Monthly Archives: June 2008

Punjab Government Urged The NRIs To Make Huge Investments

Advocate General Punjab Hardev Singh Mattewal stated that the Punjab Government was committed to safeguard the rights of the Non Resident Indians (NRIs).

This was disclosed by Mattewal while talking to media persons during his private visit to London. He said the Punjab Government was making all out efforts to resolve the issues pertaining to NRIs. He urged the NRIs to make huge investments in the states’ development programmes. He pointed out that during his visit to London he called upon the NRIs to come forward to invest in Punjab in a big way. He also met various deputations of NRIs there and assured them of state government’s fulsome support and cooperation.
Appreciating the historic decisions taken by the Badal Government for the welfare of NRIs during the NRIs Sammelan held in Punjab, Mr. Mattewal termed it as a ‘step in the right direction to win over the confidence of NRIs’. A high level committee was also constituted during this Sammelan which had so far resolved many vexed issues relating to the problems of the NRIs, said Mr. Mattewal.
Mattewal said that Punjab was making rapid strides under the stewardship of Chief Minister Mr. Parkash Singh Badal. He hoped Punjab would soon emerge as the most preferred investment destination and a Commercial Center as the diverse sectors of Industry, Real Estate, Education and Health Services in Punjab had recently witnessed huge expansion in these fields..
Replying to a query raised by the media persons, Mr. Mattewal said that he was here on the private visit and not on official one. He said he had come here to participate in a religious function organized by the London based Gurdwara where he was honored by the local Gurdwara Prabandhak Committee.
To another question Mr. Mattewal said that Mr. Badal had already setup special Police Stations for the NRIs in the state to redress their complaints and grievances on the priority. He said he was given war welcome by the NRIs settled in London and would ever cherish these memorable moments throughout his life. “I have personally realized the hardships being faced by the NRIs here and would soon take up this matter with the Punjab Government for their immediate and solution on the top priority, said Mr. Mattewal.

L&T Ready For Realty Drive

Engineering and construction, L&T, currently has real estate projects worth $2 billion in hand, said sources familiar with its plans. Most of these projects are in the form of special purpose vehicles, joint ventures and contracts. The SPVs also include a Rs 2,500 crore project in Chandigarh, sources told.

Separately, Larsen & Toubro announced that it has bagged a Rs 1,557 crore order from Andhra Pradesh Power Development Company Limited (APPDCL).

In the morning trade on 30th June(Monday), L&T was trading up by 0.5 % to Rs 2,277 in the early noon deals.

Disha Direct Celebrates 5 Successful Year In Real Estate

Disha Direct, pioneers of the second Home concept productively full five years in real estate industry.
Disha Direct nowadays offer services around the entire field of real estate be it residential properties in cities and towns, second homes away from the city, plots of developed land, commercial properties, expansive acres of land or some rare charismatic homes. With all mod cons with a team of over one hundred seventy professionals, seven brands, ten offices, eight finished projects, twenty eight current projects and three thousand five hundred satisfied customers; Disha Direct is an organization spreading its arms in the realty sector.
On the occasion of its anniversary celebrations, Disha Direct properties remain devoted to its five strong factors – Zero Risk Property, Realistic & Fixed Price, Disha Care – a property management group, Go Green – an attempt to provide projects set in the greenest of places and three thousand five hundred satisfied customers.
In this month-long celebratory event, Disha Direct plans to add to the customer’s convenience by making itself accessible at the distance of a phone call. Customers interested in latest projects can just make a call and be rest assured that a Relationship Manager will visit them with a complete presentation of the project of their interest. Property buyers in this celebratory period can enjoy the exclusive privilege of availing flat five percent concession on any property they choose from a wide collection of properties sponsored by Disha Direct. Apart from these, during the month long celebration property buyers can expect a bag full of surprises and other eye-catching offers.
All in all the anniversary celebrations at Disha Direct come as ‘Happy Hours’ for the property seekers.
Disha Direct is a foremost real estate marketing organization. Having made its foray into real estate marketing five years before specializing in second homes in scenic localities away from the city, the company has established itself as the preferred name in the real estate industry. Currently the company has seven different brands covering different real estate properties.

National Housing Bank To Raise 110 Billion Rupees

India’s National Housing Bank plans to raise one hundred ten billion rupees during the year to March 2009 to meet its loan demand. According to the chairman and managing director S. Sridhar declared that out of this one hundred and ten billion, it will raise thirty billion rupees through zero coupon bonds and another ten billion rupees via retail deposits.

The housing finance regulator also plans to set up a mortgage guarantee firm in four months, in which it will be the single largest stake holder.

Unitech In Search Of Telecom Partner

Real estate tycoon Unitech Limited declared that it was planning to sell a 26% stake in its telecom arm.
Mr. Sanjay Chandra, managing director of Unitech said, “We are planning to sell a 26% stake in the telecom operations”. However, he did not detail on the potential buyer.
Further he said that Unitech is also planning to raise one billion dollar from private equity funds over the next year, including three hundred fifty million dollars for hotels and additional funds for its Mumbai projects. Read More »

Industry Gambles On Long-term Prospects Of Real Estate

Increasing interest rates and a declining demand may dent the realty market in India. However, the long-term forecasts for the sector continue to be good, senses the industry.
At a seminar on the real estate market in India here on 27th June, most of the realty players confessed that there was a liquidity crunch due to the increase in interest rates. However, this is not going to discourage long-term investors from investing in India, they added.
Termed as “Elephant Investors,” these investors such as pension funds and endowment funds are just waiting in the groups to enter the Indian market, said A. V. Kapoor, managing director of Saffron Asset Advisors Pvt Ltd.
“There are around 21 India-dedicated real estate funds that are raising money in the international market. In the next 9 months, I believe nearly $7 billion will be entering the country through different India-dedicated funds,” Kapoor said.
“While long-term players are look at India, small-term players based in the US & Europe, for example the hedge funds and private equity players, are further interested in their local markets,” said Alex Hayim, director of REIT Property Management India.

The Loan Against Property Rates & Their Effects

The loan against property rates are fixed by the loan amount, credit ranking of the borrower and the equity of the pledged security. All these three reasons affect the interest rate directly.
The modification of 1991 marked the dawn of Indian financial system. Capped with professionalism, hi-tech IT applications and diversification, Indian financial and loan market has now at its highest altitude. The entry of overseas banks has supported the system to get better its services. Now, competition is at all time high in the Indian housing finance business. With the improved contest, the customer has a number of alternatives to select his housing finance company (HFC) to apply for a loan according to the need.
The loan against property is on the rise in the attractiveness chart as more and more Indians are nowadays taking these loans as the most cost effective solution for their needs. The banks have two prime concerns while providing a loan against home:-
1. Repayment capacity of the borrower credit risk involved in the loan deal.
2. Title of property(If it free from any legal hassles or not).
The borrower to whom the bank is lending should have the capacity to pay the loan amount back in the assigned time period. Repayment capacity is a major concern of the bank while lending funds to anyone. In case of salaried loan applicants, the borrower needs to have a cheque salary which can be verified by the bank. A track record of salary entries in a bank statement reflects consistency and genuineness of the income source of the borrower.

Impact Of Interest Rate On Real Estate And Housing Loan

Indian real estate firms expect a hit on margins for the next few quarters as the central bank’s move to raise interest rates this week will push up costs and keep potential buyers away from the market.
Developers, already facing a demand slowdown, have refused to lower the price line as they seek to make up profits despite high land costs and curbs on funding. However, higher interest rates in the economy could push them to choose survival over pride.
The Reserve Bank of India late on 24th June raised its key lending rate and cash reserve requirement by 50 basis points each to curb price pressures. Inflation jumped to its highest in more than 13 years in mid-June to 11.42 percent.
As a result, lending rates of banks are seen close to 13 percent, levels last seen nearly a decade ago, while interest rates on home loans could go up by 50-100 basis points, putting off a large segment of middle-class buyers.
Real estate prices had already started slackening, this move will lead to more slowdown,” said Ramesh Jogani, managing director at India REIT Fund Advisors, which has invested in several projects. “We see a 15-20 % fall in prices.”
Analysts say the slackening of demand is raising concern over future realizations, which is reflected in the performance of real estate stocks, with most close to their lowest level in a year and 40-60 % off their peaks.
“In the near term, we think affordability will be a bigger driver and a 20% correction in property prices will be needed by the year end to revive volumes,” UBS Investment said in a research note.

Proposal For Farmers In Mysore

Mysore city authorities have a proposal for farmers who own land in and around the city: Part with your plot for nothing and get 18% of it back after it is developed and potentially more valuable.
The Mysore Urban Development Authority (Muda) thinks it’s offering a good deal to farmers as it competes with private developers for land to build public housing in a city where property prices have doubled in 18 months. Whether the offer will find takers is in some doubt.
A. Rudrappa, joint director (planning) at Muda said, “The objective is to give back farmers 18% of their own land, after it is developed, so that they get to retain the asset”. Further he said, “It will also prevent them from being cheated by builders who often don’t pay them the entire amount.”
Muda has 1.5 lakh applications pending for public housing in Mysore, the largest city in Karnataka after Bangalore, the state capital and India’s Information Technology hub. The agency’s inability to pay market price for farmland has driven landowners to private developers and sent property valuations soaring.

The 18% land-back offer is based on the average cost estimation of developed and undeveloped land that showed farmers would benefit even if they get back less than one-fifth of their original holding, according to officials at the urban development department in Bangalore.

Developed land would include access to amenities such as electricity, water and sewerage, enhancing its potential for commercial development.

Sudarshan Rao, a Mysore property consultant who has brokered land deals said, “For many farmers, land is a liability and they want to sell it off quickly to repay debt or start some new business. They wouldn’t wait for a period of two-three years till the land gets developed and he gets partial ownership of it”.

According to farmers, land demand is huge. Farmers are not sure what kind of development will happen and what would they earn after selling their land.
Developers have bought up large parcels of agricultural land in areas such as Nanjungud Road, T Narsipur Road, Hunsur Road and HD Kote Road in and around the city, in the belief that Mysore was the next real estate market.

In the last one year, top developers such as Unitech Ltd, Emaar MGF Land Ltd, Sobha Developers Ltd, Nitesh Estates and Total Environment System have acquired land in and around Mysore. But while developers rushed in and property prices soared, little development has taken place. Most projects are yet to break ground in the city that is still waiting for its first shopping mall.

Developers say that they are waiting for an opportune time to launch their projects. said Nitesh Mani, chief executive officer of Nitesh Estates, which plans to develop an IT park in Mysore, “Though many developers have bought land, no one is jumping into development right away”. Further he said, “It is important to choose the right kind of project in Mysore.”

Praveen Kumar, associate director at property consultancy Jones Land LaSalle Meghraj said, “Selling the land to private developers at market value would be a better option for landowners because they don’t know what is the kind of development and infrastructure that would come up on that land once they get it back”.

Ishaan Real Estate Loss In FY 08

Ishaan Real Estate Plc. swung to full-year pretax loss because of the cost of investment advisory fees and provision for promote fees to be paid to the investment adviser.

However, it said it remains confident of continuing with the improvement made on assets development and also the pre-letting of the projects already initiated within its portfolio.

For the year to end-March, 2008, the India-focused real estate investment company informed a pretax loss of 1.83 million pounds against a profit of 1.73 million previous year.

The company’s net asset value (NAV) declined to 95.5 pence per share from 96.3 pence per share, however its adjusted NAV rose to 151.1 pence per share from 107.9 pence per share previous year.

Hilton Hotels Corp Plans To Add 300 Hotels In Asia

Hilton Hotels Corp plans to put in three hundred hotels to the existing forty seven in Asia over the subsequent decade, as the firm looks for to catch up with its competitors and cash in on the boom in business and leisure travel in India and China, a media report on 25th June said.
According to The Wall Street Journal Hilton, with nine brands ranging from the opulent Waldorf -Astoria Collection to the thriftier Hampton Inn, expect to administer the majority of these new hotels and leave the investment and ownership of them to others.
“The Asia region is one of our absolute top main concerns for our business and development. The plan is to put about three hundred new hotels in the region. We’d like to do better than that, but that’s our goal,” the report said quoting Hilton’s Chief Executive and President Chris Nassetta.
He also anticipated the value of these planned hotels to be in “the tens of billions of dollars.”
Hilton Hotels is a foremost worldwide hospitality company with more than three thousand hotels in seventy four countries and territories.
The newspaper quoting Nassetta said Hilton is concentrating initially on India, where it has a joint venture with local property firm DLF Ltd. that aims to open seventy five hotels within the subsequent five years.
“Starting in India’s big cities, where population density limits the availability of appropriate land for international -standard hotels, Hilton plans to set up its Hilton Hotels, Homewood Suites by Hilton and Hilton Garden Inn brands,” it noted.

SRS Group To Invest Thousand Crores

The SRS Group declared that it will be investing over thousand crore rupees in the next three years and also come out with its public issue by the end of the current financial year. It also disclosed its three upcoming projects, which are, eight hundred crore rupees five-star hotel in Haryana, an IT park and a multi-storey residential complex.

Addressing a press conference here, SRS Group Chairman Anil Jindal said that the Faridabad-based firm would invest five hundred crore rupees in the expansion of its retail business, Rs. 350 crore in setting up multiplex cinemas and Rs. 150 crore in the expansion of the food and beverage business. Read More »

Services And Real Estate Are Biggest FDI Attractions

India received a massive $20.8 billion of foreign investment in energy, services, construction and real estate sectors during the last four financial years as high economic growth lured multinational companies to set up or expand operations. The services sector witnessed the biggest spurt in foreign direct investment (FDI) flows, from $444 million in 2004-05 to $6.61 billion in 2007-08. Real estate sector, which was opened up for foreign investors in 2004-05, saw FDI leapfrogging from nil to $2.17 billion in 2007-08.FDI inflows in the power sector were $967 million in 2007-08. The sector lagged in attracting foreign investments due to lack of clarity in government policy at both central and the state level. Now, with the firming up of the policy guiding setting up of ultra mega power plants, the sector is expected to attract more FDI. Read More »

Land sale Talk Buoys Maharaja Shree Umaid Mills

Maharaja Shree Umaid Mills is close to selling off its 22000 square yards of property in downtown Jaipur, which housed its registered office. According to market sources, property is fetching the company around Rs 200 crore. Mr L. N. Bangur, Chairman and Managing Director of the company, told that until the company received the consideration nothing could be divulged officially.

Market grapevine suggests that the payment is likely to be received shortly. The company has already got necessary approvals for shifting of headquarters to Kolkata. Mr Bangur said, “The next board meeting is likely to formally announce the decision”. Read More »

Actis Will Invest $300 Million In Indian Real Estate

Bangalore-based real estate developer Vaishnavi Infrastructures has received an investment of $25 million from private equity investor Actis for its Rs 350 crore Bangalore project, an investment bank official said.

The proceeds of the investment will fund the construction and development of approximately 925,000 square feet of high-end residential and retail space at Yeshwantpur, a Bangalore suburb.

This is the first investment by Actis India Real Estate Fund, a $300 million fund sponsored by Actis.

“Actis has taken a significant minority stake in Vaishnavi’s Bangalore project as it is situated at the perfect location. With current realty market conditions private equity players prefer to invest in projects as they can get the right valuations,” T R Srinivas, director at o3 Capital told from his Bangalore office.

Srinivas added that, for further funding, Vaishnavi would take the “debt route” rather than sell more stake in the project.

With the current turmoil in the real estate market, it is becoming increasingly difficult for realtors to raise debt from banks. Industry experts believe many developers are paying interest of around 30% for new loans.

To address the problem, developers are hunting private equity investors to sell stake in their projects.

Recently, the New Delhi-based Unitech said it would sell a 50% stake in the first phase of its Mumbai project (near Bandra-Kurla complex) to Lehman Brothers for $175 million.

However, another Delhi-based developer Parsvnath Developers said it has no liquidity issues for its current project.

“I have Rs 300 crore in fixed deposits and over Rs 500 crore is unutilised and sanctioned debts available with us. I do not see any liquidity issues and am in a comfortable position,”
Parsvnath’s chairman Pradeep Jain said. He added that the average cost of the funding is around 12% for Parsvnath.

HDFC Will Organize India Homes Fair

Buoyed by an exciting real estate market, investors in Britain increasingly prefer India for investment looking for higher profits on the back of a slowdown in Britain’s realty market.
Navyroof.Com, a company that emphasizes investment prospects in the most upcoming areas of India to the UK investors, Managing Director A. Fassnidge said: “All the economic indicators project a bright, sustainable prospect for India”. Read More »

Singapore- The Next Investment Destination For Indians

Mr Akshay Jain, CEO, Land Solutions (India) told on 21st June that by the end of FY 08-09, Indian citizens are expected to invest Singapore dollar (SGD) One hundred fifty million in real estate in Singapore. Land Solutions (India) is the Indian counterpart of the Singapore based real estate developer Far East Organization.

According to Mr Jain Fifty out of one thousand seven hundred premium segment apartments, developed by Far East Organization, is estimated to be sold to Indian buyers by the end of this fiscal (08-09). Each one apartment will costs approximately SGD One million (Rs 31 million).
Mr. Jain further added, “Easy availability of housing loan, even up to 70% of property cost at a rate of 2.5% per annum is an additional advantage to the buyers who want to acquire property in Singapore.”

In the meantime, the CEO pointed out his company’s wish to set up a Special Economic Zone (SEZ) on two thousand seven hundred thirty four acres of land within a couple of years in Hyderabad. The SEZ will be set up at an initial priced of ten thousand crore rupees.

The project will be a joint venture between Land Solution (India) and a Dubai based property developing company.

Realty Sector Down 4% On Housing Rate Concerns

The realty index slipped 4.45% on inflationary concerns as realtors feared a rise in housing loan rates last week.As the Bombay Stock Exchange benchmark plummeted to touch nearly nine-month low, the realty sector index suffered a loss of 250.79 points at 5383.81, after touching a low of 5349.80 points.

The downward march of the index was led by realty major DLF and housing financing firm Housing Development Finance Corp. DLF Ltd stocks fell by Rs 21.82 to Rs 456.35 and HDFC by Rs 53.35 at Rs 528.15. Read More »

Real Estate Rises From Crisis

The story of real estate at the moment is under scrutiny in major markets like the US and the UK but Asian real estate seems to be little affected. There is some sentimental pessimism however, again emanating from major markets about the global outlook or economy and real estate which is dampening investment in Asia. Read More »

JMD Hopeful To Raise Rs 200-300 crore Through Private Equity

Real estate company JMD said on 19th June it has roped in property consultancy firm Cushman & Wakefield for an enterprise valuation, in line with its plans for a Rs 200-300 crore public issue in coming 4-6 months. JMD also hopes to raise a similar amount through private equity, for which it has already initiated discussions with 5-7 players, Mr Sunil Bedi, Managing Director of JMD, said.
“We have engaged Cushman & Wakefield to do our valuation, based on which we will decide on the quantum of equity to be offloaded. We are also talking to some private equity players and funds from US and Korea for raising up to Rs 300 crore within four months,” Mr Bedi pointed out.
He said Cushman & Wakefield’s report on the company’s valuation is expected in a fortnight. JMD hopes that getting listed would re-align the company’s debt/equity ratio and also strengthen its branding and visibility in the market.
JMD (formerly JMD Promoters) had earlier mulled a public issue about two years back but had put the plans on hold as the company wanted to strengthen its product portfolio. The volatility in the capital markets notwithstanding, the company now feels that investors are keen to invest in companies that have a strong brand, experience and product offering. “There is still a good market for companies that are delivering projects on time, and so we are hopeful of going public in the next six months’ time,” he claimed.
JMD, which initially dealt with marketing of projects on a commission basis, made its foray as a developer in 1997 with its first project ‘JMD Regent Square’ in Gurgaon with a built up area of 1.5 lakh sq ft, and is now executing projects covering commercial, residential, IT park, SEZ and hotels in Goa, Ludhiana, Panchkula, besides Gurgaon. The total area currently under construction is about 168 acres. At present, the bulk of its projects is in commercial space, close to 20 % in residential and the balance spread between IT parks and hospitality.
The company recently announced its plans for a luxury hotel in Gurgaon (Haryana) spread over 9,086 sq m involving a capital outlay of Rs 250 crore through its subsidiary company. It will construct 200 rooms and expects the property to be operational by December 2009.
“We plan to construct three-four hotel properties by 2011. These would be four star and five star hotels. In Gurgaon we are also planning a four star with 125 rooms, while another one will come up at the Chandigarh-Panchkula Road. We are also planning one hotel in Ludhiana,” Mr Bedi added

Many Projects Hanging Fire

Projects worth millions are running on slow pace. As many as three major projects, including that of Chandigarh initial master plan are still in the drawing board. An 11-storied building, as envisaged by Le Corbusier, a multi-crore multimedia city and the only theme park from Turner International in the country are some of the prime projects of the Chandigarh Administration. All of them are moving ahead on a very slow pace.
People dose to the developments say that the government processes are taking their time but the projects are moving ahead. Government officials say that projects of such a grand scale take time and it is not just up to the government to expedite the process. Read More »

In Indian Real Estate Prudential Forms JV Will Invest

Prudential Real Estate Investors on 17th june pronounced that it has launched a joint venture with Beekman Helix India Partners LLC (BHI) to invest in real estate in India. Through its fresh private equity real estate podium, the venture strategy to embark on a plan to make real estate funds for institutional clients.
Prudential Real Estate Investors is the real estate investment management and advisory business of Prudential Financial Inc.
The JV, in service as Pramerica BHI India and originated in Gurgaon close to New Delhi, will invest in middle-income residential development projects and office parks for institutional investors around the world. The plan may also contain other sectors.
Functioning with BHI through a relationship formed in 2006, Prudential Real Estate Investors was amongst the first US-originated real estate investment companies to invest in real estate openings in India.
Until now, BHI and Prudential Real Estate Investors have made eleven equity investments, adding about two hundred twenty million dollar in seven markets in India, including Bangalore, Chennai, Mumbai, the National Capital Region (NCR) and Punjab

Foreign Investors May Avoid Real Estate

Foreign investors may shun the Indian real estate market as lower asset prices in the US and the potential to earn better returns skew the risk-reward equation against emerging markets such as India.

Mr. S Sriniwasan, CEO, Kotak Real Estate Fund, said, “Real estate developers face a double whammy of slowdown in the overall growth and hardening of interest rates, while the perceived risk-reward equation for India is going down”. Read More »

CTVT For The Building, Construction And Real Estate Industry

Pune:- With growing needs and concerns of the building, construction, and the real estate industry for skilled and trained manpower at various levels and positions Akruti Citygold Institute (ACI) and Kumar Properties Education Foundation (KPEF), Pune have jointly launched an initiative called Central of Technical & Vocational Training (CTVT) .

To bridge this gap and to create a fraternity of skilled and trained manpower in construction.

The mandate of CTVT will be skill development and professional training of manpower for the building and construction sectors. CTVT will also launching a short term executive development program (EDP) for working executives

GMR’s Delhi Hospitality Project Hits AAI Barrier

The GMR Group-backed Delhi International Airport’s (DIAL) plans to develop a 45-acre hospitality district in the capital has hit an air-pocket. Airports Authority of India (AAI), which owns 26% in DIAL, is unwilling to raise the required fund of one thousand crore rupees for the proposed real estate development.

It was decided that all the stakeholders in DIAL would bring in funds in proportion to their equity holding in the company to part finance the project. This arrangement was opted after AAI raised its objection to GMR’s plan to collect security deposits from realty developers. DIAL is a joint venture between GMR (50.1%), AAI (26%), Fraport and Malaysian Airports (10% each) and IDFC (3.9%).
Read More »