The booming real estate market in India has caught the attention of the Board for Reconstruction of Public Sector Enterprises as a route for reviving sick public sector units.
Wednesday, February 6, 2008
Expecting the unexpected: While region booms, beware of dangers
The decline in real estate prices in the region, under the weight of excess supply, tighter lending conditions and the general trend of weaker property prices world wide. The perception that real estate prices here and abroad have peaked may encourage speculators to sell the property they hold before prices start to actually decline in their domestic markets. The additional supply coming to the market will be seen in the form of building of inventory, less sales and eventually lower prices. The decline in real-estate prices would reduce household wealth, bring forth lower consumption and economic growth and possibly damage the asset quality of banks. Its impact will vary from one city to another, being more visible in those countries where real-estate prices have surged most in the past few years.
Mumbai tops global rentals with New York, Tokyo
Nearly 40 million sq ft of office space was added in India last year, with the Bandra-Kurla Complex in Mumbai commanding the highest rentals even as the metro joined New York and Tokyo as the most expensive realty markets in the world, says a new study.
No plans of hiving off realty biz: Patel Engg
ICICI Prudential AMC takes 50% stake in XS Real's hotel venture
ICICI Prudential AMC is picking up 50% stake in the hospitality venture of Chennai-based XS Real Properties for Rs 150/175 crore, a banking source said. The venture in which XS Real promoter holds the remaining stake will set up 8-10 hotels across southern cities with Rs 1,000 crore outlay.
Puravankara in talks with PE firms for funds
Real estate firm Puravankara Projects is in talks to sell stakes in some projects, to fund expansion in a booming market where it sees annual growth rates of 30-40 percent, a top official said on Monday.
Monday, February 4, 2008
REITs likely to get tax-gains coating like MFs
Indian investors looking to put money in an investment vehicle in the realty segment could be in line for fiscal incentives. The government is vetting a proposal put forward by the securities market regulator Sebi to provide for a tax waiver on dividend income of Real Estate Investment Trusts (REITs). Sebi has made out a case to the government to consider granting tax benefits to REITs on the lines of mutual funds to ensure wider investor participation.
German realty major Hochtief lines up Indian foray
Germany’s largest construction company, e15-billion Hochtief, is the latest to have taken a fancy to the booming property market in India. It is all set to make an entry into the Indian construction sector through a partnership with Bangalore-headquartered realty major RMZ Corp.
Al Qudra to announce Indias plan
The chairman and managing director of Al Qudra Holding, a major investment company based in the capital, said the company will make an announcement this year regarding a stock exchange listing.
He said Al Qudra is now looking at developing real estate projects in India as part of its overseas expansion plans.
Big fat deal
The recent meltdown and the following volatility in the broader markets has left two sets of believers on the streets: one set believes in bubbles, and expects them to burst at periodic intervals, while the other believes there is a fundamental reason innate to these so-called bubbles, which is the strong undercurrent of robust domestic macroeconomic growth. For the latter set of believers, it is just a matter of conviction in the Indian growth story, while for the former worries about a correction and the bursting of such bubbles.
For some sectors of the economy, however, these divergent sets of investors align together. With a little bit of apprehension about a correction in prices in some pockets, we would like to include the Indian real estate too, in this league. Here's why: the perennial demand-supply mismatch is likely to continue in the near future.
Though real estate buyers, and more so, investors may delay their buying decision, there is middle class demand, which has taken wings due to the rise of sectors like information technology (IT), IT-enabled services and financial services. More recently, creation of manufacturing hubs in places such as Sriperumbudur in Tamil Nadu, Manesar in Haryana and Ludhiana in Punjab make one approve of this trend.
With the rate cuts announced by the US Federal Reserve, domestic rates too are expected to soften. An interest rate cut would mean cheaper home loans and thus higher demand for real estate.
Most real estate developers are gearing up for this upsurge in demand by laying out plans to construct millions of square feet (sq ft) in various sizes and shapes, across the country. But, there are a handful of developers in India, who have the scale and pace to set up shop in every nook and corner of the vast geography.
The markets have witnessed a rally in realty stocks in both directions last year, as well as the listings of a number of players including the largest of all – DLF. Now, Emaar MGF Land is set to join this league, with its plans to raise around Rs 6,000 crore via an IPO.
Two, tango
Emaar MGF Land is a joint venture (JV) between Dubai-based Emaar Properties PJSC and Delhi-based MGF Development, incorporated in 2005. Emaar – better known as the company which built the Burj Dubai, the world's tallest tower, has a global presence with operations in 16 countries, while MGF is a 10-year old real estate developer from North India with developments like City Square Mall, MGF Metropolitan in Delhi, The Plaza and Megacity in Gurgaon to its credit.
Now, the Emaar MGF JV has acquired over 13,000 acres all over the country and plans to develop it into integrated townships, residential apartments, commercial – retail and office spaces, hotels and hospitals.
Besides the parentage, the joint venture has also brought in the largest foreign direct investment (FDI) in real estate from institutions like Citigroup, JP Morgan and New York Life. As on September 2007, the company's paid-up capital of Rs 4,840 crore consisted of a 42 per cent share of Emaar, a 53.3 per cent from MGF and the rest from global financial institutions.
All the jazz
After achieving a breakeven in 27 months of inception, the joint venture is proposing to aggregate between Rs 5,540-Rs 6,464 crore through an IPO, which would amount to a post-issue stake of 10.2 per cent in the company. The price band for the issue is fixed at Rs 540-630 a share. At the upper end of the price band, the market capitalisation would thus work out to Rs 62,152 crore.
Earlier, the issue price was fixed at Rs 610-690 a share amounting to a market cap of Rs 69,382 crore. Owing to volatility in the markets the issue price has been revised downwards. Even then, this will make Emaar MGF the second largest real estate developer by market capitalisation after DLF, which has a market capitalisation of about Rs 1,39,000 crore.
"The increase in Emaar MGF's equity base will help it leverage better, since even now, the debt-equity ratio is as low as 0.86," claims Shravan Gupta, executive vice chairman and managing director, Emaar MGF Land.
Emaar MGF plans to utilise Rs 2,560.50 crore from the issue to make part payment for its land, Rs 775.50 crore toward development and construction costs of its Palm Drive project in Gurgaon, and the rest for repayment of loans.
Besides, the company has projects under development, including the 2,700 acre-plus integrated township in Mohali, a residential township in Hyderabad, Delhi, Chennai and high-end residential and commercial developments in Gurgaon. "Out of the proposed reserves, Emaar MGF has already paid up for almost 90 per cent of the land," mentions Gupta, hinting at the robustness of the developer.
Courting grandeur
Emaar MGF has mega plans for using its over 13,000 acre (about 566 million sq ft of saleable area) land reserves. The company has ongoing projects on around 18 million sq ft at present and aims to develop about the same area over the coming year.
"Going forward, we aim to expand our execution ability from 18 million sq ft a year to nearly 30 million sq ft over the coming five years," says Sanjay Baweja, chief financial officer, Emaar MGF. For this, the company has tied up with international construction majors like Australia's largest contractor, Leighton, and other players like Multiplex and Turner Construction International.
Such contractors bring along global best practices in construction, project management skills and world class equipment to the table. This ensures timely and high quality execution of Emaar MGF’s projects which range from anywhere over 100 acre to 3,000 acre. For smaller projects however, the company has tied up with domestic construction majors like L&T, Ahluwalia Contracts, and the like.
The company has also forayed into the airport, hospitality, healthcare and education sectors with marquee names as its associates. It plans to set up a speciality hospital and an international school in each of its integrated township, in association with Fortis Healthcare and Singapore-based Raffles Campus, respectively.
Raffles Campus is a subsidiary of Emaar Properties, after the latter acquired the former. Dubai Aerospace Enterprise is its partner for development of airport infrastructure in India. For its hospitality venture, Emaar MGF has chalked out about 4 million sq ft properties across various cities and tied up with global hospitality brands like Accor, Premier Travel Inn, Marriott, Intercontinental, Four Seasons and Hyatt.
Strength in strategy
The business model of Emaar MGF Land is an attempt to bring about the robust international practices from Emaar as well as its partner contractors, creating a stable revenue model for what is today just a two-year old startup. “We are looking to build properties, which could be converted into real estate investment trusts (REITs) going forward, as soon as the market opens up for REITs,” says Gupta.
To achieve this, the company has adopted a multi-pronged strategy. Although for residential properties it will go by the build-and-sell route, its commercial properties will be leased out for long periods. It plans to manage integrated townships and commercial properties by floating a facilities management subsidiary going forward. Besides, it will own the real estate in the healthcare venture with Fortis, which will set up hospitals in Emaar MGF townships. A similar strategy is followed for schools to be set up in tandem with Raffles.
HOTEL PROJECTS
Project
Location
Number
of keys
Estimated
completion
Courtyard by Marriott
Amritsar
135
FY09-FY10
JW Marriott
Kolkata
300
FY09-FY10
Holiday Inn
Kolkata
250
FY10-FY11
Holiday Inn
Dehradun
200
FY09-FY10
A luxury hotel
Jasola, New Delhi
250
FY10-FY11
For hotels, the strategy may differ depending on its partner, as some partners like Accor and Premier Travel Inn have entered into a JV with the company for a chain of hotels, while others have ventured in for select properties. For instance, Accor will set up and manage 40 hotels with an average of 80-100 rooms under its new global brand Formule 1 with Emaar MGF in a 50:50 JV. With Premier Travel Inn too, the company will set up 50 three-star hotels with over 5,000 rooms over the next seven years.
On the other hand, Marriott, Intercontinental, Four Seasons and Hyatt are going to manage some of Emaar MGF’s properties in Kolkata, Hyderabad, Gurgaon and Goa. However, since the company has been in operations for just about two years, investors may have to wait and watch for its operations to yield high cash flows.
EMAAR MGF'S ONGOING DEVELOPMENTS
Project
Nature
Saleable
area
(in million
sq ft)
Estimated
completion
Mohali, Chandigarh
Mohali Hills (Mega township)
Mohali Hills Plots
5.7
FY09-FY10
The Views (apartments)
1.9
The Villas
1.2
Central Plaza (retail space)
0.5
Hyderabad
Boulder Hills (Phase I)
Group housing
1.9
FY09-FY10
Gurgaon
Palm Springs, Gurgaon
High-end residential project
0.7
FY09-FY10
Palm Drive
Residential
3.3
FY10-FY11
Palm Square
Commercial and retail
0.3
FY10-FY11
New Delhi
The Commonwealth Games
Village 2010
Residential
1.8
FY09-FY10
Chennai
Chennai Esplanade (Phase I)
Residential
0.4
FY09-FY10
Though the company has paid up for almost 90 per cent of its land reserves, it may have to hold on to its land for longer periods, thus delaying its planned projects, if property prices correct or remain low for a prolonged period. Comfort can be derived from the fact that a large part of its Gurgaon and Mohali projects which were launched recently have been pre-sold, and are expected to be completed by FY10.
PROFITABLE ESTATE
Rs crore
6M FY07
FY08E
FY09E
FY10E
Revenues
501.7
1020
2200
3000
Operating profit
201.4
408
836
1140
OPM (%)
40.1
40
38
38
Net profit
130
270
572
765
NPM (%)
26
26.5
26
25.5
Valuations
Emaar MGF Land has not published the valuation of its land reserve. However, based on details about payment to be made for a part of its land reserves, around 5,300 acre of its land could be attributed a value of Rs 28,750 crore – close to Rs 5.4 crore an acre, or Rs 292 a share. If one values the remaining 7,900 acre of land reserves, which consist of contiguous land parcels in cities like Pune, Kolkata, Indore, Coimbatore, Kochi, Ludhiana, Jalandhar, Ghaziabad and a few others at a lower average valuation of Rs 4.5 crore per acre, one arrives at a value of Rs 360 a share.
This value includes the townships, residential and commercial projects already launched in New Delhi, Mohali, Gurgaon, Hyderabad and Chennai as well as the five hotel projects. Besides, the company has deals inked for setting up hotels amounting to a capacity of close to 5,000 keys and also hospitals and schools in its townships.
To sum up, this rough estimate leads us to conclude that the issue appears fairly priced. Since almost 90 per cent of the land reserves are owned and the fact that it has a room for further leverage makes the company attractive. Add to this, the set of investors in the company and the tie-ups it has entered to ensure timely execution of its projects aids in shrugging off execution risks.
Although not an exception for real estate developers, Emaar MGF, too, has a large part of its land reserves still defined as agricultural land. Hence, any change in legislation regarding use of agriculture land or any delays in conversion of use to non-agriculture, can impact its plans.
The only risk besides that could arise from a slowdown in demand leading to correction in real estate prices. Given the fair pricing, there appears to be little upside in the near term considering the uncertainty over real estate prices. However, in the long run, one could expect Emaar MGF to do an encore of DLF. Long term investors who buy into the great Indian growth story will reap handsome rewards from this issue.
Issue opened: February 01, 2008
Issue closes: February 06, 2008
DLF: Milestones for the future
From being the largest listed real estate player, to bidding for a telecom licence & foraying into insurance, DLF has set its sights on almost all the sunrise sectors in India. Its CFO Ramesh Sanka gives an insight into DLF’s future growth.
ICICI arm buys Vernon's 40% in Updater Services
ICICI Venture has picked up New Vernon Bharat’s 40% stake in Chennai-based Updater Services (UDS), India’s largest integrated facility management company, for close to Rs 100 crore. Founded in 1985, UDS manages over 50 million sq ft of space across all segments including corporate, IT parks, industrial and retail. It also offers production support services for auto major Hyundai Motor India and French glass major Saint Gobain.
UDS, which closed 2006-07 with a top line of Rs 82 crore, expects to achieve Rs 120 crore for the current fiscal. A couple of other funds including Actis and Future Capital were also in the race to pick up New Vernon’s stake in UDS. Veda Corporate Advisors facilitated the deal. Earlier, US-based venture fund, New Vernon Bharat, had picked up a minority stake in UDS in January, 2006 by pumping in $10 million.
While UDS has been valued at Rs 200 crore - Rs 220 crore for the deal based on last year’s turnover, New Vernon has more than doubled its investment in just two years. Currently, the organised facility management service in India is estimated around Rs 600 crore per annum and growing at 40-50% year-on-year.
“The booming Indian economy has created huge demand for office space, from both IT and non-IT sectors including retail, besides attracting large scale investments in the manufacturing sector. Being India’s largest integrated facility management company, we will continue to be in the forefront and grow aggressively, through both organic and inorganic routes,” UDS managing director T Raghunandana told ET.
According to him, UDS stands to gain by associating with ICICI, which has a large presence across regions, through its investments in real estate. Captively as a group, ICICI has large properties under its operations and spends an estimated Rs 40 crore per annum on facility management.
“They are not only aggressively growing, but also investing heavily in properties. ICICI plans to add 15 million sq ft of space to its kitty over the next 24 months,” Mr Raghunandana said. While UDS has been achieving 40% year-on-year growth over the last few years, with ICICI on its side, it hopes to increase this to 60% from now on. “Despite a pan-India presence, UDS is still a predominantly south-based company.
Almost 75% of its revenues come from the region , though we moved to other regions over three years ago. ICICI’s major strength is its strong presence in the west and northern regions,” says UDS Business Development head Samitha Rao. UDS expects its revenues to touch Rs 200 crore by March 2009.
Puravankara Projects hits the PE trail for Rs 2,000 cr
Bangalore-based real estate major Puravankara Projects (PPL) is in the final round of negotiations with four leading private equity firms — Blackstone, Goldman Sachs, AIG and Lehman Brothers — to raise Rs 2,000 crore. Puravankara will be offering a 49% stake in five real estate projects spread across four cities — Bangalore, Chennai, Kochi and Hyderabad — to mop up the money.
“The company is offering a maximum of 49% equity in the SPV level to these funds. Talks are in the final stage,” a source close to the deal said. When contacted, Ravi Ramu, CEO, Puravankara Projects, declined to comment on the deal.
Puravankara is developing around 18.78 million sq ft spread across Bangalore, Chennai, Hyderabad, Cochin and Mysore. These are 16 on-going residential projects covering 17.71 million sq ft of developable area and three commercial projects currently under development with a developable area of 1.07 million sq ft.
A string of residential and commercial projects by the firm are being lined up in Coimbatore, Cochin, Bangalore, Mysore and in Colombo, Sri Lanka.
Its consolidated net profit for the quarter ended December 31, 2007, jumped 122% to Rs 63.12 crore compared to the corresponding quarter in the previous year. Net profit margins recorded a sharp increase this quarter to 42%.
Sunday, February 3, 2008
Indiabulls Realestate to build residential appts in Chennai
Indiabulls Realestate will develop 3.5 million square feet area for commercial purposes and build 50,000 residential apartments in Mumbai, Delhi and Chennai.
"We are hoping to give delivery of 1.4 million square feet in March-April this year. We have leased out 40 per cent of the property. For residential appartments, delivery is going to happen starting this year," company CEO Gagan Banga told PTI.
The company is developing a residential project in the National Capital Region with real estate major DLF. Both the companies have equal stake in the project.
Banga denied reports that Indiabulls had bought out DLF's stake in the project.
"The land in Delhi was bought in auction from Delhi Development Authority, a government arm. Without keeping DDA in the loop, how can we possibly complete the transaction," he said.
The company is developing a 3,000 acre Special Economic Zone in Nashik and a 6,000 acre SEZ in Raigad, adjacent to Mukesh Ambani's SEZ.
"The Nashik SEZ has received final approval. We are looking at tying up with a few tenants for leasing out a part of the SEZ in the next few weeks," Banga said.
Emaar MGF bullish on India
NDTV: Can you tell us why have you chosen India for an initial public offer (IPO)?
Emaar MGF: As you understand that any company that is looking for growth, India is definitely the target. Due to our cultural and market proximity with India, we think it is the ideal thing for us to create value for our shareholders in this critical market. The size and potential of the market is also a factor that led to entering into Indian market.
NDTV: The market environment is pretty good looking at the boom in India’s real estate sector. Has that been the primary consideration?
Emaar MGF: We think in our evolution as a company today, Emaar MGF needs to be a public company to take the next step. The transparency, public visibility and corporate governance have become more prominent. With India’s upbeat real estate story, we think it is necessary for large companies to be in public domain. We chose this timing as we thought it is right time for us to make the transformation.
NDTV: Do you think choosing India has any significant links to the way you view India as part of your global strategy.
Emaar MGF: We are operating in 17 countries and none of them has size and potential of India. India is our ideal choice as we always say that India is our China because of our proximity and understanding.
NDTV: Five years from now, how significant will India become for your overall world operations?
Emaar MGF: We’ll be looking at 25-30% of our total revenue coming from India. We are optimistic to say that it could be more than that as the opportunities available in India are very exciting.
NDTV: Why is that you did not do too much of developing already before taking the IPO route?
Emaar MGF: We have concrete plans on ground as we have presence in 26 cities and we have many projects being marketed and conceptualised. There is no ideal time for an IPO and for us IPO is only one step ahead in our journey. We have received excellent response and faith from customers wherever we have launched new projects.
NDTV: Could you elaborate more on you presence in metros?
Emaar MGF: We started with the metros so majority of our land is in metros. The natural expansion is in tier-II cities so there is clearly an opportunity in tier-II cities. Our next expansion plan will focus on tier-II and tier-III cities. As India moves ahead, each micro market will become important due to a new breed of consumers created in every part of the country. We want to be present wherever we feel there is demand for our homes and offices and we guess this is just the beginning for us.
NDTV: Do you feel there could be little peripheral pressure coming in for the entire property market?
Emaar MGF: It all depends on your market strategy. If you look at the Indian market then as a market it has just started moving. It will go through its soft cycles but the medium and long terms trend is absolutely positive taking into account the sub prime crisis. This country has all the right elements and we would say sometime an adversity could become an opportunity.
NDTV: What will be your segmentisation in India?
Emaar MGF: Within India or any other world market, we are driven by customer requirements. As a result we think our products have to really align itself with market requirements and demand. The market would determine what should do and if we are smart enough we have to read that and act on it.
NDTV: What is your strategy towards mixed construction space?
Emaar MGF: We are focusing on four verticals. These are residential, IT and SEZs, retail and hotel, and all of these verticals have significant investment plans. In terms of segmentisation we are selling homes starting from Rs 30 lakh to Rs 20 crore, which will cater to all price points. We are not in low cost housing and we cater to middle income housing which is the largest Indian segment in terms of growth.
NDTV: What is size of your retail real estate development business?
Emaar MGF: We have close to about 850 stores, which are growing very fast. We hold franchise for over 90 brands with specialisation in middle income segment. Currently, for Emaar MGF, retail real estate development holds great importance looking at growth plans of retailers in the country. We believe that the opportunity within the retail sector is really compelling.
We are introducing a new concept called mall of the city like Mall of Delhi and Mall of Punjab, etc. These new generation malls will have one million square feet of space having best of entertainment and leisure facilities. In our view the mall developers are dependent on the success of retailers so we work closely with our retail partners. Before designing a mall we talk to retailers in advance and ask them for their preferences.
NDTV: When you want to locally design a mall, would you look at partnership that helps you design mall?
Emaar MGF: We have a global design center in Newport Beach, California that runs all our projects. The original concepts are created there and then it comes back to ground to local consultants and then the feedback goes back. We are dealing with already existing suppliers of the services.
NDTV: Is there a supply chain that Emaar MGF can boast of at this stage?
Emaar MGF: If you look at the Singapore market then we have complete supply structure that links all 14 countries all together. Though it is very complicated yet it works very well.
NDTV: Are we looking at initiatives in providing properties linked with golf courses?
Emaar MGF: We are building golf courses in Mohali, Punjab and Hyderabad. We are also looking at a golf course in NCR. We want to make sure that Emaar communities will have everything for customers. We have one arrangement with Fortis where they will be opening 100-bed hospital in Emaar community.
NDTV: What would be challenges for Emaar MGF?
Emaar MGF: We face challenges everyday in every country including land acquisition, bureaucracy and human resources. We know these problems are tough but at the same time we also know how to deal with these situations.
NDTV: What the size of you declared land bank?
Emaar MGF: At the moment we have little over 13,000 acres in 26 cities as per our IPO document, which includes all four verticals.
Land acquisition for metro rail to be minimal
A. Srivathsan
Alignment for
46.5-km line has been finalised
CHENNAI: The alignment for the 46.5-km metro rail has been finalised. Care has been taken to minimise land acquisition.
At a few places, the alignment was changed and taken underground to avoid land acquisition. According to a government source, a survey conducted as part of the metro proposal shows that only about 45 households will be directly affected.
However, the impact of tunnelling and other structural works of the underground line on buildings are not known.
The Government has decided to control development of properties that are close to the metro rail line. It has directed the development authority and local bodies to obtain clearance from the Chennai Metro Rail Ltd before approving any project that falls within 50m on either side of the alignment.
Funding for project
Two metro corridors are planned from Washermenpet to the airport and from Fort to St.Thomas Mount. The Japan Bank for International Cooperation will fund this Rs.9,575-crore project. The State Government has formed the Chennai Metro Rail Company to execute the metro railway line. The DMRC has drawn up the detailed project report and will be associated with the project till its completion.
Commercial rentals witness stabilisation: C&W
Commercial rentals are witnessing a stabilisation across cities over the past few months except for prime properties in NCR and Mumbai, as per findings by global real estate consultancy, Cushman and Wakefield (C&W).Commercial rentals witness stabilisation: C&W- Economy / Companies-The Sunday ET-ET Features-The Economic Times
Upbeat realtors see black
Realtors are an upbeat lot these days, with the government likely to lift the 5,000-hectare cap on mega special economic zones. An empowered group of ministers is set to take up the case on February 4. Naturally, builders and property consultants are keenly watching the scenario and evaluating what the after-effects will be on the real estate sector and the social environment if the cap is actually lifted.Upbeat realtors see black
You can make a counter-offer to the builder
When buying property, analyse the price of competing projects in the locality and use rental yields, to judge if a property offers value or is expensive, says Mr Ramesh Nair, Managing Director, Jones Lang LaSalle Meghraj, Chennai. In an interview with Business Line, Mr Nair addresses some questions frequently asked by homebuyers.The Hindu Business Line : ‘You can make a counter-offer to the builder’
RBI's tough stand on rate cut may hit real estate sector
The Reserve Bank of India’s (RBI) third-quarter monetary policy review did little to lift the sagging spirits in the real estate sector. With key interest rates remaining unchanged, hopes of buying that dream house may just take some more time.RBI's tough stand on rate cut may hit real estate sector- Property-The Sunday ET-ET Features-The Economic Times
Emaar MGF Land: Invest at cut-off
Investors can consider applying to the initial public offer of real-estate company, Emaar MGF Land (EMGF), but should retain at least a three-year perspective. The company’s shares are on offer from February 1-8 at a price band of Rs 540-630 (revised).The Hindu Business Line : Emaar MGF Land: Invest at cut-off
Friday, February 1, 2008
Myths about Indian realty market
Myth No. 1: There is a ‘bubble’ in the Indian real estate market, and it will burst soon
Fact: There is no evidence of a ‘bubble’. When a bubble develops in any market, it is because prices for that particular commodity or asset have gone through the roof and beyond affordability. This is far from the case in Indian real estate. The residential sector is led by end-users and it is they who dictate the state of the market. Neither is there a significant correlation between the state of the stock market and that of the property market. There are no indications that investor activity has overtaken genuine buyer activity. In residential, the proportion is approximately 80% end users and 20% investors. In the commercial sector, the proportion is almost 100% end users who are taking property on lease. There are instances of overheating but these are localised.
Myth No. 2: Indians do not figure very large as property buyers on the international property market.
Fact: Residential rates at Mumbai’s Nariman Point or Cuffe Parade are priced anywhere between Rs 25,000-55,000 per sq feet. For the price of a 2-BHK flat in these areas, one can buy a villa in Dubai or London’s suburbs, a luxury flat or a standalone house in New Jersey. Many Indian buyers have woken up to this fact and are buying homes abroad.
Myth No. 3: Thanks to India’s booming economy, higher salaries, higher aspirations and easier home loans, most Indians are buying high-end homes now.
Fact: The accent is still very much on affordable housing. As before, the Great Indian Middle Class is not motivated by its need for greater convenience, but by the ability to pay for a home. In that context, the greater demand will always be towards affordable housing options.
Myth No. 4: Major Indian developers are abandoning the MIG sector and concentrating on high-end residential projects because it makes better business sense
Fact: Most big-banner developers still see sense in constructing mid-income housing projects, since they can construct more volumes. The demand in terms of units is phenomenal and developers getting into this segment can build for years to come. They have the assurance of sure-shot absorption, as well. Most major Indian developers are not shifting from affordable to high-end housing - only branching out. While they get into middle-segment housing, they continue to build high-end projects.
Myth No. 5: The metros are still the best places to invest in real estate
Fact: The real estate boom is causing many of our metros and even some of the previously popular Tier II towns to saturate at an incredible pace. Property prices there skyrocket beyond the reach of middle-income homebuyers, causing them to look a little further each year. Investors observe these migration trends, analyse the magnitude and scope of activity, and identify one or the other new town as the next coming thing. A fundamental real estate investment mantra is that emerging localities are preferable to established and often saturated ones. Established areas eventually reach a peak in terms of appreciation potential, after which the growth rate either slows down or stagnates. Moreover, there is little scope for new market drivers such as malls to find a place in saturated localities - meanwhile, prices remain high. This is not the best of scenarios from an investment point of view, since optimal investment requires low entry levels and appreciable growth within a realistic time-frame. Therefore, as one or the other destination reaches its peak potential on all these counts, new ones come into the limelight.
Pune specific
Myth No. 1: Pune’s real estate boom is driven entirely by IT / ITeS
Fact: It is certainly true that this sector’s increasing presence in areas like Hinjewadi, Kharadi, Phursungi and Hadapsar has caused Pune to emerge as the new IT/ITeS Mecca. However, Pune’s real estate market will also continue to benefit from its growing manufacturing sector. The immediate future will bring considerable growth in the traditional industrial locations of Chakan, Pimpri-Chinchwad and Bhosari and the decisive emergence of new hotbeds like Talegaon. Chakan will see the entry of the German automotive giant Volkswagen, and New Chakan is the proposed site of Pune’s new international airport. Meanwhile, General Motors has selected Talegaon for its new manufacturing plant.
Myth No. 2: The scrapping of ULCRA will cause prices to crash in Pune.
Fact: Central Pune will not see a fall in rates, since no land will be released there, the release of land in the outskirt areas of Sus, Lohegaon, Baner, and Wadgaon Sheri will definitely bring prices down in the more developed adjoining areas to some extent. Since Pune’s outskirts are currently the hotbeds of real estate action, this is significant.
Myth No. 3: Apart from Mumbai, Pune is and will remain the primary hotbed of real estate activity in Maharashtra - thanks to IT / ITeS.
Fact: One cannot discount the competition presented by cities such as Nagpur and Nasik in terms of lower living cost and property rates, as well as their better infrastructure. In fact, Nagpur is now a major contender in the commercial sector by virtue of the upcoming MIHAN SEZ. This project, which includes residential areas, hotels, open spaces, entertainment facilities, an international residential school and advanced infrastructure, has attracted the attention of IT majors such as Tata Consultancy Services and Patni Computer Services.
As far as Pune’s continued IT/ITeS boom goes — a lot depends on the outcome of NASSCOM’s request for a 10-year extension of tax concessions under the STPI (Software Technology Parks of India) scheme.
Correction in realty prices may hit Indian banks: S&P
A sharp correction in property prices on account of the turmoil in global markets could impact the performance of Indian banks, according to the latest report by ratings firm Standard and Poor’s (S&P).
Is real estate market slowing down?
The momentary uncertain economic scenario, slowdown in export-driven industries, high interest rates and lacklustre credit growth in the real estate markets have raised the question of a slowdown in real estate market in India.
India is No 3 in realty returns
There is a burning interest in China and India but US real estate continues to top the global property market stakes among foreign investors, according to the annual survey by the Association of Foreign Investors in Real Estate (AFIRE).
There is a message in the findings because Washington-headquartered AFIRE always gets it straight from the horse’s mouth — nearly 200 of its members collectively hold $700 billion in cross-border real estate.
Interestingly, the resilience of the US real estate market among seasoned international investors is underscored by the timing of the survey, conducted after the credit crunch and sub-prime crisis. However, the dominance of the US real estate market is being challenged by opportunities in Asia. Survey respondents said they planned to increase spending on global real estate by 20% in 2008, compared to 16% in US acquisitions.
India first figured in AFIRE’s survey in 2005 and rocketed to second place last year. AFIRE chief James Fetgatter said China beat India to third spot this year in the rankings of countries that offer the best opportunity for capital appreciation in real estate due to creaky infrastructure.
Bangalore and Mumbai ranked in the association’s top 25 global cities to invest in. New York, Washington, London, Paris and Shanghai were among the top five global cities.
Meanwhile, Wall Street’s Merrill Lynch touted enormous real estate investment opportunities in the emerging markets of Brazil, Russia, India and China. “The real estate sector in India has been growing at 30% over the last couple of years and the growth is expected to continue,” it said in a report released on Tuesday.
Emaar buys 1.36% more in Indian JV for Rs 922 crore
The Dubai based Emaar group has purchased an additional 1.36% in its Indian joint venture Emaar MGF Land for Rs 922 crore, ahead of the initial public offer, which is scheduled to open on February 1. Emaar group has been allotted 13.37 million shares in the company, sources close to the deal said. The additional stake was purchased through a group company Emaar Holding II.
Emaar MGF Land is a joint venture between Emaar Properties of Dubai and MGF Development. Emaar group holds 41.9% stake in the JV while MGF holds 53.3% stake. Shravan Gupta, managing director, Emaar MGF confirmed the development. However, he refused to divulge any details. The shares allotted to Emaar Holding II are subject to a three-year lock-in period.
According to the existing SEBI guidelines, Emaar Holding II and Kallarister Trading company are the vehicles through which the Emaar group currently holds a 41.9% of the pre-issue equity in Emaar MGF.
Emaar is one of the world’s leading real estate companies having developed approximately 50 million square feet of real estate across residential, commercial and other business segments and with operations in 16 countries, as of December 31, 2007. MGF has over the last 10 years established itself as one of the key players in retail real estate development.
Proposal for new city awaits clearance
A. Srivathsan
Chennai: The area south of Vandalur-Kelambakkam Road stretching up to the road connecting Chengalpattu -Tirupporur is to be developed as a new city. The master plan for this area measuring about 500 sq.km, about half the size of the present Chennai Metropolitan area, awaits government approval.
In March 2007, the Tamil Nadu Government set up a high-level planning committee to explore the possibility of developing the area between Vandalur-Kelambakkam Road and Mamallapuram as a world-class city. A master plan has now been proposed nine months after the first meeting.
The plan identifies the road networks that connect GST Road with OMR and ECR. It also conceptually earmarks the interconnections and makes provision for the outer ring road to pass through. The forestland and water bodies have been mapped and the buildable portions separately zoned. Government sources inform that the existing developments would be integrated into the master plan.
It has not been decided whether a separate development authority would administer this area or whether it would be part of the CMDA with its boundaries extended. The role of local bodies in this development is yet to be discussed.
In the first meeting in March, the planning committee discussed the possibilities of joint development with private developers and explored the means to facilitate the emergence of a new city that meets international standards.
The committee also looked at the possibility of zoning the entire area into blocks of 500 to 1,000 acres for development.
Thursday, January 31, 2008
Ajay Maken hints at Model Act for real estate sector
Lower interest rates, land availability and creation of excess supply would be the panacea to cheap and affordable housing, reckon industry experts. While discussing key challenges and opportunities faced by the real estate sector at The FE Round Table Conference on the real estate sector titled Sustainable or Bubble? at The Hilton in Mumbai, select industry expressed their views before the chief guest, minister of state for urban development Ajay Maken.
Multiple processes and clearances was also seen as a hindrance to developing real estate projects. When real estate Companies seek permission to develop a residential building in India, they have to pass through 52 levels of clearance and regulation. The panelists expressed the need for a regulatory body to oversee the growth in the industry and the minister too mentioned the “creation of a Model Act” to enhance the transparency in this key sector. Maken said developing a regulatory body would bring in more surplus of land, as developers will form more joint ventures for property development.
Niranjan Hiranandani managing director of Hiranandani Constructions talked about the paucity of action taken by the policymakers to alleviate the situation. And Rashesh Shah, chairman and CEO of Edelweiss Capital pointed out that the 11% rate charged by housing Companies was probably the highest in the world when it comes to the differential between inflation and rates charged.
The central bank, panelists concurred, was probably overreacting to the risk factor. Anuj Puri, country head and chairman of Jones Lang LaSalle Meghraj said, “Ïn the real estate market, the real risk factor is the land fact as 80% of the cost is the land cost and 20% cost includes cost of construction and other transaction costs. Hence, land acquisition is the most risk factor in the real estate sector.”
Anurag Govind, Parsavnarth Developers’ COO (west) shrugged off the threat of a slump in the market and mentioned the need for developers to have a well spread operational base to beat any correction that takes place.
A Thorough Branding Professional- Dr.Kunal Banerji, MCAM (UK)
Ansal Properties & Infrastructure Ltd has a strong leadership presence in Indian real estate and the company is credited with developing modern residential and commercial properties in India and abroad. People always moan that the industry does not have skilled people. But scenario is changing and Dr Kunal Banerji, MCAM (UK) is a great example of this.
Dr Kunal Banerji, President
(International Marketing & Corporation Communication.), Ansal Properties & Infrastructure Ltd, is acknowledged for his vast experience in the field of marketing, brand building, advertising and public relations. In his 25 years of professional career, Dr Banerji has developed numerous campaigns for various large corporate clients and successfully launched several new products and brands in the market. Recently, Dr Kunal Banerji has recently received a doctorate in Real Estate Marketing and Communication from Ashwood University, Texas (USA). As President, he is also in-charge of developing associates with health-care and educational institutions. In the area of international sales and marketing, he looks after Middle-East, UK and USA. He has had the privilege of enhancing the Ansal API brand and developing dynamic marketing and sales strategies for all Real Estate projects of the group.
Dr Kunal Banerji studied at the Watford College, UK. He joined OMAXE as a Sr.Vice President in 2004 and successfully built its brand 'OMAXE- into one of the most well known and highly regarded Real Estate companies in North India, which came up with an IPO recently. He devised marketing and sales strategies for ‘The Forest', ‘NRI City', ‘Putting Green', ‘The Nile', ‘Wedding Malls', ‘Omaxe City Lucknow'.
Before entering the real estate sector, he had been associated with various national and MNCs such as FUJIFILM, J. K. Industries, ADINC (a Y&R associate) in Muscat Oman, MAA Bozell, New Delhi and The Ogilvy & Mather Group, Singapore.
Dr Banerji's vast knowledge and experience has contributed to the launches of; Guy Laroche, Rolex, Mercedez Benz, Chivas Regal in Singapore, product development of Maggi Noodles, Nescafe Classic launch in Malaysia, L'Oreal and Wella launches in Indonesia, launch of Ponds Nail Polish in South East Asia and Re-launch of Modi Xerox in India, the list goes on!.
During his tenure in J. K. Industries as a General Manager, he successfully revamped the entire department as per international lines, achieved better valuation in the price of the company's shares through Marketing & PR activities and formulated an effective motor sports communication strategy. After joining ADINC (a Y&R associate), Muscat, Oman, as a General Manager, opened up new business avenues in Malaysia and Indonesia and successfully handled various national accounts namely Mercedes Benz, Xerox, Bridgestone, Samsung, GE, Pepsi, Mazda, Oman International Bank, Calvin Klein, Sohar Milk, Dell Computers, Saj Baby Diapers, Minara Cooling Oil, and Philips Hi-fi Systems.
During his 25 years professional working period, he has maintained an interest in academics. He has taught courses at eminent institutes in India and abroad. He is also committed to share his knowledge and experience through lectures and imparted training to his own managers and staff.
No doubt, Dr Banerji's knowledge and experience will not only help Ansal API but also the real estate industry at large. We wish him well!
Author:
Ankit Vishnoi
e-mail
Phone: 09873892279
'We mimic the ecosystem within the walls'
Ecology has been on the agenda of award-winning architect Ken Yeang since he started his career in the 1970s. An IT park with an eco-friendly tower at Manesar, promoted by the Millennium Spire Limited, a Singapore-based investment company, is the latest in Yeang’s efforts at greening the concrete jungle in India. The ecologist, author and professor tells Sayantani Kar how a “green tower” ceases to be a misnomer with his design innovations.
Why make green high-rises rather than any other concrete structure?
Skyscrapers are an inevitable response to the urban sprawl as they cover less land area than horizontal campuses, leaving more space for greenery.
But they are accused of using more energy and materials. We offset that by building them in an ecological manner. It makes them sustainable and green.
Which of your designs are you most proud of?
There are many. The IBM building (Menara Mesiniaga) in Kuala Lumpur and the Singapore National Library are two of them. I also enjoyed drawing up the master-plan for a waterfront site on Vancouver called the West Kowloon Waterfront.
What are the environmental innovations that you have introduced in your designs and how does each help?
Wind-wing walls is one of our innovations. These channel wind into the building, thereby enhancing cooling. They can reduce the load off artificial air-conditioning.
The National Library building in Singapore, for example, uses just 170 kWh per square metre per annum of power against the 230 kWh usually consumed by office buildings that are open 24 by 7.
We have used laser-cut light pipes to bring daylight into the buildings. We also often use optimised day-lighting and solar orientation for harnessing maximum solar energy; sun-shading and window glazing reduce solar heat and pressure on mechanical cooling systems.
How do your innovations reduce the stress on the environment that high-rises are wont to put?
We try to mimic the ecosystem within the concrete walls, thereby seamlessly connecting the inorganic building to the organic natural environment. Our methods also help preserve biodiversity and create healthier lifestyles within. The demand for non-renewable energy can be slashed by almost 40 per cent.
When you start, what are the factors that you base your design on and why?
We always start by looking at the ecology, including the soil, groundwater levels and biodiversity of the location. We look at the local climate like the sun and wind paths and shape the building to take advantage of these. We also keep in mind whether the materials can be reused and integrated back into nature.
What kind of growth do you foresee in demand for such buildings in the next 5 years?
I see exponential growth
Will the signature tower at Millennium Spire’s IT park in Manesar be your first Indian project?
No, I have been associated with projects in India for the last one year. I have designed a master-plan and a tower (both are yet to be built) for Reliance Industries, a large retail project in Chennai and a master-plan in Bangalore.
Do you think India will contribute more to the demand for green buildings?
Certainly. The green tower at Manesar will bring eco-friendly construction into mainstream real estate.
Tuesday, January 29, 2008
Building boom - Coimbatore
On the phenomenal growth of real estate.
S. SIVA SARAVANAN 
A group housing project undertaken in 2006. Residential projects have gained momentum in the city.
THE real estate business was quick to recover from the debilitating phase that Coimbatore went through following the 1998 serial bomb blasts and a prolonged recession. The city and its outskirts are witnessing ceaseless construction activity; work on apartment complexes, residential “gated communities”, shopping malls, multistoreyed office complexes, IT parks, trade fair complexes, Special Economic Zones (SEZs) and engineering industries is apace.
“From 1998 to 2004, Coimbatore went through a bad phase. However, after 2004, all sectors, including textiles, engineering and foundry, are doing well. The growth of real estate in Coimbatore has been especially phenomenal after 2004,” said Rajesh B. Lund, managing director, Srivari Infrastructure Private Limited and Srivari Finance and Leasing Company Private Limited. “The real estate business has done really well in the past two years. The prices are stabilising. There will be a big surge in the market after 2010,” he predicted. However, what is worrying real estate developers is that affordability has come down. Land prices have risen beyond affordability. “That is a little disturbing,” said Madan Lund, Srivari’s director and Rajesh’s brother.
Srivari Infrastructure Private Limited, Presidium Constructions Coimbatore (P) Limited and Covai Property Centre (India) Private Limited are among the important real estate builders in the city.
While Srivari Infrastructure is currently engaged in building seven residential complexes and one commercial complex, Presidium Constructions, a promoter of high-end residential complexes, is entering IT parks. Presidium Constructions plans to build a one million-square-foot shopping mall on Avanashi Road. Hari Khemchand and Suressh Menda are its directors. Covai Property Centre, headed by its managing director Col. (retired) A. Sridharan, is a six-year-old company, which specialises in building residential gated communities. It is currently building residential complexes covering an area of six lakh sq ft under different projects.
Rajesh Lund said apartment construction was “an emerging market” as Coimbatore’s residents had started to accept the idea of living in apartments and getting over the concept of independent homes with space around for gardening.
“The expectations here are for a good-sized apartment. If you build a smaller-sized apartment, it is not accepted by the market. If you build a larger one, there is no affordability,” said Rajesh Lund. The demand is for apartments with an area of 1,500 sq ft to 3,700 sq ft. A separate market existed for apartments measuring 3,700 sq ft, with two living rooms and four bedrooms. “Those who cannot afford to buy bungalows but want the lifestyle of a bungalow are looking for larger apartments,” he said.
Srivari Infrastructure, which has been in the real estate business since 1995, is currently building seven residential projects and one commercial complex in prime locations. The residential projects are coming up at Race Course Road, R.S. Puram, Tiruchi Road, Peelamedu, and other places while the commercial complex is getting ready on Avanashi Road. The multistoreyed commercial complex covers 60,000 sq ft. “In future, we want to build townships. We are planning to enter IT SEZs. We are assessing the demand. We have plans to move to Chennai,” said Rajesh and Madan Lund. Rajesh Lund expects a “big surge in the market in Coimbatore after 2010”.
The nattily dressed Hari Khemchand’s assessment is that the current real estate boom can be sustained “if the government is a little proactive” and simplified the rules. “Today, we have IT parks in Coimbatore because the government started promoting one about 15 months ago,” he pointed out. Real estate developers were looking to the government to simplify land development regulations, which should be better fine-tuned to the needs of the city, he said. “The government wants to benchmark Coimbatore, based on a metro city [regulations]. This is a little unfair,” Khemchand commented. There are areas in Coimbatore that can accommodate a high density of population because land is still available.
Presidium Constructions is currently building two residential projects, on Avanashi Road and in Sai Baba Colony. These are high-end apartments with air-conditioned club houses, gymnasiums, back-up power for lifts, and so on. The residential project on Avanashi Road is called Presidium Wisteriea, an enclave of 52 “contemporary homes”. Presidium and Nithyarjuna Properties and Developers, have teamed up to build the Wisteriea.
By the middle of 2008, Presidium will start building 60 villa apartments near Golf Course. These will be luxury villas. The groundbreaking ceremony for Presidium Constructions’ IT Park at Kalapatti will be held in March. The shopping mall, covering one million sq ft to come up on Avanashi Road, will have a multiplex, an entertainment zone, retail showrooms spanning three lakh sq feet, a car park for another three lakh sq ft and a plush hotel with 125 rooms. “The mall is huge. It is going to be Presidium’s flagship project,” Suressh Menda and Hari Khemchand said. The mall will open in June 2010. Presidium has identified 300 acres of land for building 60 super luxury getaway villas. “It is a major project,” Khemchand said, declining to reveal the location.
According to Col. Sridharan, land prices which rose to astronomical levels in the past two years because “there was so much of hype about Coimbatore have dropped 20 per cent now”. His Covai Property Centre is about to complete a residential complex at Ganapati, with 97 independent houses measuring between 1,785 sq ft and 2,900 sq ft and 48 apartments varying from 1,260 sq ft to 1,700 sq ft. This residential enclave will have a commercial complex on four floors, a club house of 12,000 sq ft and a swimming pool.
“We are going to start another residential project at Sulur, which will measure 5.25 lakh sq ft, with 160 apartments and 73 independent houses. We will finish it in two years,” said Col. Sridharan.
“We specialise in comfort and retirement homes for people above 50 years. We have three such projects – one has already been completed – on Siruvani Road,” he said. All apartments and houses in the residential complexes called Soundaryam, Santhosham and Shenbagam have already been booked. These are gated communities. A club house, a library, an activity room for festivals, an open-air theatre and a reverse osmosis plant for water treatment are some of the facilities in these complexes.•
RBI monetary stance may hit real estate industry
The real estate sector may find the going tough with a likely fall in housing demand after the RBI kept key interest rates unchanged, belying expectations of rate cut.
Real estate industry, which was expecting a cut in the interest rates on housing loans, felt although property demand would continue to rise, a reduction in rates by the central bank could have given a boost to sales. In addition, it could have generated millions of jobs in the construction sector.
"Low interest rates would have definitely promoted demand in the real estate, but even at the existing rates, the demand would continue to rise as economy is on an upswing," DLF Group Executive Director Rajeev Talwar told PTI.
The banking and real estate sector had hoped that after a 0.75 per cent cut in interest rate by US Federal Reserve, the RBI would also bring down interest rate by 0.25 to 0.5 per cent.
The interest rate on home loans have gone up from around 8 per cent to over 12 per cent within two years, hitting the home sales in metros and tier-II cities as well.
"We would have liked a softening trend in interest rates to emerge from the credit policy, which would have helped not only the real estate industry but also in maintaining the tempo of economic growth," Omaxe CEO Arvind Parekh said.
"Unlike the US Federal Reserve which is always ahead of the curve, Indian Central Bank is behind the curve and we take action only when we see economy slowing down," Parekh added.
Global real estate consultant CB Richard Ellis Chairman and Managing Director (South Asia) Anshuman Magazine said that "on the backdrop of global concerns, I don't think the government wants to do anything adventurous."
Home prices begin to pinch less on high loan rates
Newly-released RBI data showed that offtake of home loans in April-November 2007 fell 39% to Rs 32,424 crore from a year ago. Project loans to developers also eased by a fourth to Rs 12,563 croreHome prices begin to pinch less on high loan rates- Indicators-Economy-News-The Economic Times
Global property investors favor US, but China rises
Global property investors still favor U.S. commercial real estate by a wide margin, but second-place China is rapidly closing in, according to an annual report tracking institutional investor interest.
High rates hit home loans growth
Rising interest rates have hit banks’ consumer finance business, particularly the housing loan segment. In the unsecured loan segment, growth in personal loans has moderated to 20 per cent at Rs 81,451 crore as on November 23, 2007, as against a 35 per cent growth at Rs 1,05,034 crore in the previous year.
The dip in growth is led by a slowdown in housing loan portfolios of banks. Interest rates on home loans have increased to over 10 per cent, affecting demand. The rising real estate prices have also had an impact on the loan growth.
Growth in the housing loan portfolio of banks has seen a 15 per cent growth at Rs 32,424 crore as on November 3, 2007, as against a 33.4 per cent growth at Rs 53,198 crore in the same period last year.
Credit flow to the real estate sector has also seen some drop, with the growth moderating to 33 per cent from 77 per cent. Despite the dip in credit growth to the sector, the Reserve Bank of India (RBI) views the 33 per cent growth to be high.
In the personal loan segment, consumer durables loans saw negative growth. The major financier of consumer durables such as GE Money exited the business with margins coming under pressure.
The consumer durables finance business has become unattractive and competitive for finance companies as large retailers are now running their own financial schemes through their own subsidiaries.
“Select banks have consciously decided to go slow on housing and personal loans. Some banks have seen a rise in default rates on personal loans on account of reckless lending.
The rising cost of capital has forced banks to go slow on home loans. This has affected credit growth,’’ said a senior banker. The rising defaults in the small-ticket personal loans have forced players such as ICICI Bank to exit the business. Citifinancial and HDFC Bank are also going slow in this business.
RBI is also convinced that non-performing assets (NPAs) for some banks in the consumer credit, housing and real estate segments have risen, but this has no systemic implication either in terms of solvency or liquidity.
“The money and credit markets in India have so far remained relatively insulated from the international financial market developments. India’s exposure to troubled sub-prime assets and related derivatives is negligible in comparison with many other economies. Notwithstanding some reports of accelerated emergence of non-performing assets with regard to consumer credit, housing and real estate in a few banks, the preliminary assessment showed that they do not have systemic implications either in terms of solvency or liquidity. This has reflected the nuanced and gradual approach in India’s financial sector reform process with the building up of appropriate safeguards to ensure stability, while taking account of the prevailing governance standards, risk management systems and incentive frameworks in financial institutions in the country,” said RBI.
The slowdown in the personal loans segment and the housing sector has seen rebalancing in the banks’ credit portfolio. Growth in bank credit to the commercial sector moderated during 2007-08 (up to January 4, 2008) from the strong pace of the previous three years.
The non-food credit by scheduled commercial banks (SCBs) expanded by 22.2 per cent, year-on-year, as on January 4, 2008, compared with 28.4 per cent at March-end 2007 and 31.9 per cent a year ago. Disaggregated sectoral data available up to November 23, 2007, show that about 43 per cent of the incremental non-food credit y-o-y was absorbed by industry compared with 34 per cent in the corresponding period last year.
The expansion of the incremental non-food credit to industry during this period was led by infrastructure (power, port and telecommunication), iron and steel, textiles, engineering, food processing, vehicles, petroleum, chemicals and construction industries.
The infrastructure sector alone accounted for over 28 per cent of the incremental credit to industry compared with 18 per cent in the corresponding period of the previous year.
The agricultural sector absorbed around 12 per cent of the incremental non-food bank credit expansion.
Sunday, January 27, 2008
Red Fort Capital to invest Rs 2,700 cr in Indian real estate
Red Fort Capital has already acquired over 1,000 acres of land in different parts of the country, he said, while adding "We are actively looking at 21 cities, with a strong interest in Mumbai, Pune, Chennai, Hyderabad, Bangalore, Kolkata and Vishakhapatnam markets."
Foreigners get a piece of the real estate pie
Who's buying, and why
The top five countries whose residents are buying U.S. real estate are, in order:
-- Mexico
-- United Kingdom
-- Canada
-- India
-- China
Check developer's reputation before investing
In fact, the lure of high returns on investments in real estate has caught the attention of all the segments of investors. Though institutional investors and high networth individuals have been able to invest through the organised route, a large number of retail investors find it difficult to own piece of property owing to the skyrocketing prices.Check developer's reputation before investing- Property-The Sunday ET-ET Features-The Economic Times
Islamic investors focus on India, China
Shifting political sands in America and Europe, especially after the 9/11 terror attack and concerns of a probable slowdown in developed economies are encouraging Islamic investors to turn their focus into growth economies like India and China.Islamic investors focus on India, China- Markets-The Sunday ET-ET Features-The Economic Times
Friday, January 25, 2008
Jaipur witnesses real estate boom
Jaipur city has taken a leap forward from its historical heritage to join the ranks of modern technology centres of reckoning in the country.
Moving towards efficiency
Property valuation as a specialism has not developed in India and there are no educational programmes aimed at training valuers. The problem now is that the real estate market developments has moved ahead and requires these skills but the hardware to supply these skills has not developed. For a change the regulation is ahead of the market! Building human capacity such as valuation would be a great challenge in the development of REITs and MBS in India.
Realty calls: Get ready to buy that dream house
The present boom in the real estate sector is likely to continue in 2008. As the economy continues to grow at around 9%, the realty sector will continue to grow at a whopping 20%, or even more, per annum. The economic growth creates demand for commercial real estates, which leads to creation of new employment and, thereby , generating demand for residential units.
Deutsche Bank arm makes $70 mn Indian real estate
RREEF, the global alternative investment management business of Deutsche Bank, advised by Deutsche Asset Management (India) Pvt Ltd, has made its first real estate investment in India. RREEF has substantially completed the purchase of an undisclosed stake in Bangalore and Hyderabad-based real estate development company, Golden Gate Properties Ltd, for US$ 70 mn (Rs. 2735 mn).
Pyramid Saimira to raise over Rs 3K cr
The group currently runs 48 multiplexes with 800 screens across India, Malaysia, Singapaore and North America and plans to take this number to 175 with 2,000 screens in India alone by 2010. For instance, in Andhra Pradesh alone it is close to striking a deal to add 100 screens to the existing 110. While all these will be on a minimum lease period of five years, Pyramid will own at least one theatre in each district of the state, company officials said. The new owned properties will be acquired through real-estate company — Pyramid Realty Ltd.
Polaris to build on surplus realty
Polaris Software Labs plans to unlock value by developing its surplus real estate, a senior company official said.
Goldman to invest Rs 800 cr in Bangalore company
Goldman Sachs is in advanced stage of discussions to invest around Rs 800 crore in Bangalore-based real estate player Century Group, sources said. The real estate fund of Goldman Sachs is seen infusing liquidity into a special purpose vehicle (SPV) for commercially developing over 300 acre near Yelahanka in north Bangalore, which is in proximity to the upcoming international airport.
Essar plants feet on ground, floats venture
Diversified business conglomerate Essar group is venturing into India’s growing real estate market by floating a new company — Essar Reality Holding.
UBS to expand India property business
Swiss bank UBS is expected to expand its property business in China and India, as the two countries' robust economic growth remain attractive to investors despite global economic uncertainty, said Mark Ebbinghaus, UBS' Asian real estate, lodging and leisure head.
Thursday, January 24, 2008
DLF Sells Stake in Kenneth Builders to Indiabulls Real Estate
DLF and Indiabulls formed the joint venture in 2006 to develop high-end residential apartments at Okhla in New Delhi. The unit bought its only holding, 35.8 acres (14.5 hectares) of land, for 4.5 billion rupees ($114 million) from the Delhi Development Authority in the same year.
Adani unveils major initiatives in Energy, Realty & Agri biz
Current Initiatives
- Shantigram Township at Ahmedabad: 41.5 approx Mn.Sq.Ft (Saleable area)
- BKC at Mumbai: 2.2 approx Mn.Sq.Ft (Saleable area)
- Mill Land at Mumbai: 2 approx Mn.Sq.Ft (Saleable area)
New Initiatives
- Mundra Township: 50 approx Mn.Sq.Ft (Saleable area)
- Cochin: 3.2 approx Mn.Sq.Ft (Saleable area)
- Surat: 5.6 approx Mn.Sq.Ft (Saleable area)
BL Kashyap's realty arm to invest Rs 1,400 cr
Construction major B L Kashyap Group today said it will invest Rs 1,400 crore on setting up 13 real estate projects across India during the next three years and eyes a turnover of Rs 2,300 crore by March 31, 2009
ETA Star to invest $1billion in India
ETA Star, one of Dubai’s household names, will invest more than $1 billion in India to cash in on booming sectors such as ports and aviation. This will be in addition to other combined investments committed by the company in the power and real estate sectors, which total more than Rs 9,000 crore.
Walton bets big on Calcutta real estate
Sourav Goswami, managing director of Walton Street Capital India, said the company was looking at two residential projects. “One of the projects will be in Rajarhat and the other within the city itself,” he added.
Wednesday, January 23, 2008
REBI comes out with India's first Property Shops Chain
Indian Real Estate industry is going through a transition phase. Most of the Real Estate Sector in our country is still in the unorganized sector. Despite of good growth prospects, it is still highly unrecognized sector, which is also supposed to be one of the most corrupt sectors. It is Unorganized, Unrecognized and where half the transactions go Unreported. Property transaction in India is still extremely complicated, courtesy India’s ubiquitous red-tapism. The Indian Real Estate Industry has more negative adjectives attached to it than any other industry. This high order of anarchy was the insignia of the real estate sector till a few years ago. Not any more says Mr. Lakshmi Narayanan, President and CEO of Bangalore based company Real Estate Bank India addressing a press conference in Hyderabad today on the occasion of inauguration of “Orange Infraa”, A.P’s first Master Franchisee today by Mr. Chandrababu Naidu, former Chief Minister of Andhra Pradesh.REBI comes out with India's first Property Shops Chain
Asian Developers Climb After U.S. Interest-Rate Cut
Sun Hung Kai and CapitaLand are among developers from developed Asian markets that are expanding into faster-growing countries such as India and China, gauging that their greater access to international capital markets will give them an edge over domestic builders.Bloomberg.com: Asia
Emaar MGF IPO on track, to open on Feb 1
Asked whether the company is considering a delay in launching its IPO or lowering the price band due to volatility in the stock markets, Shravan Gupta, executive vice chairman and managing director, Emaar MGF Land, said: "Based on the response we have got from the road show and advice from merchant bankers, we believe this is a reasonably good time to go for an IPO."Emaar MGF IPO on track, to open on Feb 1
Talent crunch sees real estate salaries touch dizzying heights
Salary levels in the real estate business have been growing at 25-30% a year over the past two years, driven largely by the shortage of people at every level
Tuesday, January 22, 2008
India : Gokaldas plans expansion in 1 & 2 tier cities
The company had last year set up 6 new units including the SEZ at Chennai. They also have a presence in towns like Mysore and Tumkur. The 2 units in Mangalore and Hubli are proposed to manufacture around 2 million units each per year.India : Gokaldas plans expansion in 1 & 2 tier cities - Apparel News India
Singapore's CapitaLand in 2 joint ventures to manage 2.12 bln sgd Indian assets - Forbes.com
Southeast Asia's biggest property developer CapitaLand said Tuesday it has entered into two separate joint ventures with Indian developers Advance India Projects Ltd and the Prestige Group to invest, develop and manage predominantly retail projects in India.Singapore's CapitaLand in 2 joint ventures to manage 2.12 bln sgd Indian assets - Forbes.com
Singapore's CapitaLand invests in 15 India malls
CapitaLand Ltd. (CATL.SI: Quote, Profile, Research) said on Tuesday it was pushing into India's fast-growing retail sector by investing in 15 malls worth S$2.1 billion ($1.45 billion), with the aim of spinning them off into a REIT.UPDATE 1-Singapore's CapitaLand invests in 15 India malls | Industries | Consumer Goods & Retail | Reuters
ICICI Group unveils IOPM Infrastructure & Real Estate Fund
ICICI Bank is the sole arranger for the fund, which will be exclusively available for ICICI Bank Global Private Clients on a private placement basis. Investment advisors to the fund will be ICICI Bank's asset management arm in India, ICICI Prudential Asset Management Company (IPAMC) Limited, and it will be advised under the guidance of Mr Nilesh Shah, Chief Investment Officer, ICICI Prudential AMC.ArabianBusiness.com - Middle East business, financial and industry news - Industry Press Releases - ICICI Group unveils IOPM Infrastructure & Real Estate Fund
Monday, January 21, 2008
Slowdown in housing loan disbursal
Rising home loan rates have severely impacted the housing sector, as its growth has fallen to 26.6 per cent in 2006-07 from 29.1 per cent in 2005-06 and is anticipated to slow down further to touch between 17 and 20 per cent in the current fiscal.
Realty: Chennai set to beat Bangalore
Rising prices in the real estate sector in Bangalore, the IT capital of the country has turned the attention of several realtors to Chennai, a city which is slowly but surely set to beat Bangalore in the real estate space.
Deutsche Bank arm buys stake in Indian property firm
India's booming property market
Real estate in 21st century India is changing the skyline of even satellite towns. Apart fropm the metro cities, smaller towns have attracted construction activity from big developers. Shopping malls, skyscrapers and new infrastructures are shaping new India.
The property sector boom is a direct result of return of the prodigal NRIs (flush with funds), foreign direct investments, multinationals entering every nook and corner of the country to set up base. Whether it is New Delhi, Noida, Mumbai, Hyderabad, Bangalore, Goa, Pune or even towns like Cochin, Udaipur, Jaipur the dynamites are paving new ways. Real estate industry is witnessing major changes.
Emaar MGF to open hotels chain with Global Hyatt0
Real estate and hospitality company Emaar MGF has agreed to enter into a joint venture with Global Hyatt Corporation of the US to set up a chain of business hotels in India under the brand name Hyatt Place. Emaar MGF is jointly owned by Emaar Properties, PJSC of Dubai and India’s MGF Developments.
Jagdish Khattar to steer auto sales and service network
As CEO of Maruti, Jagdish Khattar was known as Motown’s ace marketer. As entrepreneur, he is trying to use those skills to build what he calls an “independent, all-India, multi-brand auto sales and service network”. The first phase of his ambitious project would involve a service and bodyshop network with an all-India footprint. Mr Khattar is looking at a capex of around Rs 1,200-1,500 crore.
Emaar, Fortis plan JV to set up 25 hospitals
Realty company Emaar MGF Land Limited (Emaar MGF) and Ranbaxy Group-promoted hospital chain Fortis Healthcare plan to form a joint venture to set up 25 hospitals across major cities in India, with an investment of Rs 1,200 crore.
Emaar MGF Land IPO gets above average rating
Emaar MGF Land Ltd on Sunday said its proposed initial public offering has been assigned an above average grading by Credit Analysis and Research Ltd.
The Prudential to launch India venture
The Rock is expanding in India. Less than a year after it partnered with the DLF Group Ltd. – India’s largest real-estate developer – to establish a life-insurance venture in the South Asian nation, Prudential Financial Inc. has announced that it will team up with DLF again, this time to set up a new asset-management venture in India.
Cementing returns
Investing directly in real estate is often difficult for the retail investor. This is mainly because of the fact that you will need to lock up a large amount of money for this.
Floor Area Ratio: A crucial aspect of real estate
The issue of Floor Area Ratio (FAR) in the real estate sector has always been a contentious one. FAR is one of the key determinants for development in the country. FAR in India is low and is considered a hurdle to construction activities. While the industry has been demanding an increase in FAR, the question is whether an increase makes sense without improving the overall infrastructure in the country.
Achuthanandan keeps away from function
Kerala Chief Minister V S Achuthanandan on Saturday kept away from the foundation stone laying function of the Rs 4000 crore Cyber city here following objections raised by a Human rights group over allocation of land to a real estate company to implement the project.
Realty majors cementing ties with foreign players to stay ahead
The real estate market is evolving at a rapid pace in India. With burgeoning volumes and rising real-estate prices, developers are working out new strategies to meet project deadlines and stay on top. Large developers like DLF, Ansal API, Indiabulls Real Estate, are now tying up with international construction players to ensure timely delivery of projects. About 802 million square feet is under construction currently.
Starwood, Oberoi arm in realty deal
Kingston Properties, the flagship company of leading construction and real estate firm Oberoi Constructions, has sealed a management contract with US-based Starwood Hotels & Resorts Worldwide. Accordingly, Starwood will operate and manage its five-star brand, Westin Hotels & Resorts, with real estate offered by Oberoi in Goregaon, Mumbai
Mr. Vijay Kumar Jatia, CMD, Modern India Ltd,
Modern India Ltd (MIL) was founded by a British gentleman Mr. Gordon and was called “The Gordon Mills”. Gordon Mills was officially incorporated into the Indian Companies Act on 24th October 1933 as the “Modern Mills Ltd.” (MML) under ownership of the Sirur family. Over years Modern Mills Ltd. became one of the reputed business houses in the Indian Textile industry. With the mill workers strike in the 1980’s MML went into a deep financial burden and had to shut down production facilities and went under the BIFR scheme. MML was later taken over by the Jatia family in the early 1990s. MML closed down its manufacturing unit in 2004 and was one of the last textile mills still functioning in Mumbai. After shutting down its manufacturing facility, MML changed its identity, renaming itself to “MODERN INDIA LTD” (MIL). With changes in the Government policy, MIL started to focus on other areas of business and today operates a real estate company. At the same time MIL started a Technical Training Institute called the “Indian Institute of Jewellery” (IIJ). MIL is also in partnership with “Gitanjali Gems Ltd” in the form of a Joint Venture in the name of “Modali” (Modern - Gitanjali).
Munish Baldev joins India Bulls as President
A civil engineer by profession, Munish Baldev started his career with the Ansals Group where he eventually rose to the CEO,s position. Having worked his way up, Munish is today one of the few professionals from the Indian real estate industry who possess hands down experience in construction, mall management, marketing & right tenant mix to name a few. Being a globe trotter from the beginning, Munish brought along with him experience & business acumen picked up from his various foreign sojourns that revolutionsed the Indian real estate industry.
After his stint at Ansals, he joined retail pioneer Vikram Bakshi, MD Mcdonalds, to take care of his shopping mall projects. After a year, Munish was brought into Unitech Group as Head Retail where he pioneered two large format properties-Metro City Walk Amusement Centre in Rohini & The Great India Place mall in Noida, the largest operational mall in the country.
Financial Giant India Bulls soon came beckoning where Munish has recently taken charge of the burgeoning real estate business of the Group. “As President India Bulls, the canvass is much bigger and I am looking forward to integrate my past experience with the vision of the promoters,” says an upbeat Munish Baldev. “With Trust, dynamism & leadership as the main tenants of our corporate ethos, coupled with 640 branches and a solid customer base of 4,50, 000 of India Bulls, real estate as a product would be accepted very well,” explains Baldev.
Friday, January 18, 2008
Pragnya to focus on South with second fund
Pragnya's recent investment was in L&T South City Projects, a special purpose vehicle floated by L&T Urban Infrastructure, Dinesh Rankia Associates and Pragnya Fund 1 to develop an integrated township project off Old Mahabalipuram Road, Chennai's IT corridor.Pragnya to focus on South with second fund
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