CHENNAI: After creating a record of sorts in setting up Mahindra World City, the first SEZ at Chengalpet near Chennai, Mahindra group has embarked on yet another dream project. This time, the $6 billion-group plans to build a mega integrated township costing over $1.1 billion within the SEZ in the next five years.
As part of the gameplan, the group’s listed real estate and infrastructure subsidiary, Mahindra Lifespace Developers (MLDL) on Monday announced its partnership with Ayala Corporation, Philippines’ leading real estate developer through its subsidiary, Mahindra residential developers (MRDL).
Mahindra group will hold 51% stake in MRDL and the balance 49% held by Ayala Corporation through its real estate fund, Arch Capital Asian partners, managed by Arch Capital management company. The JV will undertake the development of a gated residential community replete with infrastructure, retail and recreational facilities within Mahindra Lifespaces’ Mahindra World City, which will be spread over 1,600 acres.
Mr Arun Nanda, Mahindra & Mahindra executive director and Vice-Chairman, MLDL, said this is the first time Ayala is entering India. It is one of the largest real estate developers in the Philippines, having a track record of 80 years plus experience. As a milestone project, Ayala has developed 2,000 acres at Makati, making it the new business capital of that country, he added.
He said the SEZ has already come up on 1400 acres and it has acquired additonal 200 acres. Of this, the industrial space will spread over 1100 acres and the township will come up on 500 acres. During 2007, employment in the SEZ crossed 8000 and this year it is expected to touch 15,000. By 2010, it is expected to employ one lakh people directly and indirectly, whereas by 2014, direct employment alone is to touch one lakh and indirect employment 1.5 lakh.
Of the 500 acres meant for commercial and residential space, the first phase will cover 250 acres. Of this, it has already utilised about 25 acres to develop the first residential project, styled Sylvan County, which has 250 units comprising apartments, bungalows and semi-detached dwellings, Nanda said.
Monday, April 28, 2008
Mahindra Lifespace Developers plan $1.1 bn mega township
Why sub-prime is not a crisis in India
R. VAIDYANATHAN
The amounts in the form of black money are large and mostly invested in real-estate and gold, two major areas of passion for the Indian middle-class. As long as a good portion of our economy and asset financing is by black income we need not worry about sub-prime, says R. VAIDYANATHAN
Just like our fashion industry is affected by US trends, so also is our financial industry. Whether it is relevant or applicable is not material. If it affects US citizens then it should affect us since we are a major economy having all the ills of a developed economy.
In the medical field it is no longer fashionable to talk about malaria or TB or leprosy, but, instead, obesity and cosmetic surgery. So also in our financial system irrelevant issues are focussed upon and inconsequential matters occupy the centre-stage with the participants not knowing what they are talking about.
The sub-prime is the current fashion and even my milk-man, when queried the other day why he was late, answered that it was due to the sub-prime crisis.
The sub-prime (mortgage) crisis is an ongoing economic problem, manifesting itself through liquidity issues in the banking system owing to foreclosures which accelerated in the US in the last two years.
The background
The term sub-prime lending refers to the practice of making loans to borrowers who do not qualify for market interest rates due to various risk factors, such as income level, size of the down payment made, credit history, and employment status.
Sub-prime borrowing was a major contributor to an increase in home ownership rates and the demand for housing. The overall US homeownership rate increased from 64 per cent in 1994 (about where it was since 1980) to a peak in 2004 with an all-time high of nearly 70 per cent. This demand helped fuel housing price increases and consumer spending.
Between 1997 and 2006, American home prices increased by 124 per cent. Partly this is due to the encouragement for the consumption economy after the 9/11 disaster to boost activities based on consumer spending.
Some homeowners used the increased property value experienced in the housing bubble to refinance their homes with lower interest rates and take out second mortgages against the added value to use the funds for consumer spending.
US household debt as a percentage of income rose to 130 per cent during 2007, versus 100 per cent earlier in the decade.
The crisis began with the bursting of the US housing bubble and high default rates on “sub-prime” and other adjustable rate mortgages (ARM) made to higher-risk borrowers with lower income or lesser credit history than “prime” borrowers.
Loan incentives and a long-term trend of rising housing prices encouraged borrowers to assume mortgages, believing they would be able to refinance at more favourable terms later.
However, once housing prices started to drop in many parts of the US, refinancing became more difficult. Defaults and foreclosure activity increased dramatically as ARM interest rates reset higher.
During 2007, nearly 1.3 million US housing properties were subject to foreclosure activity. The issue is not only of lending, it is also about borrowers providing misleading or wrong information to be eligible to borrow, such as boosting their income.
Let us look at the Indian scenario. In India, banks provide at most 40 per cent of the credit requirements of the household, including for consumption purposes. A large portion of the requirements is met by non-bank institutions, including money lenders.
Also, a large portion of organised lending is with public sector banks, which are under the control of Government, and in any event Government is not going to allow them to go under.
Unlike the US situation, where the Government or Federal Reserve has to save banks from going insolvent by providing additional capital, here in India, they are owned by Government, which will facilitate with additional funds in the form of bonds or shares if need arises.
Role of Black Money
The housing sector in India is significantly different from that of the US. A good portion of the house financing is undertaken with black money.
In other words, the proportion of black to white may vary from 20 to 40 per cent depending on the location, registration charges, bribery to local authorities, etc. This is applicable to both commercial and residential real-estate and flats.
The borrowing from banks is based only on the white portion as it should be. The banks also lend on the basis of the earning potential (past earnings record) of the client.
The income-tax assessments of many individuals present a lower picture than the actual situation. In the US, banks need to discount the claims of the borrowers while in India, banks may have to boost the claims of the borrowers since assessed income is only a part of the picture. Hence the actual position of the borrower is much better than what is shown on the paper and the margin amount; the one financed by the borrower, is substantially higher than what is shown in the book due to financing of the asset (the house) partly by black income.
In such a situation, there is no incentive for the borrower to lose the asset since his stake is much higher than shown in the book of the banks. This is the real situation.
The problem with our banking sector is different. If operational risks are due to thousands working in our banks and if credit risk is due to hundred persons then market risk is due to ten or so in the treasury.
Some of our public sector bankers who are not very good in lending and credit risk management visualise themselves to be market wizards and are active in products they are not familiar with.
Some private sector banks are aggressive sellers of these products and the CEO of one of the companies that lost heavily due to exotic derivative products, claimed that his CFO is an “innocent” person who has been tricked into buying these exotic products.
Lending based on ‘calls’
The presence of black money or what one may call the hidden net worth of India has tremendous advantages in times of asset based lending and borrowing since only a part of the price of asset is seen, like the tip of the iceberg.
The other portion of the asset finance by the borrower from black fund makes it imperative for him to protect his position by meeting the obligations.
Then the obvious question is regarding NPA in these assets. That has to be understood by the elementary issue of lending for clients knowing well that it will turn in to an NPA.
This is called telephonic banking traditional style — where the telephone call from influential netas makes the lending possible. That has got nothing to do with sub-prime crisis. It is called lending based on calls — meaning telephone calls and not on credit-worthiness.
Borrowers’ stake
Actually, given our legal processes, which are very slow, there is an incentive for the borrower to walk away.
But given his stake he is not enthusiastic to do that. Hence the default rate in the home market may be due to wilful frauds or deliberate issues of connivance by the lender.
Even in the commercial property market, it is, again, not due to sub-prime but due to bad decisions of the bankers knowing fully well the non-viability of the project or due to “external pressures”.
The amounts in the form of black money are large and mostly invested in real-estate and gold, two major areas of passion for the Indian middle-class. As long as a good portion of our economy and asset financing is by black income we need not worry about sub-prime.
The stakes are high for the borrower to let go his asset. As it is said, there is a silver lining to every dark cloud — like the strength of our hidden net worth in dealing with sub-primes.
(The author is Professor of Finance, Indian Institute of Management-Bangalore, and can be contacted at vaidya@iimb.ernet.in. The views are personal and do not reflect that of his organisation.)
Soft market? U.S. second homes popular for foreign buyers
Two years ago, while attending the home builders’ annual convention in Orlando, Fla., a top-producing local real estate agent was bubbling over the interior design features of a vacation home.
“All of my international buyers are just going to love this,” the agent said. “I can’t wait to tell them what’s now available.”
I was intrigued. How many international buyers did she have?
It turned out that more than 60 percent of the agent’s clients were buyers from overseas. And she is not the only real estate professional cultivating the foreign market. According to the National Association of Realtors® (NAR), 65 percent of Florida Realtors had at least one international customer and the trade group’s “Profile of International Home Buying Activity” indicated that at least 7 percent of home sales in Florida were to foreign purchasers.
“When you consider how the U.S. dollar has slid in value compared to other international currencies, you begin to understand why investors are purchasing real estate in this country,” said Mitch Creekmore, senior vice president of Stewart Title Co. “Real estate prices here are a bargain compared to many areas in western Europe and Asia.”
The currency environment probably played a major role in the proportion of foreign buyers who paid cash for their homes. The cash group (28 percent) was much greater than that of the general U.S. home-buyer population (8 percent). In addition, international buyers who can afford a home abroad often are from wealthier households with higher monthly incomes and cash reserves. Also, the tax benefits of mortgage interest deductions might not apply — depending on the buyer’s home country’s tax code — which lowers the incentive to take out a mortgage.
Buyers come from around the world to buy different types of properties at various prices. They plan on using the U.S. property for different reasons. Here are some common factors from NAR:
- The typical international buyer purchased a single-family home or townhouse. The primary purpose in purchasing the home was as a vacation venue for family and friends.
- The median sales price paid by the typical foreign buyer was $299,500, and the purchase was financed through a mortgage loan.
- The typical foreign buyer in the United States spends 4.2 months in their U.S. property. U.S. visa rules only allow nonresidents (unless under a student or work visa) to remain in the country for six months. Because foreign buyers are nonresidents of the United States, most of them plan to spend less than six months in their U.S. home. A small percentage — 6 percent — spend less than two weeks. Forty-four percent intend on using their U.S. property for one to six months.
While the top three state destinations for foreign home buyers in the NAR study were Florida, California and Texas, significant overseas buyers surfaced in all areas of the country. Dolly Lenz, a New York City residential specialist who led all salespersons with $748.3 million in gross sales in 2007, reported that approximately 35 percent of her customers were second-home buyers and about 50 percent of that group lived outside the United States.
The median price foreign buyers paid for a home was $299,500 in 2006 — significantly greater than the national median sales price of $221,900. More than 20 percent of international buyers purchased a home that cost between $200,001 and $300,000. Fourteen percent of foreign home buyers paid more than $750,000 for their U.S. property, according to the NAR study.
Among international clients, the top five countries of origin were Mexico, the United Kingdom, Canada, India and China. Although more than two-thirds of Realtors report that their international clientele accounts for about the same level of business during the past five years, fully a quarter of them indicate their international business has increased. Despite the recent slowdown in the U.S. housing market, U.S. real estate is still a popular option for many people outside of the country.
Foreign buyers from the United Kingdom and China paid the most for their U.S. property — a median of $335,000 and $340,000, respectively. Those from Mexico paid the least — $227,300. Buyers from Canada were more likely to have purchased homes priced over $1 million. The median price of homes purchased by Indian buyers — $292,000 — was closest to the overall median price paid by all foreign home buyers.
The American dream of homeownership is more popular than ever — especially overseas.
Tom Kelly, former real estate editor for The Seattle Times, is a syndicated columnist and talk-show host.
PropertyWala.com - The Web 2.0 Real Estate Portal Launched
A high growth in Indian real estate, property sale, purchase and renting is fueling real estate advertising through the Internet. The changing lifestyle and growth of Internet usage has created phenomenal interest in online marketing amongst property sellers, builders, dealers and buyers alike.
The launch of Beta version of PropertyWala.com™, by Efextra eSolutions Pvt Ltd, a Noida based DOTCOM company, brings an attractive alternative to expensive advertising. "PropertyWala.com offers the most comprehensive and user friendly property advertising services free for buyers and sellers in India and abroad. The site has been developed from the ground up with ease of use and web standards in mind. Even the first time users, therefore, should feel at home." says Saurabh Gupta, CEO.
Property buyers & investors can get comprehensive details of properties advertised with the features such as video tours, locations on the satellite map and a number of photographs/layout plans. This offers buyers an unmatched perspective of the desired property, just short of an actual site visit, from the comfort of their home or office. Besides the resident buyers and investors, these features will be specifically more useful to PIO/NRIs living abroad as they will be able to make a better choice with PropertyWala. Further, the quick interaction between buyers and sellers through the instant e-mail and SMS alerts from the site will save a lot of time and effort in finalising a deal.
"In addition to the usual features, PropertyWala.com offers latest Web 2.0 features like detailed user profiles/visiting cards, social networking for realtors, real estate news, property search results with RSS feeds and Google maps, etc. all in a clean and uncluttered design based on web standards like XHTML and CSS" according to Mukesh Agarwal, Senior Software Developer.
Due to its multitude of the features, their proper implementation and the convenience of use, PropertyWala.com is a perfect online destination for everyone interested in Indian real estate. Sellers interested in advertising their properties for sale or rent can logon to http://www.propertywala.com for a simple 2 minute registration (optional for buyers).
Indian Real Estate targeting Canadian NRIs
Real estate developers and agents in India are now offering more solution to market properties to Non-Resident Indians (NRIs) and international real estate investors. Their focus now is geared to target the burgeoning and lucrative market of prospective Canadian buyers.
The latest report by ‘Statistics Canada' says that South Asians have now surpassed the Chinese as the largest visible minority group in the Greater Toronto Area. 'The 2006 Census enumerated an estimated 1,262,900 individuals who identified themselves as South Asian, a growth rate of 37.7 percent from 917,100 individuals in 2001. For the first time, the South Asian community has
outnumbered the vast Chinese population in the Greater Toronto area,' says the report. Pair this with the World Bank's new report: `Migration and Remittances Factbook 2008′: NRIs (primarily in North America) sent over $27 billion in foreign remittance to India in 2007, making India the highest recipient of remittances in the world ($27 billion = INR 108,000 crores). A significant portion of this amount went into Indian real estate. Indian realty is growing at a whopping 30 percent with the $15 billion market expected to reach $90 billion within the next 8 years. Huge demand and access to capital have been the key drivers for propelling the Indian real estate market into overdrive as more and more money is pouring in.
all of the above elements come together in an exciting and unprecedented business opportunity in Canada. According to Kam Rathee, President Canada-India Business Council, 'The latest Canadian census report shows South Asians have taken over the Chinese as the largest ethnic community in Canada and Indians have a lion's share of the population and wealth among them.
This Indian wealth, which is becoming legendry on account of their foray into business, trade, investment and executive positions, has and will see its way into India's real estate market not only on account of the returns it brings but also in satisfaction of the emotional pull to invest in the motherland. Further, as the earth is flattening, the Canadian dollar, like water, is bound to find its way away from the low return in Canadian real estate to a robust return from India's realty.' .
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India Tourism Booms, But Just Try Finding a Hotel
India is starting to address its shortage of hotel rooms in big-city centers. For business travelers and tourists, there's a snag: The new rooms may not be where they're wanted.
India has only 86,000 hotel rooms in a country of 1.1 billion people. By contrast, there are more than 4.3 million rooms in the U.S and almost 74,000 in New York City alone.
ON THE EDGE
• The News: India is addressing its hotel-room shortage in big urban centers, but new rooms may not be where they're wanted.
• The Problem: Building codes and costly land make it tough to build hotels in big-city centers.
• The Results: Most of the new hotels are going up on the fringes of political and financial hubs.
With India's economic boom generating more foreign and domestic travel in the country, room rates have shot up in New Delhi and Mumbai, where a night at a central five-star hotel can cost more than $500. The Ministry of Tourism predicts India's room shortfall will increase by more than 50% to about 150,000 rooms by 2010 because of the increasing demand.
Indian and international hotel chains are seizing the opportunity. Marriott International Inc. has 24 hotels in its pipeline to open by 2011. Hilton Hotels Corp. has agreed to put up 75 hotels over the next seven years in a partnership with Indian land developer DLF Ltd. Starwood Hotels & Resorts Worldwide Inc. plans 12 Sheraton and Westin-branded properties in the next three years.
Most hoteliers are targeting foreign tourists and business travelers who are looking for affordable accommodations. Foreign tourism has nearly doubled in the past five years, to five million visitors last year, according to government figures.
As domestic tourism grows, the new hotels are looking to that huge market, too. Last year, India counted 500 million domestic tourists.
"The sky's the limit," says Koos Klein, president of Hilton Hotels in Asia Pacific. "It just depends on who grabs the opportunity first."
But city-center land is scarce, building codes make constructing large hotels in urban centers virtually impossible and many Indian states offer tax breaks that encourage building outside the big centers. The result: Real-estate developers and hotel companies are putting up most of their new hotels on the fringes of the country's political and financial hubs.
As long as India's economy keeps growing quickly and construction of new suburban offices and townships continues, the hotels should still find plenty of guests. But an economic slowdown could leave new projects starved for visitors. And the hotel boom is unlikely to help trim the prices of city-center locations.
Take the Westin New Delhi-Gurgaon, which is slated to go into operation Jan. 1, 2010, and will be the first Westin Hotel to serve India's capital. The hotel isn't in New Delhi at all. It's going up in Gurgaon, a satellite city in the state of Haryana, 15 miles south of the capital, a traffic-snarled commute that can take up to two hours.
A Starwood spokesman said the hotel is intended to cater to visitors with business in New Delhi and upper-crust tourists, and the chain expects guests will be willing to commute to their destinations.
Meanwhile, of five Hilton-branded hotels planned for New Delhi, the closest one to downtown is in Saket, a southern suburb. Three others are in Dwarka, an hour's drive from the city center, though only about 15 minutes from the airport.
A Hilton spokesman said the hotels will draw plenty of guests because the locations, in budding suburban business communities and, in the case of Dwarka, near a new convention center, have become destinations in their own right.
The same thing is happening in Mumbai, India's largest city and business capital. Other than a Four Seasons that recently opened downtown, the few hotels in development in Mumbai are either near the airport or in the city's eastern suburbs, both sites at least an hour's drive to the city center. In three years, Marriott will have as many properties in Pune, a growing second-tier city, as it does in Mumbai, 75 miles away.
A Marriott spokesman said the company isn't worried about filling rooms because its hotels will be in areas that draw business travelers.
New hotels are coming to other Indian business destinations as well. Of InterContinental Hotels Group PLC's 14 Holiday Inns going up in India, three are in Bangalore, an information-technology-industry center. None are in central New Delhi or Mumbai.
![[map]](http://s.wsj.net/public/resources/images/NA-AQ192_IHOTEL_20080423183627.gif)
When New Yorker David Miller recently visited India for a family vacation, he stayed at The Claridges, a five-star hotel near downtown New Delhi. He paid $400 to $500 each night for the privilege. Though the rates were high, Mr. Miller says he wouldn't really consider staying at new hotels if they're miles away. "At the end of the day, you don't want to take an hour to get to a bed," the 58-year-old lawyer says. "You just want to go to sleep."
The main problem, hotel executives say, is expensive land. When the Mumbai-based Leela Group bought three acres in central New Delhi last year, it shelled out $152.75 million. The only way to make it commercially viable, the company says, is to build a "trophy" hotel there, with room prices at, or above, those of five-star hotels.
Hoteliers say they could still make up for the hefty land costs if they could build large skyscrapers with enough rooms to bring in large streams of revenue. But India's city codes have a stringent restriction on floor-area ratios, or how much total floor space can be built on a given plot of land.
That restriction is holding back hotel development in inner city areas, says Paul Logan, vice president for development in Southern Asia and Korea for InterContinental Hotels.
Last month, the Delhi Development Authority, which regulates land allocation and construction, increased the limit on floor-area ratios for hotels to 2.25, meaning a hotel could build 225 square feet of floor space for every 100 square feet of land it occupies.
A spokesperson for the committee said that the higher limit should ease hoteliers' concerns about commercial viability. However, New Delhi's limits are still more stringent than other cities. Downtown Manhattan offers floor-area ratios as high as 15.
Other attempts to offer incentives haven't helped much, either. For the 2010 Commonwealth Games, for example, New Delhi offered income-tax relief for hotels built in time for the international sporting event. But out of the 30,000 rooms needed, the city has only been able to line up 17,000, says M.N. Javed, hotels commissioner at the Ministry of Tourism. "There will always be a shortage in India," Mr. Javed says. "Our biggest problem today in marketing India is the high cost of rooms. But it will always be like this."
Real estate in Bangalore and Chennai IT hubs slows
After several years of ever steepening prices the real estate market in Bangalore and Chennai is finally showing signs of moderation.
A surge in supply usually follows a surge in demand and that is exactly what we have seen in the IT hubs of the two biggest cities in southern India. Whitefield in Bangalore and Old Mahaballipuram Road in Chennai became synonymous with technology in the early 2000s.
Developers piled into the area and starting constructing like crazy. However, real estate prices rose to levels that encourage the IT companies to look further afield.
In Bangalore’s Whitefield suburb, supply outstripped absorption by 300,000 sq ft in 2007 and about 8% of the developed area remained vacant, data from real estate consultancy Cushman & Wakefield (C&W) show. On the Old Mahabalipuram Road (OMR) area South of Chennai just nine commercial deals were done in 2007. Of the four million sq ft that came into the market last year, only 1.7 million sq ft were absorbed even as rentals fell by 18 % and the vacancy rate was up to 11 %, again according to C&W data.
“The key factor contributing to the oversupply is the consistent overpricing of projects in both micromarkets. Developers who priced projects at Rs 4,000 per sq ft were unknowingly killing their golden goose in a sense,” Shriram Properties managing director M Murali said.
Whitefield and the OMR cluster, where IT and technology-enabled services firms occupy most of the office space, could be delivered another blow when a government scheme which provides tax incentives to companies in so-called “technology parks” comes to an end next year. “STP (Software Technology Park) units and business parks in both locations will take a beating in rentals with the sunset clause (for the Software Technology Parks of India scheme) ending in March 2009.
The Indian IT story therefore continues to spread out. It started in Mumbai and Delhi, moved to Gurgaon and Powai and then to Bangalore and Chennai. Now real estate prices have pushed the IT companies further afield once again to Ahmedabad, Cochin and Chandigarh amongst others.
Ascott group entered Indian real estate and extending to Hyderabad
The Ascott Group (Ascott) has acquired its first serviced residence with 220 units in Ahmedabad. The investment is a joint venture with The Rattha Group (Rattha), a company in the field of exports, infrastructure development and leasing. Ascott has invested INR 257.2 million (approximately S$9.1 million) for the project and will take a 40% stake in the joint venture, with Rattha holding the remaining. With the latest addition, Ascott's portfolio in India grows to 1,398 units across six properties which are currently under development.Ms Jennie Chua, Ascott's President & CEO said:
"Citadines Ahmedabad Parimal Garden marks our entry into West India and extends our footprint beyond the southern cities of Bangalore, Chennai and Hyderabad."Citadines Ahmedabad Parimal Garden is slated to open in the first half of 2011.Besides Citadines Ahmedabad Parimal Garden, Ascott's other serviced residences in India are Somerset Whitefield in Bangalore; Somerset Greenways, Citadines Boulevard and Citadines OMR Gateway in Chennai; and Citadines Hitec City in Hyderabad........
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We would like to take the opportunity to welcome all the community members living world wide to our real estate portal.(NRI)
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Deutsche Bank plans to invest Rs 4K cr
German banking biggie, Deutsche Bank plans to invest over $1 billion (Rs 4,000 crore) in Indian real estate and infrastructure sectors over three years.
The bank plans to make the investment through RREEF Alternative Investments, its global alternative investment management business, which formally launched its real estate, infrastructure and private equity business in India on Monday.
"We are seeing opportunities in the New Delhi railway station," said Kishore Gotety, country head of the Mumbai-based RREEF India Advisors.
The government has proposed to privatise terminal operations, development of railway land around the stations, PPP in new routes, logistics parks, cargo aggregation and warehouses for 22 railway stations.
RREEF India Advisors has been established with an initial team of six investment professionals, who will provide real estate and infrastructure advisory services to RREEF's offshore funds.
Gotety, who has recently joined from ICICI Ventures, sees opportunities in roads, airports, power, ports and railways within the infrastructure space. "We are bullish on the real estate space for the medium-to-long term period. The current price correction in the real estate sector is a result of asymmetry between demand and supply," he added.
"We are seeing interest from some of the less well-capitalised real estate players in India currently. There is greater flexibility in the economic terms that they are willing to offer," said Kurt Roeloffs, MD and CEO (Asia Pacific), Deutsche Asset Management.
RREEF Alternative Investments (RREEF) has acquired a 60 per cent equity stake in a joint venture (JV) with the Nagarjuna Constructions-promoted NCC Urban Infrastructure to develop a $400 million (Rs 1600 crore) mixed-use project in the IT/ITeS zone in western Hyderabad for an undisclosed amount.
The 31-acre greenfield site is located at the Narsingi junction, adjacent to Phase-I of the outer Ring Road connecting the IT zones of Madhapur and Gachibowli to the new international airport at Shamshabad.
Currently at its final planning stage, the project is expected to comprise over 5 million square feet of office, residential, retail and hospitality space. Subject to development approval, the JV plans to develop the site in two phases over 5 years.
In January this year, RREEF had taken a significant minority stake in Bangalore and Hyderabad-based residential real estate development company, Golden Gate Properties, for $70 million (Rs 279 crore), which has a development pipeline of over $1.25 billion of primarily residential projects. RREEF's recent investments in these transactions were out of its global fund.
"At present, we have two Asian funds dedicated to Japan and China. In the future, we may look at having an India-specific fund," said Roeloffs.
"We have not really evaluated the Real estate mutual fund (REMF) guidelines, but we will look at selling some assets. If the regulator clears Real Estate Investment Trusts (REITs), then we will definitely look at that asset class since we are more comfortable with that and have done that earlier in other markets," added Roeloffs.
Real estate investors look outside the U.S.
The U.S. credit crunch and financial meltdown is pushing a growing number of American real estate companies and investors to look outside the United States for opportunities.
India and China Housing Markets on the Bubble
Housing woes in the U.S. have been a hot topic of late, but two of the world's most populous countries may be in for a housing crisis worse than what the U.S. is experiencing.
Both China and India are watching real estate prices soar, leading many to question how long the market will last.
Can I buy a decent-sized flat…
…in Gurgaon for Rs 20 lakh? If not, what are the rates for plots there, and would this be a suitable investment option?
Nitin A Vohra, Ghaziabad
The current rates at Gurgaon range between Rs 3,200-6,000 per sq ft. At an average rate of Rs 4,000 per sq ft, a 1-BHK flat of 800 sq ft would still cost you above Rs 30 lakh. Adjoining areas like Faridabad and Ghaziabad would still offer you properties within your budget. As for the price and feasibility of a plot there—though Gurgaon’s property prices are stabilised, they will rise again over the long term. The prevailing market rates for plots there range between Rs 31,000-36,000 per sq yd.
Would you recommend buying real estate over investing in the stock market? Or are both routes more or less equally balanced in terms of benefits and drawbacks?
Abraham E. Pinto, Mapusa (Goa)
Historically, over a longer term, real estate provides returns that are comparable with returns on equities. However, the volatility in prices of real estate is lower than equities leading to a better risk management to return trade-off for the investment.
I am eager to invest in Maharashtra’s new boomtown—Pune. My budget would not exceed Rs 35 lakh, however. I have been told that Chakan or Hinjewadi would be ideal places for investment. What are the rates and prospects there, and how would you advise me?
Nilkanth Mhatre, Airoli (Navi Mumbai)
Chakan is witnessing a lot of industrial and residential development. The demand for property is driven by investors as well as end users and the rates there range from Rs 1,800-2,000 per sq ft. Appreciation potential is between 10-12% per annum. The rates at Hinjewadi are in the range of Rs 3,200-3,500 per sq ft.
There are many townships coming up in this IT-centric area, and you will still be able to buy a decent flat there within a budget of Rs 32-36 lakh, depending on the project you select. The rates are moving upwards steadily.
I am trying to track the investment pattern of real estate investors in India for my thesis. There does not seem to be any discernible pattern, though, maybe because the market has been much disorganised so far. Could you give me some insights into this? Who are investing the most?
Abhinav Karandikar, Mumbai
The two most active investor segments are High Net Worth Individuals (HNIs) and Financial Institutions. Both these segments are particularly active in commercial real estate. While the institutions like HDFC and ICICI show a preference to commercial investment, the high net worth individuals show interest in investing in residential as well as commercial properties.
Apart from these, is the third category of Non-Resident Indians (NRIs). There is a clear bias towards investing in residential properties than commercial properties by the NRIs, the fact could be reasoned as emotional attachment and future security sought by the NRIs.
As the necessary formalities and documentation for purchasing immovable properties other than agricultural and plantation properties are quite simple and the rental income is freely repatriable outside India, NRIs have increased their role as investors in real estate.
I understand that Greater Faridabad in Delhi NCR offers good returns to investors over longer periods. I wish to buy a property there purely for investment reasons, not for self-use. Would you suggest that I go ahead with this?
Baldev Kasitha, Jhansi (via email)
You have heard correctly—Greater Faridabad is indeed a lucrative investment destination in the medium-to-long term, especially with the coming of the FNG (Faridabad-Noida-Ghaziabad) Corridor. This corridor will handle a major amount of commercial traffic. There are a number of major developers planning group housing and commercial projects in Greater Faridabad and you will see significant appreciation in the next three years.
I have not made any kind of real estate investments so far, but would now like to put down around Rs 25 lakh of my savings in Kundli near Delhi. I understand that the NCR region is overall good for returns on property investment. Do you agree?
Jhumur M. Bhattacharya, Kolkata
Not entirely. Property investment potential in the NCR is not growing uniformly. Kundli, for instance, makes sense only in terms of long-term investment. At present, the prices in this entire sector have stabilised. Faridabad and Ghaziabad are better options, since growth is still a current phenomenon there. The Kundli-Manesar-Palwal Expressway will open up more investment potential for Kundli, but this is still in the future.
Whenever names like Wal-Mart are mentioned, the Indian retail industry starts worrying about the entry of foreign players into the market. I would have thought that this would be a sign of welcome progress. I believe your firm handles the highest number of large retail space transactions—what is it about foreign players that bothers Indian retailers?
Hamid Barafwalla, Gulbarga
Though true at one time, I cannot agree that this is the general case anymore. Many large Indian players are looking forward to the increased competitiveness and are, in fact, planning proactively to leverage the advent of foreign giants into the industry. Others, however, do still worry about global retail giants dominating the local landscape, as they possess a lot of financial muscle vis-à-vis the Indian retailers. These retail giant houses can bring their better managerial practices and IT-friendly techniques to cut wastage and set up integrated supply chains to gradually replace the presented disorganised and fragmented retail market.
Indian property expo opens
Over 30 builders from various parts of India are showcasing their projects at Homes of India, the largest Indian property expo in Qatar, at the Ramada Plaza hotel.
The two-day expo was opened yesterday by Dr Mohan Thomas, President of the Indian Community Benevolent Fund.
The expo will showcase projects in Cochin, Kannur, Thiruvananthapuram, Thalassery, Thrissur, Munnar, Jaipur, Delhi, Hyderabad, Mumbai, Pune, Bangalore and Chennai.
This year's expo has been brought to Qatar by Bangalore-based event management company Studioline Conventions and Bahrain-based International Trading Company.
Studioline's CEO Michael Vasanth sid: "We have noticed the trend of Indian investors across the globe, who look for return on investment. People buy a second or third home not to live in but as an investment opportunity in the fastest growing real estate market of the world."
Real estate in India has been one of the fastest growing sectors. The appreciation has been tremendous, with returns of 40-50 percent over a period of 18-24 months.
Foreign investors too foresee high yields from Indian real estate due to its growth potential.
Funds are flowing into the sector not only from private equity investors but also from builders looking for a strong hold in this market. Within six months (April 2007 to September 2007), 21 private equity deals worth $1,292m were struck in the realty sector. According to Real Estate Intelligence, a research and consulting firm, this is a substantial increase over eight deals worth $282m inked in the same period last year.
The Indian real estate sector has also attracted many banking majors like Morgan Stanley, Blackstone, UAE-based Khaleej Finance and Investment and Ras Al Khaimah Investment Authority.
The recent FICCI-Ernst & Young India Real Estate Report 2007 said that institutional investors expect $5 billion to be pumped into Indian real estate over the next three years.
Real estate champion, Mr. Donald Trump is said to be scouting for land for such properties around Delhi, Mumbai, Pune and Bangalore.
Mahindra's Jaipur SEZ to become partly operational from July
The Special Economic Zone being developed by Mahindras at Jaipur will become partly operational in July with first group of clients moving in, a top official said on Friday.
Mahindra Lifespace Developers, the real estate and infrastructure development arm of the USD 6 billion Mahindra group, has also started buying land at Karla, near Pune, for an SEZ project, Arun Nanda, vice-chairman of the company told reporters while releasing financial results here today.
The company has managed to get a premium of 20 to 40 per cent over the current market rate for some of its residential projects in Mumbai and Faridabad, he said.
The company has an estimated land bank of 35 million sq ft across the country and expanding to new places like Nashik and Nagpur, he said.
Nanda said that earlier people were talking about the long gestation periods faced by the company. But now onwards, "the company will see far more accelerated growth. The story is now unfolding. There will be unlocking of profits," he said.
The company has 1.5 million sq ft of space under construction at present.
Referring to the SEZs, he said the company has the distinction of promoting the first successful SEZ in private sector at Chennai, now known as Mahindra World City. The second SEZ at Jaipur is progressing well and the first group of clients, which includes Infosys, will move in in July. It would take couple of more years for the entire SEZ to become operational, he added.
Apeejay Surrendra wins bid for EM bypass plot
Apeejay Surrendra Park Hotels Ltd, owners of The Park Hotels, have won the bid for a plot of land on Eastern Metropolitan Bypass. This 3.35-acre piece of land has been acquired at a bid-price of Rs 135.77 crore, while the reserve price was Rs 100 crore.
According to Priya Paul, chairperson, Apeejay Surrendra Park Hotels: �The acquisition is in tune with the continuing investment of the Apeejay Surrendra Group into developing West Bengal. The Park Hotels have dominated the hotel industry in the city of Kolkata for the past 40 years with its Park Street property located in the centre of the city. This prime location in Greater Kolkata will enable us to retain our leadership in the industry. We plan to build a 300-room luxury hotel on this land.�
The Eastern Metropolitan Bypass, commonly known as the EM Bypass is a major road connecting the northern, central and southern parts of the city of Kolkata. This 21-km road runs along the eastern rim of the city and represents the newly resurgent Kolkata.
From residential complexes to some of the best medical facilities like Apollo Gleneagles it has it all. This road is also the gateway to the IT hub of the city at Sector V, Salt Lake and the fast developing townships of Rajarhat, Newtown.
The Park Hotels is a collection of contemporary luxury boutique hotels with properties in Bangalore, Chennai, New Delhi, Kolkata, Navi Mumbai and Visakhapatnam.
A 280-room hotel and retail development in Hyderabad is under construction and will open in 2009. Land has also been acquired in Jaipur and Pune for five star deluxe properties. The pioneers of the boutique hotel concept in India, The Park Hotels with 40 years of hoteliering experience are part of the Apeejay Surrendra Group.
The Park in Bangalore, Chennai, New Delhi and Kolkata are a part of the design hotels. Design Hotels Inc. represents and markets its international collection of design-oriented city hotels and exceptional leisure resorts. Member hotels need to distinguish itself through innovative interior design and architecture, uncomplicated service, a sense for creative details and a distinct identity.
The Apeejay Surrendra Group was established in 1910 and currently employs more than 42,000 people. Its activities include shipping, tea, hospitality, real estate, retail and financial services.
Ascendas comes to Gurgaon
Ascendas comes to Gurgaon
Ascendas India Development Trust has unveiled plans to develop a 62-acre integrated project comprising an IT special economic zone (SEZ) as well as residential and commercial space in Gurgaon. The project is in partnership with Dr Fresh Healthcare Services, a US-based company and a promoter of Dabur Group. The project is located along the Sohna Highway and will be developed over the next 7 years. The first phase is expected to be launched in September 2008. When fully completed, this integrated development will provide over about 100 acre of IT space and 60 acre of residential and commercial development.
Golf course home at Ludhiana
Silverglades, a lifestyle real estate firm, will launch a Nicklaus Designs, golf course at its Ludhiana project. The 18-hole golf course is proposed to be spread across 100-150 acres and is slated to be ready in the next six months. Elaborating on the company’s plans Pradeep Jain, group chairman, Silverglades said, “We are now foraying into Andhra Pradesh, Tamil Nadu, Karnataka, Punjab, and Maharashtra.”
New launches by Parsvnath
Parsvnath Developers has launched Parsvnath Premium at Jammu. The group housing project is in association with Mass House Building Cooperative, Sidhra, Jammu. The project is located on NH-1 at Sidhra by-pass. On offer are three-bedroom apartments of 1,745 sq ft area. Their basic rate ranges from Rs 2,000 per sq ft for top floor apartments and Rs 2,250 per sq ft for ground floor apartments. The company has also launched a 3-acre group housing project and a commercial mall at Jamnagar. The project is located on Jamnagar Khambalia highway. Apartments are being offered here at Rs 2,000 per sq ft.
Mahindra, Ayala JV at Chennai
Mahindra Residential Developers (MRDL) has signed a joint venture agreement with Arch Capital Asian Partners, an affiliate of Ayala Land, a large real estate brand from The Philippines. The JV will undertake development of a gated residential community spread over 55 acres inside Mahindra World City, a 1,500-acre SEZ at New Chennai. The SEZ has been developed by the Mahindra Group and Tamil Nadu Industrial Development Corporation (TIDCO). It is expected to have a working population of about 100,000 people by 2015.
API, UEM JV for a construction co.
Ansal Properties & Infrastructure has signed an agreement to form a joint venture with UEM Builders, a subsidiary of Malaysia’s UEM Group. The JV will be known as UEM Builders - Ansal API Contracts Pvt. Ltd. This will be an Indian Construction company that will carry out the building, construction, and engineering activities for Ansal API’s projects across the country. This JV will initially have an authorised capital of Rs 1 crore.
India's booming economy is making it the preferred real estate.................
India's booming economy is making it the preferred real estate investment destination for both commercial and residential properties. So much so that recent research revealed India is now one of the top three property investment destinations in the world.
As an increasing number of businesses are outsourcing their IT functions to India, property particularly in commercial hubs such as Mumbai,
is in high demand but it comes at a cost. Renting office space in Mumbai is even more expensive than in Manhattan.
It seems then that there is good business sense to invest in emerging markets rather than expensive, established areas such as Mumbai.
Rudrapur is one such place that is taking off in terms of investment in business. The government has made the area a tax free zone and there are over 450 global corporations planning to set up businesses there in 2008. Mountain View in Rudrapur offers luxury housing for workers and an affordable investment for you.
Liam Bailey, Head of International Research for David Stanley Redfern Ltd, explained the benefits of the area: 'We are seeing businesses flocking to the area since the government designated it as a Special Economic Zone (SEZ). This means businesses pay no income tax for the first five years and receive a 30% discount over the following five years."
"It's not just the tax breaks that are attracting companies to the area," continued Bailey. "Unlike many other parts of India, Rudrapur has a solid infrastructure and great transport links. Electricity rates are the lowest in the country and there is no shortage of water. All this adds up to a great demand for people to live and work there."
The tax-haven is a no-brainer for companies after cheap rents and it's a great opportunity for those wanting to invest in property. There will be 300,000 employees taking up posts in Rudrapur in 2008 and they will all be looking for property in the area.
Mountain View offers residents both beauty and convenience. Set against the picturesque backdrop of the Himalayas the complex is just five minutes by car from the SEZ. It is a serviced complex set within immaculate grounds. The spacious, balconied, two bedroom apartments are finished to a high standard and will appeal to the thousands of management level employees working in the SEZ.
The two en-suite bedroom apartments come with a five percent rental income guaranteed for the first two years.
Make money in real estate
The stock market may be chaotic, but one real estate fund has managed to keep the smile on investors' faces
It cannot be denied. The real estate industry is promising, to say the least. Over the past few years, a number of real estate companies were listed and foreign money poured into real estate funds. India's largest IPO - DLF in 2007 - was from this sector.
The listing of DLF even benefited existing players like Ansal Properties and Unitech which witnessed a sharp rise in their stock prices. A new index was developed to track the performance of the sector. And as the Sensex soared, the real estate sector too delivered impressively.
REAL ESTATE FUNDS
Returns
Scheme
1 Week
1 Month
3 Month
ICICI Pru Real Estate Sec Retail
1.19
2.91
-3.98
ING Global Real Estate Retail
1.99
8.25
8.80
BSE Realty
5.22
18.09
-20.75
BSE Sensex
1.46
9.36
-2.91
Returns as on 23rd April 2008
BSE Realty, the index for the real estate sector in India, witnessed a sharp rise, gaining nearly 84% in just a span of six months starting from July 2007. The index reached an all time high of 13,647 on January 14, 2008.
But when the Sensex crashed and lost nearly 20% between January 21, 2008 and April 22 2008), BSE Realty lost nearly 41%. Despite this, investors in the ING Global Real Estate Fund were far from sorry.
The fund came out with flying colours and stole the show. It outperformed the BSE Realty Index by a significant margin. The fund not only survived the jolt and took the crash in its stride, but delivered a return of 8% over the same time period.
If you had invested Rs 10,000 separately in the Sensex, BSE Realty and the ING Global Real Estate Fund on January 10, 2008, your investment would be worth Rs 7,900, Rs 5,500 and Rs 10,800 respectively (as on April 22, 2008).
The fund offered a return of around 11% for the one-month period ended April 22, 2008. Simultaneously, ICICI Pru Real Estate Fund delivered a negative return of 1% over the same period.
Of course, a blanket comparison is unfair since the latter is a domestically invested fund while ING Global Real Estate, a globally invested fund, is primarily a feeder fund to foreign equity fund ING Real Estate Securities.
Lesson to be learnt: Its not just asset diversification that matters. Geographical diversification too helps in enhancing the overall portfolio returns.
Ringing in the new order
Famous for its temples, Madurai has always been on tourists’ radar and gets a steady flow of visitors round the year. But that’s not the only claim to fame for the second largest city in Tamil Nadu. The IT boom has touched this temple town too, with Honeywell’s Research Lab (tied to the Thiagarajar Engineering College) and the TCS Disaster Recovery Centre being instrumental in IT development.
Spread over an area of 130 sq km, Madurai has a population of approximately 1.3 million. Domestic flights connect the city to state capital Chennai, Bangalore and Hyderabad. International connectivity from Madurai airport, located 13 km from the city centre, is also expected to begin this year. In fact, according to a Cushman & Wakefield (C&W) report, real estate development is increasingly moving to the southern and western parts of the city, mainly around the airport, Rirupparankundram Road and By-pass road. This is due to a scarcity of land in the CBD (Chinnakadai).
The city has witnessed encouraging commercial development over the last three-four years. The state government has transferred two land patches — 29 acres at Ilandhaikulam and 213 acres at Vadapalanji — to ELCOT for SEZ development. Sify, HCL, TCS, Wipro and CTS have booked their space for campus developments in the SEZ. Upcoming developments in Madurai include three IT/ ITeS/ SEZs, covering a total area of approximately 128 hectares.
This apart, the Tamil Nadu Housing Board proposes to set up several office and commercial complexes in five prominent places in Chennai and Madurai to meet the demand for commercial space, according to a recent state policy note. Typical rentals in CBD are in the range of Rs 32-35/sq ft/month. Further, the commercial space in newly-developing areas could fetch a rental of Rs 24-28/sq ft/month, according to data available with C&W.
The residential space in Madurai, like all other small towns, is largely skewed towards independent homes culture. However, the apartment culture has picked up due to an increasingly investor population that’s now driving the demand for residential apartments and villas. This has attracted many national and international developers such as ETA star, Hiranandani Constructions, Sahara City Homes and ETL Infrastructure to develop properties in Madurai. Sahara has acquired approximately 125 acres to develop 15,000 unit apartment complex, while Arihant has close to 21 acres earmarked for an integrated township.
The existing and established retail precincts include the surroundings of the famous Meenakshi Temple in Chinnakadai Area, Anna Nagar, KK Nagar and the By-pass Road. There is no mall culture at present, but the few proposed ones such as Vishal Mall (165,000 sq ft) and Milan Mall (85,000 sq ft) will house an Inox multiplex and will open early next year. The city has quite a few stand-alone formats on the By-pass Road and in areas like Anna Nagar and K K Nagar. Rentals in the CBD are about Rs 50 per sq ft/month.
Off-CBD locations could attract rents up to Rs 35 per sq ft/month, according to C&W estimates. Traditional prime locations like P T Rajan Road, Old Natham Road and TPK Road attract prices ranging from Rs 2,000-2,600/sq ft. New supply is largely concentrated towards south/south-east Madurai. In terms of rental, the new built-up villa in CBD and off-CBD could attract as high as Rs 15,000 and for apartments between Rs 3,000 and Rs 5,000.
DLF plans Rs 1,250 cr to expand multiplex biz
DLF, a leading real estate player in the country, plans to invest Rs 1,250 crore for the expansion of its multiplex business. The company has planned to add at least 500 screens in the next four to five years across the country.
DLF's entertainment wing DT Cinemas will set up a megaplex, which will have 12 screens with a total capacity of 2,500, as part of their upcoming project, Mall of India, at Gurgaon.
Expected to be one of the country's largest malls, it will cover an area of 40 lakh sq ft.
On Thursday, DT Cinemas announced the opening of their multiplex at DLF Infocity, IT Park, Chandigarh. Infocity covers an area of 1,90,000 sq ft and most of the space has been leased out. The mall will start operating within the next 10-12 days.
Kajal Aijaz, CEO, DT Cinemas, said that with the multiplex offering state-of-the-art facilities like Christie cinema projection system, excellent acoustics, wall-to-wall carpeting, extra legroom with comfortable slideback seating and push back armrests for the audience, they were eyeing about 66 per cent occupancy at the multiplex in the first year.
The multiplex with a total capacity of 786 seats has three screens, which have been imported from Harkness, in the UK.
Aijaz said that initially, ticket-booking would be provided through internet and mobile phone network. DT Cinemas plans to eventually rope in retail chains for the sale of tickets.
With DLF planning to set up another 120 malls in different parts of the country, DT Cinemas would be the chief attraction in most of these malls.
Apart from Ludhiana and Jalandhar, where multiplexes would be opened in a couple of years, the company is also opening multiplexes at Savitri-GK2, Shalimar Bagh, Vasant Kunj and Saket in Delhi and Star Mall, Gurgaon, this year, Aijaz said.
DT Cinemas will also set up multiplexes in Hyderabad, Chennai, Kochi, Bangalore, Mumbai, Pune, Ahmedabad, Goa and Kolkata.
Slowing demand may not reflect in results of realty companies
Although the demand for new homes has slowed and resulted in lower prices in some overheated markets as loans became more costly, real estate companies are unlikely to take a hit in earnings just yet, say analysts.
For the future: Real estate companies may not see the impact of declining demand on their results for two or three quarters, say analysts.
The impact of a downturn will show only after two or three quarters, they said. India’s large developers, such as DLF Ltd, Unitech Ltd, and Indiabulls Real Estate Ltd, will report fourth quarter earnings on 30 April. “It will take time to see an impact on earnings,” said Nitin Khankar, senior vice-president of research at Keynote Capitals Ltd. “We believe March earnings would be robust, even though in the later part of the quarter, real estate prices started coming off their peak levels.”
Since accounting in the real estate industry is done on a “percentage of completion” method, recognizing revenue and profit is difficult, said Unmesh Sharma, an analyst with Macquarie Capital Securities (India) Pvt Ltd.
This method recognizes profit on a long-term construction contract as it is earned gradually during the construction. “The thing (therefore) to watch out for is to see whether cash sales are happening or not,” he said. “That will indicate a slowdown in the sector.”
DLF posted a profit of Rs2,145 crore on sales of Rs3,651.25 crore for the third quarter that ended on 31 December. Analysts expect the company to post a net profit of Rs2,000-2,500 crore during the fourth quarter.
According to a report by Macquarie Research, DLF is likely to see its revenues increase to Rs3,814.3 crore.
“With DLF, it is hard to estimate their net profit because of the sale of assets to DLF Assets,” said an analyst with an international financial services group who did not wish to be named. DLF sold about Rs1,850 crore worth of properties to DLF Assets Ltd during the December quarter and booked profits for the entire amount. “The estimate (on a net profit of Rs2,000-2,500 crore) that we have made is based on the sale of the company’s stake in some projects to Indiabulls Real Estate and DSP Merril Lynch Ltd,” the analyst said. In the third quarter, DLF attracted private equity investment of Rs1,675 crore from Merrill Lynch and Brahma Investments in various residential projects in the country.
In January, the company also sold its 50% stake in Kenneth Builders and Developers Ltd to its equal partner in the joint venture, Indiabulls Real Estate.
Kenneth Builders is building a high-end residential project in Okhla, a prime south Delhi locality.
Unitech had reported a net profit of Rs525.78 crore on sales of Rs1,165.11 crore for the December quarter. In the March quarter, the company is likely to see its net profit increasing to Rs576 crore on sales of Rs1,256 crore, according to Macquarie Research. More construction is driving the growth, the report says.
Realty firm Ansal Properties and Infrastructure Ltd is expected to post a net profit of Rs55.1 crore compared with Rs41.5 crore during the quarter a year ago, showing a growth of 33%, according to Macquarie’s estimates. The company’s revenue is expected to increase by 10% to Rs279 crore from Rs253.9 crore during the same period a year ago.
“While we will not see an impact of the slowdown this quarter, we do need to keep track of the recent deals in the real estate industry to see if real estate valuations have come down,” said an analyst with a domestic financial services company, who declined to be named.
Wednesday, April 23, 2008
Dandara ICICI bank partner
UK's real estate firm Dandara is likely to tie-up with ICICI Bank to woo high net worth individuals in India for investing in UK's real estate market.Zee News - Dandara ICICI bank partner
British relators seeking Indian investments
British property developers are now looking to promote and sell Britain as a viable and stable real estate market to the Indian investors.'The success story of India is known to all. With high disposable incomes, a large number of Indians are buying overseas properties. Britain can be a potent investment destination for Indian investors looking for stable real estate market,' Seamus Nugent, managing director of Dandara Holdings Ltd, told reporters here.British relators seeking Indian investments - India PRwire
IndiaProperty.com to organise 2-day property show in Dubai
To tap the overseas market, leading real estate portal IndiaProperty.com will be launching its operations in the Gulf by promoting a two-day India Property show 2008 from May 2 in Dubai.IndiaProperty.com to organise 2-day property show in Dubai
IndiaPost.com - Indian real estate targeting Canadian NRIs
The recently launched venture of the CineMaya Media Group, Inc.,'Buy Indian Properties', a multi-platform solution for the Indian real estate industry to market properties to Non-Resident Indians (NRIs) and international real estate investors is now geared to target the burgeoning and lucrative market of prospective Canadian buyers.IndiaPost.com - Indian real estate targeting Canadian NRIs
Indiabulls buys PAL-Peugeot Mumbai land for Rs 676 cr
Finally, Indiabulls Real Estate Ltd has bought PAL-Peugeot's 134-acre Dombivali land in Mumbai’s suburbs for Rs 676 crore. According to Indiabulls Real Estate Ltd’s officials, “We have bought this land through the High Court. Post acquisition, we now plan to develop 15 million sqft of integrated townships, which will include retail malls, commercial offices and residential properties. Once the projects get completed, we hope to get an average value realisation of Rs 3,000 to Rs 4,000 crore in the next four years.”Indiabulls buys PAL-Peugeot Mumbai land for Rs 676 cr
Red Fort to invest Rs 3,500cr via FDI route
Red Fort Capital Advisors, a real estate equity firm, will invest Rs 3,500 crore in residential and hospitality projects across the country, including Rs 700 crore in Chennai.
The Mauritius-based equity firm has so far parked around Rs 1,000 crore in residential and commercial projects in Chennai, Bangalore, Hyderabad, Kolkata, Mumbai and Pune. The company is looking at property investments in about 15 other cities that have high income and employment growth and cheaper land.
Kuldip Chawlla, director, Red Fort Capital Advisors, said the company plans to build affordable flats costing Rs 15 lakh-Rs 40 lakh. These flats will have an area ranging from 900 sq ft to 1,200 sq ft.
The company will target the middle income groups, earning between Rs 6 lakh and Rs 11 lakh per annum.
Red Fort will develop the low-cost houses in partnership with the Bangalore-based Prestige Group and Hyderabad-based Indu Project and will have around 40-80 per cent stake in the projects.
The investors in Red Fort Capital include international governments, pension plans, insurance companies, foundations and endowments.
The company bought 10 acres at Ambattur, an emerging IT hub in Chennai, to build residential flats and invested in 100 acres of land at Sriperumbudur near Chennai for developing low-cost apartments, according to Chawlla.
This is in addition to Rs 700 crore set aside for various projects across the city. Red Fort had launched a domestic fund worth Rs 1,000 crore last month to finance low-cost real estate projects in key urban areas. Investors will get 30 per cent interest per annum, he added.
Red Fort to invest Rs 3,500cr via FDI route
Hiranandani Palace Gardens: April '08 Update : In2perspective
Hiranandani Palace Gardens is fast becoming one of the strongest brands in Indian real estate and with good reason.
In2Perspective have been following the progress of Hiranandani closely. We are all extremely impressed with the quality of the projects and construction as well as the first class customer service and reliability of the company.
Hiranandani Palace Gardens Chennai is a vibrant new township in suburban Chennai offering a unique mix of homes, offices, schools, health care facilities, parks, shops and entertainment. Palace Gardens is strategically located along the business corridor southwest of Chennai near Thriveni Nagar, Vadakapattu. It's a new-generation "live-work-play" development inspired by the best traditions in city planning from across India.
Spread over 500 acres with dedicated 250 acres for residential development, 100 acres for amenities and 150 acres for SEZ and IT parks. This development promises to be Hiranandani Gardens of Chennai. With 23 towers of G+3 and G+15 the development will be a self-contained township. Wide, tree-lined streets and a carefully planned network of trails and open green spaces link you to every modern amenity.
With comfortable neighborhoods and easily accessible community spaces, you can work, dine, shop and enjoy life in a natural, healthy environment. Palace Gardens is a true community that artfully blends contemporary culture and nature.
Niranjan Hiranandani, Chairman of Hirco, recently commented how pleased he is with the market’s response to Hiranandani Palace Gardens, "as demand continues to be strong. We believe these sales results underline the strength of the Hiranandani brand and the strong quality of our product and high standard of living provided by our mixed-use townships.”
Background on the developer
Hiranandani Palace Gardens projects are owned by Hirco. Hirco was formed in 2006 to co-invest in large scale mixed-use township developments in suburban areas outside city centres in India. These townships will be predominately residential and provide high quality affordable housing for India's growing young and affluent working population.
At the time of its admission to trading, Hirco was the largest ever real estate investment company IPO on AIM and the largest AIM IPO in 2006. To date, Hirco has invested approximately £254 million, which represents 70% of the net funds raised at the time of the IPO.
Hiranandani Palace Gardens: April '08 Update : In2perspective
Tuesday, April 22, 2008
Ansals join hands with Malaysia-based UEM
Real estate developer Ansal Properties & Infrastructure Ltd today announced it has joined hands with Malaysia-based UEM Group to form a new company to carry out construction activities across the country.Ansals join hands with Malaysia-based UEM
Realty: Has the middle class stopped buying?
A broker friend told me recently that India has truly evolved into a land of extremes. While the Rs 10-35 lakh category of houses is selling fine, so are the Rs 90 lakh to Rs 5 crore category. But if there is any slowdown in the property market, it has been restricted to the mid-budget between Rs 40 lakh and Rs 85 lakh.Realty: Has the middle class stopped buying?- Property-The Sunday ET-Features-The Economic Times
It is still not the end of the road, just head out
Where to invest in a house is the big question that stares at a middle-class investor. The choice is limited for those seeking value for money and cannot afford high-end apartments. This segment constitutes more than 50% of prospective apartment buyers.It is still not the end of the road, just head out-Chennai-Cities-The Times of India
Manila's Ayala enters Indian real estate market
MANILA, April 21 (Reuters) - The Philippines' biggest property developer Ayala Land (ALI.PS: Quote, Profile, Research) said on Monday an affiliate would form a joint venture with India's Mahindra Group to build an exclusive residential development in Chennai.
Mahindra will own 51 percent of the joint venture and the remainder will be owned by an investment vehicle controlled by ARCH Capital, an affiliate of Ayala Land.
Neither company said how much they would invest in the tie-up, which will be called Mahindra Residential Developers Ltd.
"This joint venture through ARCH Capital represents Ayala's first major foray into the Indian real estate market," said Fernando Zobel de Ayala, chairman of Ayala Land, in a statement.
"The Indian market is very attractive and we see many opportunities for joint development and partnerships in the future, not only in residential real estate development but even in high-growth areas such as business process outsourcing."
Ayala Land's entry into the Indian property market comes amid fears of a possible halt to a local real estate boom, as overseas demand for Philippine apartments and houses is hit by the slowdown in the United States.
The joint venture with Mahindra will involve 750 residential units being built on around 55 acres in the Mahindra World City in Chennai, the largest city in south India.
Ayala Land -- controlled by the Philippines' richest family, the Spanish-Filipino Zobel de Ayalas -- builds upscale malls, hotels, high-rise offices and residential condominiums and villages in the Philippines.
Its shares finished 2.3 percent down on Monday at 10.5 pesos, underperforming the general index which was 0.9 percent weaker. (Reporting by Carmel Crimmins; Editing by David Holmes)
Manila's Ayala enters Indian real estate market | Reuters
Friday, April 18, 2008
Educationists among city's top landlords
A study by The Times of India revealed that more than 1,000 acres around the city are held by five educational trusts. Between them, these institutions, which include the well-known Jeppiaar Education Trust and the Hindustan Group of Institutions, own property worth more than Rs 16,000 crore. However, their assets have only a notional value because under existing rules, they cannot be unlocked for commercial exploitation.
The Jeppiaar Trust is by far the biggest; it's chairman, who manages the Sathyabhama Deemed University, holds land worth close to Rs 10,000 crore, an amount large enough to bridge Tamil Nadu's Rs 9,792-crore fiscal deficit.
Jeppiaar runs four engineering colleges in the outlying areas of the city, their campuses spread over 600 acres. A former head constable with the state police, Jeppiaar's fortunes changed in the 1980s when he was appointed head of state-run utility Metrowater by erstwhile chief minister M G Ramachandran.
There's been no looking back. Jeppiaar acquired several hundred acres on the Old Mahabalipuram Road (OMR was rechristened IT Highway and more recently Rajiv Gandhi Road) and started the Jeppiaar Educational Trust in 1987. The first college he opened was named after MGR's mother Sathyabhama.
The same highway is also home to the Hindustan Group of Institutions that runs two engineering colleges. Having acquired 170 acres two decades ago in a then neglected part of the city, Hindustan is now sitting pretty. After the government designated OMR the infotech hub of Chennai, the group's holdings have appreciated significantly and are now estimated to be worth Rs 3,400 crore.
Educationists among city's top landlords-Chennai-Cities-The Times of India
Rakindo to set up $1.5-bn integrated township in TN
The self-sustaining township would house luxurious golf course villas with scenic mountains and lush greenery in the background. “We are a master developer, who believe in the concept of optimum utilisation of land rather than looking at per sq ft utilisation,” he said.
The project will be independent of the existing infrastructure system, by bringing in a comprehensive facility management, he said. On pricing, Mr Koneru said while golf-facing villas would command a specific price, there would also be high-end and medium-range apartments.
Scheduled to be launched in the third quarter of this year, the project, will be built around the concept of ‘walk to work culture’, which is the central theme of all Rakindo properties. It will also have an IT SEZ, specialty hospital, schools, star hotel, clubhouse and wellness Centre, retail, commercial and residential developments.
Stating that it is not targeting investors but customers, who are desirous of experiencing a township way of life, Mr Koneru said “ultimately, we do not want to create a ghost town as our objective is to creatively service people.”
The exclusive villas would be offered on ‘own by invitation only.’ These modern theme-based townships will offer holistic lifestyle and world-class amenities, he said adding the Kovai township project, located south west on the Coimbatore-Pallakkad route, would have about 20 million sq ft of built-up space. It will be a signature project and an ideal living experience for those who prefer proximity to nature and a global lifestyle.
Rakindo Developers is a joint venture company formed by RAKEEN, a Joint Stock Global Business Company, promoted by the government of Ras Al Khaimah, UAE and the Chennai-based mineral conglomerate Trimex Group.
Rakindo is committed to invest $ five billion in India over the next five years and will on a conservative estimate build about 50 million sq ft. It has several integrated township projects in the pipeline. These include 500 plus acre project at Hosur, 1,000 acre at Gurgaon, 450 acre at Cochin, 250 acre in Trichy and 500 acre in Madurai.
Other projects in the pipeline are a leisure destination project on 250 acre about 70 km south of Chennai east coast road at a cost Rs 6,000 crore. Similarly, at Kumarakom in Kerala it has got 405 acres, where it proposes to set up Rs 1,200 crore gateway to resort living project. Both the projects are expected to kick-off by the first quarter of 2009.
With a land bank of over 3000 acres, Rakindo is aiming for a pan-India presence over the next five years. It has plans to diversify into retail, hospitality, education and healthcare sectors through strategic alliances and partnerships.
Rakindo has a joint venture with global hotel chain Millennium & Copthorne International, which owns and operates over 110 hotels in 18 countries. The JV will invest in business class hotel properties across India. Another joint venture has been signed with Lotus Hotel Investment Fund for investing in three to four star hotels across India.
Rakindo to set up $1.5-bn integrated township in TN- Commercial-Property-Personal Finance-The Economic Times
DLF, Nitesh, HDFC vie for Beacon House
Mr Sivasankaran has mandated CB Richard Ellis to sell the property through an auction, with five bidders indicating early interest. While multiple sources confirmed interests from DLF, Nitesh Estates and HDFC Realty, unconfirmed reports indicated that local developer Arihant and Bangalore-based Sobha Developers are also in the fray.
Mr Sivasankaran had acquired the property in early 2006 for Rs 100-110 crore, sources said.The bidders, like DLF and Nitesh, may be eyeing the property for premium residential units, which, going by the current FSI of 1.5, could see 4 lakh sq ft of fresh development. The area has houses of leading industrialists, including Murugappa Group family members, and Japanese Consulate. Recently, DMK leader and son of chief minister MK Karunanidhi, MK Stalin, has moved there.
It is believed that a leading local developer True Value Homes may sit down with HDFC Realty for joint development, if the latter shows up with the winning bid. Earlier, True Value Homes had attempted to join with Mr Sivasankaran for developing premium residential apartments on the land.
Several local real estate sources said, in view soft market conditions, the maximum price it can fetch is Rs 3.25 crore per ground (56 grounds in 3 acre). Recalling the objections raised in the past over building multi-story buildings in the posh area, the realty sources added that it is not easy to take up development unless the bidder is familiar with the local conditions.
However, the national players, which may view Chennai as a more sable market in terms of real estate prices, may put in an aggressive bid that could take the auction price t Rs 225/250 in the highest band. A few months back, Bangalore-based Nitesh Estates made a winning Rs 640-crore bid for a nine-acre plot on Chamiers Road, which is in close to Beacon House.
Nitesh is in the midst of developing a one million sq ft mixed use development including luxury hotel, retail, commercial space and serviced apartments.
Beacon House came to the fold of UB chairman Vijay Mallya after he acquired B&C. Later, when the company was acquired by Indonesia’s Polysindo, it decided to sell the property making use o the scrapping of urban land ceiling act. Since Mr Sivasankaran had picked up stake in B&C, it helped him to clinch the deal.
DLF, Nitesh, HDFC vie for Beacon House- Residential-Property-Personal Finance-The Economic Times
Nodal body likely for developing postal property
The department of post (DoP) may soon constitute a nodal authority for the commercial development of its realty assets sitting idle across the country. As per the department’s estimates, about 1,871 plots (covering an area of over 382 million square feet) are lying unutilised. The DoP had earlier planned to form a special purpose vehicle (SPV) for it. However, the parliamentary standing committee has disagreed with this view — it has instead suggested a nodal authority to oversee the process as the proposed SPV would take a longer time.Nodal body likely for developing postal property - ET Cetera-News By Industry-News-The Economic Times
BPOs eye tier II cities to cut costs
The surge in real estate prices and a talent crunch in metros are forcing the $11 billion Indian BPO industry to now move to tier II cities in the country, according to a recent study conducted by consultancy firm Everest Group.BPOs eye tier II cities to cut costs- ITeS-Infotech-The Economic Times
Retail makes hay in realty surplus
| The tables have turned. Organised retail, which used to cite real estate as its first constraint, is being wooed by developers as there is a sudden surplus created by completion of pending projects and new construction. | |
| �We are about to conclude two deals where we do not have to pay rentals for three years,� said Kishore Biyani, the chief executive officer of Future Group and managing director of the group�s flagship, Pantaloon Retail. | |
| �The surplus of space is going to be larger in 2009,� added Biyani. He declined to divulge the names of the property owners or the cities in which his company is signing the deal. | |
| According to an industry analyst, the rental for a retailer used to constitute 4-5 per cent of its total revenue in the years 2001 and 2002, rising to 7-7.5 per cent in the later years. Industry analysts believe a retailer�s profit would get eroded if the rental crossed 8 per cent of revenue. | |
According to Credit Rating and Information Services of India, orgnised retail in the country raked in Rs 1,01,600 crore in 2007-08, up from Rs 67,900 crore in 2006-07.
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| �Some of the development of malls got delayed last year. However, most of the retailers completed their expansion plans with managing space at other places,� said an analyst with a Mumbai-based brokerage who did not wish to be quoted. | |
| Jones Lang LaSalle Meghraj, a real estate consultancy, said the maximum surplus this year would be in Panchkula, Mohali, Ludhiana, Jalandhar, Jaipur and Chennai. | |
| �The national capital region is likely to have a surplus by next year,� said Anuj Puri, chairman and country head of the firm. |
Retail makes hay in realty surplus
