India Real Estate Monitor

Investment In India’s Real Estate Sector continues to rise

Rajani — Wed, 27 Aug 2008 08:58:59 +0000

Investing in the Indian real estate sector continues to grow, however the pace may be slowing just a little. Foreign developers as well as private equity funds remain bullish, long-term, on India’s property market.

Not only is investment flowing into the metro cities, but attractive real-estate deals are also being negotiated and signed in ’second-tier’ cities such as Indore, Jaipur and Cochin.

From a foreign investor’s perspective, the recent correction in real estate prices in some parts of India is good news in that it could result in land being available at attractive values.

But although Indian property may make an attractive investment for foreign investors, it is important that they address some of the regulatory issues prior to making an investment.

According to India’s current foreign direct investment (FDI) policy, 100% FDI is allowed under the automatic route - that is, without requiring government approval - for the construction and development projects that include housing, commercial premises, resorts, educational institutions, recreational facilities, city and regional-level infrastructure and townships.

But this is subject to certain conditions:

Minimum area for development under each project should be:

i) 10ha in the case of services housing plots; or

ii) 50,000 square meter in the case of construction development projects.

iii) In case the project is a combination of the two, any one of the two conditions would have to be met.

Minimum capitalisation of 10 million US dollars for wholly owned subsidiaries and 5 million US dollars for joint ventures with Indian parties.
The funds have to be brought in within six months of commencement of business of the company.
The original investment is subject to a lock-in period of three years from the completion of minimum capitalisation.
At least 50% of the project must be developed within a period of five years from the date of obtaining all statutory clearances.
Investors would not be permitted to sell undeveloped plots.

Though the investment policy seems straightforward, investors still need to address some key issues and comply with other regulatory requirements.

For example, when it comes to funding, India’s exchange control regulations permit external commercial borrowings (ECBs) - that is, commercial loans in the form of bank loans, buyers’ credits, suppliers’ credits, and loans from shareholders.

There are several restrictions on the end use of ECB funds. One of these is that the proceeds of ECBs cannot be used for the purpose of acquiring real estate in India. Accordingly, ECBs cannot be used for real estate development in India.

Preference shares are also considered as ECBs and, likewise, cannot be used to invest in a real estate project in India.

The only exception is the use of compulsory convertible preference shares or fully and mandatorily convertible debentures, which would be treated as part of equity and would be considered as FDI.

Therefore, apart from pure equity funding, only compulsory convertible preference shares and fully and mandatorily convertible debentures can be used. This would tend to minimise the options available for funding a project in India because all funds would have to be in the form of equity or instruments which can be converted into equity.

As per the FDI regulations, a foreign investor’s original investment ‘cannot be repatriated before a period of three years from completion of minimum capitalisation’.

DLF Ltd Is Planning To Raise Rs 10,000 Crore By The Next One Year

manish — Wed, 27 Aug 2008 08:53:30 +0000

The largest real estate company by market share DLF Ltd is planning to raise Rs 10,000 crore over the next one year. The shareholders will pass an enabling resolution to this effect in the next annual general meeting which will be held on September 30.

According to a DLF spokesperson, “This is a normal procedure to raise money. We need the shareholders approval to raise money. This process authorizes us to raise money upto Rs 10,000 crore.”

The real estate company may not raise the absolute amount. It may raise funds for a smaller amount. The resolution is valid for one year, until the next AGM takes place.

With a size of Rs 84,909 crore DLF is the largest real estate company in India. In July this year DLF said it would buy back up to 2.2 crore shares at a maximum price of six hundred rupees per equity share. It has allocated one thousand one hundred crore rupees for the purpose, and would be financing the same through internal resources.

The company is planning to buy the shares through open market purchases through the stock exchange route. The buy back of shares will help increase the earning per share (EPS). This will also lead to a reduction in the price earning (PE) ratio. A lower PE always pushes up the stocks. High stock prices always work to a company’s advantage when it wants to raise funds.

The buyback proposal follows a sharp dip in the company’s market value over the recent past, which saw its share price plunging to below the issue price of five hundred twenty five rupees, at which the company had sold shares to public about a year ago.

At one point of time, the shares were trading at over double the public offer, but it has dropped to less than half of the life-time high of One thousand two hundred twenty five, scaled on 15th January this year.

If DLF buys back the entire 2.2 crore shares as planned, the holding of its promoters, KP Singh and family, would rise to about 89.5% from 88.2%.

DLF is developing various projects in Gurgaon, Chennai, Indore, Rajarhat and Kochi.

Puravankara Projects Ltd In Talk With Overseas Private Equity For Affordable Housing Projects

manish — Tue, 26 Aug 2008 10:56:28 +0000

Provident Housing and Infrastructure Ltd, the wholly owned subsidiary of Bangalore-based real estate company Puravankara Projects Ltd, is in talks with four overseas private equity funds to raise about seven hundred fifty crore rupees to acquire land for its affordable housing projects, a source close to the development said.
“Total project cost is eight thousand crore rupees. Of this, seven hundred fifty crore rupees will be raised through private equity funding at the project level. While one is an Asia-based fund, the remaining three are from the US,” he said.
Provident Housing and Infrastructure announced that it will invest a total of eight thousand crore rupees in seven affordable housing projects spread across Bangalore, Chennai, Hyderabad, Coimbatore and Mysore in the first phase.
The company plans to raise the remaining seven thousand two hundred fifty crore rupees through a mix of internal accruals, debt and customer advances. He also said that the company could dilute between 30-40% stake in each of the affordable housing projects. In the second phase, the company plans to take its low-cost housing projects to Delhi, Kolkata, Kochi, Jaipur, Pune and Nagpur.
Increasingly, real estate developers are foraying into the affordable housing segment in a bid to offset the slowdown in sales of mid-income and high-end apartments.
“In the last 6-12 months, there have been negligible sales in the high-end residential segment. Developers are eyeing the low-income segment as it is also a volumes game,” an analyst at a domestic brokerage said. In May, Delhi-based Omaxe had pronnounced investment of Rs eight thousand crore rupees to build around ten lakh low-cost houses over the next ten years. presently, Puravankara Projects has a land bank of over one hundred twenty five million square feet.
Nearly 65% of the company’s land bank is in Bangalore. It is developing twenty million sq ft of residential and commercial projects.
In a July report, Citigroup Global Markets had downgraded its rating on the Puravankara stock to “hold” from “buy” and cut the price target to Rs 212 per share from Rs 358.

Controversy Over SEZ In Kerala

manish — Mon, 25 Aug 2008 13:51:13 +0000

Thiruvananthapuram: The Kerala Pradesh Congress Committee (KPCC) alleges that the current controversy over Special Economic Zones (SEZs) in the State has its roots in the schism in the ruling Communist Party of India (Marxist), with one section showing undue haste in getting them cleared to help certain real estate companies.
The KPCC executive committee, which met here on Sunday, discussed the SEZ controversy among other issues and decided to come out with a statement reiterating the party’s policy perspective on the topic. KPCC president Ramesh Chennithala explained the party’s stand on the issue at a press conference after the meeting.
The committee felt that the controversy in the CPI (M) and the Left Democratic Front (LDF) it led was uncalled for. The LDF government had already cleared SEZs in several places in the State focusing on sectors such as Information Technology and neither the Communist Party of India nor Chief Minister V.S. Achuthanandan had found fault with the policy when it was mooted.
In a note circulated at the meeting, Mr. Chennithala, laying out the party’s policy, said a majority of the 21 applications before the government seeking SEZ status were from real estate groups and builders whose main objective was to construct apartments and allied facilities.
Listing out the names of the companies, Mr. Chennithala said in his note that the Industries Department had forwarded the applications of some of these companies to the Chief Minister’s office without proper spadework and by exempting them from the mandatory government clearance. And the proposals were sent for Central clearance without a discussion in the Cabinet. Most of the companies had exaggerated their investments in the SEZ and many involved farmlands, the note said.
Later at a press meet, Mr. Chennithala said the Chief Minister had now opposed the SEZs not because of ideological differences but because his party’s State committee had sought to corner him politically.The KPCC president said the Congress stance had been clarified by party president Sonia Gandhi at the Nainital All India Congress Committee session.

HCC To Invest Thousand Crore Rupees In Townships

Rajani — Sat, 23 Aug 2008 08:15:36 +0000

HCC Real Estate Ltd (HCCREL), the real estate arm of construction major Hindustan Construction Company (HCC), is in the process of entering into large size land deals. The plots, aggregating 1,550 acres in various parts of India, will be used to develop townships.
HCCREL is planning to invest a thousand crore rupees in the initial phase of the project this financial year. Funds will be raised through HCCREL’s forthcoming IPO, Rajgopal Nogja, its president, said.
According to Nogja, “We are acquiring thousand acres of land in Nashik apart from 300 acres in Thane in Mumbai and about 250 acres in Pune. Plans are on the anvil to enter into land deals in markets such as Panvel, Kolhapur and Nagpur as well.”
Apart from this, HCC Real Estate is also planning an eighty acre slum rehabilitation scheme in Vikhroli East in Mumbai.
The company is currently engaged in constructing two million square feet IT park in Vikhroli. Nogja said, “The IT park will be a world class construction with gold rated LEED certification for green buildings. It will be ready for occupation in 2009. We hope to achieve very good valuation once the project is completed.” He informed that Future Group’s Pantaloon and Orange have already leased almost 30% of the park christened `247 Park’.
Meanwhile, Oxford University has agreed to set up executive education facilities in Lavasa, the hill station being developed by HCCREL in Lonavla, Maharashtra. In addition, Girls Day School Trust of UK and Christ College, Bangalore will also set up their campus in the hill town; MoUs have been signed to this effect. While most of the infrastructure is ready for phase I of Lavasa, the construction of villas and apartments is in full swing. HCCREL has registered pre-sales of Rs 494 crore in the 2007-’08 financial year for the Lavasa project, against a target of Rs 99 crore.
HCC Real Estate is looking at setting a second Lavasa hill station project in Gujarat, on the lines of the one at Lonavala, said Nogja.

Fall In Office Rental In Delhi Ncr, Mumbai and Bangalore

manish — Sat, 23 Aug 2008 08:14:13 +0000

Office rental prices are unlikely to see any major fall across the country’s three major business hubs National Capital Region, Mumbai and Bangalore even as the commercial realty markets in these areas are expected to witness a significant surge in supply, a leading real estate consultancy firm said.
While Bangalore is expected to witness further rise in the average office rentals, those in Delhi and adjoining areas like Gurgaon and Noida as well as Mumbai are expected to remain mostly flat in the short to medium term, CBRE said in its latest office market review for Asia-Pacific region.

Only certain small pockets in National Capital Region (NCR) and Bangalore could see a correction in prices in the near future, while any downward correction is very unlikely across Mumbai region, it said.

“The National Capital Region (Gurgaon and Noida) is expected to witness flattening trend in rentals over the short to medium-term,” CBRE said.

“However, some micro-markets with forthcoming supply is likely to experience a marginal value correction in the next six months,” it said, adding there would be significant additional supply in Gurgaon, Noida and Jasola in South Delhi.

CBRE noted that in preparation for hosting the Commonwealth Games in 2010, rigorous efforts have been made to improve infrastructure all across the NCR.

For Mumbai it said, that with over one million square feet of corporate office supply currently available and another nine million square feet ordinary office space expected to come online in the next two quarters, rental values are likely to remain stagnant.

Affordable Residential Project In Bangalore By Golden Gate Properties

manish — Fri, 22 Aug 2008 12:15:40 +0000

A 995 sq ft apartment in Bangalore for Rs 19 lakh! This is the price at which Golden Gate Properties is offering two-bedroom apartments at ‘The Commune’, its affordable residential project in Bangalore.
“The project aims to fill the need-gap that has risen in the market owing to spiraling real estate costs,” said Mr K. Pratap, Managing Director, Golden Gate Properties.
A self-sufficient township, the project located near Mysore Road with proximity to the NICE Corridor, would have 3,500 units two and three bedroom apartments ranging between 900-1,500 sq ft in total.
The affordable project tag hasn’t stopped the developers from providing fabulous amenities including mini stadium, a retail centre, bank counter, ATMs, kindergarten school, medical centre, wi-fi connectivity, two club-houses, among others. The company plans to invest five hundred crore rupees in this project, which would also be replicated in Hyderabad, Chennai, Kochi, Coimbatore, Mysore, Pune and other cities.
According to Mr Pratap, it took the company 4 years to master the art of building affordable housing solution. “But having achieved this, we will roll out such projects in these cities. For the next one year, our focal point would be on the Commune projects, he said.
The developers would also be using hi-tech construction technology that would ensure faster completion of the project, reducing labour requirements by almost 75 %. Because of the volumes involved, the company’s profit margins would be reduced by almost 50 %, he said.
Two Commune projects in Hyderabad and one more in Bangalore have been planned, for which land has been acquired.
The four projects, including the one announced on 21st August, are estimated at two thousand five hundred crore rupees, for which the company would be investing approx five hundred crore rupees, and the rest would be from sale proceeds.
The other ‘Commune’ in Bangalore would be located on Sarjapur Road, which would come up on one hundred acres with 5,000 units being planned. The first of the ‘Commune’ in Hyderabad would be at Tellapur about 6,000 units over 50 acres, and the other near Secunderabad about 3,000 units.
The company, which had Rs 500-crore turnover last year, is targeting revenues of Rs 1,000 crore now; with many projects under way, Mr Pratap said the target was achievable.
The company plans to enter the capital market in two years. The company, which had received an entity-level $70-million funding from RREEF India Advisors, a subsidiary of the Deutsche Bank Group, is also looking at funding at SPV levels from the group.
“There may be two SPV-level infusions towards the end of this financial year,” Mr Pratap said.
For its IT SEZ in Bangalore, the company is planning an investment of about Rs 800-900 crore, and hopes to “raise private equity at an SPV level in 2-3 tranches, from maybe a single equity player,” he added.

NRIs Want Properties in Delhi NCR

Rajani — Fri, 22 Aug 2008 11:56:44 +0000

The property owners of posh localities, just like Delhi NCR,are extremely happy these days as their areas get more and more crowded with outsiders, since these outsiders are always in search of ready to accommodate homes.
However, it is not a win-win situation for them. They also come across some tricky incidences. Sometimes they feel uncomfortable because of the preferences of the expatriates for a specific house.
The higher officials of some of the multinational companies and the British diplomats do not feel bad to stay in the old houses having the colonial-day structural design. As a matter of fact they prefer to stay in such houses. The number of such houses is decreasing very fast but still available in and around Nizamuddin East and West, Friends Colony, and Sunder Nagar.

Dawnay Day’s hotels on the block

Rajani — Thu, 21 Aug 2008 11:13:26 +0000

Leading hotel chains and top real estate developers are understood to be bidding for the beleaguered UK investment group Dawnay Day’s four-star hotel chain Ten Hotels and other real estate assets in India. ITC, Royal Orchid, Pride Hotels, Sarovar group, Lemon Tree, DLF and Paraswanath have made a pitch for the deal, which is valued at around Rs 500-700 crore.

When contacted, Ten Hotels MD Mandeep Lamba said, “The business restructuring process is being handled out of the UK and I would not be able to make a comment at this moment until I receive dependable information on the same. As of now, the business in India is operating normally with construction activities on the hotels continuing as scheduled. The first Ten Hotel would get operational in Jaipur later this year”.

All the hotel chain and real estate developers spoke to confirmed that they have received proposals from investment bankers and are currently evaluating options. Some of the interested parties may jointly bid for the business.

It is learnt that the group is also keen to rope in a potential investor immediately to infuse $20-30 million to tide over a period till a suitable buyer is finalized for the assets. “With the hotel and real estate market currently going through a slowdown, it would be difficult to get a good price,” said an official from a Delhi-based hotel chain.

Realtors Importing Built-up Rooms And Utility Goods From China

manish — Thu, 21 Aug 2008 11:08:38 +0000

The growing pressure on hotel and mall developers, faced with soaring construction costs that have risen by some 40%, is seeing Indian hoteliers and realtors importing built-up rooms, fittings, furniture and utility goods from China to save costs and time.
The trend of imports is catching on as costs have risen up to 50%, say industry executives and suppliers.
Indian hoteliers and realtors are importing built-up rooms and utility goods.
“A lot of vendors in China are creating entire (hotel) rooms,” says Akshay Kulkarni, director for South Asia at Cushman and Wakefield Hospitality, the hotels division of the real estate consultant by the same name. “Hotel operators can go there and choose the room fit-outs that they want for their hotels.”
This, hotel consultants say, will help budget hotels cut down the time taken to build a hotel by 8-10 months and costs by 40-50%. Typically, it takes between 12-18 months to build the hotel structure and up to another 10 months to fit it out. “It cuts out a lot of costs in terms of time saving,” says Kulkarni.
With supply in the domestic hospitality industry lagging demand, such measures to ready hotel rooms faster helps the business on the revenues side as well. Even with current expansions and new hotels being put up, India’s 150,000 hotel rooms predicted for 2010, up from 89,000 today, will fall short of demand then by some 100,000 rooms.
Hotels importing material and, in some cases, full rooms from China include mid-market hotel firm Sarovar Hotels Pvt. Ltd, which has around 35 new hotels coming up in the next three years, and business hotel chain Royal Orchid Hotels Ltd, which runs nine hotels in the country and plans to expand across pan-India by 2010.
The Sarovar’s orders range from furniture, sanitary plumbing, hair dryers, electronic safes, keys and locks to glass for windows, shower fittings, mattresses, tiles, soap dispensers and light fittings, for new properties in Chandigarh, Hyderabad and Bangalore. The preferred location in China for such Indian imports is the Guangdong province. Once the consignment is shipped to India, all that hoteliers do is assemble and fit these into the bare room structures.
“Guangdong has markets called a furniture city, or lights city spread across a 10km stretch on either side of the road,” Ajay K. Bakaya, executive director at Sarovar Hotels, said. “The only thing you need there is a local representative, or a local office that can manage everything for you once you have placed your order. We see huge cost savings of around 50%” with duties and a foreign earnings-linked scheme for capital goods imports, he added.
Sarovar works with Hong Kong-based logistics and sourcing company Blue Art Overseas Ltd, which is paid a commission of around 3% on the total consignment value shipped to India.
According to Ramesh Nahata, chief executive officer of the firm, for a normal factory in China that has orders for about 200-250 rooms, it would take two months for production, one month for transit and clearing, and another 10 days for assembling. In contrast, “if you were to give the contract to an Indian contractor, it will take him an average of four-six months to do the same,” he said.
One early trend among mall developers, according to an analyst tracking realty and construction firms, is that they are importing prefabricated walls from China in the last three-four months after steel prices shot up. The analyst, employed by a domestic brokerage, who did not want to be named because he is not authorized to speak to the media, said, “It helps developers cut costs by 15-20% and time by 30-50%.”
Such practices will also help developers and hotel chains finish projects on time because less manual labour is required for projects where prefabricated materials are used.
The Royal Orchid group is, however, more careful of what it gets from China and imports only artificial grass and hot plates from there. “It is not completely necessary to go to China for the entire hotel room, particularly not for our five-star rooms that require quality stuff. However, for our four-star rooms, we are looking at importing furniture, flooring and marble from China,” said Keshav Baljee, vice- president (corporate affairs) at Royal Orchid Hotels. Furniture imports save time by 10-15%, says Baljee, while imported flooring trims costs by around 20%.
Prices of construction raw materials have gone up in the last year, which has pushed up the construction cost for developers by as much as 40%. Between January and April, prices of pig iron went up by more than 70%, construction steel and wire rods by more than 36% and hot-rolled coils by more than 40%.

SEZ In Greater Noida, Haryana and Rajasthan By Ansal Properties

manish — Wed, 20 Aug 2008 15:39:38 +0000

Real Estate major Ansal Properties and Infrastructure Ltd today said it plans to set up special economic zones in Greater Noida, Haryana and Rajasthan.

“We are set to set up SEZs at Greater Noida, Haryana and Rajasthan and are organising a roadshow in the holy city of Varanasi to let the people know about our plans at their native places,” Ansal API Vice-Chairman and Managing Director Pranav Ansal said in a statement here.

The company is developing a 2,000-acre township, besides an IT SEZ in Lucknow. The company has also launched a 2500-acre township near Greater Noida.

Besides, it has launched residential and commercial projects in Agra, Meerut, Lucknow, Greater Noida and Ghaziabad. It had last month announced plans to invest Rs 900 crore in a 250-acre engineering SEZ at Sonepat, Haryana.

Rs 872 Crore Is To Be Invested For Logistic Park In Mumbai

manish — Wed, 20 Aug 2008 15:36:37 +0000

Mumbai has come into view as the most preferred destination for logistics and warehousing companies with proposed investments for setting up logistics parks in the city touching around Two hundred million dollar (Rs872 crore), a report said.
In spite of their lack of support infrastructure, smaller cities such as Nagpur in Maharashtra, Gurgaon in Haryana, Visakhapatnam in Andhra Pradesh, were recognized as promising locations, based on their proximity to manufacturing centres, geographic location and accessibility, according to the report released by real estate consultant Cushman and Wakefield Inc.
“Since almost one-third of the total realty development in the sector is expected to take place in emerging locations, many tier II and tier III cities and peripheral locations that offer good connectivity to multiple markets will witness increased activity from logistics players, providing a thrust to the real estate market,” said a statement from Cushman and Wakefield India’s joint managing director Sanjay Dutt.
The report estimates that 110 logistics parks, spread over 3,500 acres and costing $1 billion, will be operational by 2012 across the country. This is apart from some 45 million sq. ft of warehousing space costing $500 million that will come up during the period.
Bangalore, Indore Ambala, Ahmedabad, Jamshedpur and Alwar were classified as promising hubs in the report.
Kolkata, Chennai and Hyderabad were rated as “established logistics hubs”.
“Logistics people have started tapping (areas) closer to manufacturing locations because our arterial distribution networks such as the railways and the national highways are clogged,” said C.S. Verma, vice-chairman and managing director of logistics company ACV Logistics Pvt. Ltd.

Realtor Looking For Overseas Offices

manish — Tue, 19 Aug 2008 10:56:48 +0000

Property firms are eyeing newer overseas markets for business opportunities as the domestic real estate market continues to slump.
While the looking overseas trend isn’t too new, firms such as the Bangalore-based Puravankara Projects Ltd and Sobha Developers Ltd, and the Delhi-based Parsvnath Developers Ltd are pushing ahead to expand their global presence.
Overseas offices can help in multiple ways. An office in the US, for instance, could help them look for more private equity funds; in China it can help find cheaper construction material; there are potential buyers in Singapore and Australia, which also has possible investors. And in countries such as Sri Lanka and Malaysia, Indian developers are looking to identify properties.
PRA Realty, a property developer from Pune, which is pumping in nearly $100 million (Rs432 crore) into three township projects in Nagpur and Pune and Nashik, has set up an office in Chicago with a new chief financial officer (CFO) based there.
“The idea is to interact with US-based funds there, raise capital and explore business opportunities,” said Rustom Bharucha, managing director (MD), PRA, which also has a marketing office in Dubai.
Traditionally, Indian developers have been opening marketing and sales offices in the United Arab Emirates, particularly in Dubai, with builders such as Hircon Llc., Ajmera Housing and more recently, Omaxe, constructing projects there. But developers such as Parvsnath, Lodha Group, Sobha and Puravankara are also moving in on new locations, such as South-East Asia and China, as well as traditional locales such as the UK and US.
Sobha, for instance, gets much of its raw material and interior fittings, such as tiles and silicate boards (used in bathroom ceilings) from Guandong, on the southern coast of China, where it has set up an office. In 2007, Sobha estimates, it imported material worth Rs2.5 crore from China, a number that is expected to rise sharply.
“As a company expands across cities, it is important to have a presence internationally so that people know about your products. We are planning to open offices in Australia and Singapore besides the US and UK in the near future,” says J.C. Sharma, executive director of Sobha. The firm is expanding in India by launching projects in Pune, Coimbatore, Kerala and Mysore.
Parvsnath is in talks with a Singapore-based real estate firm for a hospitality and real estate joint venture. The Indian developer has already set up a subsidiary for its Singapore operations, Parsvnath Developers Pte Ltd, and would soon set up offices there. The firm expects to develop at least one five-star hotel there. “We are talking to real estate firms there for partnerships,” Pradeep Jain, chairman, Parsvanath, said at a press conference to announce its fourth quarter results. “Singapore market is very transparent and well organized. Margins in Singapore are almost same as in India.”
Puravankara has just opened an office in Sri Lanka. The company plans to launch a 300-super luxury villa project on 26 acres near Colombo. “We are in the last leg of approvals for the project. We have appointed representatives in the UK and US,” says Ravi Ramu, CFO.
Non-resident Indians, or NRIs, buy 15–25% of all new real estate developments in India, depending on the location and the project, claims a recent report by Jones Lang LaSalle Meghraj, a global real estate consultant. While NRIs from the UK, Canada and Dubai have been investing in Indian real estate, those from Singapore, Hong Kong and Thailand have now started buying properties here, says Raminder Grover, managing director, Homebay Residential (a subsidiary of Jones Lang LaSalle Meghraj).

Luxury Brands Prawling For High Street Space

Rajani — Tue, 19 Aug 2008 10:55:21 +0000

Most luxury and premium brands are looking for quality retail-centric real estate spaces not only for expanding their branded retail shops but also for having their new offices, according to industry experts.

Hugo Boss luxury watches, which is being retailed by Titan Industries Ltd through about 15 to 20 of 250 World of Titan showrooms, will also be retailed through upcoming luxury retail malls, apart from premium departmental stores and premium malls in India, Harish Bhatt, chief operating officer, Titan Industries said. According to him, “We are open to selling luxury Hugo Boss luxury watches in luxury malls and premium departmental stores which provide an environment for accessible luxury watches. Besides this, luxury malls also provide scope for higher brand visibility.”

Luxury and premium goods distributor Brand Marketing India Private Ltd (BMI), promoted by the Mumbai-based Murjani Group has moved out of its four offices in Nariman Point (including one office at The Trident, Mumbai) and shifted to Metro theatre building in February this year. In Metro theater building, Murjani Group has set up its new 7,000 square feet office. This is to have ample quality real estate space in Mumbai for its office, Shehzad Karachiwala from Murjani Group said.

BMI has exclusive licensing rights to top global brands including Gucci, Jimmy Choo, French Connection, Calvin Klein, La Perla and Bottega Veneta. BMI brands are already sold in Mumbai’s Shoppers Stop, The Trident and Vama and will be part of Delhi’s luxury mall DLF Emporio as well as UB City in Bangalore. While luxury retailers Crossroads, Oberoi and the MBD Group are all hoping to launch luxury malls soon, new luxury brands entrants such as Armani and Miss Sixty too are vying for quality space in luxury malls.

According to Shubhranshu Pani, managing director – retail, Jones Lang LaSalle Meghraj, “Luxury brands look for quality retail-centric real estate spaces. 5-star hotels do provide quality spaces, but such hotels obviously have their own agenda and the environment is based more on hospitality than retail. Moreover, 5-star hotel spaces are limited and do not offer much scope for expansion, or the introduction of a healthy brand mix. Currently, luxury brands still find value in occupying space in 5-star hotels and are retaining these. However, thanks to the advent of luxury malls such as UB City and DLF Emporio, they now have alternatives and are beginning to benefit from the re-loaded, focused retail experience.”

Developers Are Offering Discounts

Rajani — Mon, 18 Aug 2008 08:39:53 +0000

Developers today are offering discounts, freebies and value add items. This includes discounts in values, freebies in amenities like discounted parking space or lifetime club membership, value adds like providing interiors and ready-to move homes at little discounted rate.

Discounts would mean reduction in the upfront money the customer would be paying to the developer. Discount in parking spaces would mean anything between Rs 10,000 to Rs 20,000. Value-add interiors will include goods like fans, wardrobes and so on.

Ram Yadav, head of a finance company says, “It all depends on how you position your project. Builders are trying to put together all these three elements for their customers, but again, it is not across the board.”

Buyers can get good options and there is room for negotiations, point out industry sources. Builders are now ready to meet customers and do not want to let go of those coming in. Incentives are given across the table, depending on the project. Where there is 100% down payment, the incentives are greater. It can go up to 3-5 % depending on the developer and his need.

Explains Ramakant Sharma, a realty agent, banks are giving advance disbursement facilities, based on the developer and his project besides profile of the buyer. Where the developer gets a lump sum amount in advance at an early stage of the project, he is ready to give more benefits to the buyer. The benefits in such cases would be more compared to a project at its fag end.

“There are small discounts in the rates to accommodate customers,” feels Suresh Singh, a local builder. Builders who have purchased lands at high costs will find it difficult to offer discounts but those who have bought at cheaper rates will, depending on the project, offer 2-5 % discounts.

He adds that the rising interest rate costs means that banks too should come up with innovative products as their business too is affected.

Cash discount is the best discount, says Vinod Singhvi, a builder. Developers point out that a home buyer can get a good deal for himself by enquiring with various builder offices on discounts being offered. Brokers too will be in the know of the best discounts available and projects giving value for money.

The overall mood of the home buyer with the interest rate costs and inflation is to wait and watch, feel experts. He, however, adds that in new projects where a builder requires cash flow, he doesn’t mind going ahead with discounts. Also where there are five to six builders coming together for a project, they would like to come out of the project at the earliest and would be offering discounts even to the tune of 2-7 %, as they need to run the show. Such discounts will definitely trigger sales amongst the fence sitters.

Better connectivity in sight, rush begins for suburbs

manish — Mon, 18 Aug 2008 08:36:08 +0000

Distance is no longer a restriction for prospective buyers on the look out for a dream home. It seems people do not mind traveling a few extra miles as long as the location provides for convenience of commuting.
With the announcement of a number of transport and road infrastructure projects, property prices are shooting up in the suburbs.
The construction of Barasat-Raichak Expressway to be undertaken by the Salim Group has sent property prices rocketing in the Barasat-Madhyamgram area in North 24 Parganas.
A year ago, the cost of flats constructed by Bengal Shelter at Shishirkunj near Rajarhat hovered between Rs 1,300 to Rs 1,400 per square feet. The prices for the same properties have now gone up to Rs 1,800 per square feet. “There were practically no big real estate projects in the area even a year ago. Now, at least two giant corporate houses like a venture of Vedic Realty-Diamond Group and Fortune Group is underway. There are more in the offing,” said Swarajit Dutta Gupta, senior marketing executive of Pioneer Property Management Ltd.
He was speaking at a recent property exhibition organized by the Bengal chapter of Confederation of Real Estate Developers Association of India (CREDAI).
Even residential projects located near the Chapadali crossing at Barasat have prices, which was unthinkable even a year ago. The township to be developed by the Fortune Group will be located at a distance of 20 minutes from the Kolkata airport.
The same ripple effect of infrastructure projects was evident at Maheshtala in South 24 Parganas. The 8-km long flyover to come up from Jinzira Bazaar to Taratala junction has given an added impetus to the Eden City projects at Batanagar township in Maheshtala. “The flyover will be constructed under the JNNURM scheme. It will boost the infrastructure in the area and will definitely make the housing projects in the area more attractive for buyers,” said Biswadeep Gupta, General Manager, Eden Realty Ventures Private Limited.

Non-Residents Homing In Thick And Fast

Rajani — Tue, 12 Aug 2008 10:23:35 +0000

With the stock markets down in India, the realty market here offers a reliable investment avenue.
There are three reasons why NRIs invest in India — they remit money for family expenses or investments or for maintaining their bank accounts and investments here.
According to RBI records, NRIs’ annualised remittances to India have grown from $26 billion in 2006 to $40 billion in October 2007. A big percentage of this is going into buying property here.
Developers say NRIs now account for 15-30% of sales in branded developments as against 5-15% three years ago. Properties in Mumbai, Ahmedabad and Goa are attracting most of the buyers but enquiries are coming for other cities too.
And it’s not just biggies such as Shapoorji Pallonji, Unitech, DLF, Hiranandanis, K Raheja that are benefiting from the NRI wave but also middle-level players such as Rustomjee and others.
Aniruddha Joshi, executive director of real estate investment company Hirco Group, says India as an investment destination has gained prominence over the last 10 years. “Real estate is a key asset class for any investor looking at India,” he adds.

SRK Group To Invest Rs 5,000 crore In Next 5 Years

manish — Tue, 12 Aug 2008 10:20:32 +0000

Real estate firm SRK Group is planning to invest Rs 5,000 crore in developing various properties across the country over the next five years with plans to expand to new cities.

“The group has identified many projects in south India and other parts of the country to pump in about Rs 5,000 crore in the next five years in developing residential as well as commercial projects,” industry sources said.

When contacted, the Pune-based SRK Group’s Chairman and Managing Director K Rasheed Malik said, “We are looking into new areas and different projects. In Kerala, we have already identified some projects, which we will be developing in the future.”

He, however, declined to comment on the size of the investment the group is planning to put in.

According to the sources, SRK group plans to invest about Rs 2,000 crore in Kerala in five years. It is also likely to launch 3-4 residential projects in the state within the next six months.

Malik said, the group was looking at markets like Delhi, Gurgaon, Ahmedabad, Pune and Chennai.

“Currently we are talking to land owners to acquire land, but nothing has been finalised yet,” he added.

Apart from Delhi, where SRK Group plans to develop only commercial projects, in all the other cities it will develop both residential and commercial properties.

“We are looking to develop about 15 projects in these five new cities with over 100 acres of land in total,” Malik said.

The group, which is currently developing 20 projects in south India, is also planning to construct 100 housing units for Adivasis and poor people in Kerala free of cost, he said.

“We will also be launching healthcare facilities and ambulance services in rural Kerala,” he added.

Guaranteed Land Title Act

Rajani — Mon, 11 Aug 2008 06:45:57 +0000

Lack of transparency surrounding land deals in the state will soon be a thing of the past with the Rajasthan government all set to introduce a Guaranteed Land Title Act. The new law will be initially made applicable in 11 cities of the state with the state capital itself introducing it as a pilot project.

The draft of the bill has already been prepared and is currently with the law department. After the draft is cleared, an Ordinance will be issued later this month, just in time to avoid the code of conduct which will come into force sometime next month.

The introduction of the Act for granting land titles is part of reforms that states have to undertake as part of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM ). Besides, it was also one of the promises in the budget speech of chief minister Vasundhara Raje.

An official said, “Till now, most real estate dealings have been done on lease hold lands as the concept of free-hold land was absent. This means that parties were given lease of the plot by the government on which they built their property and even after they sold this property, the land title stayed with the government and no mutation could be done”.

The only way an owner of a property could establish his claim on it was by getting his name incorporated in the receipt of the property tax that he pays every month or through the sale deed. But once the Act comes into being, provisions will be made where the title of a land can be changed to that of the new buyer giving him permanent ownership of it.

Initially, it will be optional for the old allottees of land to go in for the guaranteed land title but it will be made compulsory for all future projects. The land title would be made applicable on all the properties of JDA, Jaipur Municipal Corporation (JMC) and Rajasthan State Industrial Development and Investment Corporation Limited, the official added.

Through the Act, the Jaipur Development Authority (JDA) would also be guarantying land titles when a property changes hand. In the event of a dispute, where a buyer gets cheated by the seller, JDA will be giving full compensation to buyer. However, initially, only provisional titles would be given, but after two-year tenure, permanent tiles would be issued.

The official added, “In places like Delhi, the initial response for going in for a certification that would guarantee land title to the buyer was poor. But as people understood its advantages, more and more of them now prefer to deal only in those plots that guarantees a title. We hope that even here it would be the same. However, owners wanting to get a JDA certification for his property would have to pay a sum for the same as before issuance of a certification, lots of exercises have to be done by the JDA”.

IT Sector, A New Ground Of Indian Real Estate

manish — Mon, 11 Aug 2008 06:44:55 +0000

The Indian real estate sector is breaking new ground, by adopting information technology (IT).
In recent years, many real estate companies have been taking to end-to-end IT solutions in a bid to automate their business processes. This has not only helped to increase efficiency and cut cost but also to make their functioning more transparent, they say. It has enabled them to grow, as well.
Rapid growth in business opportunities, inflow of foreign investment into the sector, and the entry of second-generation owners or managers into companies are largely the reasons behind the real-estate industry adopting IT solutions, say industry watchers.
Using IT is linked to the opening up of foreign direct investment in the real estate market, says RahulChawla, Chief Executive, In4velocity Systems, a provider of IT solutions to the real estate sector. Most of the new developers funded by private equity or real estate funds use IT, he adds.
The spread of IT could be attributed to the second-generation owners or managers in a company, says Rajesh Ponnan, SBU Head, Construction Solutions, Sobha Renaissance Information Technology Private Ltd. They have more exposure, are aware of technology and rely on technology to a great extent, he points out.
However, the use of complete end-to-end solutions is still fairly recent. Chawla says it is a three-four-year-old phenomenon. In4velocity introduced its product in 2005. Initially the response was slow, but in the last two years, things have begun to change. At present the company gets about seven to ten enquiries a week, he says.
Earlier, different departments in a company would independently decide on the software they would use, but now enterprise resource planning (ERP) has become popular, says Ponnan. He says the industry has moved from fragmented software to consolidated ERP solutions, though it involves a substantial cost escalation.