Real estate firm Unitech is branching out into the Indian telecom sector with a new business that will be operated as a separate entity. The company’s announcement came after it obtained a pan-India telecom license.Indian Real Estate Firm Unitech Branches Out Into Telecom Sector
Friday, January 18, 2008
Indian Real Estate Firm Unitech Branches Out Into Telecom Sector
Property Portals: House hunting - livemint
Real estate portals with national reach, such as 99acres.com, Magicbricks.com and Indiaproperty.com, which were mostly launched in the last two years, have come as a blessing for people such as Saha and Maxwell. According to San Francisco-based Alexa.com, which monitors Internet use, Indiaproperty, 99acres, Magicbricks and Indiaproperties are among the top players in the field in terms of daily reach.Property Portals: House hunting - livemint
Building intelligence into buildings
According to a recent market study, real estate in India is expected to rise from $14 billion to $102 billion in the next 10 years.Deccan Herald - Building intelligence into buildings
Thursday, January 17, 2008
SVP Builders to Invest Rs. 500 Crores
Will Deliver 3100 Flats which includes 50 Lakh sqft of Residential Space 7 Lakh sqft of Commercial Space by 2010; Additional 2000 Flats by 2011; Forays into Healthcare
'Building India': DLF's Big Gamble
With land holdings of almost 750 million square feet spanning the country, about 20% more than its next-biggest competitor, DLF's corporate slogan is apt: "Building India."
Sustainability and international investment to drive real estate in 2008
Sustainabity, better quality construction and transparency will be the key drivers of the GCC real estate market over the next year, according to new research by Jones Lang LaSalle
An international approach to commercial real estate
Many countries enjoy strong real estate fundamentals, boosted by commodity-rich economies (Australia, Brazil, Canada and Russia) or by rapid urbanisation and an emerging middle class (China, India, Mexico and Turkey). Once these new professionals secure their first jobs (in new office buildings), they buy their first cars and go shopping.
Arvind Singhal: The Modern Alchemy
In the interim, perhaps yesterday’s stars like Infosys should consider de-merging its internal guest house accommodation bank (it reportedly has over 15,000 rooms), its campuses’ real estate, its on & offline hiring expertise, its internal catering experience, and its formidable treasury function assets into independent companies, get re-rated and become sizzling hot once again. And I should try to convince my wife that we have successfully run a household for 25 years and therefore we should unlock some value by announcing plans to get into food & grocery, real estate facilities management, financial advisory, and entertainment and leisure businesses!
Patel Engg hires DTZ to value its land bank
Patel Engineering (PEL), a Mumbai-based construction major, has roped in global real estate advisor DTZ to value its land bank across the country ahead of a proposed sale of part equity to private equity players in its recently floated wholly-owned subsidiary — Patel Realities India (PRIL).
The Good News About the Recession
Dubai investors purchasing Indian real estate, Indian builders buying German engineering products and services, and German engineers buying toys made in China....
Wednesday, January 16, 2008
Alony Hetz in joint $200m SE Asia real estate venture
Alony Hetz Property and Investments Ltd. (TASE: ALHE) has signed an memorandum of understanding (MOU) with Singapore-based Pacific Star Holding pte Ltd. to set up a real estate fund to invest in Southeast Asia, to be called Pacific Arrow Star. The new fund will focus on Vietnam, but will also consider business opportunities elsewhere in the region.Alony Hetz in joint $200m SE Asia real estate venture
Dubai's Emaar Properties' 2007 profit rises 3.2% on international operations - MarketWatch
Dubai-based Emaar Properties, the Middle East's largest property developer by market value, recorded a 3.2% year-on-year rise in profit for 2007 as its international operations started contributing to its income.Dubai's Emaar Properties' 2007 profit rises 3.2% on international operations - MarketWatch
The current credit crunch is more than the bursting of a ‘bubble’
If you find the web of international economies and money incomprehensible, take heart. You are not alone. That is how it is: “beyond comprehension,” as Satyajit Das says. He is the author of Traders, Guns & Money,’ a book that talked about the known and the unknown in ‘the dazzling world of derivatives.The Hindu News Update Service
Pioneer Uses SAP to Improve Customer Relations
The Pioneer Group, a well-known corporate house stepped into the world of real estate in the year 1986 and pioneered the organized real estate industry in India. Pioneer Property Management has been at the forefront of the infrastructure boom. The company provides all real estate solutions for a diverse range of users and needs, including comprehensive consulting, marketing and management of large-scale housing, commercial and industrial projects. Pioneer also has a financial assistance team to assist its clients for housing as well as corporate financing. It has a strong network and business associates spread across Kolkata, Mumbai, Delhi, Bangalore and Chennai.CXOtoday.com > News > Technology > Pioneer Uses SAP to Improve Customer Relations
LIC seeks bids to consolidate realty assets
Life Insurance Corporation of India (LIC), the country's largest life insurance firm, today said it plans to consolidate its real estate portfolio across the country.LIC seeks bids to consolidate realty assets
Homes of India show to begin in Alkhobar
More than 20 builders from various parts of India will take part in the two-day Indian property exhibition dubbed "Homes of India", to be held at Carlton Al-Moaibed Hotel in Alkhobar starting tomorrow, organizers said.MENAFN - Middle East North Africa . Financial Network News: Homes of India show to begin in Alkhobar
Marg to focus more on developing industrial clusters-India Business-Business-The Times of India
Chennai-based Marg (formerly Marg Constructions), a real estate and infrastructure company, is unleashing its 2,500 acres of land bank to develop industrial clusters. G R K Reddy, MD, Marg, said, "We have acquired lands in select pockets in Andhra Pradesh which we want to develop as industrial clusters. For the lands on the fringes of Vijayawada, we want to create a building products cluster. This piece of land is close to cement companies and is in the vicinity of Krishna river. It is an ideal location for making building products."Marg to focus more on developing industrial clusters-India Business-Business-The Times of India
The Great Indian Mutiny » Bangalore : Surviving the ‘BYTE’ - Part1
Bangalore was your quaint old south Indian city — a pensioner’s paradise and a garden city. Misty mornings heralded the start of beautiful, often sunny days. Laden with rich aroma of filter coffee, crisp morning air soon displaced this misty blur. The tune of suprabhata would fill the neighborhoods from some one’s old transistorThe Great Indian Mutiny » Bangalore : Surviving the ‘BYTE’ - Part1
HIRCO REPORTS CONTINUED STRONG SALES AT HIRANANDANI PALACE GARDENS IN CHENNAI, INDIA
Sales of residential units in Phase 1 of its Chennai township development, Hiranandani Palace Gardens, continue to be strong both in terms of volume of residential units sold and the level of pricing achieved.HIRCO REPORTS CONTINUED STRONG SALES AT HIRANANDANI PALACE GARDENS IN CHENNAI, INDIA
Vatika may hive off business centres unit
Real estate and hospitality company Vatika Group plans to hive off its unit running Vatika business centres as a separate entity with a view to let it raise money through an initial public offering (IPO) in fiscal 2009-10.Vatika may hive off business centres unit - livemint
Puravankara to launch over Rs 12 bn project in Chennai
Puravankara Projects announced today (Monday) that the company plans to launch its mega housing project `Purva Windermere` at Pallikarnai, Lake district in Chennai with an estimated project cost of over Rs 12 billion.Puravankara to launch over Rs 12 bn project in Chennai
Retail players constrained by high realty cost: Modwel- Interviews-Opinion-The Economic Times
MUMBAI-based Wadhawan Retail, the two-year old retail business of Wadhawan Holdings under Spinach convenience store brand, has been on an acquisition spree. In just a year, it has acquired a host of regional retailers, including Delhi-based Sabka Bazaar and Home Store, Bangalore-based Smart, management contract of co-operative firm Maratha Stores, and is now planning another sizeable acquisition. Wadhawan Holdings CEO Gaurav Modwel spoke to Chaitali Chakravarty on the company’s retail plans.Retail players constrained by high realty cost: Modwel- Interviews-Opinion-The Economic Times
Why real estate continues to be hot property for investors?- Realty Trends-Real Estate-Markets-The Economic Times
The real estate sector has always been a favourite with Indian investors as they are comfortable putting their money in an asset class that offers them the ‘touch and feel’ benefit.And there seems to be every reason to continue to repose faith in the realty sector as it has been growing at around 30% per annum, with most reports generated by reputed banks and institutions making encouraging predictions for the sector.Why real estate continues to be hot property for investors?- Realty Trends-Real Estate-Markets-The Economic Times
India looks to the world for investment
Those looking to invest in property overseas may find encouragement in many things. Low prices, growing tourist markets, expanding economies, expanding infrastructure and more airports are all factors which encourage investors.Assetz® News - India looks to the world for investment
Unitech plans pvt placement
Unitech, the biggest real estate firm in the country after DLF, is set to mop up around Rs 5,000 crore through private placement to qualified institutional investors. According to highly placed sources, the company is conducting a road show abroad and is expected to complete the transaction by next week.Unitech plans pvt placement- Hindustan Times
BSR and Lehman Brothers in Indian real estate venture
Another Israeli developers is entering the Indian real estate market. BSR Engineering and Development Ltd. (TASE:BSRE) and Lehman Brothers Real Estate Partners have signed an memorandum of understanding (MOU) to set up a joint venture to buy land in India for the development of residential and commercial projects.BSR and Lehman Brothers in Indian real estate venture
AIG Investments eyes India realty mart
US based AIG Investments is planning for a portfolio management service (PMS) through which it will invest in the Indian real estate market.AIG Investments eyes India realty mart
HospitalityBizIndia :: Property transactions made safer
Bajaj Allianz General Insurance and ICICI Lombard plan to launch their ‘title insurance covers’, shortly in India. In the multi-crore, high risk real estate business, an insurance cover is important in case of property transactions/acquisitions falling through.HospitalityBizIndia :: Property transactions made safer
Cross border smart partnerships
MALAYSIAN Institute of Estate Agents (MIEA) will continue to support local real estate agents to set up operations overseas, according to president K. Soma Sundram.“We will facilitate smart partnerships between local and foreign real estate agents for possible cross-business cooperation,” he told reporters after the opening of the Malaysian Annual Real Estate Convention (MAREC 08) in Kuala Lumpur on Saturday.Cross border smart partnerships
Hindujas to put Rs 80K cr in oil fields
Hindujas have 40 acres land in Bangalore, which is witnessing a real estate boom because of the mushrooming IT and ITeS companies. “The Bangalore project would be the first real estate project to be taken up. We have received all the clearances for the project,” he said. Hindujas plan to build complexes for IT and ITeS and some residential in the 40 acres. “We are planning more investments in real estate in other cities particularly tier II,” he said without giving further details.Hindujas to put Rs 80K cr in oil fields
South India tops North for tier-III realty development- Realty Trends-Real Estate-Markets-The Economic Times
South India has outscored the northern part of the country in terms of emergence of new growth centres in the fast-growing real estate sector with Thiruvananthapuram and Mangalore being named as the top two tier-III cities by global realty consultant Knight Frank.South India tops North for tier-III realty development- Realty Trends-Real Estate-Markets-The Economic Times
IPO rally in '08 to be dominated by power, real estate and financial services - livemint
Among real estate companies, EmaarMGF, Gammon Infra and a host of others have lined up their public offers.IPO rally in ?08 to be dominated by power, real estate and financial services - livemint
Spectral Services helping cos save energy- Power-Energy-News By Industry-News-The Economic Times
“Energy efficiency is no rocket science,” says Prem C Jain, founder chairman of Spectral Services Consultants in Delhi. Jain should know—after all he heads a company that helps make buildings in India save energy and go ‘green’.Going green also needn’t be expensive, insists Jain. The key is in making smart use of available resources, and innovating. “At energy efficient building energy is saved whereas in a green building it is also recycled,” he says.Spectral Services helping cos save energy- Power-Energy-News By Industry-News-The Economic Times
Real estate developers fear Mumbai property rates may shoot through the roof soon
Real estate developers fear 30% to 50% increase in prices as well as demand for property in Mumbai, Pune, Nasik, Chennai and Bangalore, compared with the ongoing steady demand and prices in Delhi and the NCR region from March 2008 onwards. According to industry experts, with Indiabulls (14 lakh sq ft of commercial and retail) and Peninsula II (5 lakh sq ft) properties under construction in Lower Parel in Mumbai, the demand for residential properties is expected to rise by 30% from March 2008. While Indiabulls property is expected to be operational thisyear with a parking space for 3,500 cars, the Peninsula II properties will be completed next year.more
Sunday, January 13, 2008
SEBI readies REIT for investors
As one of the biggest show stealers in the Indian real estate industry over the last couple of weeks, the draft regulations on REITS published by the Securities and Exchange Board of India (Sebi) elicited a spate of responses from developers and other stakeholders in the real estate industry at the recently concluded Natcon organized by the Confederation of Real Esatet Developers Associations of India.
Building blocks of urban India
Builder, real estate, property developer… terms like these are still looked at in askance by many Indians even today, and arguably for good reasons. Much of the business remains unorganised, hence opaque and subject to a lot of black money-based dealings. Though no business can claim full marks on the ethical score, the real estate business finds itself lower on the scale. One must also admit that this portrayal in some measure is due to depictions in Indian popular cinema. ...
Can Chennai overcome urbanisation woes?
You know the truism about the best laid plans of mice and men? Nowhere does it apply more than in the area of urban planning, in India especially. But despite their plans going awry, architects, town-planners, civic officials, industry and citizens bodies continue to persist with the exercise.
The most recent one in this vein is the one floated by the Confederation of Indian Industries for the city of Chennai. Euphonically christened MAP Chennai Region, it proposes to develop a 5,000 square kilometre region around the southern metropolis, ringed by the cities of Marakkanam, Arakkonam and Pulicat.
"This is a regional development plan," says G R K Reddy, managing director of city-based infrastructure development company Marg Constructions [Get Quote], and chairperson of CII Infra 2007, the event where the plan was unveiled, "to take the pressure of migration off the city and to bring about inclusive growth."
Taking as its model the National Capital Region, where you have Noida and Gurgaon to take the population load off Delhi, the plan seeks to develop a network of cities and towns in the region, in a "hub and spoke model" in Reddy's words.
For example, Arakkonam, which has the largest engineering workshop of Indian Railways, and the manufacturing plants of TVS [Get Quote], Tamil Nadu Telecommunications [Get Quote] Limited and MRF Tyres, could be a centre for engineering excellence; Madurantakam, with the automobile testing facility and the Ford and BMW plants nearby, could become a centre for automobile engineering excellence; and so on.
Very noble indeed. But that's not all town-planners have come up with for Chennai. The city is to soon have a new master plan, its first in 31 years. And as residents will say, not a day too soon.
A sleepy, colonial town until even a decade ago, in the globalised India of today, Chennai is the preferred destination for the IT/ITES, auto and auto ancillaries, leather, apparel industries, with a 70 million population projected to grow at a CAGR of 2.34 per cent between 2001-11.
Naturally, that has led to problems, the most acute being the lack of sewerage and drinking water, said to affect 40 per cent of the residents.
Unlike the first MAP Chennai plan, which is still only a proposal, the master plan, albeit a draft yet, has official sanction. And very unlikely for official plans, is being sounded out by stakeholder groups -- citizens, NGOs, architects and the like -- for the past eight months, to preclude the occurrence of the kind of problems that rose with the Delhi Master Plan.
The response from the experts, however, is mixed. Subhash Chandra, chairman of the state chapter of the Institute of Town Planners, feels that the views of industry, the biggest driver of growth, have not been included enough.
Next, there is no provision to attract private participation in city development in the PPP model, something that CII's Chennai MAP plan incorporates in its estimation of Rs 24,000 crore (Rs 240 billion) investment in the next five-six years.
G Dattari, former chief urban planner of the Chennai Metropolitan Development Authority (CMDA) and advisor, Sustainable Madras Support Project, finds many good things in the plan.
"For one, it makes provisions for 'urbanisable' land leaving flexible its specific use, industrial or residential, which will lead to composite development of localities. Two, it suggests making the Tamil Nadu Pollution Control Board the nodal agency for clearances, so that hazardous industries are regulated." Ch Gopinath Rao, former national president of the Institute of Valuers, however, finds "no logic" in the plan's not clearly demarcating land for agricultural use.
It's early days yet to know whether Chennai MAP region will see the light of day, but there have already been a lot of positive noises. It has now been referred to the CMDA for its views, informs Chandra.
However, there might be hope for the MAP Chennai plan from the master plan itself, which says that "the government has been considering to declare the areas adjoining the CMA as a Region comprising parts of the Thiruvallur and Kanchee-puram Districts for preparing Regional Plan, considering the developments coming up in the Kelambakkam-Tiruporur, Orgadam-Sriperumbudur and Gummidipoondi-Ponneri areas".
The problem, of course, is not with the plans themselves, but with the cavalier way in which governments everywhere and the multifarious bodies having jurisdiction over a particular area deal with them.
Dattari calls the government the "weakest link", while Gopinath Rao says it is officialdom's lack of foresight that is the stumbling block, because by the time it has reacted to a problem, the problem itself would have been magnified manifold. In this regard, he maintains, the master plan may not improve matters, but it will at least not aggravate them.
Next, it is debatable whether the centrifugal model of urban planning is such a great idea. As Dattari says, "NCR has not been a very effective idea on the ground."
Saturday, January 12, 2008
Dwelling on low-cost dwelling demands
Low-cost housing or LCH is slowly getting high on the agenda of developers. While this is understandable, because of the enormous gap between supply and demand, what should be worrying is that high land cost, and lack of connectivity owing to poor infrastructure are proving to be major impediments to LCH in India.The Hindu News Update Service
Friday, January 11, 2008
Thursday, January 10, 2008
Stations facelift to wagon Rs 10,000 crore to Laludom
The Railways plan to unlock around 300 hectares in Delhi, Patna, Howrah, Agra, Jaipur and Chennai railway stations and hope to generate over Rs 10,000 crore from their development. The Railways would unlock around 100 hectares in Delhi out of which around 20 hectares would be used for commercial development. The rest of 200 acres would be unlocked in the other cities.
“Works on Patna and New Delhi would start by March,” an official said. He said New Delhi station modernisation project could cost up to Rs 5,000 crore and big infrastructure players like DLF, ADAG, Tata and GMR are among the players that are in talks with the Railways for the contract. The Railways have appointed Hong Kong-based Terry Farrell and Partners as consultant for the architectural design for modernising New Delhi Railway station. Consultants for Patna railway station makeover is set to be finalised in a month.
“Delhi and Patna railway stations makeover is topmost priority for the Railways at the moment. The rest of cities would follow suit subsequently,” the official said.
The Railway land are likely to command a price of around Rs 30,000 per sq ft, akin to commercial real estate prices prevalent in Central Business District (CBD). Analysts said this could be largest A-grade real estate space available after completion.
The Railways are in talks with the urban development ministry for grant of an additional floor area ratio (FAR) of 1 against the permissible 1.5 on railway land. Apart for unlocking land in these cities, the Railways have also decided to exploit about 500 acres in Mumbai, which could also add significant moolah to its kitty. The Maharashtra government has agreed to grant Railways a floor space index of four in Mumbai against existing norm of 2.5.
Unitech to go for $1.5 billion QIP
Board has already given nod for the issuance of 200 million shares.
In the largest-ever qualified institutional placement (QIP) by Indian corporates, real estate developer Unitech is expected to raise $1.5 billion (Rs 6,000 crore) through the QIP route in a couple of months. The QIP was expected in the first quarter of 2008, sources said.
The company’s board has already given approval for the issuance of 200 million shares to increase the paid-up share capital of the company, Unitech told exchanges on December 7. With a total share capital of 1,623.37 million, the company could dilute upto 12 per cent in the company.
If the company does a QIP of Rs 6,000 crore at today’s closing price of Rs 516, the dilution could be in the range of six to seven per cent, sources said.
In the previous major QIPs, GMR Infrastructure raised nearly Rs 3,965.52 crore ($1 billion) last month and wind energy company Suzlon raised nearly Rs 2,182.70 crore last year.
When contacted, company executives said: “We have already received shareholders’ approval for a QIP and we are considering the same. However, we have not finalised anything,” he said.
According to sources, the company is expected to use the QIP proceeds for its upcoming projects and telecom foray, which it is planning in all 22 telecom circles of the country. Unitech is also foraying into Mumbai real estate market with an investment of Rs 4,000 crore.
Unitech has several business segments relating to residential, commercial, IT parks, retail, amusement parks and hotels.
According to its annual report for 2006-07, it has 50 million square feet of ongoing projects. The company is also planning to build 50 malls across the country with an investment of Rs 20,000 crore.
Unitech has raised over Rs 3,100 crore (360 million POUND) on the Alternative Investment Market (AIM) of the London Stock Exchange through its arm Unitech Corporate Parks Plc (UCP).
Unitech is also considering to float a Real Estate Investment Trust (Reit) in an overseas market to raise $2-3 billion (about Rs 8,000-12,000 crore) to meet its expansion plans.
The company’s shares closed at Rs 516.95, down 1.54 per cent over yesterday’s close of Rs 525.05.
Wednesday, January 9, 2008
Punjab’s real estate industry goes hi-tech!
PUNJAB’S REAL estate industry has gone hi-tech, especially in Mohali and Chandigarh.
Taking a cue from their NRI brethren, the local real estate fraternity has taken to the internet media in a big way to promote their business.
Most builders have their own websites where the clients can reach and get updated on every facet of the project. Of great interest to the majority of the residents are the residential and commercial projects coming up in the region.
A local entrepreneur based in Mohali has gone a step further. Aps Randhawa, president & CEO of thelandsmiths.com is busy building a real estate portal providing services such as asset management, retail management, online marketing and free listing of properties to become a leader in the real estate industry not only in Punjab but in the whole of India. He is supported by a bunch of youthful IT professionals - all local Punjabi boys and girls who wish to give competition a run for their money. They include Rajesh Kumar, who is excited by the global reach of his work as he provides guidance and customer care services to NRIs. Says Aps Randhawa, "In the success of my real estate portal, I see the success of Punjabi enterprise."
It is true that entrepreneurs like Aps Randhawa are the people who will make Mohali the IT City of Punjab.
SEBI gives go-ahead to Emaar-MGF IPO
Realty major Emaar-MGF's application to go public has got the stamp of approval from the Securities and Exchange Board of India (SEBI) to launch its Initial Public Offering (IPO). The IPO is expected to hit the market in the first week of February and raise between Rs 5,000-6,000 crores, making it the second largest realty IPO in the country till date. The company will offload 11 crore shares with the pricing expected to hover around Rs 500-600 per share.
According to sources, the go-ahead came on Tuesday, subject to compliance of observations. "The documents will be finalized in another day or two and filed by Friday or Monday. This is only a formality and we expect to get everything ready so as to launch the IPO in early February," says the source.
Emaar MGF Land, a joint venture between one of the world's leading real estate companies Emaar Properties PJSC of Dubai, and MGF Development of India, filed its Draft Red Herring Prospectus (DRHP) with SEBI in September last year to enter the capital market with its IPO of equity shares.
The global co-ordinators and book running lead manager to the issue are Enam Securities Private Limited and DSP Merill Lynch Limited. The Book Lead Managers are Citigroup Global Markets India Private Limited, Kotak Mahindra Capital Company Limited, HSBC Securities and Capital Markets (India) Private Limited, JP Morgan India Private Limited and Goldman Sachs (India) Securities Private Limited.
The company is engaged in the development of properties in the residential, commercial, retail and hospitality sectors. Its operations span various aspects of real estate development such as land identification and acquisition; project planning, designing, marketing and execution.
Some of the current projects under implementation include development of Palm Springs and Palm Drive in Gurgaon, Mohali Hills at Mohali, the prestigious Commonwealth Games village, Delhi and Boulder Hills, Hyderabad.
Many real estate companies launched their IPOs last year, but the largest of them all was the DLF offering in July 2007, which raised Rs 9187 crore.
Realty developers urge govt to increase Floor Area Ratio
In order to create more affordable housing, the real estate industry on Tuesday urged the government to increase the Floor Area Ratio while developing infrastructure across the country.
At a national conference organised by the Confederation of Real Estate Developers' Associations of India (CREDAI), various developers, consultants and experts emphasised the need to increase the Floor Area Ratio for creating housing for all.
"If we really want to change the quality of life of poor and create housing for them, we have have to increase the Floor Surface Index (FSI) (or FAR)," Hiranandani Constructions Pvt Ltd Managing Director Niranjan Hiranandani said.
He suggested that the FSI should be increased to between 4-6 in the country.
However, Urban Development Expert Chandrashekhar Prabhu viewed that before increasing the FAR, infrastructure in the country should be developed first.
"Infrastructure is the key issue. First develop the infrastructure and then increase the FSI," he said.
Global real estate consultant CB Richard Ellis Chairman and Managing Director Anshuman Magazine also opined in the same way and said: "Ideally infrastructure should have been developed first and then FAR be increased. But unfortunately in India, it is not happening."
The prices of the properties have gone through roofs because of supply constraints, Magazine said, adding "... the only solution is to increase FAR and develop infrastructure simultaneously."
He said that the current average FSI in the country is between 1.25 and 2.
DLF Group Executive Director Rajeev Talwar also favoured a change in the existing FAR norms.
India's IT city is showing no signs of slowing down!
Anurang Mathur, Deputy MD, Cushman & Wakefield said, “Most of the demand comes from IT/ITES sector and Bangalore has lead for the last 3 to 4 years in the demand for this industry and hence in the office market as well. Now it has a critical mass and good breath hence we expect it to continue to do well.”
But the face of the Bangalore commercial real estate market looks all set to change. Reason -the city is facing a large space crunch for commercial property in the central business district. Commercial property rates that rose by 10-15 percent last year are expected to increase similarly this year; especially after the opening the new airport.
Mathur said, “This is airport is very far from the current airport and CBD and there is a lot of land and opportunity available for commercial development between the airport and the city. We will see plenty of action in those areas and all that real estate will change.”
The opening on the new airport is expected to change the dynamics of Bangalore’s commercial real estate market, areas like Indiranagar, airport road and the inner ring road that flourished until now because of their proximity to the current airport may witness a drop in interest levels
Nevertheless industry experts are bullish on Bangalore’s commercial market. They don't expect to see a situation of over supply for at least two years.
Commercial real estate (in million sqft)City Demand Absorption
Bangalore 13.32 8.7
NCR 10.6 6.6
Chennai 8.7 6.4
Mumbai 4.5 1.4
Source: Cushman & Wakefield Annual Report
Parsvnath Developers wins contract worth Rs. 90 crore from Shirdi Sai Trust
Parsvnath Developers Ltd, a major real estate player in the country has announced that the company has won a contract of Rs 90 crore from Chennai-based Shirdi Sai Trust for building an ashram in Mahrashtra.
Under the contract, Parsvnath will construct dormitories, residential blocks and an open air theatre and restaurant block over an area of approximately one million sq feet.
The company is already developing a 3-star hotel at Shirdi over an area of 50,000 sq feet.
The project will be initiated within the month of January 2008 and the work will be completed within 21 months from the date of commencement of construction, an official release said.
Pradeep Jain, Chairman, Parsvnath Developers Ltd said, “We feel privileged to be part of this great social work. Service to the pilgrims is paramount for us. The ashram will provide comfortable stay to Sai Baba devotees visiting the pilgrimage. Once complete, Shirdi Sai trust will hand over the ashram to Shirdi Sai Sansthan for ownership, management and further maintenance.”
Parsvnath Developers Limited a leading real estate developer in India has a PAN - India presence and an experience of more than 17 years in offering state of the art construction in 48 cities and 17 states with across key verticals of real estate industry.
At 11:55 am, stock of construction firm, Parsvnath Developers was quoting at Rs 546. It has touched an intraday high of Rs 583 and an intraday low of Rs 545. The stock was recommended for Buy yesterday by TopNews. The stock touched an all time high in yesterday’ trade.
Tuesday, January 8, 2008
Isreali real estate firm to invest $1 bn in Ludhiana
With India being dubbed as the 'next big destination' in real estate here, Israeli real estate firm Fishman Holdings is planning to invest $1 billion in Ludhiana.
According to media reports, the latest investment plan in India comes close on the heels of another project it embarked upon last month in Jaipur to build a township at the cost of $2 billion.
Fishman Holdings' Indian real estate development subsidiary, Mondon Investments Ltd, has signed a Memorandum of Understanding (MoU) to buy a 300 acre plot in Ludhiana for $84 million, the daily said.
Mondon is planning a 2.3 million square metre residential and commercial project on the site, assuming that the entire lot is purchased.
The entire cost, including the land, is estimated to be about $1 billion.
The land was purchased for $280,000 per acre with Mondon reaching an agreement with the seller that if the size of the plot falls below 300 acres, provided that it is no less than 100 acres, the price will be reduced to $238,000 per acre, it added.
The firm is already involved in a number of development projects in India, including residential and commercial projects in New Delhi, Thane, Hyderabad, and another project in Ludhiana.
Centre awaits Goa response on SEZs
The Centre will take a final decision on the three notified special economic zones (SEZs) in Goa only after receiving a formal communication from the state government.
The Goa government had, on December 31, 2007, decided to scrap all SEZs in the state following widespread protests and recommend de-notification of the three notified SEZs.
“We are waiting to hear from the state government. Once we get their letter, we will respond to it and look at it,” Commerce Minister Kamal Nath said on the sidelines of a conference organised by the Confederation of Real Estate Developers’ Association of India (CREDAI) here today. Nath added it was for states to decide if they wanted SEZs or not.
“It is for a state to formulate its own policy. Some states want more, some states want less, some want it differently. The growth process of the state has to be determined by the state itself,” he said.
The three notified zones in Goa are Meditab Specialities, K Raheja Corporation and Peninsula Pharma. Pharma major Cipla has already invested Rs 200 crore in the meditab zone for setting up two units.
After the Goa government’s decision, Commerce Secretary Gopal K Pillai had said there was no provision in the SEZ Act to de-notify a zone. However, Nath later said the de-notification of an SEZ was possible.
When asked about the industry’s demand for lower taxes in the real estate sector to promote low-cost housing, Nath said: “I am in favour of what stimulates demand.”
Speaking at the function, CREDAI Chairman Kumar Gera said taxes constituted 25 per cent of the cost of real estate projects.
“If we take a pan-India average of Rs 2,700 per sq foot, at least Rs 700 goes towards paying taxes,” he said.
REITs may help address hoteliers' fund-shortage woes
The hotel industry has got something to cheer about. The expected introduction of Real Estate Investment Trusts (REITs) by the Securities and Exchange Board of India (SEBI) may now help the industry overcome room shortages.
According to hospitality heads, REITs will not only allow retail investors to participate in the hospitality boom but will also correct the demand-supply mismatch in the hotel sector. In the long run, it will also correct room rates and will have an impact on land prices.
According to hospitality consultancy firm HVS International, with the introduction of REITs, retail investors can participate in the booming hospitality industry registering a 20% YoY growth.
“REITs will provide an alternate source of funding to hotels. Earlier hotels could only look at banks and financial institutions for investments. Then private equity funds came in and now REITs will fund expansion of hotels,” says HVS International associate director Siddharth Thaker.
As per advisory firm Grant Thornton, around $259 million was invested in the hospitality sector in six private equity deals last year. This is 2% of the total PE money invested across various sectors in the country.
REITs would invest directly in real estate projects after raising money through stock markets. “With REITs, liquid funds will be available to fuel hospitality players’ expansion plans. With greater supply of hotel rooms, it will correct average room rates (ARRs) in the long run,” says Sarovar Hotels executive director Ajay Bakaya.
The group is already in discussions with two prospective REIT funds for its expansion. Another fallout that industry analysts foresee is greater financial transparency in the sector. “It will make industry more transparent,” says Mr Thaker.
Choice Hotels India CEO Vilas Pawar says: “It will make relations between operators and owners more professional.” Choice Hotels, a US-based hotel brand, with over 30 properties in India has global exposure to REITs. For instance in Canada, InnVest REIT holds interest in Choice Hotels Canada, a wholly-owned subsidiary of Choice Hotels US.
“In India, we are open to promoters who will have REIT funding,” adds Mr Pawar. Globally, REIT is a popular investment vehicle for hotels. With greater supply coming in, the ARRs may soften, but the already high land prices may witness an upward trend.
“In India, land price is 50% of the total hotel cost whereas in China, it is only 10-15% and in US, it is 20-25%. REITs will increase expansion, pushing the land costs up,” says Lemon Tree Hotels VP-operations Rahul Pandit. For now, the hotel industry is gung-ho about the introduction of REIT and it eagerly awaits SEBI guidelines on the same.
Real estate sector seeks special residential zones
The real estate industry on Monday sought introduction of special residential zones (on the lines of Special Economic Zones), to ensure affordable housing in the country.
“We need SRZs across India with these zones patterned on the lines of SEZ Act entailing similar approvals, the board structure, and monitoring and execution, and also similar concessions in terms of direct, indirect taxes and octroi, amongst others,” Mr Kumar Gera, Chairman of Confederation of Real Estate Developers’ Association of India (CREDAI), said at a conference here.
Mr Gera said that the experience gained from the SEZ Act could be translated to create SRZs, and pointed out that SRZs could ensure affordable housing in India. “To ensure that these SRZs do not become new slums, they need to be supported by proper infrastructure, sustainable development, and a realistic floor space index (FSI),” Mr Gera added.
Goa SEZ issue
Meanwhile, reiterating his earlier stance that SEZ policy could not be “thrust or forced”, the Union Minister of Commerce and Industry, Mr Kamal Nath, on Monday said he is awaiting a written representation from Goa Government, on the SEZ issue.
“We are waiting to hear from them, and once we get letter from the State, we will respond to it. But just now there is no letter,” Mr Nath said on the sidelines of a real estate conference organised by CREDAI here.
Mr Nath had, last week, asked the Goa Chief Minister, Mr Digambar Kamat, to give in writing the reasons for scrapping SEZs in the state.
The Commerce Minister today said that while SEZ policy was not to be thrust or forced on anyone, it was for a State to formulate its own policies.
“Some States want more, some less, some want things differently but the growth process of the State has to be determined by the State itself,” he said.
The Minister also hinted that he favoured moderation in duties and levies to stimulate growth in the real estate sector. “Real estate sector needs stimulation, and the Government has to look at it,” Mr Nath said but did not specify whether his ministry would demand tax concessions for the sector in the upcoming Budget.
Addressing a conference earlier, the Minister said, “We need low-cost houses….Real estate is growing at 13-14 per cent annually, but is still a small portion of the GDP.”
Nath favours duty cuts to aid realty sector
Trade Minister Kamal Nath said on Monday he favoured lowering of duties and levies to help the booming real estate sector sustain high growth.
"I favour what will stimulate demand in the sector. The government has to look at it," Nath said, referring to high duties on building and construction materials.
However, he did not disclose what his ministry would recommend to the finance ministry for the next budget.
Taxes on building materials like cement and steel, stamp duties on purchase of property and other state levies make up almost 25 percent of the total cost of dwelling units.
The Confederation of Real Estate Developers' Associations of India (CREDAI) chairman, Kumar Gera, said the total cost of floor space of an average housing unit was 2,700 rupees per square feet and about 700 rupees comprised taxes and levies.
"These (duties) have to be brought down for housing to be more affordable," Kumar said at a conference on the real estate sector.
Nath said the real estate sector was growing at an annual 13-14 percent and this has attracted foreign investors to the sector.
"With the economy on an upswing, the emphasis and requirement today is on creating international standard infrastructure and housing facility to sustain the growth rate projected in the five year plan," Nath said.
India's real estate sector has pushed up demand and prices of cement, steel and other materials in the last few years, apart from contributing to economic growth.
DEVELOPMENTS IN REAL ESTATE SECTOR, A REFLECTION OF GROWTH IN INDIAN ECONOMY
Shri Kamal Nath, Union Minister of Commerce and Industry, has stated that the developments in the real estate sector symbolize the changing face of India and it is a reflection of the growth in the Indian economy brought about by high rates of GDP and also by India’s integration with the global economy. He was speaking at the “ National Convention ‘NATCON 2008’: Real Estate for All” organised by the Confederation of Real Estate Developer’s Association of India (CREDAI), here today. He also stated that in the recent years, services sector has been the main driving engine of Indian economy’s growth.
“With the economy on an upswing, the emphasis and requirement today is on creating international standard infrastructure and housing facility to sustain the growth rate projected in the 11th Five Year Plan. The Real Estate Development sector has the capacity to pay for itself without straining the limited resources of the State Government”, Shri Kamal Nath said. The Minister further stated that we have already opened construction development sector for FDI and the policy permits wholly owned subsidiary in this sector in India by a foreign company. “Of course, there are conditions regarding minimum area for development and minimum capitalization to be brought in by the foreign investor. A number of global players have entered the Indian market and many more have shown interest. Growth and investment have also created opportunities for investment in real estate sector, he said.
“While the role of the Government is expected to be primarily as a facilitator to the development process, the private sector participation is aimed at bringing technical and managerial expertise in delivering good quality mass housing projects. It is a good sign that many State governments are joining hands with private entrepreneurs in resolving the acute housing problem in urban areas. The private sector and Government has to work in tandem towards a common goal. It is equally important to address the institutional and regulatory aspects as well as strengthen and expand the capacity of financing institutions for further growth of the sector”, Shri Kamal Nath said.
Monday, January 7, 2008
Fire Capital to inject $750 mn in Indian real estate
Private equity firm Fire Capital plans to invest up to Rs 3,000 crore by 2010 to develop over 25 real estate projects across the country.
"By 2010, we expect to invest around 750 million dollars in developing projects in Indian real estate," FireCapital Fund Pvt Ltd CEO Om Chaudhry told PTI.
Of the 750 million dollars earmarked, the firm has already committed the capital of first fund of USD250 million in seven projects - one each in Chennai, Bangalore, Nagpur, Indore, Jaipur, Ahmedabad and Dehradun, he said, adding that the company was now in the process of raising USD500 million.
The company expects the closure of the second fund worth 500 million dollars by February 2008 to start the projects thereafter.
"We will develop about 20 projects utilising the second fund and 250 million dollars are in the pipeline," Chaudhry said, without elaborating on the identified projects.
With the first fund, the Mauritius-based company is developing seven integrated townships in partnership with local developers, which would be completed in 5-6 years, he said, adding "...from these ventures, we expect a realisation of over Rs 16,000 crore."
The seven townships would have 3,400 acres of land area and 75 million sq ft of built-up area. "Besides 30,000 residential units, the complexes would comprise schools, hospitals, hotels and shopping malls," he informed.
The company is developing eight hotels in the townships in various star categories with total capacity of about 2,000 rooms. Jaipur project would have a five-star and a three-star hotel.
Chaudhry said: "Other townships will have three-star hotels comprising 200-250 rooms each."
Asked on tie-ups for managing the hotels, he said that talks were going on and the company preferred local entities instead of "some big brands".
As a part of the each township, Fire Capital would also construct seven hospitals, which would have a combined capacity of 1,500 beds, with those in Jaipur and Bangalore being slightly bigger having about 350 beds each.
"As medical tourism is catching up, we have decided to have bigger hospitals in Bangalore and Jaipur," Chaudhry said.
The CEO of the close-ended fund said that all the hospitals would be multi-speciality ones.
"For running the hospitals, we prefer to tie-up with local partners who will have a feel of the region," he said.
Welcoming the proposal of a real estate regulator for Delhi, he said, "for long-term health and sustainable growth of the industry, this should be implemented strictly."
Sunday, January 6, 2008
Canary Wharf readies war chest for property spree - Times Online
Gibbon believes that investors from the so-called Bric economies � Brazil, Russia, India and China � will emerge as buyers of commercial-property assets. He also predicts that companies from those countries will start to rent space from landlords as they set up satellite offices.Canary Wharf readies war chest for property spree - Times Online
Saturday, January 5, 2008
Friday, January 4, 2008
Residex a benchmark for all stakeholders
You could see it as a Sensex for residential house prices. Residex, India's first housing residential price index compiled by the National Housing Bank (NHB), will give an indicative trend of the prices of properties in different cities and serve as a benchmark for different users. A composite index, it can be used by policy makers, home buyers, brokers, developers, and housing loan companies to take informed decisions on cities or localities.
Being a non-biased reference point to understand the trend in the market, lenders can protect themselves from over-valuing a property and lending greater amounts while buyers can bargain better looking at the index. The index will also give an idea of the parallel economy in real estate transactions and policy makers can use this to reduce stamp duty on transactions to increase compliance, besides other policy interventions. For instance, if the Residex indicates the price at a particular location is Rs 10 lakhs and the stamp duty payable is eight percent i.e. Rs 8,000, a person paying Rs 4,000 would mean the property is being undervalued.
Manoj Vaish, president and CEO, Dun & Bradstreet Information Services India Pvt Ltd, says the index is welcome as there was a big need for authentic information. Reveals R V Verma,executive director,National Housing Bank,it is a granularised model and has a basket of parameters which are factored in and will include the market prices, broker's price, buyer's price, seller's price, ultimately to reflect the trend in prices.
The Sensex tracks India's 30 most valued and transacted companies, while Residex will collect data and track fluctuations in the property market. "This index will remove the opacity in the market and allow for more efficiency in market pricing. It will throw up a uniform kind of approach for determining the prices in different areas and hence allow for a more homogenous property market.The pricing based on demand and supply and other factors will be more efficient and transparent" ,Verma explains.
Right now, the index looks at five cities - Bangalore, Bhopal, Delhi, Kolkata and Mumbai - with two subgroups in Kolkata (Kolkata Municipal Corporation and Kolkata Metropolitan Area) and Mumbai (Greater Mumbai City Corporation and Other Municipalities). NHB proposes to extend the Residex to 63 cities covered under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme and eventually move towards a National Index.
"It is a good way to objectively study the merits and the demerits of this asset class and is also useful in the area of property taxes, which is very litigious" , points out Sanjiv Swarup, president, Synergy Consultants. Elaborating on this he says, currently the government officer assesses the properties at a particular rate and there is an opportunity to make a special case for an individual. With this, there will be less scope for subjective decisions. The whole exercise will be more transparent and sometime in future, we can look forward to property taxes linked to a particular index.
"Ultimately ,the Residex will become an areawise index. Just as initially there was only the BSE-30 index but now you have the IT,Bankex etc for different sector stocks. In property too, you will have an area wise index, to be followed by special sub sets of the index like residential,commercial and retail index.There will also be other competing indices which will appear" , says Akash Deep Jyoti, head, Corporate and Infrastructure Ratings, Crisil.
"The real estate price index in India assumes high importance in view of the contribution of the sector to the national GDP, the large exposure of the banking sector through developer and home loans and the dependence of governments at the Centre (for capital gains), state (for stamp duty) and Urban Local Bodies (for property tax)", he adds. "Most developed countries have similar indices - Singapore (index developed by Urban Redevelopment Authority), USA (index developed by the Office of Federal Housing Enterprise Oversight), Canada (New Housing Price Index) and UK (Halifax index).
"Residex in whatever form is a good beginning and will be helpful for individual or institutional decision makers in evaluating and benchmarking their decisions" , points out Mahesh Gandhi, director advisory, Trikona Capital India, a fund dedicated to investing in real estate in India.
The key difficulties in index development, points out Akash Deep Jyoti, are low accuracy of data due to the sector's heterogenity and illiquidity, high data requirement due to diversity and nonstandardisation of real estate units, and disparate prices for apparently similar properties due to a high degree of volatility. According to Gandhi, "The ultimate usefulness of the index will depend on its accuracy, which will be based on factors including the source of data collection the most accurate source of information would be data collected from the offices of sub-registrar of assurances, where all agreements are registered.
Sampling techniques are very important as are index error tracking and stabilisation, which will take some time" .
The government has to constantly reinforce the need of this benchmark. The whole exercise will start driving the back end of the market,which implies governance of land,registering of land, and mode of registry. As people start relying on this benchmark, the data will become more transparent and sensitive to the market. All this will improve the quality of the benchmark itself.
Kochi’s the new realty hotspot
The queen of the Arabian Sea is now a hot destination for real estate giants. What is unique to Kochi is, the city has attracted almost every domestic property developer worth its salt, and a slew of foreign companies, mostly from the Middle East.
Leading real estate developers like DLF, Sobha Developers, Ansals, Purvankara, Confident Group, Oceanus, Unitech, Nitesh Estates, Housing Development and Infrastructure (HDIL), Prestige Group, Emaar MGF and Parsvanath Developers have all descended upon Kochi, the financial and industrial capital of Kerala, during the last 6-8 months with a cumulative investment of over $2.5 billion. Prominent among the Middle East-based business groups that have forayed into Kochi are KGA Group of Kuwait, EMKE Group of Abu Dhabi and Indroyal. Some of them are also investing in the hospitality sector to set up luxury hotels chains.
Property prices in the city have appreciated by around 60% in 2007. During the past six months, half-a-dozen developers have announced their plans to enter Kochi; many have already acquired huge parcels of land. “Property development and real estate activities have overshadowed the state’s booming tourism sector. This boom witnessed the emergence of many developers and projects,” an industry observer and a former builder said.
Recently, HDIL purchased a 70-acre plot from the government-owned HMT and announced its plans to set up an IT park at Kalamassery, near Kochi. HDIL is also setting up a Cybercity in the HMT land, which will have IT space, hospitality, retail and entertainment projects. The total investment in the project is estimated to be around Rs 2,000 crore.
According to Kerala Builders Forum chairman George E George: “Till a decade ago, real estate activity of each city was driven by local builders.” The bigger players acquired the financial muscle to launch multi-city operations after they raised resources through public issue route. “Even then, many of them missed the bus in Bangalore and Chennai as the rates peaked before their entry,” he said. “I think they have spotted the opportunity in Kochi and are moving in early,” he added.
Sobha Developers is setting up the largest township in Maradu, Kochi, called the Sobha Hitech City. Maradu is a high-potential suburb of Kochi with commercial projects, 5-star hotels, shopping malls and IT projects. The total investment in the project is estimated at around Rs 5,000 crore. Nitesh Shetty,CMD of Bangalore-based real estate firm Nitesh Estates, said the Kochi skyline has changed dramatically over the last few years and today it is one of the fastest growing cities in the country. “The city offers grand investment opportunities for real estate mainly due to reasons such as large NRI population who want to buy homes in Kochi and increasing IT jobs in the city,” he said. His company recently acquired around 5 acres of land in Kakkanad near Kochi.
Similarly, in 2006, India’s real estate giant DLF purchased 3.78 acres in Kochi from the state government for Rs 78 crore. The DLF Group is planning to build a shopping mall, a multiplex and a 250-room deluxe hotel in Kochi. “Cochin is poised for a quantum leap. The commissioning of Vallarpadom international container terminal and numerous IT parks will make Kochi the preferred destination for highly-paid executives,” a senior HDIL official said.
Though builders have been focusing on Kochi, the supply is still grossly inadequate when compared to the potential demand, according to builders. For example, in Kakkanad, the city’s IT destination, the Infopark alone will create close to 30,000 to 40,000 jobs in the next 3 years. But the supply by all builders put together would be just 10,000 to 12,000 apartments by 2010. Apart from this, the Smart City Project is expected to provide nearly 90,000 IT jobs in the next one decade. Several private developers are also developing IT parks in Kakkanad and nearby areas.
Thursday, January 3, 2008
CREDAI`s 7th National Real Estate Convention from Jan 7 `08
Shri Kamal Nath, Shri Jaipal S Reddy and Kumari Selja to address NATCON 2008
CREDAI (Confederation of Real Estate Developers' Associations of India) today announced that its 7th National real estate convention - Natcon 2008 would begin on January 7th, 2008. The Chief guest at the Convention is Kamal Nath - Hon'ble Minister of Commerce & Industry. Jaipal S Reddy, Hon'ble Minister of Urban Development and Kumari Selja - Hon'ble Minister of State, (IC), Housing and Poverty Alleviation would be making the Inaugural and Presidential Address respectively, amongst other prominent dignitaries. The convention that has the theme "Real Estate for all" is going to be held from January 7-9, 2008 at Hotel Ashok, New Delhi.
Natcon 2008 is CREDAI's attempt to bring together developers, real estate professionals, policy makers, financial institutions and investors under one roof to debate, discuss and explore the new avenues in the real estate sector in India. All deliberations and panel discussions would revolve around various subjects affecting the realty sector, viz. - FDI/SEZ Policy attitude towards Real Estate, Policy and Regulatory Environment, Real Estate Indices and Developer Rating, Reforms in Real Estate: Taking Stock, Affordable Housing: Making it a reality with PPP, Future of Real Estate in next five years- Impact of Real Estate on Growth of Economic Development of India, The 21st century Developer: Pushing the Envelope, Shifting ownership patterns and influence of FDI. The convention is actively supported by the Ministry of Urban Development Government of India & Ministry of Housing and Urban Poverty Alleviation Government of India.
A galaxy of speakers from Government, Real Estate, Housing Finance Institutions, FDI will also be expressing their views and sharing knowledge including Mr. Deepak Parekh, Chairman, HDFC, Shri M Ramachandran, Secretary, Ministry of Urban Development, Govt. of India, Dr Harjit S Anand, IAS, Secretary, Ministry of Housing and Urban Poverty Alleviation, Mr. Sunil Rohokale, MD and CEO, ICICI Home Finance Co Ltd, Mr. S. Sridhar, Chairman and MD, NHB, Shri Sunil Kumar Singh, Joint Secretary, Ministry of Housing and Urban Poverty Alleviation.
According to Ranjit Naiknavare, Member - Natcon, ¬¬CREDAI, "We are proud to announce our seventh national convention which is reflective of the successes that we have achieved over the last six years. With each successive year we have been getting a tremendous response and this year too we expect 700 to 800 delegates to participate in the Convention."
"We have deliberately chosen this year's theme as 'Real estate for all' in keeping with the heterogeneity in lifestyles across the country. We believe that the real estate sector will play a phenomenal part in the economy in the years to come and Natcon 2008 is our earnest attempt to collectively deliberate on how we could eradicate the stumbling blocks in the real estate industry and streamline the course of action for the years to come." He further added.
NATCON is focused on meaningful discussions encompassing real estate that either enhance the understanding of a subject or seek solutions. The convention will address issues afflicting the real estate community on this day. Beginning from financing to customer care to affordable housing to taxation, all concerns will be attended to by expert speakers, based on their experience and expertise in their specific fields of real estate. The focus of the convention largely remains identifying the issues in the sector and working towards their solutions. NATCON also outlines the future of real estate in the country and reckons its contribution in appending India's global stature.
Godrej plans JV for developing factory lands
The Godrej group, which is one of the beneficiaries of the Urban Land Ceiling (Regulation) Act (Ulcra) being repealed, is looking at developing real estate at some of its factories in India.
The group has some 100 factories across India, and these include prime areas like Mohali and Ambattur (Chennai). With some parts of the manufacturing likely to be relocated to tax free zones like Himachal Pradesh, there is a possibility of a lot of factory land being freed up for development.
"Wherever there is a scope to develop real estate at factory land, Godrej Properties will enter into joint ventures with the respective group companies," said Adi Godrej, chairman, Godrej group.
For instance, Godrej Lawkim had recently entered into a JV with Godrej Properties to develop a property in Thane. A similar JV could be forged with Godrej Agrovet where the company has around around 110 acres of land in the outskirts of Bangalore. However, these will require the requisite clearances from boards of the respective group companies.
The group would proceed with such moves only if "positive" changes are brought about in the regulatory framework by the state government, post Ulcra repealment.
Godrej, like others in the real estate sector, wants the government to modernise the regulatory framework. The group is waiting for changes to be made in the FSI (floor space index) regulations.
Once there is clarity on the policy front, it hopes to go ahead with its plans on developing real estate.
The Rs 7,500 cr group is planning to adopt an integrated development strategy on real estate.
The growth story in real estate is expected to continue for the next few years on the back of housing demand for the growing young urban population in India.
To capitalise on this opportunity, Godrej Properties has entered into development opportunity in Hyderabad, Bangalore, Goa, among others.
Dunlop rolls out plan to sell idle land
Dunlop India is planning to sell part of its excess land in Bengal and Tamil Nadu to prop up the troubled tyre maker’s shaky balancesheet.
The company has spun off the excess land at Sahagunj in Bengal and Ambattur near Chennai into separate subsidiaries. It plans to sell a stake in the two subsidiaries to strategic partners.
Dunlop wants to build infotech SEZs in the two states.
“Dunlop is actively looking for partners to develop the areas for IT SEZs. We are ready to offload 50 per cent in the two companies,” Dunlop chairman Pawan Ruia told The Telegraph.
The company owns over 58.52 acres at Athipattu village in Ambattur in addition to the 30-acre factory premises.
That area has become a hotbed of the IT industry with a number of domestic and multinational IT majors setting up shop there.
The company hopes to rake in $70 million (about Rs 280 crore) by offloading 50 per cent stake in the subsidiary that holds the property at Ambattur.
“If we can do this, our working capital requirements of Rs 200 crore will be taken care of. Dunlop can also retire some of the high-cost loans,” Ruia said.
The company is also hoping to find a partner for the proposed IT SEZ at Sahagunj where 178.8 acres of excess land was transferred to a subsidiary company out of the total 239 acres. The Dunlop management is finding it hard to run operations because of shortage of funds. It is also straddled with high-cost loans worth Rs 130 crore.
While real estate developers think it could be hard to get the same sort of valuation for the land at Sahagunj, Ruia is hopeful.
“It doesn’t take more than 90 minutes from the airport to the plant site,” he said.
The Ambattur deal is likely to take place before the Sahagunj one. Dunlop has sought clearance from both the Tamil Nadu and Bengal governments to establish the IT SEZs.
Dunlop had hived off idle properties to wholly owned subsidiaries in the last quarter of 2006-07. Instead of paying cash, these companies had issued shares of equivalent amount to Dunlop.
The financial engineering enabled the company to report a positive networth. Last month, it was able to come out of the BIFR’s ambit after a Chennai High Court ruling.
Wednesday, January 2, 2008
Property title insurance in the offing
Bajaj Allianz, ICICI Lombard in talks with American company to launch the product.
Property transactions in India will soon have an insurance cover to fall back in case something goes wrong in the deal. The country’s two large private sector insurers, ICICI Lombard General Insurance and Bajaj Allianz General, are planning to launch title insurance covers this year.
Title insurance is a cover that protects a potential owner of a property against loss from defects in title. The policy is a retrospective one, where the insured is protected against losses arising from the events that occurred prior to the date of issuing the policy. Globally, the policy is bought by investors, occupiers and financiers.
At present, none of the property transactions, be it large acquisitions or a simple sale of a land or a flat, is covered through an insurance policy by an Indian insurer.
The reason is that Indian insurance companies do not have the underwriting expertise to offer title insurance products. Indian insurers require reinsurance support to be able to offer the product.
Both Bajaj Allianz and ICICI Lombard are in talks with First American Title Insurance Company (FATIC), which will be offering reinsurance support for Indian insurers to offer the product.
FATIC is the largest title insurer globally, with a revenue of $8.4 billion in 2006.
Says Swaraj Krishnan, CEO, Bajaj Allianz General Insurance, “We have had a preliminary discussion with First American Title Insurance. We have asked them to give us the product details. We will be doing a market study, verifying the titles and will file the product with the regulator in the coming months.”
The value of the title insurance cover will be equal to the price of land that has to be acquired. The premium rates will be a function of the value of property, the nature of transaction, which means the size of the purchase, the past history of the real estate property, costs relating to title search and the legalities involved in the title search.
Howden Insurance Brokers is also in talks with real estate developers, financial institutions, law firms, insurance companies and reinsurers to culminate into the next few insurance policies being sold.
Says Anoop Mathur, vice-president of Howden Insurance Brokers, “The value at risk has grown proportionally as the land cost has increased for the real estate developers. Title insurance makes a project bankable and saleable to customers.”
According to Akshaya Kumar, chairman, Park Lane Property Advisors, consultants during due diligence discover 20-30 per cent cases have title defects in them.
Property consultants believe that the availability of title insurance products will boost private equity investment in Indian real estate since most of the institutions are very particular about clear titles.
According to accounting and business consultancy firm Grant Thornton India, private equity firms have invested nearly Rs 25,000 crore in Indian real estate and infrastructure in 2007and, according to industry estimates, the investments are set to grow in the coming year.
“Institutions do not buy even if they have the slightest doubt about the titles. More private equity funds will flow in the Indian real estate if title insurance products are available in the country,” says Anuj Puri, chairman, Jones Lang LaSalle Meghraj, an international property consultant.
Adds Anshuman Magazine, managing director, CB Richard Ellis, South Asia: “Title insurance products give a lot of comfort to international investors to invest their funds in the property markets of developing markets such as India. Since these investors do not invest directly and do joint ventures with Indian developers, the local partners will take care of title issues. But we have also seen foreign investors demanding these products before signing the agreements to develop properties.”
According to Mathur of Howden Insurance Brokers, the two Bills — Land Acquisition Amendment Bill, which has been introduced last month in the Lok Sabha, and the Resettlement and Rehabilitation Bill – will make corporates acquiring land for SEZ or other reasons buy title insurance covers.
Explains Mathur, “After the amendement of the Land Acquisition Act, 1984, the government will not be able to acquire land and make it available for companies. As a result, corporates will have to acquire the land directly from land owners at a higher price. In such a scenario, title insurance would protect project developers from any financial loss arising from any defects in title to real property.”
There are two types of title insurance policies: the owners’ policy and the lenders’ policy. Owners’ title insurance is bought by a buyer of the property. It protects the buyer from all loss or defects in a title.
On the other hand, the lenders’ title insurance is bought by lenders such as banks and financial institutions. Experience in other global markets is that all institutional lenders require title insurance to protect their interests in the collateral of loans secured in real estate.
The policy amount decreases each year in proportion to the loan paid off each year. The policy has a provision for defence cost if a title to the real property is challenged in a court of law up to the actual amount of indemnity provided under the policy.
Land records in the country are not computerised and are not easily accessible.
The deeds registration system is not guaranteed by the state government and is inconclusive; typically leaving buyers with 30 years of title deeds to assess. Besides, the level of fraud in Indian real estate transactions is very significant; and the legal process is slow.
According to insurance officials, four to five foreign title insurance companies are keen to do business in India on this product. They may set up a dedicated company in India or could provide reinsurance support to Indian insurers to offer the policy for this line of business.
Kroger to run realty check before retail
In a first-of-its-kind move, top US grocery retailer Kroger is entering the real estate business in India. Representatives of the $66-billion company have already met 3-4 prominent real estate companies of India for joint ventures.
“They are mainly interested in jointly developing new FDI-compliant commercial projects or buying into existing ones,” said a senior figure in the real estate industry on condition of anonymity. Interestingly, America No. 3 general retailer behind Wal-Mart and The Home Depot runs all its nearly 2,500 supermarket stores in the US.
Considering India’s rapidly expanding market vis a vis the almost stagnated US market, it’s no surprise that Kroger wants to enter India. But what makes it look into the Indian realty sector and not retail? For one, Kroger can hold a majority stake in a commercial real estate project in India, while it’s not possible in the multi-brand retail space.
Another reason could be the backlash on organised retail. “It’s quite possible that Kroger has decided to refrain from retail due to the political sensitivities involved,” the source said.
Most of all, sources say, Kroger’s key objective behind entering Indian realty space is to gain a holistic understanding of the Indian consumer market. That is why, they add, the US major is likely to get into JVs with local partners even though 100% FDI is allowed in commercial real estate. According to them, being in the business of commercial real estate would give Kroger a good exposure to the retail market as well.
For retailers, setting up shops at the right place and at the right price is going to be the biggest challenge. If Kroger is able to block sufficient real estate, it would have an edge over competition when it enters the retail business. Of late, unavailability of viable property has made retailers put on hold their expansion in top cities.
Tuesday, January 1, 2008
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