumbai, Trikona also manages Trikona Trinity Capital PLC (LSE: TRC), a $500 million fund initiated in April 2006 for the Indian real estate and infrastructure sectors. For more information, go to www.trikonacapital.com.
Contacts
Gutenberg Communications
U.S.
Mike Sherrill, 212-239-8741
msherrill@gutenbergpr.com
or
India
Ameya Sirur, +91 9987588991
ameya@gutenbergpr.com
or
UK
Bell Pottinger Corporate & Financial
Amy Rajendran, +44 20 7861 3232
ARajendran@Bell-Pottinger.co.uk
Yatra Cap invests Rs 175cr in B'lore property
Despite fears of slowdown, investments in the Indian properties continue unabated. The Euronext-listed real estate investment company Yatra Capital has invested nearly Rs 175 crore in Bangalore-based property developments.
Yatra has invested Rs 111.62 crore in Palladium Constructions, which will develop a mixed complex of retail and residential buildings, for a 30 per cent stake. Yatra has also invested Rs 63.44 crore in another entity Platinum Hospitality Services for a 30 per cent stake. Platinum will develop a hotel in Bangalore.
Yatra has committed Rs 914.62 crore of Rs 1,375 crore of the capital it has raised. The company has invested in nine real estate projects/entities so far.
Palladium Constructions will develop a 1.9 mn square feet of mixed use complex of retail and residential buildings. The development will comprise 1.4 mn square feet of retail space and 0.5 mn square feet of residential space. The project cost is nearly Rs 950.12 crore, the company said.
Platinum Hospitality Services will develop a 0.5 mn square feet hotel property, including serviced apartments. The hotel will be built at a cost of estimated Rs 402.62 crore. Construction on both properties is expected to begin in the last quarter of 2008 with the entire project expected to be completed in five years, the company said.
Yatra invested Rs 23.31 crore for 0.47 per cent equity in Phoenix Mills in 2007. Betting on returns of over 25% in Indian properties and stagnancy in realty markets of Western countries, a host of international funds such as Citigroup, Blackstone and Morgan Stanley have invested in Indian properties. According to estimates, nearly Rs 20,000 crore has been invested by international and domestic private equity funds in the Indian property market in 2007.
Realty tops savings tool for Indian households
Indian households are increasingly opting for physical assets as instruments of savings compared with their earlier emphasis on financial tools.
According to data released by the government, the household sector’s savings in physical assets increased by 16.12 per cent to Rs 5,17,837 crore in 2006-07 compared to Rs 4,45,915 crore in 2005-06. The savings in financial assets have gone up by 11.20 per cent to Rs 4,67,985 crore in 2006-07 compared with Rs 4,20,841 crore in 2005-06.
“As the stock market and real estate market witnessed a boom, a section of the population diverted its investments into physical assets. The investment in small savings has also seen come contraction. On account of increased intermediation, incrementally semi-urban areas are becoming aware of alternate investment options. The rural people are holding their savings in gold,” said Shubda Rao, chief economist, Yes Bank.
The Reserve Bank of India’s March 2008 bulletin shows that household savings constituted 23.8 per cent of the gross domestic product (GDP) between 2003-04 and 2006-07, as against 20.8 per cent from 1997-98 to 2002-03. In contrast, the share of physical assets has gone up and accounted for 12.7 per cent of the GDP between 2003-04 and 2006-07 compared with 10.5 per cent from 1997-98 to 2002-03.
“Rising consumerism and availability of bank credit has led to an increase in households’ financial expenses. The booming stock markets and real estate last year led many investors to park their funds in shares and debentures, while others opted for real estate. Incomes have gone and so has affordability. Despite a rise in the interest rates, consumers are buying houses. Savings are been diverted into these purchases,” said an economist with a foreign bank.
The bank household sector advances went up by 55 per cent to Rs 2,72,136 crore in 2006-07 as against Rs 1,75,010 crore in the previous financial year. Households’ savings in shares and debentures, including mutual funds, increased 62.31 per cent to Rs 48,228 crore in 2006-07 compared with Rs 29,712 crore in 2005-06. The bank deposits grew at 53.64 per cent, life insurance funds rose by 36.34 per cent and pension funds increased by 10.95 per cent during the period.
The net mobilisation of resources by mutual funds was 55.6 per cent higher at Rs 1,23,993 crore in April-December 2007.
“Indian youth want fast results and are willing to take risks if the returns are high. To minimise risks, individuals invest through mutual funds. Bank deposits and postal saving schemes are losing out to mutual funds, thanks to the stock markets. The stock market returns, even in case of under-performance, are anywhere in the region of 13 to 14 per cent,” said a public sector bank executive.
Goa Property Show attracts 3,000 home seekers
Home is where the heart is but ironically a home that suits the heart, mind and pocket is something that does not come easy. Therefore, when MagicBricks.com, India’s No. 1 property site, conducted the Goa Property Show ‘Delhi’ 2008 it had a strong 3,000 home seekers thronging the two-day event.
Pinjra.com introduces Tenants and Buyers feature
Pinjra.com is one of the fasting growing real estate website in India. It provides comprehensive features for Indian real estate market i.e. buy sell rent or lease properties.
India (PRWEB) March 25, 2008 -- http://www.Pinjra.com recently introduced a new feature to support real estate requirements listing. Most of the time, users looking for properties can't find suitable property as per their need and instead just to wait and receive an alert when a property matching their criteria is advertised. pinjra.com introduced a new feature where tenants and buyers can advertise their own real estate requirement.
The tenants/buyers search feature allows others users to view property requirements and provides facility to get in touch with the advertiser of the property requirement. But that's not all, even registered real estate agents, brokers, builders and letting agencies of that city are notified that there is a new real estate requirement and if they have any such property then they can get in touch with the advertiser. Pinjra.com also provides standard feature where users can save real estate requirement as an email alert without advertising their property requirement and they get notified when such property is advertised on Pinjra.com.
More about Pinjra.com and its features:
Pinjra.com is one of the fastest growing real estate website in India and it has many remarkable features and it is still keeping it free for end users. It allows registered users to advertise properties for free and imposes no restrictions. Registered users can advertise as many as properties they want and that's a lot of money saving for real estate professionals like real estate agents, builders and letting agencies. Further, property photos can be added easily to property listing and has a neat feature to mark property's location on map. Property search feature using map is good and it is not yet very common in India real estate websites.
Pinjra.com provides very good performance statistics feature for a property advertisement. It not only shows that how many times a property listing has been viewed but it also tells that how many times people have forwarded property advertisement to their known and how many persons have marked property advertisement so that they can visit it later. Also it lets property advertiser to contact them in a restricted way i.e. without revealing details of other users.
Property advertisement or requirement of any part of India can be advertised on Pinjra.com, it is not just for big cities like New Delhi, Chandigarh or Gurgaon, but users can advertise property for any city and if that city doesn't exist, one can add that easily. It supports nearly all types of properties i.e. from residential properties to commercial properties. So whether one is looking for homes in Mumbai or office on lease in Bangalore or to buy property in Chennai or to sell property in Hyderabad, Pinjra.com provides answer to all and provides solution to real estate investment.
Persons interested in learning more about website can go to http://www.Pinjra.com
Wednesday, March 26, 2008
Reality check
ANUPAMA KATAKAM
Escalating real estate prices in Mumbai have made housing almost unaffordable for practically all sections other than the affluent.
VIVEK BENDRE 
The South Mumbai skyline.
IN November 2007, a four-bedroom apartment in NCPA Building at Nariman Point in south Mumbai sold for the gravity-defying price of Rs.34 crore to a United Kingdom-based non-resident Indian. It cost Rs.97,842 a square foot, perhaps the largest ever residential property sale on record in the country.
A week later, the city recorded the biggest ever commercial land deal. The Wadhwa Group bought a plot of less than two acres (1 acre is 0.4 hectare) at Bandra-Kurla Complex in suburban Mumbai for a record-breaking Rs.821 crore.
Towards the end of 2007, particularly after these staggering sales, there was talk of Mumbai’s unreal realty market seeing a correction. These sales were “freak” cases, said most people in the industry. There had to be some checks on the skyrocketing prices. Yet, almost six months later, and in spite of a dip in the stock market, prices continue on an upward course. Housing in the island city has never before been so expensive. It has become virtually unattainable for all other than the very wealthy.
The unreal rates are not restricted to purchases. The city’s landlords are now demanding astronomical prices for rentals. While multinationals or rich Indian companies are able to fork out vast amounts to house their executives, people with smaller budgets find it increasingly difficult to find a home. Many have shifted out towards the northern suburbs and commute at least an hour each way every day.
“I came to Mumbai from Bangalore a year ago to work in an ad agency. Apart from the prohibitive rental rates, my company does not take out company leases and that makes it doubly hard to find a house in south Mumbai. All the landlords want leases with MNCs or banks or big Indian companies,” said Sunil Rao. “I finally found a two-room apartment for Rs.20,000 in Andheri. It takes me an hour and a half by train each way. If we work late, I have to take a cab, which costs around Rs.500.” For this price, said Rao, he could have rented a three-room flat in Bangalore and perhaps lived reasonably close to his workplace.
A recent study by the rating agency Crisil found that in the past four years Mumbai saw a nearly fourfold jump in residential real estate prices in certain areas. “The residential real estate price increases in Mumbai have been of the order of 50 per cent and 300 per cent over the last three years, varying areawise,” the report says.
The report also points out that most of the available housing is targeted towards higher-income households, rendering it largely unaffordable for 56 per cent of the population of the city, with an annual household income below Rs.2 lakh. “Though most households in this category aspire to buy a house, residential real estate for this category is largely unavailable. Only 3 per cent of the total households have annual incomes above 20 lakh.”
“Owners have become greedy,” said a housing loan banker. “Just when a deal has been agreed on, at the eleventh hour the owner would raise the price by no less than Rs.50 lakh or Rs.1 crore.” Apart from being unethical, such actions shatter the buyer, who by this stage would have already spent a fair amount on legal and bank fees. In one instance, a seller got an offer at Rs.21,000 a square foot but was not prepared to talk unless a rate of Rs.21,500 was offered. “It’s plain greed that makes people haggle over Rs.500 when they are getting several crores. It’s a ridiculous seller’s market,” the banker said.
Money from abroad, increased disposable income, huge upgrades in salaries over the past few years, a bullish stock market, companies shifting to cost-to-company structures in salaries and a continuous flow of immigrants have contributed to the upward trend in commercial and residential real estate prices, said Pankaj Jaju, an analyst with Enam Securities Private Limited.
“Mumbai has emerged as the most resilient real estate market with most developers holding or increasing prices steadily,” said Jaju. His colleague Neelabh Sanyal, an analyst of the industry, agreed. They expected Mumbai’s commercial real estate to be more resilient than the residential, though it would be difficult to predict a correction soon.
With several mill properties in Central Mumbai up for sale, it was expected that the increased supply of land would balance the demand. But Jaju and Sanyal pointed out that this would have a limited impact on prices. There are visible supply schemes such as affordable housing in the suburban centres, slum rehabilitation schemes and the redevelopment of nearly 19,000 dilapidated buildings in the island city. Additionally, the repeal of the Urban Land Ceiling Regulation Act will free up land that will be used for mid-lower income housing. Yet, this supply is expected to come in only after three to five years and so will have no immediate effect, analysts say.
Floor space index (FSI) is another area of contention. Developers believe that if the government increases it in the island city, the supply may increase as taller buildings would be allowed to come up. But the authorities, instead, compensates this “loss” by giving transfer of development rights (TDR) to developers in the northern suburbs. This means that those developers who have taken on the responsibility of redeveloping a slum in the city will be allowed to have large-scale developments on lands bought in the north. Some of these lands are sold at subsidised prices.
Activists, urban planners and even some real estate professionals have been appealing to the State government to amend or introduce laws to improve the housing situation. The government has made a few attempts by drafting a housing policy which, however, is yet to be implemented. One of the recommendations is to sell property on the basis of carpet area and not super built-up area, which is the current norm.
One of the oddities in Mumbai’s real estate market is that a large portion of south Mumbai is actually owned by the Collector’s office. This includes land on which there are buildings as well. If a residential sale takes place, the Collector has to be paid Rs.500 a square foot. For commercial sale the rate is Rs.1,500 and for industrial sale it is Rs.1,000. This year the Collector’s office earned Rs.50 crore in sale and transfer fees – Rs.8 crore from the NCPA sale itself.
Recently, in an effort to control expenses on property purchase, the State government said it would abolish these fees. While the news cheered buyers, Collector I.A. Kundan says it is unfortunate as these fees benefit the Collector’s office. Besides, the land legally belongs to the Collector’s office, so it is only right that a fee is paid if a sale takes place.
“Mumbai’s real estate issues are exclusive to the city,” said Kundan. “The fact is there is very little land. The city has developed on a very narrow strip of land. Unless the spread takes place further north, the city will not decongest. And until infrastructure is better in the suburbs or northern areas, there is no attraction to live there. This part of Mumbai will always remain expensive because of the demand on housing.”
“The problem is no one wants to leave this pocket [south Mumbai]. It is hardly 20 kilometres in length. And the Bandra-Juhu belt, also very sought after, is only about 10 km,” said Usha Thakkar, a real estate broker. “Infrastructure is not the same there, that is why people do not want to move out. Also, if they do something about the central business districts (CBDs) and have companies move, that might motivate people to settle in those areas so that they can reduce commuting.”
Each area has a distinct culture, and people used to living in the southern areas of the city do not want to buy property in the suburbs. Areas such as Matunga, Dadar or Parel are clearly dominated by one or two communities, though, said Thakkar, this is changing, particularly after the mill properties were sold.
The construction of plush residential towers and commercial complexes in Parel, an area once dominated by textile mills and possessing a distinct blue-collar culture, is now emerging as an upscale upper-middle-class neighbourhood, complete with big brand stores and fancy cars.
Thakkar said that the large-scale construction in the Parel belt was unlikely to affect Mumbai’s property prices. “Prices have only gone up. A flat selling for Rs.7,000 per sq ft in 2005 is now going for close to Rs.22,000 in 2008.” As soon as a project is announced, there are enquiries from prospective buyers.
She recalled how in 1998-99 “prices were going through the roof and nobody thought they would come down. But they crashed. We may not see a crash, but prices have to steady eventually.” The dynamics are different now. With 100 per cent foreign direct investment allowed in India in real estate, the sector is now being eyed as an investment opportunity, so prices will remain in the upper brackets, she said.
Several private equity funds and investment banks have already begun investing in this sector. According to a leading bank, India’s real estate sector is slated to grow to $40-50 billion in the next five years. The Federation of Indian Chambers of Commerce and Industry (FICCI) predicts that Indian real estate is poised to emerge as one of the most preferred investment destinations for global realty and investment firms in the next few years.
Mumbai is among the top 10 cities in the world when it comes to costly real estate. London and Tokyo vie for the top position. As an island city it has only that much land for development and, therefore, historically has always been expensive in terms of real estate.
Official estimates peg the population of Mumbai at 13 million. Unofficial sources say it is more likely to be 18 million. Demographics in Mumbai are constantly changing, but it can be said without doubt that a large chunk of the population would fall into the lower- and middle-income segments.
It is unfortunate that in these “home loan friendly” times, very few can actually afford a home in this city, which, ironically has plenty of opportunities for Indians in every category – from the rural poor to the corporate affluent.
Shalini Madaras starts new real estate development company
By Brian Shea
Shalini Madaras, founder of Silver Pine Real Estate, a new residential real estate firm, stands outside of her home on Signal Hill Road. —Brian Shea photo
For Shalini Madaras of Signal Hill Road, opening her own residential real estate firm, Silver Pine Real Estate, was the natural next step in a career that began in 1999.
Ms. Madaras, who came to the United States from India 15 years ago, said she first started on the career path for a very simple reason: “I’ve always been around the buying and selling of real estate.”
She said that having worked for three different firms throughout her career, she was exposed to three different models and the last one, which focused on teardowns and redevelopment projects for houses, left an imprint on her as she founded her own firm.
“I had the experience of doing traditional real estate along with the redevelopment part,” she said. “My firm will explore the maximum potential of what the land can offer.”
As an example, she said a property might be supporting a small rundown house that could instead be used for condominiums. By tearing down the house and building the condominiums, the land would be used more effectively.
Because in real estate the project being sold cannot be changed, it’s necessary to find the advantages and disadvantages of a piece of property and emphasize the strong points, she said.
“By emphasizing the individual character and ambiance of each residence and setting, I try to personalize what that property can represent to a buyer. By also taking the time to thoroughly understand the buyer’s or seller’s mentality, I try to match each buyer with their ideal home and each seller with their ideal buyer,” said Ms. Madaras.
She founded the firm recently, but is already working on three different construction projects and has two listings in Norwalk of existing houses as well. The three construction projects are single family homes, with two in Wilton and one in New Canaan.
She said in crafting redevelopment projects, her firm was always very conscious of what the community needs and wanted the projects to contribute to the community in a positive way.
While she presently is the only executive in the firm, she said she has some ideas for those that might wish to join the firm as partners.
The name for the firm comes from a tree Ms. Madaras sees when she visits the grave of her son, Nicholas Madaras. Mr. Madaras, a U.S. Army soldier, was killed in action in the fall of 2006 in Iraq by a roadside bomb.
While at his grave, Ms. Madaras said “there was a tree that caught my attention. It was a silver pine.” Her son’s battalion was nicknamed the Silver Lions, and so she felt the name was fitting for the firm.
Ms. Madaras said her experience of working in the United States has been very different from working in India.
“The opportunity this country gives you ... is tremendous. You get that opportunity to be the best person you can be,” she said. In India “you need to have people who will support you to go forward with your career,” in contrast with the United States where its possible to strike out independently.
“Here in the U.S., I found that if you are focused, determined, persevering and not afraid to work for what you want and believe in, you encounter kindness and generosity from people who are more than happy to give you a helping hand,” she said.
Her firm also strives to help causes that need it. She is currently helping a project in India that supports handicapped children there.
“I would like to make sure I always stay involved in the world, so to speak. It’s just about the business,” said Ms. Madaras.
She hopes the project will help the children and spread good will to India in the same way the Kick for Nick campaign, which sends soccer balls to Iraqi children in Mr. Madaras’s name, sends good will to the Iraqis.
“I want to extend a friendship that cuts the barrier of race, that cuts the barrier of our differences,” said Ms. Madaras.
World Class Properties in major cities of India unveiled for the First time in Chennai
MagicBricks.com, India’s No. 1 Property site is proud to have the privilege of organizing the ‘Chennai Property Bazaar 2008 on 29th & 30th March 2008 at MRC Center, Santhome High Road, MRC Nagar. The MagicBricks.com Chennai Property Bazaar 2008 will showcase a slew of exclusive properties and projects, from Chennai, Bangalore, Hyderabad and in Kerala, both ready for occupancy and under development, offering world class living with international amenities, built in an eco-friendly ambience.
Mr. R. Sundar, CEO, Times Business Solutions said,”MagicBricks.com has been set-up to empower the home-seeker with transparency & choice, and has redefined the way property transactions are conducted, providing products, services and platforms, that had never been witnessed in the real estate sector. MagicBricks.com is set to provide property-seekers in Chennai with the amazing experience of a Landmark Real-Estate Property Fair with this event.”
“Backed by rigorous research, unique product developments, and innovative initiatives, such as The MagicBricks.com Chennai Property Bazaar 2008. MagicBricks.com became the No.1 property site within 3 month of its launch in August 2006 and has maintained its position, lauded for its easier interactivity and transparency it has brought about in the realty space. “added Mr. Naveen Luthra, Business Head of MagicBricks.com.
MagicBricks.com’s objective of empowering property buyers and sellers with unique and innovative, products, services and platforms for interaction has led, among many other achievements to the successful hosting of shows in Dubai, London, and Singapore and across cities in India.
MagicBricks.com conducts Property Fairs, branded as “MagicBricks.com Property Bazaars”, which serve as a one-stop-shop for property-seekers to interact face-to-face with developers, agents and housing financing institutions, all at a single venue. MagicBricks.com Property Fairs are conducted in 4 different formats, Locality-Centric (e.g. Property Fair in Bangalore for properties in that city), Income-Centric (e.g. Luxury Properties for HNIs – by invitation only), Regional Showcase (e.g. Goa properties fair in Delhi), and International Fairs (e.g. Indian Properties showcased to NRIs and PIOs in Singapore, Dubai & London). So far, MagicBricks.com has conducted over 40 domestic and 6 international property fairs.
The Chennai Property Bazaar 2008 is the first in Chennai of several property fairs hosted by Magicbricks.com. Backed by in depth research and global experience MagicBricks.com property fairs offer the participants new growth prospects through opportunities to reach out to newer markets. The fair itself will be promoted extensively through advertisements in reputed dailies and in popular FM radio channels, editorial publicity in major print media, outdoor visibility through hoardings, bus panels, banners and slide shows in cinema halls, among others.
An exhibitor and participant at Chennai Property Bazaar 2008 benefits in the following ways :
1. Build one’s brand visibility with large number of prospective customers
2. Relevant quality footfalls
3. Face-to-face interaction with prospect customers
4. Showcase one’s newer projects and services to a class audience
5. Build new relations with prospects and reinforce relationships with existing clients
6. Generate new investment opportunities
MagicBricks.com is set to provide home-seekers with the amazing experience of a landmark real estate fair with this event. So don’t miss this amazing opportunity!
Make time & visit the best developers and builders - all under one roof at the innovative MagicBricks.com Chennai Property Bazaar 2008 - on 29th & 30th March 2008 at MRC Center, Santhome High Road, MRC Nagar.
Real Estate business in India getting serious through community portals.
RealAcres.com, India’s leading and fastest growing real estate portal which provides with a open platform to form community and speak openly on the issues faced by home buyers.
A recent most popular issue was the CLEARANCE ISSUE IN HIRANANDANI ESTATE, THANE(W) www.realacres.com/simply_ask/discussion/92/clearance-issue-in-hi ..
Group of people facing problem have grouped together and are following the builder while noting down the conversation in this forum ”Simply Ask” powered by RealAcres.com.
Smita Thorat, CEO of RealAcres.com states that, “Simply Ask has been a strong voice for home buyers, they
share information such as the local area, neighborhood information and the quality of the real estate etc., Real Estate is a tough business to understand and there are several hidden information which a home buyer fails to understand. Simply Ask has helped a lot to home buyers and attracts 1 lakh unique visitors per month sharing their thoughts and experiences in Simply Ask”
Simply Ask forum is answered by experts from the real estate industries including Vastu, FengShui, Loan Experts, Lawyers and home buyers with valuable information to share.
RealAcres.com continues to build a dedicated community of users by bringing together the information that consumers need to make the best possible real estate decisions.
Contact Information:
RealAcres.com
101, Mahinder Chambers, W.t.Patil Marg, Opp. Dukes Factory, Chembur, Mumbai - 400 071
Contact Person:
Pooja Pathak
Phone: +91 022 2521 4122 / 2520 7283
email: email
Web: http://www.realacres.com/
Realty players hop on to hospitality business
The booming realty market is blurring the lines between commercial, residential and hotel developers in Chennai. Close on the heels of major players such as DLF, Unitech, and Puravankara, city-based developers are also diversifying into the hospitality business.
While developers such as Appasamy, Ceebros and Harrisons have forayed into this category, others such as Arihant and Visranthi are expected to follow suit.
Industry observers attribute the heightened interest in the hospitality sector to a number of drivers like availability of capital,the synergy that real estate developers bring to hotel projects, IT parks having lost some of their sheen for these developers due to uncertainty in tax benefits and a huge demand for hotel rooms that stems from an increase in the number of business and leisure travelers plus tourists.
"The specialist construction knowledge of residential developers gives them a natural affinity for an asset class such as hotels, particularly in markets where the hotel offering is not very competitive. Residential developers, provided they brand appropriately, are able to find synergies with their accommodation expertise," said Mr Ramesh Nair, managing director-Chennai, Jones Lang LaSalle Meghraj.
Mr Nair added that another hospitality asset class gaining traction among residential developers is serviced apartments, as it does not require the 'high street presence' of hotels. For example, Star City spearheaded the concept of service apartments in Chennai, to address the needs of the expatriate population.
Appasamy Real Estates, which diversified into the hotel business more than a decade back, currently operates five hotels in the three star-four star category in Tamil Nadu and Karnataka. "Developers have local expertise in acquiring land, which gives them an advantage. However, the market has enough room for established hospitality players and the new builders coming in," said Mr Ravi Appasamy, managing director, Appasamy Real Estates.
Mr Appasamy added that though the IT parks continue to see a demand for occupancy, the pace of construction is ahead of the rate of absorption.
Also, the realty market in India is unorganized in terms of developers. So, any developer who finds a good opportunity will diversify. Earlier, diversification into IT parks was in flavour among small developers. With the IT sector facing trying times now, hospitality offers the next diversification opportunity.
Mr R Rajesh Babu, chief consultant- RECS Group, a real estate consultancy firm said that the recent budget proposal offering a five-year tax holiday for three or four star hotels established in districts that have UNESCO-declared 'World Heritage Sites' is also driving more activity in the hotel business.
According the ministry of tourism, Government of India, Tamil Nadu ranks third in the domestic tourism scenario, followed by Andhra Pradesh and Uttar Pradesh. On the foreign arrivals too, TN stands third. "When a city grows, the visitors also increase. Lot of sectors such as IT, hardware manufacturing, automobile and financial services have a strong presence here," Mr Rajesh Babu added.
While the hospitality industry in India is growing at a brisk pace there is still a huge gap between demand and supply resulting in increase in room rates. Going by the figures put out by the South India Hotels and Restaurant Association (SIHRA), the demand is projected at 1,00,000 quality rooms all across India but there are less than 40,000 rooms in supply.
"There is a huge shortage in the three and four star category. Also, in terms of IT parks, the non-SEZ parks are not in flavour. So, hospitality offers a good alternative," said Mr Kamal Lunawath, managing director- Arihant Foundation & Housing Limited.
Mr Lunawath added that Arihant plans to open 3 or 4 hotels in the next few years in the South, to tap the opportunity in this space. "We will handle the construction and leave the operational aspects to brands that already have expertise in the hospitality area," he said.
Tuesday, March 25, 2008
'High interest rates, prices stunt real estate'
| High interest rates and overheated asset prices have cooled the super-charged growth in real estate even as a demand-supply mismatch continues in the Indian property market.
“We have not seen any major movement in prices of office buildings over the last three months. In fact, prices in the central business district of Delhi have remained hard. Rentals in the suburbs have stagnated,” said Pradeep Jain, chairman, Parsvnath Developers. | |
| Rentals of prime commercial buildings in the New Delhi central business district, which covers the area around Connaught Place, stand at their December prices of Rs 330 to Rs 375 per square foot (sq ft). | |
| At Nehru Place, the capital’s secondary business district, commercial rentals have been constant at Rs 220 to 260 per sq ft during the same period, say property consultants. | |
| In contrast, rentals grew 40 to 50 per cent in the National Capital Region in calendar 2007, according to a recent report by property consultancy Jones Lang LaSalle Meghraj (JLLM) | |
| In the emerging boomtowns Gurgaon and Noida, which command rentals between Rs 50 and 200 per sq ft, have seen a 5 to 10 per cent dip in commercial rentals in the last three months, according to consultants. | |
| Slowdown in Mumbai Last week, Mumbai’s city planning agency — the Mumbai Metropolitan Region Development Authority (MMRDA) — failed to get bidders for two plots in the Bandra-Kurla Complex (BKC), the city’s new business district. Analysts say this is a clear indication of a slowdown. | |
| “The days of super-high growth are over. Now developers are only going for those properties which are reasonable,” said Abhishek Kiran Gupta of JLLM. | |
| A landmark office tower at Worli, which commanded rentals of Rs 550 per sq ft, has seen a decline to Rs 375 per sq ft, said a city-based property consultant. He added that rentals in BKC, which had gone up to around Rs 450 per sq ft, are likely to soften by Rs 75 to Rs 100 per sq ft. | |
| The addition of new office space over the next six to eight quarters is expected to lead to a further decline in rentals. Nearly 15 million sq ft, the equivalent of the BKC, of office space will be added in Mumbai by end-2008, the NCR is expected to see an addition of 7 million sq ft of office space. | |
| “Rentals will not grow by 30 to 40 per cent now as was the case till now. Rates in the prime city centre areas will not fluctuate much,” said Gupta, adding: “Rentals in the suburbs will not grow more than 8 to 15 per cent.” | |
| Given that economic growth is expected to slow in 2008-09, experts say reduced demand could see more supplies coming into the market. | |
| “Companies book and lease space keeping three- to five-year horizon. But given the slowdown in economy, they tend to scale down their demand projection of space. Reduction in demand means more supply hitting the market,” said Jai Mavani, executive director, KPMG. | |
| Slump in housing Residential demand, which is more sensitive to interest rate movement, has cooled in recent times, though developers are reluctant to admit this. | |
| However, it is a fact that property transactions have dropped and the rate of new home loan disbursals has also fallen. | |
| The State Bank of India (SBI), the country’s largest lender, saw a home loan portfolio growth rate of 16 per cent in 2007, slower than the 20 per cent growth witnessed in 2006. | |
| SBI has cut home loan rates twice since January 2008, a bank executive said, adding that there was no visible growth as yet in the home loan portfolio. “Property prices are still high and people still cannot afford flats in big cities,” he added. | |
| “Apartment sales have gone down by 20 to 30 per cent in Mumbai. Developers are doling out goodies like stamp duty relief, free parking and interiors to boost sales,” said Rajiv Sabharwal, head, retail assets, ICICI Bank. | |
| Crucially, developers are not cutting prices. | |
| “Developers can not cut prices because once you do that, it signals the start of a downward spiral. They are holding on to the prices to maintain the momentum,” said Rajesh Mehta, a leading property consultant in Mumbai, adding: “April and May are the key months as far as property deals go. If transactions do not pick up, prices of apartments will fall at least 10 to 15 per cent”. | |
| Traditionally a stock market boom has a direct impact on real estate prices. However, the near 5000-points fall in Bombay Stock Exchange Sensex from its peak in January 2008 has wiped out much investor wealth. | |
| This reversal of fortunes is expected to have an immediate impact on residential real estate prices. The last two or three years have seen prices escalate across the country. | |
| Despite anecdotal evidence of prices falling marginally in recent times, the fact remains that supply of apartments and built up plots in the developed areas of Mumbai and Delhi is scarce. | |
| “New residential projects have slowed down. Only big developers are launching new projects. Buyers are also waiting whether prices will come down,” adds ICICI’s Sabharwal. | |
| Speculators have exited many areas like Greater Noida, Kundli and even some parts of Gurgaon. JLLM Chairman Anuj Puri believes that investors, who comprise nearly 20 per cent of property buyers, are staying out after the stock market crash. “The absence of speculator interest has led to a 15 to 20 per cent correction in areas like Gurgaon and Noida,” he said. | |
| The scenario in Cyberabad The southern city has seen a change in the nature of buyers. Where investors dominated before, more and more end-users are buying properties, says I Syam Prasad Reddy, managing director and chief executive officer, Indu Projects Ltd. | |
| “Hitherto, demand was driven both by investors and end users. Currently there is a substantial drop in investor interest, but there isn’t any slow down and demand is only flat”, he adds. | |
| All quiet in Silicon city “No upward movement of prices has been evident in Bangalore’s commercial business district for the last four to five months. Residential realty prices have stagnated due to an increase in supply, much more than the demand,” said Samira Chandra Gupta, regional director, Colliers International. | |
| Others concur with this view. “Prices have been generally flat. In many localities prices have fallen sharply. The reduction is greater in peripheral areas and to some extent in premium or super-luxury residential properties,” said Shivaram Malakala, executive director, Habitat Ventures. | |
| On the outlook for Bangalore, Collier’s Gupta said demand from the IT sector may be impacted by the US slowdown, but sectors like pharma, R&D services and some manufacturing companies would continue to drive demand. Hardening interest rate over the past year have seen second and third home buys, which drove the markets, dry up. | |
| Like elsewhere, prices are expected to remain bearish, with Malakala saying they could fall further by up to 10 to 15 per cent. |
'High interest rates, prices stunt real estate'
Shaping dreams: The emerging metros of tomorrow
The real estate industry is showing a rapid shift in the focus from the metros and Tier I cities to the Tier II and Tier III cities. The industry is moving over from Delhi, Mumbai, and Chennai, to pave the path for the new contestants in the race. The real estate industry has realised that there is life and potential for growth of the industry beyond the mega and metropolitan cities in India.Shaping dreams: The emerging metros of tomorrow
From class banking to mass banking
Suburban locations in India are witnessing a real estate and retail boom with a lot of residential and commercial complexes being built out there. Now, banks are also aggressively targeting such centres for business by opening new branches in such areas. Says Maninder Juneja, head, retail liabilities, ICICI Bank, "Customer behaviour and transaction studies have shown us that customers have a tendency to approach the nearest bank branch for all their transaction needs. Moreover, customer footfall in a suburb branch is at par with a comparative branch in a metro." More than 150 ICICI Bank branches are located in the metros of Delhi, Mumbai, Kolkata and Chennai. "The suburbs of these four metros are supported by around 20% of these branch numbers. Suburban locations are a key focus area in our branch expansion plan for this year too," says Juneja.From class banking to mass banking
Monday, March 24, 2008
Take advantage of the buyer’s market
With talk about the subprime lending crisis, foreclosures and a questionable real estate market, what is a potential buyer to do? INDIA New England spoke with several real estate agents in New England to get their advice on how buyers can best position themselves to take advantage of the current housing market.Take advantage of the buyer’s market | Articles | India New England
Pinjra.com - Upcoming Real Estate Website
As the US economy is slowing down or heading towards recession, eventually investors will turn to growing economies. Among the fastest growing economies like China and India, India will be the least affected from US slowdown as it is not a totally export oriented economy. So in the end, more money will flow towards India. One of the sectors which will benefit from this is India's real estate which is already making new heights.Pinjra.com - Upcoming Real Estate Website - PR.com
Emaar bullish about Indian real estate
UAE Property major Emaar Properties has said that it will reconsider its initial public offering (IPO) in India “when the time is right” though the company is bullish about the Indian real estate market.Emaar bullish about Indian real estate
New airport to improve Hyderabad's brand image
With the new international airport commencing operations near here, the brand image of Hyderabad is to go up, attracting more investment in IT, biotechnology and other industries.New airport to improve Hyderabad's brand image
Are Global Investors Shying Away From Asia?
Fund managers at a recent conference in Hong Kong said many global hedge funds have stopped dabbling in the region's property and though private equity players continue to develop in India and China, they are more likely to buy buildings on the cheap in the West than in Asia.blackenterprise.com
EDGY CITY EMBRACES REDEVELOPMENT GOLD RUSH
The lukewarm response to the auction of plots in the Bandra-Kurla Complex last week may have been an indicator of the slump in Mumbai’s real estate market, which has so far spiralled at a meteoric rate to become one of the costliest in the world. However, with the availability of land in the country’s financial capital almost next to nil, residents in housing societies are being promised the moon if they agree to redevelopment. In a Newsline series beginning today, Shalini Nair takes a look at the pros and cons of the trend as projects take off rapidly and bigger players jump into the frayExpress India :: EDGY CITY EMBRACES REDEVELOPMENT GOLD RUSH
Indiabulls banks on realty skills to run Trumart
| Barely four months after it acquired an 84 per cent stake in Piramyd Retail, Indiabulls is going in for a major restructuring of the Trumart business model. |
| Indiabulls Director Gagan Banga said the company is applying its real estate skills to tighten the retail business. |
| “Retail is hardcore real estate business. You need real estate and good supply chain management; it is two businesses (combined) into one. It’s a zero-intellect business,” said Banga. “The largest real estate player in the world is Wal-Mart, that’s why it is the largest retailer.” |
| So Indiabulls has closed five retail stores of Trumart, now known as Indiabulls Mart, one each in Thane, Jaipur and Pune and two in Ahmedabad. |
| Rates high “This is business as usual. We have closed five stores and opened five new stores (two each in Ahmedabad and Pune and one in Jaipur). Two stores will open this Monday in Bhopal and Dewas. The closed stores will be reopened in the same, or nearby areas, with better rental deals,” said Banga. |
| In most stores that are being closed down, the lease has expired. The company is either unwilling to accept a big hike in rentals or it has identified alternative sites, which offer a better real estate deal (lower rental and lower deposit). |
| Typically, these leases have a lock-in period of two years, where the rentals are hiked by five per cent every year, and 15 per cent every three years. The rentals have shot up in many metros, and in one such case the landlord was seeking a 40 per cent hike in rentals, which would have made the stores more unviable. |
| Neighbourhood focus “We will expand the number of neighbourhood stores from 35 to 55 by June. We had acquired 35 stores, and 10 more old deals were scheduled to be signed in six months,” said Banga. |
| “Some were bad real estate deals. We were paying rents of Rs 10 lakh a store where net margins are just 2 per cent.” |
| The retail business is a subsidiary of Indiabulls Real Estate, and it is now using its real estate skills to secure better deals by lowering the deposits one needs to pay for such leases, or looking for alternate locations with lower rentals. It has started selling groceries in a couple of Megastores, where there’s demand. |
| Indiabulls says it will add six neighbourhood stores by the end of April, and 14 more by June. In all, it plans to have 55 Indiabulls Marts by the end of the next fiscal. |
| Similarly, it had seven Megastores and has added two stores. It plans to open two Megastores by April and four by June, taking the total number of Megastores to 15. |
| Scaling back In all, the group has set a target of 70 Indiabulls Mart and Megastore outlets by June and 100 by December. When acquiring Piramyd, Indiabulls said it planned to scale up the number of Piramyd stores from 42 to over 150 stores by the end of next year. It has scaled back its plans even as it gears up to launch its first hypermarket, under Indiabulls Wholesale, in April. |
| “Food retail is not viable beyond certain rates (rentals of Rs 55-70), with a few exceptions where footfalls can be high,” said the CEO of a food retailer, who requested anonymity. Observers said Trumart was paying high rentals, had issues of locations, merchandise, stock management, and was poorly managed. |
| Difficult times “In the days to come, 3-5 per cent of all retail stores across the industry would close for reasons of viability, bad locations or error of judgement,” said the CEO of a food retailer. |
| “In food retail, nobody is making money. Scale is crucial in business as gross margins are only 10-15 per cent. If you include general merchandise, the gross margins can be 18-20 per cent as compared to 32-35 per cent in the West,’’ said a former CEO of food and grocery retail chain in India. |
| “In the West, the costs are also low. In India, the rentals as a percentage of sales can be as high as 14 per cent, as compared with 2-3 per cent in the US,” he pointed out. |
Indiabulls banks on realty skills to run Trumart
Global investment banks to invest $500mn in Unitech SPV
Private equity players Lehman Brothers and Deutsche Bank are set to make a combined investment of $500 million in an SPV floated by India’s second-most valued real estate developer Unitech, according to a person close to the development.Global investment banks to invest $500mn in Unitech SPV- News -Real Estate-Markets-The Economic Times
PE firms cut corpus of realty funds
A tightening of global liquidity markets has made private equity fund raising for the real estate and infrastructure sectors difficult with many funds expected to extend their closures or reduce the target corpus. According to people in the industry, the churn in the global equity markets has made investors wary of even private equity funds, although the two markets are in different categories with different quantum of risks.PE firms cut corpus of realty funds- Finance-Banking/ Finance -News By Industry-News-The Economic Times
Red Fort to launch 2nd offshore fund in April
Red Fort Capital, the investment manager of Cayman Islands-based Red Fort India Real Estate Fund I, is planning to launch a second offshore fund next month with a corpus of Rs 3,200 crore ($800 million) to invest in the Indian real estate.Red Fort to launch 2nd offshore fund in April
Rising interest costs, unsold units pinch realty developers
Boom or bust, real estate companies have been among the dominant players which have set the pace of the stock market for quite some time now. When the market was scaling new highs every day, they earned gigantic returns for investors. And when the market started crashing, realty stocks were among the ones which were hammered the most.Rising interest costs, unsold units pinch realty developers- Investor's Guide-Features-The Economic Times
Corporates optimistic on retail boom; line up huge investments
As the investment rate of 36.3 per cent is driving the Indian growth story, corporate retailers across the country have announced investments plans amounting to Rs 1,31,804 crore in the past six months for expanding their network of stores in the next four-five years to cash in the retail boom, according to the ASSOCHAM Investment Meter (AIM).The Hindu Business Line : Corporates optimistic on retail boom; line up huge investments
Jhajjar SEZ has farmers in two minds
| Kishan Kumar was a happy man a year ago, having pocketed more than Rs 4 crore from selling nearly 20 acres of fertile land to Reliance Industries Ltd for its 12,355-acre Special Economic Zone (SEZ) in Jhajjar and Gurgaon districts of Haryana. |
| Today, he is one of the many landowners in the area who look back at the transaction in regret. |
| “I would have been better off had I not sold my land. Frankly, when my neighbours started selling land to Reliance at Rs 22 lakh per acre, I was lured into it and sold 20 of my 32 acres,” said Kumar, a farmer from Dadri-Toye village in Jhajjar district. He used to earn an annual income of nearly Rs 10 lakh from his land. |
| Kumar’s lament is a small example of a dilemma farmers across India face as companies approach them for land for industrial projects. |
| The price surge at Jhajjar has more to do with skyrocketing land prices near the SEZ site plus a recent rumour that the Haryana government may increase the minimum price for land acquisition to more than Rs 55 lakh per acre. |
| Sat Pal, whose family had sold more than six acres of land in Ladpur village, has the same story to tell. |
| “If the land acquisition prices go up, my family can do nothing but regret the decision to sell their land. Had we waited like others, we would have got more than double the money,” he said. |
| He added that most of the farmers who have sold their land were either in need of money or had plots that were not very productive. |
| Property brokers estimate that Reliance has already bought around 9,000 acres of land in the region, which the company declined to confirm. |
| And the impact has been significant. Property dealers in Jhajjar and Sultanpur said that land prices adjoining the SEZ site have doubled, and in some areas trebled. “In Sultanpur, plots near the road are going for more than Rs 1 crore an acre, up from around Rs 45 lakh per acre. It’s the same story in places like Garhi plots are going in the range of Rs 60 lakh to 80 lakh per acre from Rs 20 lakh to 25 lakh per acre. In Pataudi, farm plots are going for up to Rs 40 lakh an acre,” said a property dealer based in Sultanpur. Kishan Kumar and early sellers may be complaining of lost opportunities but there are many signs of new-found affluence in Jhajjar and surrounding areas. Yesterday’s chief transport, the community tractor, has been jettisoned in favour of Maruti Altos and even the upmarket Honda SRV. Meanwhile, bankers in Jhajjar confirm that deposits have doubled in the past one year. So much so that State Bank of India and Indian Bank have added this once sleepy town in their branch network. “Deposits in Punjab and Sindh Bank touched Rs 180 crore. But in the past couple of months, many people have withdrawn money to invest in other source like land and real estate,” said a banker in Jhajjar. Indeed, Kishan Kumar has bought nearly 8 acres of land in Pataudi near Jhajjar, and will use it for farming. Just like him, many farmers are buying farm plots as far as Uttar Pradesh and Rajasthan. But signs of tensions are already brewing. Despite the visible lifestyle changes of those farmers who sold land, there are many who are opting not to sell — and not just because they anticipate higher prices later. For instance, Kishan Kumar’s friend Suresh Kumar has decided not to sell his land and stick to farming. “I have no idea about handling large sums of money and farming is the only skill I know. I will not sell my land to Reliance and the state government will have to acquire it from me,” he said. Suresh claims there are others in his village who are not going to sell their land to Reliance at any cost. Indeed, Kishan Kumar said his friends and family have decided not to sell their land to Reliance. “There has not been any major land deals for the past three four months in my village or the surrounding area,” he said. |
Jhajjar SEZ has farmers in two minds
Asian markets are safe haven from credit crisis
The rapid Asian growth story has been a lucrative play for investors over the past five years. In China, where the economy has grown at an incredible average rate of 9.8 per cent a year since 2003, stock markets have almost trebled over the period, while some funds that invest in the region have delivered even better returns.Asian markets are safe haven from credit crisis - Invest & Save, Money - Independent.co.uk
SBI to launch “Real Estate Equity Mutual Fund”
SBI Mutual Funds Management has finally filed its initial papers with India's market regulator for launching a dedicated scheme for the real estate and related sector.SBI to launch “Real Estate Equity Mutual Fund” | Top News
Some myths about wealth creation
Vandana Shiva, the feisty green-activist, organic farming enthusiast-cum-practitioner and thinker, in the course of a recent interview in the Top Shot programme of Doordarshan Lok Sabha Channel, wondered whether the stock markets really create wealth.The Hindu Business Line : Some myths about wealth creation
Property in newer IT destinations selling briskly -Chennai
The IT sector in India fuelled the first round of residential real estate boom. Growing salaries, leading to larger disposable incomes and the search for a new lifestyle befitting the new work culture created a boom in the residential real estate sector. But as the products become more and more opulent and expensive, developers are realising that the IT segment leads the boom and contributes to about 30% of sales. But for long-term sustainability, the market cannot outprice itself and expect to survive on premium sales alone. Bangalore, Hyderabad and Gurgaon are facing a slowdown while newer IT destinations such as Kolkata and Chennai are still selling briskly.Property in newer IT destinations selling briskly - Property-The Sunday ET-Features-The Economic Times
BPOs feel realty pinch in smaller cities
India Inc, especially the BPO (business process oursourcing) sector, looks at them as the 'next destination cities'. With sky rocketing property prices, non-availability of good office spaces on rent, and high attrition rates, Tier I cities like Mumbai, Bangalore and Delhi are fast becoming too expensive for many BPO firms. A reason why Tier II-III cities like Pune, Ahmedabad, Nagpur, are coming up as alternative destinations.BPOs feel realty pinch in smaller cities-India Business-Business-The Times of India
Friday, March 21, 2008
I have a choice of investing Rs 12 lakh either in Vadodara or ...
...Surat. Which would you advise me to go in for? I live in Vadodara.
Ismael Hussein, Vadodara
As a resident of Vadodara, you are aware of the fact that it is the more cosmopolitan city of the two. It has several good residential projects coming up and is a better choice for purely residential purposes. However, Surat is a better location if you are purchasing the property from investment point of view. The property rates there are appreciating at a faster pace than Surat.
How good is Faridabad as an investment destination? I have been advised to consider a property at Sector 78 there. What are the rates in this area? My focus is both end-use and investment potential.
Chandrachur Biswas, Greater Noida
Sector 78 of Faridabad is still in the process of development and will take at least 3-5 years to reach its maximum investment potential. It makes good sense from a long-term investment perspective, and there are many reputed developers with projects there. These include Triveni, Omaxe, BPTP and Piyush. You will find a decent property in the range of Rs 1,400-1,600 per sq ft.
What are the prospects for commercial office real estate at Pune over the next three years?
K A Bharadwaj, Kharghar (Navi Mumbai)
The short-term reflects a shortage of ready supply of Grade A office space however, the long-term will see the influx of considerable supply as under-construction projects reach completion and proposed ones are finalised. Commercial real estate rates are likely to stabilise in the medium term.
I own a property located approximately 10 km from Mihan at Nagpur. I am in no particular hurry to sell this property, but would certainly like to know how it will fare over the next few years. May I have your professional opinion on this?
Mrs R S Thote, Panshet (Pune)
Nagpur is currently at a nascent stage of development, and overall progress on this front is still marginal. The scenario will not change in the short term. However, Mihan is a good bet for long-term investment since it is venue for the proposed new airport. Nagpur’s property market will respond favourably once the airport goes operational. Also, the proposed SEZ in the vicinity of the airport will add value as a commercial hub.
How will India’s real estate sector fare over the next few years? I don’t believe in the ‘bubble’ theory, but am certain there will be some downward fluctuations. I intend to make some long-term investments and your opinion will help me decide.
Mahesh Khandelwal, Surat
We have every reason to believe that India’s real estate market will be worth close to $50 billion by the year 2010. The fundamentals are strong and will remain so, there is an annual population growth of 1.4%, and the economy is growing at around 9% per year. As a result, there will be continued demand for both urban residential and commercial space in India. The overall demand will be close to 700 mn sq ft in the next three years. Need I say more?
You have gone on record as saying that sustainable real estate is not only the need of the hour but the business model of the future. Do you feel that a switch in current sentiments is possible to bring about a ‘green’ revolution in India?
B K Arora, Ghaziabad
It is a matter of bringing about a change in consumption patterns. We firmly believe that replacing the consumption of ‘grey’ or non-sustainable developments in India with ‘green’ or environmentally sustainable ones will boost our ecosystem by reducing eco-stress, and eventually open up avenues for a paradigm change. However, we do not believe that this argument alone will suffice to bring about the required change in sentiments. The most powerful argument in favour of sustainable real estate development is that the fact that it is also good for economic activity—in other words, business.
The Union Budget has given the SEZ format a real shot in the arm. What areas of Pune will see the most significant activity on the SEZ front?
Dr Namrata Harolikar, Nasik
Currently, the following companies have proposed to establish multi-product SEZs at Pune:
Videocon (at Wagholi)
Bharat Forge/Kalyani Group (at Mulshi Taluka on Nasik Highway)
DSK Group (at Phursungi)
Serum Institute - Biotech (at Manjri/Phursungi)
MIDC - Research and Development (at Chakan)
With so much hype about office and retail real estate, one could be forgiven for thinking that residential space is perhaps nothing but a poor cousin of the other real estate sectors. How feasible is investing in residential space in India today?
Jatin, e-mail
Progress in commercial and retail real estate sectors automatically spells good news for the residential sector, and similarly, the reverse is also true. Indian residential real estate is going nowhere but in the upward direction. On an average, residential properties have given investors a return of anything between 20% and 100% in the last three years. We saw the arrival of many players from South-East Asia, the United States and Europe who have their eyes on new residential townships, as well as technology parks, warehouses and other infrastructure projects.
Thursday, March 20, 2008
Andhra Pradesh Emerges as the Preferred IT Hub in India
Proactive initiatives of the Andhra Pradesh government and potential to sustain long term IT growth have transformed Hyderabad to become India’s leading IT hub, according to a report released today jointly by the Information Technology and Communications Department, Government of Andhra Pradesh and Jones Lang LaSalle Meghraj.
The report “Andhra Pradesh – The chosen destination for IT” was released by the Honourable Chief Minister of Andhra Pradesh, Dr. Y S Rajasekhara Reddy, and Mr Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj, at the Hyderabad IT Summit 2008.
The state of Andhra Pradesh earns the fourth largest revenues in IT exports amounting to INR 1.85 billion, accounting for about 15% of the total IT/software exports from India. The state continues to be a significant contributor towards India’s economic growth. Beginning with the government’s initiative towards the development of the successful Hitec City in Hyderabad and policy initiatives aimed at bolstering investment, IT development is gradually spreading to other cities within the state. Moreover, the Andhra Pradesh government is now looking proactively at foraying into sunrise IT sectors such as KPO along with Animation and Gaming.
According to the report, the Indian real estate market is not only growing in terms of pace, but also in scale. Real estate growth engines are no longer in cities such as Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Kolkata and Pune. The smaller cities are now expected to be the growth drivers over the next decade. More that a dozen Tier III cities compete with each other to attract developers, investors and occupiers. The smaller cities in Andhra Pradesh will have an advantage due to relentless government support.
Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj said, The IT boom has had a significant impact on real estate development in Andhra Pradesh. The state offers tremendous development potential with Hyderabad at the epicenter of IT growth, followed by emerging cities such as Visakhapatnam, Vijayawada and Tirupati. The state’s initiatives and strategies for infrastructural development, human resource development and policy framework to support and attract investments have helped it become an attractive investment destination for developers and occupiers. From the positive growth momentum built by the government, Andhra Pradesh is steadily placing itself firmly on the global business map.”
Other salient points from the report include:
Andhra Pradesh has the highest number of SEZs approved by the central government for the IT sector (as of 31st December, 2007). It is expected to get a total of 71 SEZs which will create overall jobs for more than 2.5 million people
Digital Entertainment City is envisaged to be developed as the largest animation and gaming hub in South Asia and will be developed through private-public partnership. The city will have world class in facilities and incubation centers
With relatively lower rental and commercial values when compared to major cities, Hyderabad is still affordable in terms of real estate costs and living
A new ICT (2005-2010) is in place to make Andhra Pradesh the most attractive and preferred destination for the IT Companies.
Overall, the report concludes that buoyed by significant infrastructure development and the emergence of Hyderabad as the prime IT hub of Andhra Pradesh, the government has identified the IT sector as one of the most important economic drivers for the state. Andhra Pradesh with its strong focus on policy and overall development presents a compelling investment opportunity.
About Jones Lang LaSalle Meghraj
Jones Lang LaSalle Meghraj is the Indian operations of Jones Lang LaSalle (NYSE: JLL), the only real estate money management and services firm named to FORTUNE magazine’s “100 Best Companies to Work For” and Forbes magazine’s “400 Best Big Companies”. It is the premiere and largest real estate services company in India, with an extensive geographic footprint across ten cities (Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad, Kolkata, Kochi, Chandigarh and Coimbatore) and a staff strength of over 3300. The company provides investors, developers, local corporates and multinational companies with a comprehensive range of services including research, consultancy, transactions, project and development services, integrated facility management, property management, capital markets, residential, hotels and retail advisory.
For press backgrounder on Jones Lang LaSalle click here
Media contact details
Sukhvinder Kaur,
Jones Lang LaSalle,
+91 (0124) 4605000,
sukhvinder.kaur@jllm.co.in
Ameya Sirur,
Gutenberg Communications,
+91 9987588991,
ameya@gutenbergpr.com
