Private equity funds sense their time has come in the Indian property arena, with developers offering plum deals as banks tighten lending and a stock market slump shuts off public share offerings.
Since India eased rules on inward investment in the construction industry in early 2005, foreign investors have earmarked an estimated $20 billion for the booming property market. But government figures show only about $2 billion has actually been spent in the last three years. Read More
One can get a BMW or a private jet, a multiple entry visas or a free ticket to fly down as an incentive for buying a home or investing in property abroad. The Luckiest person can get a permanent residency or citizenship too. Read More
To cash in on the growth of organised retail in India, UK and South Africa-based real estate investment groups have launched retail property focused Triangle Real Estate Fund (TREF) for India. The $500 million fund will be routed through Mauritius and will be managed by Property Zone – a joint venture between Old Mutual Investment Group Property investment Ltd., South Africa and ICS Realty Private Limited, India.
Strutt & Parker Real Estate Financial Service Limited (SPREFS) has been appointed as UK and European placing agent. “Unlike most other real estate investors, the fund will dedicatedly concentrate on tier 2 and tier 3 cities in India.
Four projects in cities of Aurangabad, Jaipur, Indore and Nagpur have been selected for the first phase of investment. Surat is also being considered,” Nick Harvey Jones of SPREF told DNA Money.
“It is a high net worth investor fund which requires minimum investment of $5,00,000 form an individual and $5 million form institutional investors,” he added.
Two deals, consisting of 11 projects and having cumulative worth over $200 million, are in the pipeline.
MUMBAI:Monday the stock exchange goes down by 950 points made the real estate industry jittery and on edge.Its really a bad news for the property investors to know the way market is reacting these days and really they would be facing some more problems till it become stable atleast.
Pujit Aggrawal Developer from Orbit explains that sales has came to the grinding halt of commercial and residential sector, over the past three moths. He added “Property prices are about to fall by 30% in an year or next 18 month.”
Mr Aggrawal Added, The demand for commercial space has gone down because it was driven 50% by the financial institutions. If the markets contuniues to fall like this a huge corrections can be seen in the places like Thane, Jogeshwari and beyond will see huge corrections.In the past couple of months teh stock market has fallen down by 35% approx, said HDFC Chief Deepak Parekh. The rationale is that when the stock market is bullish, people are more comfortable buying property. Now that there is a hit, the real estate market is bound to slow down.
He further added, “Investors have withdrawn from the real estate market. There may not be an impact on prices in south Mumbai, but certainly in other cities like Gurgaon, Noida, Bangalore and Hyderabad.”
Real estate values are correcting accross india and hope fully it will stop the illogical land evaluation, said Chanakya Chakravarty, MD of Actis Advisors.But the stock market fall will hit the sentiments badly and investors will take the time to invest more in this market situation .
MUMBAI: The Mumbai Metropolitan Region Development Authority (MMRDA) on Tuesday auctioned three plots in city’s Bandra-Kurla Complex (BKC) for Rs 1,322 crore.
It’s a far cry from the Rs 2,790 crore the authority earned just three months ago for a similar transaction, confirming what every real estate player has dreaded so far, the slowdown in Mumbai’s property market is finally real.
The slump in the real estate market is also being attributed to the turbulence in the equities market and a slowdown in Indian industrial production figures on concerns that the recession in the US and financial liquidity problems may adversely impact India. It could be for the first time since 1995 that the MMRDA is getting a poor response to its land auction.
The MMRDA had put 5 plots on auction in the G-Block of Bandra-Kurla Complex, 2 commercial, 2 residential and a club house. However, it did not open the bids for one of the commercial plots, while there were no bidders for the club house property.
MMRDA officials said the authority sold the 3 plots, 2 residential and 1 commercial, to pharma tycoon Ajay Piramal-promoted Starlight Systems and Jet Airways, respectively. Starlight quoted Rs 248 crore each for the two residential plots measuring 7,050 sq m.
Mortgage lending rose 160 % previous year, bringing the total to 611 billion rubles ($25 billion), Vedomosti reported last week, citing the Central Bank. Sberbank and VTB Group, the country’s first- and second-biggest lenders, respectively, saw their share of the total rise to 70 % from 55 %, said Vasily Belov, general director of mortgage brokers Fosborn Home, the newspaper reported.
LONDON – The Indian government formally approved ONGC Videsh Ltd’s (OVL) 102.21 mn USD investment in a Qatar-based project and also its formation of a joint venture with CVP/Petroleos De Venezuela SA (PDVSA).
ONGC Videsh is a unit of Oil & Natural Gas Corp, India’s largest oil and gas exploration company.
The government also authorised ONGC Videsh to directly invest in Najwat Najem appraisal, development and production sharing agreement (NNADPSA) Qatar project.
The joint venture with the Venezuelan company will be formed — or development of San Cristobal field located in the Orinoco oil belt, directly or through OVL’s wholly owned unit, a government release said.
The Qatar-based project, in which OVL can obtain a 40 pc stakes, will be the company’s first property in Venezuela.
India said ONGC can provide funding and guarantee support to OVL in both projects, without seeking budgetary support from the government.
In the biggest deal of its type, Mumbai-listed real estate company Indiabulls will make an all-share offer for Aim-listed Dev Property Development.
It will be the first time that a deal of this size – Pounds 138 million – will be financed in the UK entirely by Indian shares.
Indiabulls is a property and financial services conglomerate with a Pounds 4 billion market capitalisation. It is the parent group of the largest real estate company in India, Ibrel, which is handling some of the biggest commercial projects in Mumbai.
The deal, which still has to be approved, will value Isle of Man- based Dev Property at a 32 per cent premium to its closing price of 75 .5 p.
The economic boom in India, where GDP is growing at nearly nine per cent a year, has fuelled investment from international companies setting up offices in Mumbai, which has ignited the commercial property market.
Last year, Dev Property was the fourth Indian developer to launch an Aim listing of a fund that allowed investors to take part in the Indian real estate market through a UK investment vehicle.
Private equity firm ICICI Venture has picked up a 14.9% stake in Mumbai-based textile and real estate development firm Arrow Webtex through a preferential allotment. The deal is estimated to be in the region of around Rs 130-140 crore. The transaction gives the private equity fund a stake marginally below the level which mandates an open offer for public listed firms in India.
Arrow Webtex is engaged in the business of woven and printed labels, elastic tapes, apart from various activities related to real estate, hospitality and gaming business through its subsidiaries. For the quarter ending December 2007, it had consolidated net sales of Rs 46.03 crore with consolidated net profit of Rs 2.76 crore. The company has a market capitalisation of around Rs 645 crore.
As per the disclosures made to the stock exchanges, ICICI Venture, which manages various private equity, real estate and mezzanine funds, has picked up around 2.03 crore shares through the allotment last week. If the deal was struck at the market price on the day, it would be valued at about Rs 132 crore. However, preferential allotments are usually done at a small premium.
Early this month, Arrow Webtex had also made another preferential allotment to another firm, Pacific Corporate Services. This deal gave Pacific Corporate Services a 8.8% equity stake in Arrow Webtex. Through the two equity placements, the company has now raised about Rs 200 crore over the past two weeks.
In the Bangalore, anyone can hop from Tribeca to Brooklyn, stop off at the White House, and head out to Melrose in just a few minutes.
The miraculous journey unfolds in a new housing development in Bangalore’s Electronic City named “Concorde Manhattans”, which sits on prime real estate across from a Wipro Technologies campus. While location is the major draw, developer Concorde Group is also betting that its American naming scheme will help attract Wipro’s globe trotting employees.
India is internationally recognized as a booming economy, making it a favored real estate investment destination for both commercial and residential properties. Still, there is always the confusion of whether to invest in an recognized area or in potentially more money-making area.
Reliance Industries is in advanced discussion with the New York-based Vornado Realty Trust. It is one of the world’s top five real estate asset managers. Main aim of this discussion is to float a $1-billion plus fund. The proposed fund will acquire and manage properties, mainly in the retail space, across India. People familiar with the development said RIL and the New York Stock Exchange-listed real estate investment trust (REIT) were discussing the possibility of an equal joint venture.
Vornado has a market capitalization of nearly $14 billion. It owns and manages over 116 million square feet of realty assets in the US with significant concentration in New York and Washington districts.
It is supposed that the joint venture is likely to manage real estate for RIL’s rapidly-expanding retail arm Reliance Retail (RRL). The group could also consider taking realty assets off the balance sheet of RRL and its subsidiaries and park it under the management of the proposed joint venture. However, the likelihood of such a move could not be verified.
Reliance has been on the lookout for partnering a real estate manager for developing an asset base, primarily for expanding its retail play. It has been in talks with several international players, including Taubman Centre, another US-based player. However, the group has now adopted a more pragmatic approach of forming joint ventures to capitalize on the domain expertise or brand power that an international partner could bring in certain sectors.
February 17, Mumbai. As land prices is rising, large business houses now appear to be increasingly aware of their excess property holdings and the valuations it could fetch in addition to their regular stream of businesses.
Hindustan Unilever, A multi-national, has an extensive property portfolio. HUL has entered the property development business in a big way and is currently developing/selling about six million square feet across the country. Read More
A real estate mutual fund’s (REMF) purpose is to invest directly or indirectly in real estate. A REMF moreover functions like any other mutual fund. It gathers funds from investors and put in them in real estate. It will be administrated by the provisions and guidelines under the SEBI (Mutual Funds) Regulations 1996.
Housing and real estate comprise a substantive portion of national wealth. This sector is also speedily growing in the economy. The concept of REMF is quite popular and well-known in developed markets. This is a new concept here and a lot of financial and fund houses have shown an interest in launching a REMF here.
These funds invest although the real estate investment trust (REIT). A REIT owns and manages real estate properties like shopping complexes, apartment complexes, office complexes, hotels etc. REMFs will provide ample capital for developing infrastructure by channeling small investments into the construction sector.
Wonderla, the amusement park promoted by the Kerala-based V-Guard, is looking to set up a theme park in Mumbai with an investment of Rs 150 crore.
This will be the second one for the company after its theme-park at Bidadi near Bangalore. The company has already acquired around 80 acres and plans to acquire further 40 acres for the project.
Presently, the firm is looking at the feasibility of setting up a park-cum-resort in Navi Mumbai. This is the model followed in many of the western countries.
The amusement park, expected to be up and running in three years, will be an integrated project which will also include commercial space to go with it, according to sources. The firm had acquired the land for a price between Rs 15 crore and Rs 20 crore. The project when completed, is expected to see an investment of over Rs 150 crore.
“The project is still in its early stages,” said Arun K Chittipally, executive director, Wonderla Holidays Pvt Ltd.
With property prices shooting up, the firm is finding it a challenge to find more land to buy as the development taking place in and around Navi Mumbai and the consequent rise in the property prices is making farmers staying away from selling their lands. With Reliance planning a township in the vicinity, said Chittipally, “The park could have a high number of footfalls.”
Speaking on the existing Wonderla amusement park on the outskirts of Bangalore, he said they are looking to expand it. The park, set up at an investment of Rs 105 crore about two years ago is set to breakeven in another two to three years. The company reported Rs 30.5 crore revenues in 2006-07, a growth of 8.9 per cent in the previous fiscal year.
The firm, which has 90 acres of land at Wonderla, has built the park in over some 40 acres. Wonderla has seen average footfalls of over 7 million per annum over the last two years its been in existence.
The size of the amusement parks business in India in 2006 was estimated around $6.6 billion, according to the Indian Association of Amusement Parks and Industries, better known as IAAPI.
The business has been growing at a break-neck speed over the last few years. Chittipally said, “The Indian amusement park business is where the movie theatre business was 15 years ago. Now, its the the age of multiplexes. There’s a lot more to come in the theme park industry to
MUMBAI: The Dubai based Emaar group has purchased another 1.36% in its Indian joint venture Emaar MGF Land for Rs 922 crore, ahead of the initial public offer, which is considered to open on February 1. Emaar group has been assigned 13.37 million shares in the company, sources close to the arrangement 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 say no to disclose any details. The shares allotted to Emaar Holding II are subject to a three-year lock-in period.
As per the existing SEBI guidelines, Emaar Holding II and Kallarister Trading company are the vehicles through which the Emaar group presently 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 just about 50 million square feet of real estate across residential, commercial and other business sections and with processes in 16 countries, as of December 31, 2007. MGF has over the last 10 years launched itself as one of the key players in retail real estate development
People who are disappointed by the RBI decision to hold rates, especially since it is now more fashionable to cut rates are not right. But, Dr Reddy is doing the sensible thing, say experts.
As the RBI’s quarterly meeting approaches, most editorials and columns favored lower interest rates. Their reasons were simple – domestic growth has slowed down, inflation is not very upsetting even after bearing in mind oil prices and financial markets have seen some confusion.
But, Dr Reddy has held firm and has kept all the key rates steady. Industrialists, bankers, investors and most others who can make something of monetary policy are obviously disappointed. But, Dr. Reddy has his reasons.
According to him growth thrust has weakened in current quarters. The apparent signal is the decline in industrial growth over the first eight months of the financial year, when compared to the same period of previous year. There are before time signs of a demand decelerate and asset prices have stabilized after many years of sharp increase.
For the corporate sector, both top-line and bottom-line growth rates have restrained from last year’s levels. Expansion prediction for the coming financial year is not frightening either. Assuming that we already know most of what we need to know about the global credit crisis and its fallout, our growth rate for next year should be around 8 per cent. This moderation in growth is not sufficient reason for the RBI to alarm and start lessening interest rates today.
Another aspect which should be kept in mind is Inflation risks. Ben Bernanke has a comprehensible thought about the inflationary trends in the US economy. Dr. Reddy is not so lucky. He has to take the weekly WPI statistics and then do his on modifications and computations to arrive at a likely ‘real’ inflation figure. However, exact his adjustments are, his figure will still be an estimate.
Most information on the Indian economy will state that inflation is at a multi-year low, even if it is because of subsidized fuel prices. The Indian crude oil basket has gone up by over a third last year, but we still haven’t increased retail prices. Because of its impact at multiple levels, it is not easy to estimate the potential change in overall price levels if fuel prices are increased.
Therefore, RBI has sensibly decided to wait – either for oil prices to come down or for the government to increase fuel prices.
Even with subsidized fuel prices, inflation is not all that comfortable as made out to be. At around 3.8 per cent, it is not much below RBI’s medium term target range of 4 to 4.5 per cent. After adjusting for higher oil prices, inflation may actually be closer to RBI’s target of 5 per cent for the current financial year.
Need the RBI support asset prices?
RBI can safely ignore the recent decline in stock prices and the demand by equity investors for lower rates. Yes, the Fed did drop its key rate by 75 basis points last week and seems all set to cut another 50 basis points this week. These actions, it is now widely believed, were in response to the global market sell-off.
Many commentators had argued that the RBI should take the Fed’s lead and prevent further decline in equity prices. If the Fed is justifiably concerned about financial markets, the RBI should have no qualms in adopting a similar stand, they aver.
Threat of capital inflows
If some industry bodies are to be believed, this is the biggest risk from RBI’s decision to hold rates. As interest rates in developed economies are being cut, the differential with our rates will increase and result in additional capital inflows. This will lead to further rupee appreciation and add to the returns of foreign investors, which will in turn attract more inflows. Stronger rupee will further dent our global competitiveness and affect growth. The logic sounds simple and sensible enough, and industrialists are understandably worried.
Will there be a cut before April?
Those who expected a rate cut today are now sure that RBI will be forced to cut rates before its next scheduled policy meeting in April. They expect weaker economic data and lower inflation in the coming months, which should force the RBI to act. If such a scenario plays out, the case for lowering interest rates will be almost irresistible. Even the RBI admits so in its policy.
But, the RBI may go in for a surprise cut only if there is a significant event or data which shows a sharp and sizeable change in economic trends. Expecting otherwise would be foolish, especially after Dr. Reddy has proved that he has a mind of his own.
Jan 08, New Delhi. Gold prices penetrated through the maximum to reach its new peak of Rs 11,150 per ten gram on the gold market due to aggressive buying by jewelers in line with a firming global trend.Gold price increased by Rs 175 per ten gram on emergence of buying by jewelers and stockiest, extending their positions to meet ensuring wedding season.Market expert said that the buying was more of a tentative nature as some of the stockiest enlarged their positions in future trading, while some purchases by jewelry fabricators also supported the trend.A sudden rise today exceeded the previous record of Rs 11,025 set on January 4 when crude oil prices reached to record 100 dollar a barrel and dollar fell against 13 currencies in the forex market, making the metal more attractive for investment purposes.
Standard gold and ornaments flashed up by Rs 175 each at Rs 11,150 and Rs 11,000 per ten gram respectively. Sovereign also rose by Rs 50 at Rs 8950 per piece of eight gram.
The market received signals from international front. Gold rose by 15.90 dollars to 877.90 dollars an ounce on the New York Mercantile Exchange, breaking its 28-year record levels.
A like gold, same trend was noticed in white metal as silver ready found fresh buying support from industrial units and registered a smart rise of Rs 190 at Rs 19,560 per kilo. Weekly-based delivery rose by Rs 150 at Rs 19,900 per kilo. However, silver coins remained around previous level at Rs 25,300 for buying and Rs 25,400 for selling of 100 coins.
