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I think this budget could be presented in much better way. Mr. FM has increased allocations for various social sector projects. It has strong scope for market and the market will soon realise its benefits and will take it as supportive budget.

Everybody is saying that there is no gain in budget, but at the same time it is also acceptable that there is no lose in this budget. It is not bad as per investment point of view.

Taking a closer look at what’s going on in Delhi and the National Capital Region (NCR), it is observed that transactional volumes for residential projects have witnessed a drop of 20-25% over the past six months. Among these are the upscale projects like Emaar MGF’s Palm Street project in Gurgaon, the Uppal Group’s Plumeria housing project in Greater Noida, Unitech’s project on Taj Express highway and BPTP’s Parklands project in Faridabad.

Developers themselves are not too kicked about the state of affairs. While maintaining that inflation and interest rates have been the key factors, they are not too optimistic about the way forward. Vipin Aggarwal, executive director, Omaxe said, “There is a slowdown and this will continue for at least a year and half. Besides, the real estate sector is itself facing a cash crunch. There are many companies that are focusing on completing the project at hand instead of increasing the size of their land-banks”.

By contrast, Mumbai story has been quite different and this has been led by the fact that demand far exceeds supply. According to Dharmesh Jain, chairman, Nirmal Group of Companies, that is a point that cannot be ignored. He pointed, “Supply is meager and that is a huge problem”. This demand-supply disequilibrium has helped the process of making Mumbai among the most expensive property locations globally.

Property prices in up-market areas like Malabar Hill in South Mumbai have moved up from around Rs 12,000 per square foot in 2003 to twice that figure this year. More importantly, there was a deal struck at Rs 60,000 per square feet earlier this year.

Across the country, there have been up-market projects coming up at a frenetic pace. Not surprisingly, a large player like DLF is playing down the slowdown story. “Our properties are developed according to the current market needs. In order to stimulate demand, we are also coming out with affordable housing and, therefore, we have not witnessed much of an impact on account of a slowdown,” says a DLF spokesperson.

India’s IT capital, Bangalore has also been witnessing a drop in sales volumes. According to J C Sharma, managing director, Sobha Developers, home sales have dropped this year compared to 2007. Further he said, “Like any other industry, real estate is going through a cycle”.

Indiabulls Properties Investment Trust could raise up to $388.3 million (US$286million) selling units in a real estate investment trust (REIT) in Singapore, according to reports. The trust, part of Indiabulls Real Estate Ltd., plans to sell 353 million units of Indiabulls Properties Investment Trust at between S$1 and S$1.10.

This will be the first such sale by an Indian real estate company.

Billionaire Lakshmi Mittal, the world’s fourth-richest man, has reportedly agreed to buy 91mn units. Mittal was among the initial investors in Indiabulls Financial Services Ltd., which last year spun off Indiabulls Real Estate as a separate company.

The projected yield for the trust is 4.66-5.12% based on forecast income for the year ending March 2009. Presentations to institutional investors start today, with pricing scheduled for next week.

Deutsche Bank and Merrill Lynch are handling the deal, which will see Indiabulls inject into the trust two projects with a total of 3.4 million square feet of space, according to the prospectus filed with the Monetary Authority of Singapore earlier this month.

The Mumbai properties due to be ready by August, are designed for IT and financial firms and retail outlets, and has residential components. The two assets are estimated by Knight Frank to be worth US$3.2 billion.

The Indiabulls REIT would be the first major test of investors’ appetite for new listing since the market crash in November. The last two REITs to list in Singapore, Lippo-Mapletree Indonesia Retail Trust and Saizen REIT, tumbled on their debuts in November and are still trading well below their IPO price.

Credit ratings agency Moody’s only last week issued a negative outlook for Singapore’s REITs over the next 12-18 months, citing weak market sentiment and tighter liquidity that have impaired their access to capital markets.

The poor market conditions sparked by the US subprime crisis and the ensuing global credit crunch had forced Indiabulls Real Estate, and fellow Indian developers Unitech and DLF, to postpone their planned Singapore REIT IPOs in March.

Meanwhile, DLF Assets owes money to DLF, a major chunk of which it planned to pay off via its proposed listing as a real estate investment trust in Singapore. But due to poor market sentiments and a global market slowdown, it had to put off its listing.
It was looking to raise $1 billion through the public issue. DLF Assets has however paid up the bulk of money it owes DLF for the last year but still owns nineteen hundred crore rupees. The fresh infusion of funds from Symphony Capital would enable DLF Assets to partly pay up the money it owes DLF.
Further, seeing DAPL’s inability to raise funds through an IPO, the parent company DLF has also reversed the sale of fifteen hundred crore rupees worth of office assets to the group company DLF Assets, thereby reporting a reduction of eight hundred crore rupees in the PBT for the quarter ended March ‘07. Had the sale not been reversed Q4 PBT could have been Rs thirty five hundred crore rupees versus the reported Rs 2,704 crore. The reversal of sale is on account of properties not qualifying as IT/ITes SEZs.. DAL will now hold only IT/ITeS properties and this action will benefit DAL.

Parsvnath Developers has bought 1.18 acre land, jointly owned by Mahajan Industries and Videocon group in Connaught Place for Rs 200 crore. Compared to hotel major Leela group’s acquisition of 3 acres in Chanakyapuri last year for Rs 611 crore, Parsvnath land deal has come at a discount of almost 17 percent at Rs 169 crore per acre.

Parsvnath plans to develop retail and office space, while Leela is building a hotel. Real estate experts say Connaught Place and Chanakyapuri are comparable locations in the capital and should fetch similar rates if transactions happen at the same time.

In addition, the FAR (the ratio of developable space to total land) for both retail/office and hotels are the same at 1.5, according to Delhi’s new master plan.

Mr. Sanjay Verma, Cushman & Wakefield Asia executive managing director, said, “We have come to the end of one property cycle. Speculators have exited the market and we are seeing a softening in the housing market. This will now spread to the commercial market and then finally impact land prices. So with borrowing cost going up, and prices softening, the euphoria towards land acquisition has certainly died down”.
He cautions that there may still be several takers for prime properties such as those in Connaught Place in Delhi and Nariman Point in Mumbai. Mr. Verma said,“The land deals in prime city locations are very few and far between. So the prices, although, reflect the market sentiments, do not give you a trend”.

Parsvnath is planning to develop a luxury mall and office space in Connaught Place. The company plans to invest around Rs 100 crore in the construction of the mall, which is likely to be ready in the next 30 months.

Emaar MGF (40% of which is owned by Dubai-based leading property developer Emaar and 56% by Delhi-based MGF) was forced to withdraw its Rs 7,000-crore share sale, the third-biggest in the history of the country, due to poor market sentiments. Since then, markets have lost steam on global cues, leading to dramatic erosion in the market cap of real estate firms. Real estate biggies such as DLF and Unitech have lost 45% and 50% of their market caps while smaller players such as Parsvnath and Omaxe witnessed a close to two-third erosion of their market caps from their January peak.

The poor market sentiments have also forced DLF, Unitech and Indiabulls to postpone Singapore listing of their real estate investment trust. Though money flow has not stopped in the real estate sector, developers, including the unlisted ones, are hesitant to go for equity dilution at parent company level fearing lower valuation. This has prompted most companies to look at private equity fund at project or SPV level.

Emaar MGF, too, is raising funds at SPV level purely because the current market situation may not have given them the expected valuation. Three SPVs, where the PE money is likely to come, are expected to take up development projects across verticals: housing, retail and office. The exact projects to be undertaken by these SPVs couldn’t be ascertained, but they would be part of the projects already being undertaken by the company.

Some of the mega projects the company has undertaken include a 3,000-acre integrated township in Mohali, a 531-acre integrated township in Hyderabad and a 14-acre residential project in Chennai. The company is also executing the prestigious Commonwealth Games village project, where it is developing a 27.7-acre residential complex with an estimated saleable area of 1.8 million square feet.

The company also plans to develop more 200 hotels over the next 7-9 years. It has two equal joint ventures with Accor for 100 budget hotels and Premier Inn for 80 hotels. The company has also entered into separate management tie-ups with Hyatt, Intercontinental and JW Marriott to run a total of 26 hotels.

Currently, DAL is owned by DLF promoters and the listed firm has no equity stake in this firm. However, as per the plan, DLF will also invest $750 million or Rs 3,000 crore in the REIT. DAL had earlier planned to list the REIT, but now is going for a private placement.

DLF spokesperson declined to comment saying that the Singapore market regulation didn’t allow company to make any comment on the issue as its application for listing of REIT was still being scrutinized by the authorities.

DLF Assets originally planned to raise $2 billion through its REIT called DLF Office Trust. Given the downturn in the global financial markets, DAL has now put on hold its plan to list the REIT. In the meanwhile, it is going ahead with its fund-raising plan through the private-placement route. According to sources, DLF Office Trust will now be a private trust, raising money only through institutional investors. A private trust, unlike a public trust, is not listed and doesn’t have retail participation. DLF had originally planned to have 10% retail investors in its REIT.

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.”

Apart from the rise in price in overseas markets, covering of short positions in futures trading ahead of the settlement on month-end acted as a boosting factor for gold prices.

Market professional said that gold and silver spurted all over the world following fears of fall in production and anticipated weakening of dollar in case the US Federal announces another rate cut tomorrow in its regular meeting. They said prices also rise in domestic markets as traders who enlarged their positions in futures trading were forced to cover up ahead of the current settlement this month-end.