Monthly Archives: April 2012

ASK Group plans to Invest in Indian Real Estate Projects

April 30, 2012 – 4:13 pm

Real estate fund house ASK Property Investment Advisors has said it is planning to fund to invest in Indian real estate projects.

The company has already committed $40 million (Rs 200 crore) out of its second domestic fund. It has formed a subsidiary in Singapore that will be raising this offshore fund. To be launched in July, the ASK Real Estate Special Opportunities Fund plans to invest in projects with a completion cycle of three-four years.

“We are a domestic fund and are constantly looking for opportunities in the domestic markets. Developers are constantly scouting for investments to buy land. We have so far deployed funds in ten investments,” Mr Amit Bhagat, Managing Director and CEO, ASK Property Investment Advisors, said.

The average investments will be to the tune of Rs 75-125 crore. The second fund will invest in mid-sized development projects in key cities such as Delhi-NCR, Mumbai, Pune, Bangalore and Chennai. The ASK Group had raised its first domestic fund of $75 million in 2009. It was also targeted at residential segment. “We have committed 100 per cent of the first fund,” he added. Industry sources note that realty focussed funds pan-India are looking to rise over $5 billion from both domestic and offshore markets.

By | Posted in Real Estate News | Tagged , , , , , , | Comments Off on ASK Group plans to Invest in Indian Real Estate Projects

Goldman Sachs upgrade, DLF gains

April 30, 2012 – 4:12 pm

Reuters Market Eye – India’s biggest real estate developer DLF (DLF.NS) rose 3.2 percent to 188.10 rupees after Goldman Sachs upgraded its rating on the stock to “buy” from “neutral” and raised its 12-month target price to 264 rupees from 252 rupees.

Goldman cited a pickup in residential launches, a recovery in commercial property, easing interest rates, and improved outlooks for asset sales as well as for operating/financial leverage as reasons for upgrade.

DLF’s share price is down 0.5 percent for 2012 while the BSE Sensex is up about 11 percent in the same period.

The upgrade has come close on the heels of DLF’s removal from the Sensex, which will come into effect from June 11.

By | Posted in Real Estate News | Tagged , , , , , | Comments Off on Goldman Sachs upgrade, DLF gains

Mumbai: Commercial Realty Offers Big Opportunities

April 27, 2012 – 5:43 pm

The number of high net worth investors (HNIs) and corporates seriously looking to invest in Indian office space has increased manifold in the last few years. Mumbai continues as India’s numerous office space investment destination, with companies from all over the world unerringly zeroing in on the financial capital. As South Asia’s only true financial hub, Mumbai is among India’s best places to invest in commercial real estate. In times of global economic uncertainty, investors flock to markets that have consistently proved their long-term stability and fundamentals.

In a scenario wherein institutional investors are showing reduced preference for commercial real estate in their portfolios, Mumbai continues to present HNI and corporate investors with myriad growth opportunities in office properties. However, the multitude of options also gives many enthusiastic investors heartburn -where on Mumbai’s vast and complex map are the low-risk/high returns locations?

Today, Mumbai as a city for commercial space investment reveals a high rate of vacancies in many locations. The rental yields in these micro-locations are expected to decrease marginally over the next 12 months. While this seems to present a depressing scenario on the surface, the fact is that we are now looking at the bottom of the curve. In other words, these markets are expected to bottom out over the next one year and will consequently start to move up again. These locations have significant long-term capital value appreciation potential, and well-informed investors are keeping a close eye on them.

By | Posted in Real Estate News | Tagged , , , , , , | Comments Off on Mumbai: Commercial Realty Offers Big Opportunities

DLF in talks to sell Mumbai land as per a report

April 27, 2012 – 2:51 pm

DLF, India’s top-listed realtor, is in talks with three Mumbai-based real estate companies — Lodha Developers, Runwal Group and Sheth Creators, to sell a piece of land in central Mumbai, according to a report on Friday.

While DLF is seeking a valuation of 30 billion rupees ($571 million) for the 6.8 hectare property, the potential buyers are negotiating at between 20 billion and 22 billion rupees, the newspaper said, citing an unnamed person.

“Even as all the parties had talks with DLF, the developer is yet to make up its mind, as it is expecting higher valuations,” it quoted the person as saying.

DLF bought the land for 7.02 billion rupees in 2005 from state-owned National Textile Corporation.

Abhisheck Lodha, managing director of Lodha Developers, said the company was not in talks with DLF while an executive at Runwal group also responded in the negative, the paper said.

DLF does not comment on market speculation, the company’s spokesman told.

By | Posted in Real Estate News | Tagged , , , , , | Comments Off on DLF in talks to sell Mumbai land as per a report

As per a survey, Hyderabad 3rd most affordable office location in 2011.

April 24, 2012 – 11:34 am

Hyderabad has emerged as the world’s third most affordable office location in 2011 in a list prepared by global realty consultant DTZ, which has also named Chennai and Pune among the top five such positions.

According to DTZ’s latest study ‘Global Occupancy Costs offices’, Surabaya in Indonesia and Qingdao in China were placed in the top two positions of the chart as the most affordable office locations in the world last year.

“While Tier II cities in India and China dominate the list of top 10 most affordable markets globally, Surabaya in Indonesia remains number one,” DTZ said in the report. The consultant said Hong Kong, London, Geneva, Tokyo and Zurich were the five most expensive office markets in 2011.

DTZ said Surabaya and Qingdao saw average rentals of $ 1,680 and $ 2,380 per workstation a year, respectively in 2011. Hyderabad, Chennai and Pune followed the top two places with rentals of $ 2,430, $ 2,570 and $ 2,590 a year per workstation respectively, it added.

The study showed that Hong Kong was costliest office place with an annual rental of $ 25,160 per workstation in 2011, followed by London and Geneva at $ 22,590 and $ 18,740, respectively. DTZ, however, said many cities across the world are likely to witness decline in their rentals during this year.

“Under the downside scenario, 2012 offers occupiers a window of opportunity in which to realise cost savings as rents decline… In the top five least affordable cities of Paris, Tokyo, Geneva, London and Hong Kong, office rents fall in 2012 under the euro break-up scenario,” it added. Occupiers in Rome and Milan are likely to benefit from falling occupancy costs over the next five years as sharp decreases in rents are expected in 2012 and 2013, DTZ said.

It further said office rentals in low-cost Indian cities may see double-digit falls in this year.

By | Posted in Real Estate News | Tagged , , , , , , , , , , , , | Comments Off on As per a survey, Hyderabad 3rd most affordable office location in 2011.

Property prices in Coimbatore goes High

April 24, 2012 – 11:34 am

The jump in land, materials and labour costs has pushed property prices up by 25%-30% per cent and slowed the growth of the real estate sector in Coimbatore in the last two years. Property developers in the city believe that if the real estate sector has to grow at pace similar to that of Chennai, which despite the global economic slowdown, registered a steady growth quarter after quarter, as per the residential price index brought out by the National Housing Bank, the government has to develop infrastructure facilities, promote industries and improve water bodies.

“There is not much space left for property developers inside the city. All construction activities are moving towards the suburbs,” said V Subramanian, president, Confederation of Real Estate Developers Association of India (CREDAI), Coimbatore. However, land prices have increased in the outskirts in the past two years. The cost of material and labour is also on the rise. This has seriously affected the middle income group, which is the major segment that invests money to buy property. Property developers have been forced to pass the cost increase burden on the people, which have slowed down the market.

“Land costs have increased four-fold in Coimbatore, which is causing major problems for developers,” Subramanian said. Cement, which was costing Rs 190 a bag a year ago, is now available for Rs 300. Steel prices have increased from Rs 38000 per tonne to Rs 60000 per tonne now. Developers are struggling to control their costs and boost sales. Omkar Sankar, director, Sankar Foundation, said there is huge demand for affordable and low-budget houses in Coimbatore. But the jump in prices of affordable houses is now becoming a cause for concern, he noted.

Flats that were sold for Rs 4500 per sq. ft. in Ramnagar area are now being sold for Rs 6500 per sq. ft. Similarly, in areas like Vilankurichi, Thondamuthur, Vadavalli, which are outside the city, costs have moved from Rs 2300 per sq. ft. to Rs 3500 and more. Though the recent lowering of interest rate by banks may bring some respite, developers are still in a wait and watch mode. The situation in Coimbatore is different from Chennai, which is well connected with infrastructure facilities even in far-off areas.

There is a huge demand for housing in Coimbatore and in the next few years there would be at least a demand for 1 lakh housing units, said P Karthikeyan, Chief Executive Officer, Trishul Shelters Private Limited. However this would require good connectivity and infrastructure development in the suburban areas, which is lacking now, he said. Besides the developers have to look at ways to keep costs down by adopting innovative methods and different technologies, he noted.

By | Posted in Real Estate News | Tagged , , , , , , , , | Comments Off on Property prices in Coimbatore goes High

Realty players to protest decision deficit as clearance delays

April 24, 2012 – 11:34 am

Mumbai’s realty sector has taken a decision to protest decision deficit and policy paralysis in the state and central governments and various agencies. A large number of realty organisations, including Maharashtra Chamber of Housing Industry (MCHI) and Confederation of Real Estate Developers’ Association of India (Credai), have joined hands to go on a token strike and sit-in dharna on May 3 to protest the lack of continuity in policies and inordinate delays in getting clearances for various projects.

The Practicing Engineers, Architects and Town Planners’ Association would take a call on April 26 on its participation in the proposed strike. Realty players’ move comes at a time when there has been 14.8% decline in property registration (sales and purchases) during January-March 2012 in Mumbai, while leave and licence agreements have surged by 11.72%.

The timing of the token strike is crucial when auto unions have announced their decision to go on indefinite strike to press for tariff revision among other issues and similar strike call has been given by auto fuel dealers in the last week of April.

Paras Gundecha, president, Maharashtra Chamber of Housing Industry, told Business Standard: “There are couple of issues which we have been flagging off with the government and civic authorities time and again. However, there has not been any major improvement. A committee appointed by the state government for high-rises does not examining structural stability; instead, it keeps on asking about other issues which are not in its jurisdiction. It takes a long time to get approval from the committee. Besides,  it takes at least two years to get building plans passed by the Brihan Mumbai Municipal Corporation. All this needs to be expedited.”

Gundecha said at least 455 files of various projects await environment clearance. “In Gujarat, Punjab and Kolkata, the environment clearance is given in about eight to 10 months. But in Mumbai, it takes at least two years. The state government’s intervention to fast-track these clearances, especially from the ministry of environment and forest is required,” he mentioned.

Yomesh Rao, director, YMS Consultants, which is engaged in professional consultancy to developers and societies, said: “Delays in the approval process negate the purpose of rehabilitation and redevelopment which in general affects the infrastructure and housing needs of the middle class. What needs to be done is that the administrative officials and politicians alike should take decisions without fear for the larger public interest.”

Sachin Ahir, minister of state for housing, said the government was prepared for a dialogue. “The government is open for talks. I want to appeal the builders and developers to reconsider their plan to go on a token strike.” However, Gundecha said despite the talk there has not been any formal policy on rental housing has been framed by the state government.  He also wondered why realty players need to keep aside certain flats for discretionary allocations despite the repeal of Urban Land Ceiling Act way back during the BJP-led NDA rule.

 

By | Posted in Real Estate News | Tagged , , , , , , , | Comments Off on Realty players to protest decision deficit as clearance delays

RBI Rate Cut Proves to be a Boon for Affordable Housing Investors

April 20, 2012 – 6:11 pm

The recent move by the Reserve Bank of India (RBI) in its annual Credit Policy has given some hope for investors in the affordable housing segment. This is being seen as a positive development for the overall property market. While investors remain cautious and wait for banks to announce the lowering of interest rates, realtors are optimistic of the scenario, however, hoping that inflation remains under check. “While the rate cut of 50 basis points is definitely a ray of hope, it does not dispel the shadows nearly as much as may be initially supposed. It should be borne in mind that the Reserve Bank of India (RBI) has hiked interest rates 13 times between March 2010 and October 2011,” says Om Ahuja, CEO – Residential Services, Jones Lang LaSalle India.

“While this is understandable, given the on-going concerns over inflation and liquidity in the market, the spate of rate hikes has created a compounded problem for the residential real estate sector. The series of hikes in the past have also affected the price that builders put on their properties, since their own costs of borrowing have increased. It is unlikely that property prices will come down because of this rate cut. In fact, it is very likely that there will be an upward bias on property rates because of the anticipated improvement in sentiments of buyers who have so far been sitting on the fence, waiting for some signals of relief,” adds Ahuja. Shrinivas Rao, CEO, Vestian Global Workplace Solutions says the reduction in repo rate will boost economic growth and improve business sentiments which in turn will strengthen buying activity. However, the impact will vary across sectors depending on implementation of the cut by leading banks.

“Leading lenders are likely to cut interest rates on deposits and loans. Home loans are likely to turn cheaper. For instance, a 25 basis point cut could lower home loan EMIs by Rs 16 per Rs 1 lakh. A cut in the repo rate will also reduce the interest on commercial loans which in turn will favour developers to avail cheaper loans, thereby providing traction to real estate activity. Cheaper loan rates are expected to attract more end-users, impacting the residential sales positively,” he says.

With banks offering loans at cheaper rates, developers are likely to prefer the bank loans as against private equity funds. However, an increase in market demand in the short term will drive capital values, thereby benefitting retail investors, adds Rao. According to Ganesh Vasudevan, Vice President and Business Head, IndiaProperty, the cut of 50 basis points by the RBI is a move that will have a positive effect on the real estate segment.

By | Posted in Real Estate News | Tagged , , , , , , , | Comments Off on RBI Rate Cut Proves to be a Boon for Affordable Housing Investors

HongKong and Shanghai Hotels try to make headway in Indian Market

April 20, 2012 – 12:36 pm

The Hongkong and Shanghai Hotels Ltd that operates luxury hotels under ‘Peninsula’ brand today said it is in talks with international parties for partnership to enter the Indian market. “We have looked at several properties and held discussions in India to have a presence in the country,” Hongkong and Shanghai Hotels Ltd Director and Chief Operating Officer Peter C Borer told said.

The company is scouting for assets in India to start operations in Delhi and Mumbai. Unlike other international chains, it will look to invest in properties as owners with a majority stake.
Senior company officials have been visiting India for the last four to five years to scout for potential partners, he said but did not disclose the parties with which the company has been having discussions.

When asked why the company has not made progress so far, he said: “We are looking for the right partnership for long term and we want to go slow and steady in the market.”
Borer, however, did not comment on the timeline for opening its first property in India as well as possible investments to be made in the country.

Commenting on the company’s business model, he said: “Our philosophy worldwide is to invest in property and manage rather than only managing it.” The Hong Kong-based hospitality chain currently operates nine hotels in Hong Kong, Tokyo, Beijing, Shanghai, Bangkok, Manila, New York, Chicago and California with an average room of about 200-300 per property. These properties are positioned as business as well as leisure destinations.

The company is currently developing its 10th property in Paris and is likely to be operational by 2013. When asked about room tariff of the chain, Borer said it varies from location to location but ranges between USD 150 to USD 900 per room per night. The average occupancy level across the chain is about up to 75 per cent.

Commenting on the Indian market, The Peninsula Shanghai General Manager Joseph W Y Chong said: “We are still learning about the real estate situation in India. We will not compromise on lower or cheaper substitutes and ideally we will go for a location which is culturally connected and centrally located.”

By | Posted in Real Estate News | Tagged , , , , , , , | Comments Off on HongKong and Shanghai Hotels try to make headway in Indian Market

Economy and Realty in April 2012

April 19, 2012 – 5:38 pm

Healthy office space absorption in 2011-2012 inspite of slowdown in GDP, However 2012-13 seems bleak.

Currently, the top seven cities of India that is Mumbai, National Capital Region, Bangalore, Pune, Chennai, Hyderabad and Kolkata together occupy 389 mn sq.ft of Grade-A office space. During 2010-11, a total of 38 mn sq.ft of new space was constructed in the top seven cities and it was 37 mn sq. ft during 2011-12. Office space absorption in India during 2011-12 was merely 2% lower than 2010-11 despite GDP growth slowing down from 8.4% to 6.9% during the same period. This is in sharp contrast to the popular belief that 2011-12 was a dull year for office market in terms of absorption. Healthy absorption rate ensured a drop in vacancy level to 21% by the end of Q4 2011-12 from 27% in Q4 2009-10.

Share of Banking & IT sector falls in absorption while manufacturing sector has witnessed an increasing trend over the last two years and contributed 19% in total absorption during 2011-12, higher from 13% in 2010-11. GDP growth of service segment is estimated to grow at 8.8% during 2012-13, much higher than industry segment growth of 6%. Absorption of space during 2012-13 is expected to be considerably lower than the previous two years and this will make it all the more challenging for developers to maintain existing levels of rent.

However, the latest move by Reserve Bank of India (RBI) of reducing the repo and reverse repo rate by 50 basis points (bps) each could provide the much needed impetus to the economy and help in reviewing the demand scenario for office space in the coming quarters.

 

By | Posted in Real Estate News | Tagged , , , , , , | Comments Off on Economy and Realty in April 2012

Bengal Urban Land Policy: Low-Cost Housing Seeks 30% Reservation

April 19, 2012 – 1:06 pm

The promise of Ma, Mati, and Manush governance by Mamata Banerjee may fall short of the second M-word, meaning land — at least for real estate developers in the state’s capital city. For, the West Bengal government has now decided to bring in an amendment to the Urban Land (Ceiling and Regulation) Act (ULCA), 1976, an eyesore of developers for quite some time. The proposed alteration will stipulate the developers to reserve 30 per cent apartments in big housing projects for the low-income group (LIG). Industrialists have been seeking a total repeal of the Act, introduced in 1976 to prevent hoarding or excessive holding of land in urban centres.

According to the Act, the ceiling limit on vacant land in a category ‘A’ city like Kolkata is 7.5 cottah or about 500 square meters. The demand for repealing the ULCA was raised for the first time by Godrej Properties chairman Adi Godrej, at an industry meet within the first month of Banerjee taking over the chief minister’s office.

Much to the disappointment of the developers, urban development minister Firhad Hakim has now totally ruled out the possibility of repealing the Act. “We are not going to abolish the Land Ceiling Act,” he said. “Instead, we will give permission to developers for purchase of land beyond ceiling, provided they reserve 30 per cent housing for low-income housing segment.”

As for the Trinamool dispensation, it has also decided to do away with the concept of public-private partnership (PPP) — an idea pioneered by the earlier Left Front government under Buddhadeb Bhattacharjee. Instead, “the government will allocate land to the highest bidder and for the rest of the big projects the state will build on its own,” according to Hakim. Notably, in spite of the Land Ceiling Act, the earlier government had windfall gains by allotting land in prime areas of city.

For example, three prominent government agencies involved in land deals in and around Kolkata — the Kolkata Metropolitan Development Authority (KMDA), Kolkata Municipal Corporation and West Bengal Housing Board— signed deals worth more than Rs 18,000 crore, for over 5,250 acres of land during the period in little over two years. In fact, KMDA was credited with signing deals, worth more thanRs 800 crore with real estate developers on a single day. “The process of land allotment slowed substantially over the last two years. First, it was due to elections,” said a city-based real estate developer. “Second, it was due to lack of vision and policy of the new government.”

By | Posted in Real Estate News | Tagged , , , , , , , , , , , , , , , , , , | Comments Off on Bengal Urban Land Policy: Low-Cost Housing Seeks 30% Reservation

2012 Most Tougher Year for Fund Raising

April 18, 2012 – 5:09 pm

Due to global issues, liquidity is becoming a problem. Though the phase is temporarily, the concern cannot be ruled out. Indian real estate sector is banking on the fact that change will take place and market will come out of the situation. The fact of the matter is that next 12 months and in fact 2012, does not look too bright for the sector.

The global debt worries have led to more and more uncertainty. In the last few months, the sector has been plagued by a potential liquidity squeeze. The situation is very unsettling and the fear is that we might end up looking at the year 2008 situation. It is certain that banks will get into selective lending with more strict verifications. In 2012, we are expecting that interest rates might get stabilized but disbursal of home loans will come down.

As RBI has been steadily increasing interest rates, debt for developers is becoming expensive. Also many banks are right now not keen to lend to real estate projects. Due to global uncertainty even private equity is cautious of investing in India. In fact, companies have started looking at alternative routes of fund raising. And many a deals are being done as structured debt deals hiding behind the facade of an equity structure.

In structured debt deals, the companies—investor and investee—sign two agreements. In the publicly announced agreement the investor—a PE or a VC fund—buys an equity stake in the company; and in the second contract they have buyback clause, which allows investee company to buy back its shares from the PE/VC fund at a price that will give the fund a return of about 20% per annum over the duration of the investment.

All signs currently suggest that 2012 would not be an easy year. As debt becomes more expensive and PE funds find it difficult to deploy cash due to global economic conditions, we would see higher number of structured deals taking place in 2012. Though these structured deals are being done, they have their share of problems. The problem is when the side-contracts are not honoured.

By | Posted in Real Estate News | Tagged , , , , , , | Comments Off on 2012 Most Tougher Year for Fund Raising

Realty Industry Welcomes Rate Cut And Sees Benefit for All

April 18, 2012 – 5:09 pm

The interest rate sensitive realty industry Tuesday welcomed the Reserve Bank of India’s (RBI) decision to cut key lending rates by 50 basis points, and felt the move will boost builders’ and home loan customers’ sentiments alike.

“For the real estate in particular, this is indeed a welcome step by RBI. While the sector was already reeling under the pressures of high interest rates, this will allow banks to lower down the interest rates significantly. Both buyers and developers shall get benefitted from this,” said Pradeep Jain, chairman, Confederation of Real Estate Developers’ Association of India (CREDAI).

Home loan buyers are currently paying a higher rate of interest in the range of 11.50-13 percent on floating basis. Customers, who had earlier opted for dual rate scheme and now just exhausted their fixed tenure rate, are paying the same rate of interest.

Other industry players like Unitech and real estate consultancy firm Cushman & Wakefield also welcomed the move, which they said would boost business confidence.

“This development will have a positive impact across the economy and particularly in the real-estate industry. Not only will the cost of borrowing rationalize, this reduction will also provide an impetus to growth and enhance business-confidence,” said Ajay Chandra, managing director, Unitech.

Cushman & Wakefield India said that the banks are expected to pass on the reduction in interest rates to consumers, which will provide a positive boost to market sentiments especially in the residential sales markets.

“We expect to witness some pickup in the volume of sales transactions. For the whole of last year, end buyers had to defer their purchase decisions as they were facing the double-edged sword of rising interest rates and stubborn price levels,” said Anurag Mathur, managing director, Cushman & Wakefield.

The RBI’s announcement also buoyed the BSE Realty index which grew by 32.50 points at 1,813.97 points around 2:50 p.m. Stocks of realty industry players also surged with DLF’s scrip growing by 3.75 points or 1.88 percent at 203.25 points.

 

 

By | Posted in Real Estate News | Tagged , , , , , , , | Comments Off on Realty Industry Welcomes Rate Cut And Sees Benefit for All

Indian Hotels Is Said to Seek Bigger Stake in Orient-Express.

April 17, 2012 – 4:36 pm

Indian Hotels Co. (IH), the country’s biggest hotel operator, has restarted efforts to boost its stake in Orient-Express (OEH) Hotels Ltd., two people with knowledge of the matter said.

The Mumbai-based company has approached Orient-Express about a deal, though discussions are at an early stage and may fail to lead to an agreement, the people said, declining to be identified as deliberations are private. Indian Hotels owns 6.9 percent of Hamilton, Bermuda-based Orient-Express, whose market value has jumped 32 percent this year to $1.2 billion.

Indian Hotels, owner of the Taj Mahal Palace in Mumbai, initially paid $211.3 million for a 10 percent stake in Orient- Express in 2007. Two years later, Indian Hotels said it would be “happy” to boost its investment, though added it doesn’t make “hostile moves.” Orient-Express had in September 2007 rejected an approach to pursue strategic discussions from Indian Hotels.

Indian Hotels’ stake in Orient-Express was diluted since the 2007 investment, as the New York-listed company completed four stock sales, according to data compiled by Bloomberg. It wasn’t clear how much of Orient-Express Indian Hotels is seeking.

Paul White, the former Orient-Express chief executive officer who rejected Indian Hotels’ approach, resigned from the company’s board in July. Orient Express owns New York’s 21 Club restaurants and the Hotel Cipriani in Venice, Italy.

Indian Hotels in an e-mailed statement declined to comment “on market speculation.” Victoria Legg, a spokeswoman for Orient-Express in London, declined to comment.

Indian Hotels, controlled by the Tata Group, bought the Ritz-Carlton in Boston in 2007 for $170 million from Millennium Partners and renamed it Taj Boston. In 2005, the company re- entered the New York market after six years with the rights to manage the 201-room Pierre.

The Mumbai-based company has 112 hotels and plans to open 12 new resorts this year, according to a December investor presentation. Sahara Group, the Indian owner of assets ranging from TV channels to real estate, bought the Grosvenor House in London’s Mayfair district for 470 million pounds ($744 million) that month in its first overseas hotel acquisition.

By | Posted in Real Estate News | Tagged , , , , , , , | Comments Off on Indian Hotels Is Said to Seek Bigger Stake in Orient-Express.

RBI’s Rate Cut: Realty Sector Expect Rise in Property Demand

April 17, 2012 – 4:36 pm

Realty firms on Tuesday hailed the RBI’s decision to cut short-term lending rate saying the move would reduce the cost of funds to home buyers as well as developers and boost property demand.

“Reserve Bank’s decision to cut the repo rate by 50 basis points and abolish pre-payment penalties is a good move for home buyers,” Confederation of Real Estate Developers Association of India (CREDAI) Chairman Pradeep Jain said. In its annual credit policy, RBI has asked banks not to levy foreclosure charges or pre-payment penalties on home loans extended on a floating interest rate.

The country’s largest realty firm DLF also welcomed the decision, saying it would significantly improve the cash flows of developers. “It is positive news although very-very delayed. This will benefit home buyers besides the industry. It will improve cash flows tremendously,” DLF Group Executive Director Rajeev Talwar said.

Jain too said that liquidity for developers would improve and cost of funds would be cheaper. On demand, Credai Chairman said the move would definitely boost housing demand. However, property consultant DTZ India CEO Anshul Jain felt more measures need to be taken to have a positive impact on housing demand.

“It is a step in right direction although lot more measures need to be taken before we see any effect of the rate cut on the real estate sector,” said Jain of DTZ. The housing demand, which is very subdued currently, would only rise if the interest rates on home loans come down to below 10 percent, he added.

By | Posted in Real Estate News | Tagged , , , , , , , | Comments Off on RBI’s Rate Cut: Realty Sector Expect Rise in Property Demand

Realty projects, roads to help build-up for Unity Infraprojects

April 16, 2012 – 6:32 pm

Healthy order book, strong balance sheet and the potential to unlock value from real estate projects make Unity Infraprojects a decent investment idea on a medium-term basis. Mumbai-based Unity Infraprojects is a small-sized construction firm operating in buildings, water and roads segments. The company is also developing real estate on its land parcels in Nagpur, Bangalore, Pune, Kolkata and Goa. The total saleable area from these projects is nearly nine million square feet.

Unity Infraprojects stands to gain by unlocking the value in its real estate projects. It was not able to monetise any of its real estate projects due to delays in execution by over a year. However, it is now in an advanced stage of securing approvals for launching its Bangalore residential project. Unity has a total saleable area of nearly 3 million square feet in this project, which it intends to launch in another three months.

After this it will focus on monetising its real estate in other cities. The current order book of the company in its construction business stands at Rs 4,700 crore, which are 2.75 times its FY11 revenues. These orders are to be executed over the next three years. The company has been increasing its exposure to the roads segment in the last few years. Although the roads segment is highly competitive, Unity’s backward integration in terms of owns machinery has allowed the company to garner better operating margins than its peers.

In the nine months ending December 2011, the company has maintained an operating margin of 15.5%. Another factor that augurs well for the company is its strong balance sheet. As of September 2011, the company had a debt-equity ratio of 1.1, which is one of the best among its peers. Unity Infraprojects’ stock is trading at a P/E of 3.9 while similar-sized rivals like Pratibha Industries and Supreme Infrastructure India are trading at a P/E of 5.9 and 5.2, respectively. Considering its growth potential and the relative discount to its peers, the stock looks attractive at this level.

By | Posted in Real Estate News | Tagged , , , , , , , , , , | Comments Off on Realty projects, roads to help build-up for Unity Infraprojects

Sahara, Bhushan Steel, ICICI race to buy Parsvnath’s Connaught Place land.

April 16, 2012 – 5:15 pm

Sahara Group, ICICI Bank, Bhushan Steel, Bharti Realty, Red Fort Capital and Shri Lal Mahal are understood to be in the race among others to acquire Parsvnath Developers’ 1.18 acre of prime commercial land near Connaught Place in the National Capital.

In January, Parsvnath had announced plans to monetise the KG Marg land, which it had bought for Rs 200 crore in 2008. Parsvnath, which is eyeing about Rs 700 crore from sale of this land, got the building plan approved from local authority last week and potential buyer can start construction on the land immediately after the deal, sources said.

“The first round of bidding and due diligence have been already completed. The process will be expedited now as the company was waiting for the building plans approvals before it starts negotiation with potential buyer,” a source, who is involved in the process, said. Sahara Group, ICICI Bank, Bhushan Steel, Bharti Realty, private equity firm Red Fort Capital, rice company Shri Lal Mahal and one leading realty firm from NCR have shown interest in buying this land, sources said, adding that Parsvnath had got bids up to about Rs 700 crore in the first round of bidding.

When contacted, Parsvnath Developers Chairman Pradeep Jain said: “The process for sale of this land is on. We cannot comment any further.” Property consultant Jones Lang LaSalle India is helping Parsvnath in this deal. The built-up area allowed on this prime land is about 1.5 lakh sq ft with 300 car parking. Realty consultant said that prime office buildings near CP are currently commanding a monthly rental of 350-400 per sq ft.

Although Jain did not give any timeline for completion of this transaction, sources said that the deal could be closed in this quarter. Parsvnath has a net debt of about Rs 1,200 crore and plans to reduce it to about Rs 500 crore by utilising the proceeds from sale of this prime property. The company has two housing projects and several shopping malls at metro stations in the National Capital. It is setting up an office building near Gole Market here with an investment of Rs 300 crore.

That apart, Parsvnath had bought in 2010 a 38 acre of land near Sarai Rohilla from the Railways for Rs 1,651 crore, making it the second biggest land deal in Delhi. The company, in partnership with Red Fort Capital, plans to provide luxury housing and commercial space in this project. Parsvnath, which has a land bank of about 200 million sq ft across the country, had received private equity funding from Sun Apollo and JP Morgan in some other projects in NCR.

 

 

By | Posted in Real Estate News | Tagged , , , , , , , , , , , | Comments (1)

Capital gains tax on sold property.

April 14, 2012 – 6:42 pm

Real estate is a significant part of an investor’s pie. It is also a time tested asset, which almost always appreciates except in times of severe economic downtrends, when it’s temporarily affected. In fact, buying real estate for investment purposes and selling it later at a higher price has become very common among investors. Banks and other financial institutions (NBFCs or non-banking financial institutions) have also helped in this trend by providing easy loans to investors.

What is confusing for many investors though is the tax structure on these real estate transactions. This article will explore the tax liability on such transactions, also known as capital gain (or loss depending on whether the investor made money on the transaction).

 Capital Gain Tax Structure.

The income tax rules define gain in two broad categories; namely short term capital gain (STCG) and long term capital gain (LTCG). If investors buy and sell assets within 3 years, this comes under short term capital gain. If investors buy real estate, keep it for more than 3 years and sell, it comes under long term capital gain.

For short term capital gain, the gain from asset is added to the investor’s income and taxed as per the income slab they fall under. For example, if an investor falls under the tax slab of 30%, the gain will also be taxed at the rate of 30%.

For long term capital gain, tax calculation involves what is known as indexation. The acquisition cost or cost of acquiring the asset is recalculated based on indexation. Indexation is a concept, which factors inflation in its calculation by using a factor called cost inflation index (CII). The cost inflation index number is published every year by Reserve Bank of India (RBI) and people can use it to find out the taxable gain on the transaction.

By | Posted in Real Estate News | Tagged , , , , , , , , , , , , | Comments Off on Capital gains tax on sold property.

Bangalore: More about Office….Office.

April 14, 2012 – 6:42 pm

While demand for residential space was mostly sluggish in 2011, demand for office and retail space remained healthy in Bangalore.

The market for commercial space is estimated at 50 mil sq. ft. across the country. The average yearly absorption rates in Bangalore and NCR are about nine mil sq. ft. While six mil sq. ft. is absorbed in Mumbai, the rates are 4 to 5 mil sq. ft. each in Chennai and Hyderabad.

However, last year, Bangalore topped the list with the highest absorption of more than 13 mil sq. ft. of non-captive office space, about 2 mil sq. ft. more than the levels seen in 2010. About 80% of this came from the IT & ITES sector.

“Consolidation of real estate portfolios by Indian and MNC IT companies has boosted the real estate market in Bangalore,” said Karun Varma, MD (Bangalore and Kochi), and Jones Lang LaSalle India. “Demand for back offices and contact centres has resulted in continued strong growth in suburban real estate development, with IT companies lining up their investments for setting up new facilities in the city,” he added.

Experts predict demand for 16 mil sq. ft. of office space in 2012 in India’s Silicon Valley, which will be the highest ever in the country. This will be mostly due to the new SEZ norms and direct tax code (DTC) that will come into play.

About 75% of the 16 mil sq. ft. office space will be in upcoming SEZ regions. Recently, global investment banking firm Goldman Sachs took up 1 mil sq. ft. of office space developed by Kalyani Developers on the outer ring road. “Companies see an opportunity from a tax break perspective; so, many are planning to migrate their future work to SEZ parks,” said Shrinivas Rao, CEO (Asia Pacific), Vestian Global Workplace Services.

In the next three years, an additional 28.8 mil sq. ft. of office space will be available in the region, for which projects are already under way. “We are expecting to see about 6 to 7 mil sq. ft. of this to come up in 2012,” said Rao.

By | Posted in Real Estate News | Tagged , , , , , , , , , , , , , , , | Comments Off on Bangalore: More about Office….Office.

Economy and Realty at Glance: In the Month of March 2012.

April 14, 2012 – 6:38 pm

The report highlights the revised service tax and its impact on the consumers, the deduction in TDS and the current scenario of the External Commercial Borrowing (ECB) apart from its emphasis on the Chennai Realty Market.

Following are the key takeaways of the report:

– Chennai leads the market in terms of number of units under construction accounting for 68% of the total number of units coming up in the city, followed by the western region with 27%.

– Chennai is slated to witness the infusion of around 67500 residential units in the forthcoming three years.

– During 2011, the highest price rise was observed in the central areas of the city, to the tune of around10-18%.

– According to a United Nations study, Chennai has a deficit of around 60000 housing units. About 6000 of them are in the high income group segment, 12000 in the middle income group and 18000 in the low income group.

By | Posted in Real Estate News | Tagged , , , , , , , , | Comments Off on Economy and Realty at Glance: In the Month of March 2012.

Indian Companies invested $2.7 bn overseas in March.

April 14, 2012 – 6:37 pm

Overseas investments by Indian companies stood at USD 2.77 billion in March, up 37.6 percent over the previous month, with Binani Industries, Mercator Lines, HCL Technologies, Varun Shipping, Hexaware Technologies, and Tata Steel emerging as major investors.

As many as 489 overseas investment transactions were carried out by various companies in March, as per the Reserve Bank data released Wednesday. Binani Industries invested a total of USD 323.34 million in its two wholly-owned subsidiaries based in Luxembourg and the US that are involved in financial, real estate and manufacturing services.

Mercator Lines, which is into agriculture and mining, through its joint venture-Mercator Offshore PTE- invested USD 150.15 million in Singapore during the month, it said. ABG Shipyard, through its wholly-owned subsidiary invested USD 80 million in Singapore.

HCL Technologies, India’s fourth largest software exporter, invested USD 60 million in Bermuda through its wholly owned subsidiary for providing financial, insurance and real estate solutions.
Likewise, Varun Shipping which is into transport, storage and communication business invested USD 60 million via its JV in Cyprus.

Hexaware Technologies invested USD 38.7 million through its wholly-owned subsidiary in Germany to provide financial, insurance, real estate solutions, it said. Tata Steel invested USD 35.5 million in Singapore through its wholly-owned unit, it said.

By | Posted in Real Estate News | Tagged , , , , , , , , , | Comments Off on Indian Companies invested $2.7 bn overseas in March.

Noida: Unitech comes up with Gardens Galleria

April 14, 2012 – 6:36 pm

Unitech, one of the India’s leading integrated developers of large-scale real estate projects, has launched Gardens Galleria in Noida. It is part of Unitech’s existing 147 acres entertainment-cum-retail destination in Noida.
Gardens Galleria, designed by US-based firm Callihon, is spread over 8.36 acres, is strategically positioned adjacent to sector -18, Noida and Film City. It is minutes away from ITO, East Delhi, South Delhi, and Noida Expressway. The project is in the midst of established residential areas, offices, colleges and other commercial towers.

The destination already comprises of an international standard themed amusement park Worlds of Wonder and The Great India Place, a shopping mall. The mall, a combination of entertainment, retail and hospitality, in Noida will comprise of hyper market, departmental stores, international shops, spa, gymnasium, banks, ATMs, food and fun joints. The project comprises 230 retail outlets and there is also parking facility for 8,500 cars. Unitech has already got over 10 lakh patrons a month in its three operational malls the Metro Walk in New Delhi, Great India Place in Noida and Gurgaon Central.

Commenting on the launch, Munish Baldev, head-retail of Unitech said, “We are happy to launch Gardens Galleria in Noida. Unitech has already developed 1.3 million sq ft of mall area in New Delhi, Noida and Gurgaon since 2006, and is developing another 4 million sq ft of retail space in cities such as Kochi, Gurgaon, Bangalore, Lucknow, Mohali, Bhopal, Bhub­aneswar, and Dehradun. We have always been bullish about the retail development space and have been developing the shopping malls as per our business plan. We have been getting strong traction from retailers for leasing of the mall-space under development.”

Genesis Luxury, Genesis Lifest­yle, French Connection, Nautica, Louis Philippe, Van Heusen, Calvin Klein are among some of the major brands who have their stores in Galleria. The company is also developing another 4 million sq ft of retail space in cities such as Kochi, Bhopal, Bhubaneswar, Bangalore, Dehradun, Mohali, Lucknow, and Gurgaon in the next 4-5 years.

By | Posted in Real Estate News | Tagged , , , , , , , , , , | Comments Off on Noida: Unitech comes up with Gardens Galleria

Surat Realty experiences 100% growth in 2 yrs.

April 14, 2012 – 6:35 pm

Realty glitters in the diamond city. Real estate sector has witnessed a 100 per cent growth in the past two years, aided by a number of factors like vertical development, business opportunities and influx of people from other places.

Om Ahuja, CEO-residential services, Jones Lang LaSalle (JLL) India, said, “In cities like Surat, the growth is directly related to increased income of people. High income has also spawned more nuclear families.”

Chairman CREDAI, Surat, Tarun Rawal said, “On-going development of mass transport infrastructure and planned town planning schemes in the city has given confidence to people to go to faraway places to live. Hence, small sector projects – 1,500 sq ft houses – have gained a foothold in the city.”

Surat was the only city where people used to buy and sell properties without documents, but now awareness is growing. “Now small units have started to come up in huge numbers,” said Harshil Daliwala of SNS Builders.

The city is estimated to be spread over in an area of 326 sq km. It could further expand by another 200 sq km. “There is a plan to convert Surat-Navsari into twin cities which will together have a population of 1.15 crore people,” Surat Municipal Corporation’s director of planning Jivan Patel said.

By | Posted in Real Estate News | Tagged , , , , , , , , , , , , , | Comments Off on Surat Realty experiences 100% growth in 2 yrs.

Indian Realty is Growing Bigger.

April 14, 2012 – 6:34 pm

The real estate industry is expected to reach US $180 billion by 2020, said analysts and industry experts at a seminar organised in the city. As part of the Management Development programme, the students of the Acharya Bangalore B School attended a three-day seminar on Real Estate Management that started on Thursday.

Realtors and analysts from the field also attended the seminar to provide the students with future prospects and various professional options.

Presenting a paper on ‘Internet and Real Estate’, Business Head of 99Acres.com, Vineet Singh said, “As per reports by real estate intelligence firms, India is ranked as the fifth most attractive destination for future real estate investments in a list topped by China. The Indian real estate industry is expected to reach US $180 billion by 2020. This is a good platform to involve both academia and industry to facilitate dual growth and understanding. We get to know what the emerging new talent holds and they learn about the industry perspective.”

Industry experts from Brigade Group, Sobha Developers and other leading real estate organisations attended the event to train the students. “I’ve always had an interest in this industry as my family deals with real estate. But at this seminar I could ask a few basic questions and get industry relevant answers,” said Niharika Singh, a student.

By | Posted in Real Estate News | Tagged , , , , , , , , , | Comments Off on Indian Realty is Growing Bigger.

Mirah Group to Grow into Realty Sector.

April 14, 2012 – 6:34 pm

Mirah Group, a diversified business group with interests in food and beverage (F&B), hospitality, travel and international trading, is scaling up its real estate business and consolidating it under a single entity, said a top executive. The group, which runs popular restaurant chains and food stores including Rajdhani, Mad over Donuts and Manchester United Cafe and Bar, has completed around 10 real estate projects in the past decade. But it is only now that the group is organizing and branding the business under a new entity, Edifice Properties.

“We are looking to develop large mixed-development townships in Mumbai and Pune,” said Gaurav Goenka, managing director, Mirah Group. The first project is a 300-acre township in Nagpur, which has received funding in the form of foreign direct investment from a subsidiary of Bank of Scotland. The second will be a township in Pune, and the third, of 200-300 acres in Thane, is in the land acquisition stage.

In the F&B space, Mirah Group, known for expanding through acquisitions, is in talks to buy stakes in both domestic and international brands. “International brands are coming in by the dozen and we will look at picking up stakes in brands that are scalable and have a USP (unique selling proposition),” said Goenka.

The firm intends to invest around Rs.200 crore in this space in two-three years. It will expand Rajdhani, its flagship brand, from 35 outlets to 50 in a year and Mad Over Donuts to 100 from the current 35. Cafe Mangii, which is present only in Mumbai, will travel to Bangalore and Delhi and expand from five to 15 restaurants.

Mirah also runs a chain of hotels under the brand name, Citrus. From the current lot of seven hotels, it plans to open another seven that it will itself build, own and operate. Besides running its own F&B outlets, last year, Mirah Hospitality, a part of Mirah Group, invested Rs.40 crore and acquired a 26% stake in Impresario Entertainment and Hospitality Pvt. Ltd, which runs cafes and fine dining restaurants such as Mocha and Smoke House Deli.

Saloni Nangia, senior vice-president at retail consultancy Technopak Advisors Pvt. Ltd, said that with the fast pace of growth in the number of people across socio-economic strata eating out and ordering in, the F&B space in India will only grow from where it is today. “While a lot of modern retail will move online, F&B, still being an experience-related business, will continue to grow,” she said.

Retail consultants said the F&B sector will continue to draw the attention of investors such as private equity and venture capital funds. Jacob Kurian, a partner at Asia-focused private equity fund New Silk Route, said the fund is exploring opportunities in the sector. New Silk Route is in talks to buy a stake in Adiga’s, a south Indian restaurant chain.

By | Posted in Real Estate News | Tagged , , , , , , , , | Comments Off on Mirah Group to Grow into Realty Sector.