Photo by nancyarora2020The nationwide poll named ‘Realty Trends 2010’ for metros and Tier II cities across the country, which saw participation from over 4,800 property seekers consisted of Majority of the respondents belonging to the age group of 26- 35 years.

The country capital topped the charts with 34 per cent while Mumbai got 28 percent votes. Bangalore received 11 per cent votes in its favor with particularly south Bangalore being preferred the most.

With the introduction of budget 2010 the economy is improving and property prices are stabilizing, this is attracting the investors who restrained from investing last year to jump into the market with full swing.

The survey showed a large number of people looking to purchase a house want it for self-consumption. The figures tell that 67 per cent of the national property seekers want to buy a house for themselves while only 23 per cent are looking for property options from a long-term investment perspective. Short-term investors have only 10 per cent survey takers.

Surely the Indian Real Estate sector is on a roll.

As researched by Boston Analytics, the Indian realty sector has undergone an increased supply and pace of development activity which brought an improvement in pessimism associated with the realty prices. A low interest rate on home loans driven by Government’s impetus packages have also catalysed the Indian consumers to buy homes.

“Increased supply, improvement in pessimism related to realty sector rates, and low rates of interest on home loans seems to be encouraging Indian consumers to firm up their home purchase decisions” as said by Shirin Bagga, Economist, Boston Analytics.

The data was collected by conducting a monthly survey that targets 10,000 respondents cross 15 Indian cities—Delhi, Mumbai, Hyderabad, Kolkata, Chennai, Bangalore, Chandigarh, Nagpur , Ahmedabad , Kochi, Jaipur, Lucknow, Bhubaneswar, Patna, and Vishakhapatnam.

According to the recent reports the conviction concerned to speed of construction activity conveys more anticipation with regards to observed change in construction activity in Tier II and Tier III cities relative to Tier I cities.

The real estate projects which are in different phases of completion in all levels of towns and cities appear to be introducing optimism about the expected change in construction activity among respondents across Tiers,” the report said.

As brought into light by Economic Survey of 2009-10, the need of the construction and real estate sector in creation of both financial and physical assets has been amplifying over the years. The construction sector now accounts for 8% of GDP at constant prices, hiked from 7.7% in 2004-05.Equivalently, the share of real estate ownership of dwelling and business services in overall GDP as hiked to 9.2% in 2008-09 from 8.9% in 2004-05.

The realtor is also in negotiations with banks to restructure an additional Rs 500 crore of loans as part of its plan to cut debt and secure funding to complete existing projects.

The Gurgaon-based realty firm, whose stock is now trading at less than a tenth of its 52-week peak on the Bombay Stock Exchange (BSE), plans to draw down $110 million (Rs 540 crore) from Unitech Real Estate International Fund to invest in its realty projects in the National Capital Region (NCR). When contacted, the company declined to comment on the development.

Last year, Unitech received commitments of $330 million (Rs 1,620 crore) for its international fund, which was launched exclusively to raise money to invest in the company’s residential projects.

The realty major is also in talks with PE funds to raise $300 million (Rs 1,480 crore) at the corporate level and as much as $150 million (Rs 740 crore) for specific residential projects being developed in Hyderabad and Kolkata. While the company expects to tie up PE funding for its Hyderabad and Kolkata projects, being developed through special purpose vehicles (SPVs), by the end of March 2009, PE funding at corporate level is expected only after the fortunes of the market turn for the better.

Unitech has admitted that it has a debt of Rs 8,000 crore on its balance sheet, of which it has to repay Rs 2,500 crore by March 2009.

Of the Rs 2,500 crore, the developer has already restructured Rs 1,000 crore of loans with banks and is in talks to restructure an additional Rs 500 crore. It expects to complete the process by the end of this month.

For the balance Rs 1,000 crore. The company is in talks to sell its Gurgaon-based hotel project and also the project in the national Capital’s Saket area to meet the remaining Rs 1,000 crore. However, a report by CLSA said Unitech needed to repay Rs 1,000 crore of debt to mutual funds this quarter, indicating trouble for the company. Unlike banks, where it has the option of restructuring loans, the debt owed to mutual funds will have to be repaid by this quarter, the CLSA report said. However, Unitech has disputed the report, saying the company did not owe debt to mutual funds.

* The hotels would be located in the national capital region (NCR), Kolkata, Chennai, Goa, Mysore, Bangalore, Hyderabad, Chandigarh, Siliguri and Assam.

* Of the total planned hotels, about 50 per cent would be located in Kolkata and the NCR, Chandra said.

Neptune group chairman Nayan Bheda confirmed the deal, but refused to share the details, including the amount involved. “We have expanded our operations across India and the money will be invested in upcoming projects,” Bheda added.

In the past few years, Neptune has grown into a pan-India player with projects in Pune, Hyderabad, Chennai, Vishakhapatnam, Kochi and Nagpur, among others.

“It is for the first time that we are investing in the entity-level. The deal will help us get a pan-India presence as Neptune is expanding operations across India,” said Indiareit Fund Advisors CEO Ramesh Jogani.

Indiareit is looking at investments in excess of Rs 200 cr in properties in Mumbai and Hyderabad. It had invested Rs 225 cr in Bangalore-based Skyline Constructions & Housing last year.

They were assessed on eight parameters necessary for a metro city, such as social infrastructure, infrastructure availability, real estate cost and availability, transportation facility (connectivity), presence of quality educational institutes, employment opportunity, facility of financial services and business environment.

According to the analysis, Pune occupies the first position, though it needs to improve on transportation, social infrastructure and financial services. Ahmedabad is the second city with most potential to be a metro, as it provides good infrastructure facilities and connectivity. The study puts Lucknow in the third place as it needs to pick up on infrastructure, business environment and social infrastructure.
Chandigarh, the smallest of the four in terms of area and population, ranks fourth though it fares well in real estate prices, financial services and business environment. At 9.21%, it is the least employment-generating city among the four emerging metros.

The total investment is estimated to be over one hundred crores rupees. The move, which is part of the company’s overall plans to scale up its presence across the country, is expected to shore up the group’s overall business from the eastern sector.

Alok Tandon, COO, Inox Leisure, said, “Kolkata and eastern India as a whole is an integral part of the company’s strategy. Going forward, we will have at least 18 multiplexes with 67 screens from just five multiplexes in this part of the country.”

“The future appears to have more in store. Following the hub and spoke model, Inox is planning more multiplexes in multiple locations. These will include cities like Bangalore, Hyderabad, Nagpur, Goa, Mangalore and newer hubs across Navi Mumbai.” Tandon added.

Outlining the corporate strategy, Tandon said the company would be spreading out across three-four fresh locations every year for the next two-three years. By 2010, the company intends to have at least 68-70 multiplexes with some 260 screens. Each screen, on an average, will find an investment of Rs 2-2.5 crores being ploughed in. The investments cover aspects like projection and concessionaire equipment, interiors flooring and false ceiling.

The company is looking at all options to give shape to its expansion programme. “If we get land at attractive price and the financial are viable, we may purchase the property and develop it ourselves or go for lease. We are also open to more acquisitions in the near future if the opportunity comes,” he added.

Sometime ago, the company had acquired Calcutta Cine Pvt Ltd (CCPL), a joint venture between Bengal Ambuja Group & its associates and Consolidated Entertainment Pvt Ltd.

Meanwhile, Inox Leisure board will meet on June 09, to consider recommendation of dividend, for the financial year ended on March 31, 2008.

The report says if the airports are modernized according to schedule, the non-aeronautical revenues may rise from the current 35- 54% by 2015. It is estimated that rent from retail, office and hospitality will constitute nearly 45 % of the airports’ non-aeronautical revenue by 2015. The rest will come from other non-aeronautical sources like trading concessions, public admission fees and miscellaneous income from advertising, car parking, etc.

Mr. Anurag Mathur, joint managing director, Cushman & Wakefield, said,”Globally, airports derive a large portion of their income from non-aeronautical revenue sources; Heathrow, San Francisco, Vancouver and Brisbane earn as much as 50% from retail and other non-aeronautical resources. With greenfield projects in Hyderabad and Bangalore taking their maiden steps, India is soon to replicate this potential revenue-earning model.”

According to estimates, retail space accounts for 18% of the total real estate space projections for airport projects. Most of this supply is concentrated in tier-III towns and cities as it comprises tourist destinations. The highest supply is, however, expected to be in Hyderabad, which accounts for 1.8 million square feet of the total projected retail space.

The study estimates office space to be more than 50% of the total real estate space projected for airport projects. With nearly forty one million square feet office space planned, the three tier-I locations are expected to add 14 million square feet office space, whereas the five tier-II cities expect 13.5 million square feet by 2015. Tier-III locations, which include over thirty five cities, would account for around 32% of the total office space supply amounting to fourteen million square feet.

Announcing this progress, PBEL, executive director Anand Reddy said, “The Company has invested twenty crore rupees on a ten acre plot of land at Devanoor village along the ring road in Mysore to build a residential township. This is in tune with our strategy to build a land bank in secondary cities across south India. The company, in addition to Mysore, has short-listed Coimbatore in Tamilnadu and Vizag in Andhra Pradesh for sizeable investments.”

PBEL has invested five hundred crore rupees so far and is actively pursuing more investment opportunities in the real estate sector across south India. It intends to develop and build high quality high-rise apartment buildings with modern amenities in environment friendly surroundings. PBEL will be bringing internationally known high quality products and consultants from abroad who have worked on renowned projects world wide to ensure that international standards are met. The investment has seen the company acquire ten acres of residential land in Mysore. This is in addition to fifty eight acres in two land parcels in Hyderabad and forty two acres in Chennai for a mixed township project.

PBC, a subsidiary of the IDB group, is active in the realty space in three continents: North America, Europe and Asia. The IDB Group is Israel’s largest business conglomerate with global assets in excess of twenty seven billion dollar. PBC is a major participant in the development of the new plaza Las Vegas hotel. ERE is one of the leading real estate companies in Israel, owning over one hundred nine properties and fifty eight hotels in Europe and North America and is a subsidiary of Elco holdings, one of the main business groups in Israel.

NKID is a large infrastructure project near Kolkata being developed by a consortium including Unitech (40%) and Salim Group (40%) and Universal Success (20%) of Indonesia. The project is spread over 37,830 acres of which govt has handed over 13,457 acres (35%) for development, includes the recent, 12,500 acres handed for a Chemical SEZ.

Delhi and Mumbai hotel industries charged highest room rates in the country. Customer paid more than ten thousand for a night. Bangalore finally saw a marginal correction in room rates. Mumbai performed the best as far as hotel occupancy is concerned. While branded hotels in Mumbai registered an average occupancy of 80 percent, Delhi was at 78 percent and Kolkata at 77.4 percent.

The South Asia Real Estate Seminar, a collaborative effort between the HBS Executive Education Program and the HBS Indian Research Center, will offer a four-day workshop in Hyderabad, India that aims to connect experienced executives in real estate with HBS faculty familiar with current industry research.

Using the Business School’s renowned case study method, the course aims to equip participations with skills that enable them to better evaluate the opportunities and obstacles in South Asia’s booming real estate market.

“Real estate is one of the areas where we think we can help most because it is the largest asset case in the world,” said John D. Macomber, lecturer of business administration at HBS and the seminar’s co-leader.

According to its official description, the seminar is designed for “an elite group of senior executives” such as chief executive officers, presidents, managing directors, and firm partners.

Macomber said that the application process is aimed to ensure that the business leaders will be comfortable around each other and have similar levels of experience.

Mr. Rakesh Khurana, associate professor of business administration said “The executives bring a lot of practical, everyday experience,”. “We have systematic research on how other organizations and countries have tackled the problems they’re facing.”

HBS faculty members involved in the seminar expect that the collaboration will prove to be beneficial not only to Indian executives but to Business School students and faculty as well.

Khurana said the seminar will be an opportunity to research and develop teaching materials we can bring back to the classroom.

He added that the seminar is also consistent with the need to understand globalization and how it is affecting business and society.

The South Asia Real Estate seminar is the latest of the Business School’s many programs in India. HBS’s Indian Research Center has been conducting research in Mumbai since 2005, and in February, the HBS Executive Education program conducted a seminar on “Building a Global Enterprise in India.”

A number of factors are responsible for the same. While  the so far high interest rates are decreasing, cost of flats having gone up by fifty per cent , price rise in input costs, and harder rules /attitude of mid-level builders has led to the declining attitude of the  buyers. This has further resulted into a freeze on construction activity for some time.

Although these pessimistic aspects, the sector illustrates promise to grow as players with muscles get funds for superior projects  such as townships and gated communities. Rajiv Gandhi International Airport( going to be commissioned on March 16) and over forty SEZs coming up in and around the twin cities too, would act as a trigger for real-estate growth in the subsequent years.

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.

On the proposed development of the Jawahar Nagar region, situated to the north of Hyderabad, the HUDA officials explained to the Chief Minister that the township would provide four lakh direct and indirect jobs and would attract 40 percent of the population from other areas after completion. The presence of reputed institutions such as BITS Pilani, lakes and resorts would be an added advantage, they said. The proposed township would come up on 2,118 hectares.

Sant Singh Chatwal observes Bangalore, Kochi, Hyderabad and some more southern india as a great market for hotel industry. Chatwal chose Hyderabad to launch his property of 100 room four-star hotel- Hampshire plaza. The Hampshire group will invest Rs 500 crore in Hyderabad alone. It will launch another luxury hotel in Kochi soon with an initial outlay of Rs 200 crores.

Sant Singh Chatwal is a well known New York based high profile hotelier. Hampshire group owns record 3000 rooms in New York’s Manhattan along with properties in the US, UK, Canada and south-east Asia. Hopefully, this time Sant Singh Chatwal will enter the Indian hotel industry as it is well-known that he failed in trying the same in 1985.