Monthly Archives: July 2010

Lutron To Enter Residential Space

Living Room, Reverse
As the Real Estate Industry of the country gains pace after the slowdown, many different firms plan to foray into the sector. One among them is the Global Lighting Controls Major LUTRON.

Lutron which is present in the country for more than 10 years is likely to enter into the residential apartment space. Till now they have been focusing only on the hospitality sector and high end residential projects.

Lutron’s Country Manager-India, Mr. Manjul Trehan said, “This is a very nascent market, and we have not touched residential apartments yet. But looking ahead, this would be the volume business. We are in talks with a few real estate companies.” Further he added that the company will mainly concentrate on projects where the expenditure on lighting will be more than one lakh.

The company is looking at 2-3 players in the eastern part of the country but the region is likely to contribute very minimally to the firm’s earnings. Mr. Trehan hoped to double the figures in the next few years.

Even though the company was not badly affected by the slowdown in the market the present and the coming year look challenging for the company.

Embassy Properties Plan Realty Projects

Rainy View
Photo by avlxyz
Embassy Property Development, a Real Estate Firm has planned a public issue of Rs. 2400 cr to Finance Realty Projects. It has already filed Draft Red Herring Prospectus (DRHP) with the market regulator SEBI.

The firm also plans on considering pre-IPO placements of Rs. 1175 cr worth of equity shares.

Embassy Properties have joined ventures with a Malaysian company Azikaf SDN BHD, a member of Emkay Group to develop a business park in Cyberjaya, MKN Embassy Techzone. This will be first real estate development outside the country.

Presently the company is developing 49.65 million sq. ft. area. It includes 63 international and domestic projects.

The proceeds from the issue will be used to finance the construction and development of ongoing projects, investments, associates, paying loans etc.

The book running lead managers to the issue are Nomura Financial Advisory and Securities (India) Pvt Ltd, UBS Securities India Private Limited, Edelweiss Capital Ltd.

Shapoorji Pallonji Group Focus Infrastructure

221 34th St, Manhattan Beach Living Room
Photo by millerm217
The multi million Shapoorji Pallonji Group, India’s one of the oldest and biggest industrial house, is putting major focus on “owned” infrastructure as far as the roads, ports and power are concerned. This has been done as the company approaches 150th year of operations.

Mr. Shapoor Mistry, Group MD said during a function in Mumbai, “We have done a lot of projects under our company Afcons as contractors; now we will give a greater push for ownership-based infrastructure projects. We have already done some work in these areas, but owing projects would be our key focus.”

The group’s interests lie majorly in Real Estate, Construction, Textiles, Apparels, Shipping and Water Purification Appliances.

Shapoor’s father, Mr. Pallonji Mistry, Chairman, Shapoorji Pallonji Group is reportedly one of the largest shareholders in Tata Sons with 18.5% stake in the salt-software corp. house.

Embassy Firm Plan To Raise Funds

Money... Major reason of voilance
Photo by raman..exploring myself..
A Real Estate firm Embassy Developers is expected to generate over 513 million US Dollars as said by their Prospectus which was filed today. This will be done through an initial public offering of shares.

The draft is available on the Edelweiss website. The lead running managers for the issue are Nomura, UBS, Local Investment Bank and Citi.

The prospectus included that Embassy property is looking at pre-IPO placement of around 57 million shares for up to 11.75 billion rupees with certain investors. The retail investors may be offered a 5% discount on the issue price.

Though the time line is not yet been set.

The Indian companies have raised a lot of money through share sales by mid-June of FY10 from 56 issues which is higher than last year, as shown by the data collected by Thomson Reuters.

India has also asked bids to appoint 4 banks for managing a follow-on public offering in state-run Power grid Corp of India.

Second Annual Convention Of NAR

Venetian Grand Hallway
Photo by respres
The Real Estate Agents Association of Chennai is all set to host the annual convention of the Indian National Association of Realtors. This will be the second year of the meet.

It will be a two day event that will take place on July 16 and 17 at the seaside Radisson Resort temple bay at Mamallapuram. The town is situated 45 km from Chennai.

The participation of around 400 delegates from around the globe is anticipated.

They will discuss on matters related to the developments in real estate as well as the opportunities and the challenges. Some other topics of discussion will be legal aspects of transactions and case studies, retail, industrial and warehouse marketing.

The event will include a seminar which will be addressed by an expert panel on a wide range of topics and also a workshop by Mr. Marcus Wally from UK on Marketing Real Estate for Profit.

It will be a good opportunity for people of the trade to exchange cards and information.

Realty Prices To Further Shoot Up

100409-SthSth029a World Bank
It is very likely that the Real Estate prices in the country will shoot up further with the Finance Ministry’s decision of not withdrawing 2.5% service tax. This move was proposed by the Urban Development Ministry in the budget of FY10-11.

The budget had earlier proposed this tax on all under-construction projects. And it is common knowledge that eventually the customers will have to bear the burden and not the developers.

The declination came as no less than a shock to the Urban Development Ministry. Its Minister Mr. S Jaipal Reddy argued with the Finance Minister Mr. Pranab Mukherjee in the favor of the move in April this year but it could yield no results evidently.

The ultimate sufferers will be the Indian middle class who already has to bear the burden of inflation in almost all other spheres but also dreams of owing a home of their own!

Mondon’s Indian Partner Goes Bankrupt

Proceed with Caution
Photo by bartmaguire
In a recent development the local partner of Mondon Investment Ltd. went bankrupt. Following the event Indian banks initiated a foreclosure proceeding against Fishman Holding’s Indian development arm project.

They were to construct a mall in Ludhiana, Punjab.

The project company ended up in violation of their financial covenants to banks after Mondon’s partner violated their covenants financially.

The loan was not repaid by the end of May through the joint venture as a result of which bank had to open up legal procedures.

Mondon plans to take legal action against its partner on the account of breach of contract for damage to the firm because of the joint venture.

They had bought 121-hectare site for the mall for NIS 26 million two years back.

RBI Tighten Ropes On Real Estate

State Bank of India, Kochi
In a recent development the Reserve Bank of India along with the Department of Industrial Policy and Promotion are working to streamline and regulate the access and use of Real Estate Firms regarding the External Commercial Borrowings (ECBs). This will be done through a monitoring mechanism which will ensure stricter norms from now on.

RBI took this step in lieu of Real Estate Companies planning to raise ECBs worth Rs.4000 cr in the future and using this money for activities that cannot be funded through ECBs which will eventually adversely affect our economy.

Presently, Real Estate Companies that are only into developing integrated townships of various sizes are allowed to make use of these ECBs provided it is being used only for activities that are related to the construction of the townships. Now even this window will not be available by the end of this year.

Indian Realty Sector And Overview

The Final Frontier
Indian Real Estate Market has grown with time. The main reason for the accelerated growth can be contributed to the fact that the industry is very flexible in nature.

The development has caused higher aspirations for better standards of living and a good quality of life.

The rapid increase has been because of the relaxed policies of our government regarding Foreign Direct Investment which favors economic development of the country as well as easy Home Loan terms and conditions with an increase in the income of people, degree of urbanization, and their purchasing power. All this has helped shape up the Indian realty sector.

Some of the factors that have given a boost to the Indian Real Estate Market are the FDI policies have increased the amount of Foreign Investment in India. Owing to this our country ranks second most preferred location for Real Estate Investment in the world.

After Agriculture Industry, Real Estate has become the second highest employer.

Real estate whether Residential, Commercial, Retail is being developed on full scale in many different cities of the country.

The large number of people getting education in India will demand over 100 million sq feet of office and industrial spaces.

More so, India has been a host to Fortune 500 companies which in turn attract more companies to make this country their operational base which will also require more office space in future.

Thus it is evident that the Real estate Industry in India will see a lot of work in the years to come.

RICS Plans To Reform Indian Realty Sector

RICSanIndian Real Estate Developers have fastened their seatbelts to come at par with their counterparts in other parts of the world. This has been started by the formation of new boards and committees which will include leaders from the Real Estate and Infrastructure sector of the country.

The move was initiated by RICS (Royal Institution of Chartered Surveyors) India.

The persons in the committee will mainly focus on developing standards and practices in the Indian Realty Market to increase the level of professionalism and transparency among professionals as well as bring reforms in policies for the benefit of people at large and overcome barriers obstructing the growth of industry.

The various challenges that have to be met are the currently fragmented and old legal system including the current laws on land acquisition, problems associated with Rent control laws, providing infrastructure facilities keeping pace with the speed of urbanization, lack of skilled professionals in the industry, among others.

As said by Sachin Sandhir, MD, RICS India, “As the mark of property professionalism worldwide, RICS aims to develop professional knowledge and standards in India and protect public interest through best practice regulation. We are pleased to be represented by India’s most established and respected professionals in this industry and are confident our new Boards and Committees will enable us realize this goal”.

An Agenda-driven conference on the issue saw participation from various Government bodies such as SEBI, National Housing Bank, Ministry of Corporate Affairs. Matters that were discussed were the need for valuation reform and the directions for future practices for the Real Estate Industry.

Asia Invest More In UK Than UK Itself!

Changed priorities ahead
According to a study conducted by a Global Property Consultancy Firm Asia is the biggest investor in UK’s Realty Sector particularly Central London. This has been possible because of decreased value of pound and strong Asian economies.

The report showed, Asians spent around 761 million pounds in fresh properties in London for gains in the current fiscal year. Surprisingly they accounted for 49% of total purchase in the country while only 36% was constituted by the locals.

Asians are expected to put 20% of their money on new build residential properties also.

The report marked a change in the priorities of buyers as now they prefer more high class quality properties than in the last year.

Asia is on  roll for sure even as the effects of recession start to wear off of other countries.

Real Estate Invesment Trusts In Asia To Rise

Asian Continent Location Map
The number of Real Estate Investment Trusts (REITs) in the Asian Continent is going to swell over the coming 3 to 4 yrs according to HSBC. It will be because of increasing call for investments in more risk disinclined properties.

REITs invest in commercial properties mainly and pay rent collected from their properties to shareholders as dividend. This is why some investors see them as safer investments than property stocks.Another advantage is that they usually offer returns that are higher than yields of government bonds.

The increased activity in the REIT IPO market this year especially in the Asian continent is due to successful listing of Cache Logistics Trust in Singapore. Also Sunway City plans to list its REIT in Malaysia come July.

Kern anticipates Singapore to witness most of the activity with more than 20 to be listed there in the coming years from companies all across it’s continent. It already has more than 20 listed REITs such as Fortune, Saizen from Hong Kong and Ascends from India.

This Trend is only to bring fortune to our Country as well.

Real Estate Collaborates With Education Industry

Math - Teacher Education
Realty and Infrastructure firms like GMR and Hindustan Construction Company, HCC have announced to set up university campuses and other educational institutes within India. They mainly aim to ride high on the huge returning education industry.

The education industry in India is worth more than 10 bn US dollars with continuous growth rate. Because the Real Estate market is on a low these days developers are looking at alternate assets such as education.

Partnerships of such kind are increasing day by day in every other township or SEZ as educational institutes bring more revenue.

Chintan Patel, Associate Director, Transaction Advisory Services, E&Y said, “Access to social infrastructure such as schools and colleges serve as attractive features that make it easier for a developer to sell projects.”

Further he had to say that partnerships between a developer and international institution benefits society and develops retail, office and residential spaces around.

The tie ups usually work on build-and-rent business model. While a developer acquires the land and builds the infrastructure for the educational facility, the institute runs the school or college. It either pays rent or works on a revenue-share model.
The companies which are laying out plans in education are HCC who have bought 500 acres for institutes at Lavasa, its hill city project close to Pune, Maharashtra.It has tied up with Symbiosis, Bangalore-based Christ University, Institute of International Business Relations of Germany, Switzerland-based hospitality Management Institute Ecole Hoteliere de Lausanne and Educomp, and more.

Global infrastructure player GMR, too, has collaborated with Canada-based Schulich School of Business to build a campus in Shamsabad, Andhra Pradesh, The Company will construct the physical infrastructure for the institute, and in return, earn management fee on the maintenance of residences and hostel facilities.