Tag Archives: Property Consultant

Sahara, ICICI, Bhushan Steel in race to buy Parsvnath’s Connaught Place land.

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Sahara Group, ICICI Bank, Bhushan Steel, Bharti Realty, Red Fort Capital and Shri Lal Mahal are understood to be in the race among others to acquire Parsvnath Developers’ 1.18 acre of prime commercial land near Connaught Place in the National Capital.

In January, Parsvnath had announced plans to monetise the KG Marg land, which it had bought for Rs 200 crore in 2008. Parsvnath, which is eyeing about Rs 700 crore from sale of this land, got the building plan approved from local authority last week and potential buyer can start construction on the land immediately after the deal, sources said.

“The first round of bidding and due diligence have been already completed. The process will be expedited now as the company was waiting for the building plans approvals before it starts negotiation with potential buyer,” a source, who is involved in the process, said. Sahara Group, ICICI Bank, Bhushan Steel, Bharti Realty, private equity firm Red Fort Capital, rice company Shri Lal Mahal and one leading realty firm from NCR have shown interest in buying this land, sources said, adding that Parsvnath had got bids up to about Rs 700 crore in the first round of bidding.

When contacted, Parsvnath Developers Chairman Pradeep Jain said: “The process for sale of this land is on. We cannot comment any further.” Property consultant Jones Lang LaSalle India is helping Parsvnath in this deal. The built-up area allowed on this prime land is about 1.5 lakh sq ft with 300 car parking. Realty consultant said that prime office buildings near CP are currently commanding a monthly rental of 350-400 per sq ft.

Although Jain did not give any timeline for completion of this transaction, sources said that the deal could be closed in this quarter. Parsvnath has a net debt of about Rs 1,200 crore and plans to reduce it to about Rs 500 crore by utilising the proceeds from sale of this prime property. The company has two housing projects and several shopping malls at metro stations in the National Capital. It is setting up an office building near Gole Market here with an investment of Rs 300 crore.

That apart, Parsvnath had bought in 2010 a 38 acre of land near Sarai Rohilla from the Railways for Rs 1,651 crore, making it the second biggest land deal in Delhi. The company, in partnership with Red Fort Capital, plans to provide luxury housing and commercial space in this project. Parsvnath, which has a land bank of about 200 million sq ft across the country, had received private equity funding from Sun Apollo and JP Morgan in some other projects in NCR.

 

 

Realty PE Deal Volume in Q1 rises but Big Deals are missing.

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Private equity deals are alive and kicking in Indian real estate space even though headline numbers do not reflect the same due to the absence of big ticket investments. The total number of PE deals during the first quarter of CY 2012 has hit a three-year high, according to VCCEdge, the financial research platform of VCCircle.

There were 12 deals worth $279 million in Q1, compared to 9 deals worth $432 million in Q1 CY2011 and 4 deals worth $97 million in the same period in 2010, according to VCCEdge. This is much lower than the peak of 22 deals cumulating to $1.2 billion in the first quarter of 2008, after which stock markets went into a tailspin due to global financial meltdown.

Although the overall value of PE investments has shrunk and investors remain cautious about the sector, it does not necessarily reflect a poor investment scenario in the realty space, according to analysts.

Shobhit Agarwal, joint managing director (capital markets) at property consultant Jones Lang LaSalle India, says, “Most of the funding that is happening now is for last-mile project completion where most of the money has already been spent by the developers and they don’t need large-size funding.” In fact, the projects are 60-70 per cent complete and developers are looking for some more equity to finish them off, he adds.

Last year, the average deal for PE investments was skewed up in the first quarter due to two $100 million-plus investments, including one by Ascendas. This pushed up the average deal size to around $50 million, as against the average size of $20-25 million in Q1 of the previous two years.

But there is another reason for lower quantum of investments by PE firms in the realty sector. According to V Hari Krishna, director of Kotak Realty Fund, “Most of the funds are reaching their shelf life and new fundraising is not happening in the same pace as it happened in the earlier round. Therefore, a lot of funds have either exhausted their capital or are on the verge of it and investments are slowing down.”

Even though the average ticket size of PE investments has shrunk, real estate remains one of the top sectors drawing PE firms. During Q1, real estate accounted for almost 10 per cent of the total PE deal volume and around 15 per cent of total value of PE investments, as per VCCEdge.

Real Estate Suffers due to Regional Laws

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3D Realty Handshake
In past few years, the realty sector has shown tremendous growth but according to experts, it may still remain a regional play in the country. The underlying reason is that different regions have different laws.

JLLM,Jones Lang LaSalle Meghraj, a property consultant firm’s  Country Head and Managing Director Anuj Puri said that developers experience difficulties in having a pan-Indian presence due to the different procedure and different laws in every state for acquiring land, property taxation and approvals for projects.

Since there is a need of understanding local dynamics for developing realty projects, many developers take property sector as a regional business.

The problem for developers of having a pan-India presence cannot be helped until there is in land acquisition process and regulatory approvals are the belief of many consultants and developers.