February 20, 2008 – 8:46 am
The withdrawal of an IPO by a big property developer in India earlier this month was just the latest sign of the growing difficulties companies world-wide are having tapping capital markets.
But the message for the sizzling Indian real-estate development business was worse: get ready for a slowdown.
Emaar MGF Land Pvt. Ltd. said it pulled its initial public offering of shares because of “prevailing adverse market sentiments, fueled by renewed indications of a U.S. recession and global meltdown.” Emaar MGF is a joint venture between the developers Emaar Properties PJSC of Dubai, United Arab Emirates, and MGF Development Ltd.
February 16, 2008 – 5:44 am
MUMBAI – Property developers are expected to turn overseas to list Real Estate Investment Trusts (REITs) as proposed local rules favour funds and small investors rather than real estate companies, officials said.
Developers are hoping to recover costs by selling properties to REITs in which they hold a controlling stake. However, draft rules, which restrict ownership by a single entity, may prompt them to list REITs elsewhere.
“We can sell our developments to Indian REITs. But we will still be floating them in countries that favour developer REITs.” Ramesh Sanka, chief financial officer at India’s largest real estate developer DLF, said.
“The protection mechanism (in India) essentially makes it a product for funds and investors and not developers,” said Sanka.
A REIT is a property investment trust that raises money from investors by listing on exchanges and uses the funds to buy out investments from a developer. It then leases out the property, using the rental income to pay dividend.
DLF and rivals Unitech and Indiabulls Real Estate are among a clutch of developers looking to Singapore for a REIT listing. DLF wants to raise $1.5 billion, Indiabulls $1 billion and Unitech $600 million, bankers have said.
R. Nagaraju, general manager, corporate planning, Unitech, told that Valuations in the international market are better. Funds are also better developed (abroad) and yields lower.
It is told by the one of the analyst that India does not yet allow REITs, but draft norms are in place. The move will increase transparency in the fragmented sector but developers need to be made direct stakeholders.
February 13, 2008 – 8:35 am
Indian Stock Market and Real Estate sector is attracting NRI attention in a huge way. Non-resident Indians are more and more tending towards investment in these two sectors. This is primarily due to the fact that India is growing at a faster pace than other countries and the equity market has outperformed those of developed nations.
NRIs know the potential of investments in India very well but find it difficult to execute a comprehensive plan. Most green card holders have not capitalized on the Indian growth story because of their poor evaluation of the market. NRIs rarely find time from their hectic professional life, they lack proper advice or find handling and monitoring investment transactions inconvenient, says Anand KS of Nile Financial Planners.
Another point of concern felt by NRIs is the transparency level on charges in various trading sites and other investment options. Remember to ask for details regarding time horizon of investment, risk and return before starting off and opening accounts.
To invest on a repatriable basis, the person must have an NRI or FCNR bank account in India. In this case, the net income or capital gains after tax is eligible for repatriation subject to regulatory guidelines. In the case of investment on a non-repatriation basis, only the net income the dividend arising out of investment is eligible for repatriation.
February 13, 2008 – 4:06 am
MUMBAI – Fitch Ratings said it sees the outlook for the Indian construction sector in 2007-08 as positive, boosted by increased investment in infrastructure projects and real estate.
The ratings agency noted that while Indian construction companies have witnessed sharp growth in their order books and revenue with the increase in investment projected over the next five years, the majority of the profit in terms of revenue and earnings will start accumulating from fiscal year 2009.
Fitch also said it imagines that the industry to exhibit negative cash flow from operations due to increased working capital requirements. Substantial investments in real estate will also put pressure on the industry credit profile, it added.
The ratings agency warned that credit profiles are likely to deteriorate, with increased debt required during the mobilisation phase to complete the massive projects but will get better substantially over the long-term once these projects achieve the stable revenue phase.
By
|
Also posted in Property News
|
Tagged Construction Sector, Credit Profile, Credit Profiles, Fitch, Fitch Ratings, Indian Construction Companies, Investments, Order Books, Outlook, Projects, Real Estate, Working Capital
|
