IL And FS PE Plans Fund For Yatra Capital

IL&FS Investment Managers Ltd (IIML), the country’s largest home-grown private equity firm by assets under management (AUM), is planning to launch a fresh fund under the banner of Amsterdam’s Euronext-listed Yatra Capital.

Yatra Capital is an India-focused real estate investment firm, promoted by Saffron Capital Advisors.

Archana Hingorani, chief executive officer and executive director of IIML, told “We are in the process of getting shareholder approval at its upcoming annual general meeting. After the approval comes and depending upon the capital markets, we will be able to raise fresh money for the same.”

IIML would be hoping to be second time lucky.

This involved renaming the existing shares of Yatra Capital as ‘real estate shares’ whereas the new share class was to be christened as ‘infrastructure shares’. This would have developed Yatra Capital as a multi-class fund house with a strategy to invest in Indian infrastructure through debt and equity components, as against its present strategy of primarily equity investments in the Indian realty sector.

Yatra Capital has invested across asset class but its maximum exposure is in the retail segment where it has invested in market city projects of the Mumbai-based realtor Phoenix Mills Ltd. It also has enterprise level stake in Saket Engineers Pvt Ltd and the Phoenix Mills.

After the proposal was submitted, a number of amendments were suggested by the concerned shareholders and the board had later determined that until a final position was reached on the potential amendments to the proposal, it would not be implemented. This happened in spite of the board getting what it called a ‘broad’ investor support.

Property prices in Coimbatore may get hike

The jump in land, materials and labour costs has pushed property prices up by 25%-30% per cent and slowed the growth of the real estate sector in Coimbatore in the last two years. Property developers in the city believe that if the real estate sector has to grow at pace similar to that of Chennai, which despite the global economic slowdown, registered a steady growth quarter after quarter, as per the residential price index brought out by the National Housing Bank, the government has to develop infrastructure facilities, promote industries and improve water bodies.

“There is not much space left for property developers inside the city. All construction activities are moving towards the suburbs,” said V Subramanian, president, Confederation of Real Estate Developers Association of India (CREDAI), Coimbatore. However, land prices have increased in the outskirts in the past two years. The cost of material and labour is also on the rise. This has seriously affected the middle income group, which is the major segment that invests money to buy property. Property developers have been forced to pass the cost increase burden on the people, which have slowed down the market.

“Land costs have increased four-fold in Coimbatore, which is causing major problems for developers,” Subramanian said. Cement, which was costing Rs 190 a bag a year ago, is now available for Rs 300. Steel prices have increased from Rs 38000 per tonne to Rs 60000 per tonne now. Developers are struggling to control their costs and boost sales. Omkar Sankar, director, Sankar Foundation, said there is huge demand for affordable and low-budget houses in Coimbatore. But the jump in prices of affordable houses is now becoming a cause for concern, he noted.

Flats that were sold for Rs 4500 per sq. ft. in Ramnagar area are now being sold for Rs 6500 per sq. ft. Similarly, in areas like Vilankurichi, Thondamuthur, Vadavalli, which are outside the city, costs have moved from Rs 2300 per sq. ft. to Rs 3500 and more. Though the recent lowering of interest rate by banks may bring some respite, developers are still in a wait and watch mode. The situation in Coimbatore is different from Chennai, which is well connected with infrastructure facilities even in far-off areas.

There is a huge demand for housing in Coimbatore and in the next few years there would be at least a demand for 1 lakh housing units, said P Karthikeyan, Chief Executive Officer, Trishul Shelters Private Limited. However this would require good connectivity and infrastructure development in the suburban areas, which is lacking now, he said. Besides the developers have to look at ways to keep costs down by adopting innovative methods and different technologies, he noted.

Chennai leads Indian Realty Sector.

In a recent report, property broking and real estate consulting firm Jones Lang LaSalle said the Indian property market is poised to attract about US$3 billion, almost double last year’s US$1.6 billion, from overseas buyers this year.

The Indian property market will see more investment from overseas this year as it still remains an attractive investment destination globally.

Of this, one-third would be from home buyers and the balance from investors. This is despite the fact that property prices in India are at an all-time high.

According to a recent National Housing Bank (NHB) survey, property prices in big Indian cities have increased by as much as 43 per cent to 166 per cent in the last four years.

NHB, wholly owned by the Reserve Bank of India, lends to home-mortgage companies. It also regulates and refinances social housing programmes. In its report, the bank said Chennai had seen the highest rise in prices at 166 per cent. Bhopal was second with a hike of 117 per cent and Mumbai was ranked third with an increase of 87 per cent.

What then brings overseas investment to Indian property, when prices are skyrocketing? The answer is simple: Despite the global turmoil because of the financial crisis, the Indian economy has remained robust, largely due to domestic-driven demand.

According to Jones Lang LaSalle, India’s strong economic growth, rapid urbanisation, growing middle-class population, demographic advantage and increased thrust on infrastructure has worked in its favour. Buying property is especially popular among Indians living abroad, who all seem to want a piece of the homeland. That is why Indian property shows are burgeoning around the globe.

Dubai-based Sumansa Exhibitions has been holding Indian property shows across five countries. And every year the number of developers taking part in the shows and the attendees has grown rapidly.

Sumansa Exhibitions’ chief executive officer Sunil Jaiswal says: “We have held shows in the UK, South Africa, Hong Kong, Dubai and Singapore. They have been very well received by both exhibitors and visitors alike.”

This year Sumansa will hold the Indian Property Show in Singapore on April 14 and 15. It will be held at the Suntec Exhibition Centre’s hall 401 and nearly 40 developers from across India will be part of the show.

More than 200 properties will be showcased during the two-day exhibition. Sumansa expects the number of footfalls at the event to be much larger than the 4,000 that turned up at its last year’s event.

Hopes Revive for Housing , Infra Projects in Patwari

With the Supreme Court on Wednesday dismissing as withdrawn a special leave petition (SLP) filed by a group of Patwari farmers ,who challenged the Government ‘s move to work out an out of court settlement with farmers , The greater noida industrial development authority (GNIDA) is confident that the crises in Patwari will be resolved soon. There’s relief for 20,000 homebuyers who have booked flats in projects coming up in Noida Extention’s paywari village.

The Dismissal of the SLP and the indications that the Allahabad high court will begin hearing the Noida and Greater Noida land acquisition cases only after two weeks have allowed the government more time to make more and more Patwari farmers fall in line.
Not only homebuyers but projects like Metro line which is proposed from Noida to Greater Noida road (140 Metre wide, 28 Kms long) , a Greater Noida – Ghaziabad road (60 Metre wide , 22 Kms Long) will also get a new lease if life.
The authority had allotted 3,000 residential plots to people , plus there are number of corporate offices , besides schools and other institutions in that area. A section of farmers in Patwari , where the state government on August 6 struck a higher compensation deal to revive real estate projects , had moved the Supreme Court against the arrangement. Greater Noida chief executive officer Rama Raman termed the SC order “a positive sign”.
A two judge bench of the same court on July 19 quashed forcible acquition of 589 hectares of land in Patwari. But another two judge bench of the same court , while hearing some remaining petitions from Patwari on July 26 , referred the matter to the higher bench for hearing. The court also allowed the contesting parties time till August 12 for the settlement.
Farmer Layer Mr Parminder Bhati said “our contentions was when the HC had quashed acquition in Patwari village , the remaining petitions should have got the same relief. In the name of out of court settlements , government, officials and its heavy weight politicians have been putting pressure on farmers”
Farmers also claimed the court’s stand on Wednesday as victory for them. Ranveer Pradhan a farmer said “we thought we might not get back our land.but the court has approved of the july 19 verdict of the high court”.”The court has said the July 19 verdict was in favour of farmers and assured if the high court’s higher bench ruled against the interest of farmers they can move the Supreme Court.” Said Bhati.

Joint Venture Among Tata Housing & Tata Realty

Joint venture
April 26, 2010

The two companies Tata Realty and Tata Housing belonging to Tata Sons Ltd. are competing with each other which are doing nothing but hindering Tata Sons on a whole.  Therefore, Tata Sons is asking them to avoid this competition.

Tata Housing Development Co. Ltd was established so as to develop and sell primarily residential projects whereas Tata Realty and Infrastructure Ltd was set up to function as a fund and develop infrastructure projects. They both are 100 percent subsidiaries of the group.

Some officials stated that the problem arose two years ago when Tata Realty started looking for real estate projects which directly overlap Tata Housing’s business interests.

This competition is on its peak since both of them now plan residential projects in cities such as Pune and New Delhi.

Now, Tata Realty is been told that it has two options; either develop its ongoing and future residential projects as joint ventures with Tata Housing or not pursue housing projects at all.

Mr. Brotin Banerjee, managing director and chief executive officer of Tata Housing maintained a silence when asked if the two groups had competition amongst them and said that just some overlaps were there and added that the companies shared the same chairman, R.K. Krishnakumar.