Real estate developers in Karnataka have decided to raise home prices by 3-8% from June 10, citing steep increases in the cost of construction materials and higher labour rates.

The price hike was “inevitable” because steel was dearer by 24% compared to its January level and cement prices were up 56% from the beginning of the year, Balakrishna Hegde, the president of the Karnataka unit of the Confederation of Real Estate Developers’ Associations of India said. The revision is the first of what could be a series of increases in the rates of residential properties.

CREDAI’s state chapter groups 124 real estate firms and includes the top property developers in Karnataka.

“Rising input costs have affected the cost of construction very harshly, increasing development costs by 20%-30%, depending on the stage of construction. Our members will increase prices by Rs 75 to Rs 500 per sq ft based on the location and the stage of construction,” Mr Hegde said.

The revision is the first of what could be a series of increases in the rates of residential properties as commodity prices escalate, pushed higher by soaring oil prices.

“What we are passing on is only a small portion of the increased cost of construction. We do not want to pass on the entire burden to at this stage, but will review the situation and take appropriate steps in the coming months,” he said.

The Ahmedabad-based EsVee Group, promoted by Mr Vijay Kumar Gupta, Chairman and Managing Director of Gujarat Ambuja Exports Ltd (GAEL), plans to develop exclusive townships across India. The first of these chain-townships, at Mysore, is scheduled to be completed by 2010, on a 60-acre plot situated 1.5 km from the airport. The township, christened `Highlands’, would offer250 residential flats of three to five bedrooms and 150 villas – all fully furnished and air-conditioned.

After being on the backburner for over 7 yrs, the Securities and Exchange Board of India (SEBI) has released draft rules for mutual funds real estate schemes, bringing a lot of relief to the MF industry. SEBI has given authorization to two types of real estate funds.

While the first group is of real estate MFs (REMF), and the other group is Real estate investment trusts or REITS. REMF will spend in real estate projects and mortgage-backed securities. These will be closed-ended funds, listed on the exchanges. As their net asset values will be declared daily, investors will have the choice to exit any day.

The Bhopal-based Som Distilleries and Breweries, manufacturer of the Hunter beer, has acquired a 50-acre prime plot in Gwalior for Rs 266 crore from the Madhya Pradesh government. The company will develop a retail mall, a theme mall and two hotels — a star hotel and a budget hotel — as well as residential apartments, in the property.

The project, called Thatipur Gandhi Road Project, is a 60:40 collaboration with Patel Engineering and marks the brewing company’s foray into realty business. Sompel, the company in charge of the project, is promoted by Som Distilleries.

Som Distilleries’ chairman and managing director Mr. JR Arora said, “The project is expected to generate a valuation of Rs 2,500 crore in three years. This project will boost the growth of the company further”.
The project is part of the state government’s housing scheme for its employees, wherein the builder is required to construct a certain number of houses.

The cost of the project will be deducted from the amount to be paid to the government, on account of acquisition of the land on a 90-year lease. Mr Arora said that the project will cost around Rs 100 crore, and will be financed through internal accruals, financing from customers, institutional borrowings etc.

The bid comes as a breakthrough for Som Distilleries, which has been looking for opportunities to diversify from the brewing and distilling business. The Rs 200-crore company, which introduced the concept of strong beer in India, has plans to venture into the South Indian beer market.

Though it controls 12% of the country’s premium beer market, the distribution has been limited to the North Indian market up till a few months ago. Now the company is planning to access brewing facilities through bottling contracts, acquisitions and greenfield projects in southern markets.

Knight Frank India, a real estate consultant company, predicts more correction in house prices if the existing slowdown in residential property sales keeps on, Chairman Pranay Vakil said.

“(In) residential, there is a slowdown. The volumes of dealings are low and it is a precursor to prices going down. In a lot of speculative areas, prices have already gone down. If these things continue for further 2-3 months, it is very probable prices will come down for residential segment,” Vakil said, adding sales volumes traditionally drop in June.

His remarks come at a time when there are concerns over a probable slowdown in demand for residential real estate because of high interest rates, oversupply, and funding issues.

Real estate developers for example Brigade Enterprises had said the company observered a 20 % slowdown in house unit demand in south India in January-March.

Media reports also suggested that prices in Mumbai, Bangalore, Pune, and National Capital Region have corrected 15-20 % in the first quarter of this calendar year.

Due to mismatch in demand and supply on commercial office space, rentals are likely to remain high for further 6-12 months, Vakil said.

Khaleeji Commercial Bank has collected $163.5 million of equity from investors across GCC for Danat India Investment Company.

Danat will invest in a real estate development project near New Delhi, targeted at the expanding middle class of India.

India, presently one of the foremost rising markets is predicted to be the world’s 3rd biggest economy by 2050, ahead of Japan, the UK and Germany.

In a statement Khaleeji Commercial Bank chief executive officer Ebrahim H Ebrahim said that theyt are extremely delighted with the response to Danat, which is their first foray into the Indian Sub-continent.

“With a target return on investment of 83pc over a 3-year period, Danat wants to fulfill the requirement of middle income residential properties driven by increasing urbanization, rising disposable income and trouble-free financing alternatives. It offers our investors a chance to potentially advantage from the continued growth of the Indian economy, specially the demand from its burgeoning middle class.”

Milestone Capital Advisors will raise a fund of ten billion rupees to invest in the real estate sector in tier-II and tier-III cities of Tamil Nadu (TN).
The amount would be raised from high net worth individuals and financial institutions.

This fund would be primarily used for the construction and development of low-cost and green housing and also large warehousing across Tamil Nadu.

The company had so far floated two funds. The first one was for Rs 2.5 billion and the amount was disbursed for fourteen projects, of which nine were in Chennai.

The second one was for ten billion rupees, which was invested in readily available properties such as warehousing and office complexes.

As the four-year bull run in the Indian market went into a sharp correction early this year, foreign investors quietly withdrew part of their holdings in leading stocks while retail investors bought into them.
Domestic investors(including institutions, MFs and retail investors)were net buyers in those top companies. These entities together bought around 1.1 percentage point stake in these companies, the highest ever in 28 quarters. During the quarter, retail investors too increased their stake by 0.4 percentage points to 14.4%, the first hike in stakes in two years.

On the other hand, FIIs continued to sell these stocks and reduce their stake for a third quarter running, taking it down by 2.6 percentage points from the September 2005 high, the report noted. Interestingly, FII stake in the top 20 holdings were up significantly to 71.3%, compared to 70% as of December 2007.

Retail investors have been buyers of these top companies’ stocks in only seven out of the past 28 quarters, since the ownership data was first disclosed, in contrast to FIIs, which have been buyers in 17 of these 28 quarters.

Apart from reducing their stakes in the 75 top companies, FIIs also continued to churn their portfolios at the individual stock level as well as at the sector level, the Morgan Stanley report said. At the sectoral level, FIIs appear to be overweight in just three sectors — telecom, financials and consumer discretionary.

Mumbai-based firm will invest Rs 18,000 crore in next twelve years. BSEL Infrastructure Realty plans to set up a company in Malaysia to execute its operations in that country.
The Mumbai-based company has signed a memorandum of understanding (MOU) with Malaysia’s Iskandar Regional Development Authority (IRDA) to develop properties in Johar Bharu region of Malaysia. The company has plans to invest Rs 18,000 crore in the next twelve years.
The new company will be either made a supplementary of BSEL Infrastructure Realty, or its UAE subsidiary BSEL Infrastructure Realty FZE.
Dharmendra Raichura, managing director, BSEL, said that the company will use the proceeds from UAE projects to finance the Malaysian projects. The company generated revenues of three hundred crore rupees in 2007-08 from the UAE operations and expects to make seven hundred crore rupees in the recent financial year. BSEL will borrow funds to finance the projects.
The company will develop seventy million sq ft of space in three phases with ten million sq ft in the first phase and double in every subsequent phase. It will invest Rs 2,500 crore in the first phase and Rs 5,000 crore in the next phase.
Raichura said the company expects returns of 35- 40 % from the project. Private equity companies invest in realty projects in India with expectations of 25-30 % rate on investment.
“Johar Bharu is a 25-minute drive from Central Singapore, where property prices are 25 times more than the rest of the country. The authority plans to transform Johar Bharu into the next hot spot after Singapore in five to seven years. That is why we chose that city,” Raichura said.
BSEL will get a tax holiday on land sales and premises sales till 2015 and exemption on rental income till 2020.

MUMBAI: Equities are seen opening flat-to-negative on Tuesday amid quiet global cues. Crude oil’s record high spike to the $127 mark will weigh on sentiment.

Essar Oil’s refinery expansion project at Vadinar may turn out to be the only such upcoming project to be denied a 100% tax holiday available to refinery projects. This follows the finance ministry’s decision which allows refinery projects to enjoy the tax holiday only if they have a joint venture with a public sector company that holds a 49 per cent stake. Shares of Essar Oil ended at Rs 257.75 on the BSE.

Italy is fast turning into a hunting ground for Indian auto companies and more so for Mahindra & Mahindra. The tractor and utility vehicle maker is learnt to have set sights on Italian motorcycle marque brands — Cagiva and MV Agusta — famed for designing high-end, high-performance superbikes that are a rage on the speed motorcycle circuit. Mahindra & Mahindra shares closed at Rs 662 on the BSE.

Parsvnath Developers may bag the development rights for one of India’s biggest infrastructure projects, the Rs 1,850-crore Nanocity to come up in Panchkula near Chandigarh. The project, spread over 11,138 acres, being jointly promoted by Hotmail founder Sabeer Bhatia and the Haryana State Industrial and Infrastructure Development Corporation is modelled on the Silicon Valley and will come up in two phases. Shares of Parsvnath Developers ended at Rs 222.35 on the BSE.

Tech Mahindra has paid British Telecom $110 million as ‘exclusivity fee’ for an impending mega-deal with the UK-based telco. The company is in exclusive negotiations with BT along with a consortium partner that is a large global IT player for a significantly large deal. Tech Mahindra scrip gained 2.42 per cent to Rs 956.05 on the BSE.

Champagne Indage took over assets of UK-based wine supplier, Darlington Wines for an undisclosed amount. This is company’s fourth overseas acquisition and a part of its strategy to strengthen its overseas presence. The stock ended at Rs 530 on the BSE.

BSEL Infrastructure Realty will develop about 70 million square feet in the Iskandar region in southern Malaysia. The company will be investing Rs 18,000 crore over 12 years to develop residential and commercial property in the area. The stock ended at Rs 50.55 on the BSE.

Tata Coffee is eyeing a distribution company in Russia which owns a couple of well-known coffee brands, reports DNA Money. Shares of Tata Coffee climbed 1.35 per cent to end at Rs 228.20.

Peninsula Land and Arrow Webtex will form a joint venture to enter hospitality business. A special purpose vehicle will be created which will be held 50-50 by both the partners to build business hotels. In the first phase, an equity infusion of about Rs 100 crore is envisaged by both the joint venture partners in equal proportion.

Bombay Dyeing is considering demerging its real estate business into a separate company, reports DNA Money. The hiveoff will be followed by an initial public offering. The stock gained 5.35 per cent to close at Rs 973.15 on the BSE.

Stock specific action is likely with a slew of corporate results from the likes of Suzlon Energy, Bharat Forge, GMR Infrastructure and Tata Teleservices Maharashtra.

 After the fresh rise in real estate prices all over India, the reports are coming about rising rental prices in key industrial towns. A current report about rental prices in New Delhi has shown a 13 % rise in rental prices in year 2008.
Global real estate consulting company, Cushman & Wakefield has reported a rise of 7-13% in rental prices during the first quarter of this year. The demand is high and space for further development is limited. While in Gurgaon and Noida, the rentals have grown at 10-12 %.
Rental prices are higher in Bangalore, Mumbai, Chandigarh, Noida and Gurgaon as well. Real estate prices were lower during the first quarter of 2008. The prices had seen a good appreciation and there was a need for correction in the prices of real estate.
Small builders were having problem in selling their existing projects. According to recent reports, many small builders sold stake to real estate majors as they couldn’t bear the diminishing in prices of residential property. Real estate majors have lot of cash and can wait for the prices to stabilize. Home buyers and long term investors were waiting for reduction in prices while speculation based traders have reduced their exposure in most sectors.

The Real estate industry in India has been growing by leaps and bounds in the past few years. However, the country still lacks a credible way to cross-check the price swings (real or reported) in the sector. For example, recent reports of residential prices cooling off in major cities of the country could not be verified.

There was no authentic data to indicate such a trend. Thus, property buyers remain confused, not knowing, for instance, whether Mumbai property prices fell more than that of Delhi in the last quarter?

The same does not happen with equity investors. At the end of the day, anyone wants to know the day’s market trend and for this he could take help of BSE/NSE website or see next day’s newspaper to know the exact rise or fall of Sensex or Nifty. Sensex or Nifty are taken as a barometer of market sentiment. With years of index publishing, a sort of credibility and association has been built with the equity investors by these financial institutions.

NHB made a beginning in this direction in 2005 when it launched a project for preparation of the real estate price indices for the residential housing segment, NHB Residex. To start with, the project envisaged compiling the indices for 10 cities — Greater Mumbai, Kolkata, Delhi, Chennai, Bangalore, Hyderabad, Ahmedabad, Kanpur, Jaipur and Patna. It also gave price appreciation figures for major cities at the time of the launch of the index. However, getting data from NHB has been tough for analysts.

With various mutual funds planning to soon launch real estate funds, it is imperative that a reliable index data, preferably from a government body like NHB, is made available to act as a benchmark.

Capturing real estate prices in India has its own challenges. Thanks to different types of housing that are made available by builders, there are large variations in property price in a single locality. It is difficult to put a single price to a locality which has different class of houses, say premium as well as low cost.

However, NHB with its wealth of information on loan disbursements and other crucial figures could do a lot for the industry. Since most financiers would have data on a city-wise basis, it could be shared with NHB for internal index calculation purposes. If NHB cracks the same, it could be one big step towards making the industry more competitive.

Nearly seventy eight million square feet real estate space is expected to be added by 2015 due to forty seven airport modernization and upgrade projects.
The projects cover forty thousand acres across forty existing and seven new airports, according to the Airport Realty Report by global property consultancy Cushman & Wakefield.

The report says if the airports are modernized according to schedule, the non-aeronautical revenues may rise from the current 35- 54% by 2015. It is estimated that rent from retail, office and hospitality will constitute nearly 45 % of the airports’ non-aeronautical revenue by 2015. The rest will come from other non-aeronautical sources like trading concessions, public admission fees and miscellaneous income from advertising, car parking, etc.

Mr. Anurag Mathur, joint managing director, Cushman & Wakefield, said,”Globally, airports derive a large portion of their income from non-aeronautical revenue sources; Heathrow, San Francisco, Vancouver and Brisbane earn as much as 50% from retail and other non-aeronautical resources. With greenfield projects in Hyderabad and Bangalore taking their maiden steps, India is soon to replicate this potential revenue-earning model.”

According to estimates, retail space accounts for 18% of the total real estate space projections for airport projects. Most of this supply is concentrated in tier-III towns and cities as it comprises tourist destinations. The highest supply is, however, expected to be in Hyderabad, which accounts for 1.8 million square feet of the total projected retail space.

The study estimates office space to be more than 50% of the total real estate space projected for airport projects. With nearly forty one million square feet office space planned, the three tier-I locations are expected to add 14 million square feet office space, whereas the five tier-II cities expect 13.5 million square feet by 2015. Tier-III locations, which include over thirty five cities, would account for around 32% of the total office space supply amounting to fourteen million square feet.

MUMBAI: The Ajmera group-controlled Shree Precoated Steels, which has interests in real estate and steel, has taken a decision to hive off its steel business into a separate company. This will be a reverse merger as the Mumbai-based group had earlier merged its real estate assets with Shree Precoated Steels.

The group will rename Shree Precoated Steels as Ajmera Real Estate and Infrastructure, while the demerged entity will be known as Shree Precoated Steels, said Shree Precoated Steels CFO OP Gandhi. The group had mandated PricewaterhouseCoopers to advise it on the demerger, he told ET. The Ajmera family owns 62.5 per cent in Shree Precoated Steels, according to BSE data.
Post-demerger, Ajmera Real Estate and Infrastructure will hold the group’s five real estate projects — three in Mumbai (Wadala, Kanjur Marg and Ghatkopar) and one each in Bangalore and Bahrain. Shree Precoated Steel will continue to make colour coated galvanised steel sheets. On 16th may, the stock closed marginally down at Rs 189.20 on BSE. “The demerger will help the group give exact focus to both steel and real estate businesses,” Mr Gandhi said. The group is developing residential and commercial projects in Wadala and Kanjur Marg, while it is developing a residential project in Ghatkopar.
Mr Gandhi said the Kanjur Marg project is the biggest among its existing real estate developments. The project is being developed under a special purpose vehicle named Jolly Brothers.
The group also plans to develop a two thousand five hundred crore rupees, residential-cum hospitality-cum-commercial area in Kanjur Marg, comprising residential space of twenty six lakh sq ft and commercial space of fifty four lakh sq ft. The company intends to pump in Rs 500 crore and raise Rs 1,000 crore by way of debt.
Ajmera group has already developed 170 lakh sq ft in Mumbai, besides large format projects in Pune, Rajkot, Ahmedabad and Surat.

ICICI Venture, the private equity wing of ICICI Bank, plans to raise three billion dollar from its 2 funds including equity and a real estate fund.
A senior ICICI Venture executive told that they will raise $1.5 billion from both these funds.
The ICICI Venture executive said the company expects to generate most of the investment for the fund from the US, Europe, Canada and West Asia.
“The equity fund will invest in all vital knowledge economy sectors. The real estate fund will invest in residential in addition to commercial properties,” he said.
The $1.5 billion real estate fund is the 2nd such offering from ICICI. The company has just closed a five hundred fifty million dollar real estate fund, the first in a proposed series of real estate funds by the firm.
Real estate is the hottest sector for private equity investment in the country, and accounts for 30- 40 % of the deals. At present, Goldman Sachs one billion dollar real estate fund is the largest fund investing in real estate in India. The US investment banking firm had set up this fund in 2006.
Credit Suisse had also announced plans to set up a one billion dollar real estate fund in India. However, the proposal was not cleared by the RBI.

NEW DELHI: Delhi Metro has produced six hundred crore revenue from the commercial use of its property during the first phase of the Metro project.

The real revenue generation is approximately double the target, thanks to skyrocketing commercial property prices and growing demand from retail sector and IT companies. Buoyed by the excellent response, DMRC officials expect that total revenue from property development would reach Rs 1,000 crore in a few years.
Earnings from commercial use of vacant land constitute around 30% of the total operating revenues generated by DMRC. In 2007-08, the company reported total operating revenue of Rs 327 crore, a 28% increase from Rs 256 crore in 2006-07.
“The revenue generated from the property development in the first phase of the metro project will contribute to our internal accruals, which will be used to finance the next phase of the Metro project. Still, there are some unoccupied areas that can be commercially used under the phase-I and we expect the total earnings from such commercial activity to reach Rs 1,000 crore. In the second phase, similar property development will be undertaken and we have targeted a revenue generation of Rs 405 crore from the same,” said a source.
Property development undertaken so far includes 6-12-year licence awarded for the spaces within station buildings for commercial related vendors such as ATMs, kiosks, refreshment and magazine stalls. Similarly, shopping malls have also been set up through developers on a license basis for the period of 12 years inside station buildings which have larger concourses.
Such malls have already come up at Inderlok, Netaji Subhash Place and Kashmere gate stations. DMRC has set up an IT park at Shastri park station which has been rented out to ITES operators. The company has undertaken some residential and commercial developments outside Shahdara and Inderlok stations through developers on a concession period of 30 years.

NEW DELHI: All new airports in the country will emerge as business nucleus with world class office, hospitality and retail space. The modernization and development of airports will not only provide the facelift to respective cities but also improve the real estate sector, said a report by Cushman & Wakefield.

To exploit the trend of rising city centers around airports, the Airport Authority of India has provided huge land for development of commercial realty and retail space. For airports in Mumbai and Delhi, the report said, 50 per cent of the total real estate space has been allocated for commercial development.
India has come into view as one of the most favored destination in Asia-Pacific region for strong performance of businesses, which led to an influx of MNCs. This has sustained the demand for commercial office space in large cities. The high economic growth across the country also made the smaller cities like Lucknow, Kochi, Coimbatore, Mysore, Jaipur and Indore among others attractive destinations to do businesses.
The report said apart from commercial office space supply, these airport projects will also allow time saving between business meetings during the transit/ waiting period with the proposed convention and business centers that form part of the overall development plan.
In the retail sector also, the report said, huge opportunities are awaited. It said, “With changes in airport security, passengers today are required to arrive early, consequently finding themselves with adequate time to spend before departing.” This provides the opportunity to tap the captive consumer base with high spending power.

Landmark Group declared that it would invest approx four thousand crore rupees in developing twelve properties across the north India in the coming three to four years.

Mr. Amit Kumar, Director, Landmark Group, said, “Currently, our twelve projects are undergoing in the North, which will be completed in the next three to four years. We will be investing about one billion dollar in developing these projects”. Further he added that the company would fund the projects through internal accruals and funds from private equities.

He said, “We will try to fund our projects through our own resources, but also, we do not mind private equity players’ participation. Starting from twenty-five percent, we are ready to sell up to forty percent to private equity players in different projects”.

The NCR-based firm has planned to develop three hotels, 2 5-star and a budget hotels in the coming three years, which could entail an investment of about seven hundred crore rupees.

Mr. Kumar said that Landmark Group is developing a three thousand room 5-star hotel in dharuhera and a budget hotel in Gurgaon with more than hundred rooms. The other five star hotel would come up at Bawal in Haryana

The Indian real estate company Sigrun and a leading Israeli firm are in talks over a deal worth more than five hundred million dollar, as said by knowledgeable sources.

Most of Sigrun’s activities (95 %) are in residential property and the rest in office rentals, according to CEO and controlling shareholder Rajesh Nair. He said that the company’s profit in preceding FY was fifteen million dollar, and if everything goes as planned, this year it will be forty million dollar.
Sigrun is examining different possibilities for cooperating with Israeli companies. One main Israeli firm, which has not expanded into the Indian market so far, expressed interest in continuing the contacts with Sigrun, and the latter has hired a leading Tel Aviv law office to facilitate the proceedings.
In a discussion with TheMarker, Nair pointed out that his company has construction-ready building plots in India worth five hundred million dollar, in addition to 100 apartment units in different stages of construction. He said that the discussion here have not yet reached the stage of precise numbers and percentages.
Nair stressed that any Israeli partner must have international exposure, since Sigrun has not yet ventured away from India, while many Israeli companies are active in the world real estate market. He said he is looking for a company that can bring to the table technologies and planning capabilities that Sigrun lacks at this time, while Sigrun can contribute its proficiency in the Indian market to the Israeli partner.
Only a few Israeli developers – including Electra Real Estate and Azorim, and Elbit Imaging – are involved in construction in India.

A few years ago, DDA and GDA used to make one-bedroom flats in a big way. These one-bedroom flats can be seen in numerous parts of the capital, and in Ghaziabad. Thousand of people live in these flats with their families.

Nowadays, there are ample buyers for such one-bedroom flats; the prestigious real estate firms have almost stopped making one-bedroom houses. One has to really make an extra effort to figure out if any well-known builder is still constructing such flats.

This trend has also spread out to the whole of NCR. Those who know the real estate market well enough will tell you that many aspiring flat owners cannot buy houses due to the high cost of 2,3 and 4 bedroom apartments.

Due to this very reason, many of them drop the idea of buying a flat. If the same people are offered a single-bedroom house, costing up to Rs 18-20 lakhs, they can easily buy that with the help of a home loan. It is really baffling to say the least, that builders have essentially stopped making single-bedroom flats despite the enormous demand.

Anil Sharma of Amrapali group also says that there is an urgent need to build a large number of one-bedroom houses in a covered area of up to 700 square feet.

Mr. Sharma said, “I know from my own experience that there are many people from my home state Bihar, interested in purchasing small and compact flats here in Delhi. But, due to non-availability of such flats, they keep on living in rented house”.

Mr. Sharma suggest a solution by stating that as nobody can force any builder to make one-bedroom houses, it is high time that the government gives some financial incentives to builders so that they feel encouraged to make one-bedroom flats.

Real estate and hospitality major Royal Palms India will invest two thousand four hundred crore rupees in the coming two years for setting up four- and five-star hotels in big cities in the country. The company is planning to build four luxury hotels in Mumbai.

Royal Palms India Joint Managing Director Dilawar Nensey said that “The company is setting up four luxury hotels in Mumbai itself, out of which one is a three-star, one four star and two five-star hotels. This will increase the total room capacity to three thousand by 2010, which will be around 30% of the total rooms available in the city”.

Royal Palms already have 2 hotels in Mumbai and 3 each in Hyderabad and Kolkata. Right now, the company has a total of about four hundred rooms in Mumbai. “The investment for Mumbai will be one of the uppermost as it excludes the price required for land. We plan to set up hotels on our own land at Goregaon East,” Nensey said. The addition of rooms will provide to the existing lack of around three thousand rooms per day in Mumbai.
The company is in the process of identifying properties in Hyderabad and Kolkata for setting up luxury hotels. Royal Palms will invest around one thousand four hundred crore rupees to build three- and five-star hotels in these cities.
The company intends to develop one three-star, one four-star and one five-star hotel each in Hyderabad and Kolkata, with a total room capacity of around one thousand.

Pantaloon Retail (India) Limited, a future group venture, will make an investment of more than Rs 1500 crore for opening more than 110 big bazaar hyper Markets in various cities across the country, Anand Adukia, Zonal Chief of the company said on Friday.

“With this launch, Big bazaar is now present in all the four major cities of Ahmadabad (five stores), Anand, Surat, Rajkot and Vadodara (one each) while the count for all India goes upto 90 stores in 55 cities in the country,” Adukia told reporters, after opening its ninth store in the city today.

The sprawling three floors of Vadodara Big Bazzar houses over 1.6 lakh products and is a destination store to cater to every single household needs of a family, he said.

“We are a consumer-driven company and we ensure that all our Big Bazzar stores fulfill the needs of the entire household under one roof,”Adukia said.

This store also houses, ‘Navras’, a national brand known for fine 22 carat pure gold and diamond jewelery.

The company intends to open one more store in Vadodara, and Ahmedabad in next couple of months along with Jamnagar, Bhavnagar and Vapi among others, Adukia added.

Besides, the company also intends to open 11 more stores in Gujarat later this year, he said adding, with this, the company has made a total investment of Rs 500 crore in the state.

At present, Pantaloons caters to the lifestyle segment through its 40 stores and seven central malls.

The company is a leading retailer with a turn over of over Rs 3350 crores and is targeting 50% growth this year, Adukia added.

With bank credit drying up and private channels of funding getting expensive, several small developers are attempting to mop-up funds from retail investors by offering them a 12% guaranteed return for 5-9 years. Under the scheme, a retail investor has to buy a minimum area in the project and make an outright payment.

Delhi-based Piyush group, which is developing a 4 lakh square feet IT project in Faridabad, is offering a 12% return for nine years, but investor will have to make a minimum investment of Rs 20 lakh for 500 square feet. Piyush Group JMD Mr. Amit Goyal said, “We are offering a minimum guarantee to investors to cover their risk as the project is not yet ready and so can’t be leased out”.

There are several other developers who are offering a similar return for a minimum purchase of 500 square feet. A buyer or an investor would get monthly return till the project gets completed.

Following which, the developer will lease out the space and the rentals, if it exceeds the guaranteed 12%, would either be given away to investor or shared between the investor and the developer depending on the scheme. However, if the rentals dip below the 12% mark, the developer is expected to compensate the investor.

Experts say 12.25% is a much cheaper rate in today’s cash-crunch times. Cushman & Wakefield India director (capital markets group) Mr. Sandeep Singh said, “Small developers are not getting bank loans. Private borrowings at 18% or more is quite risky. So it makes sense for them to borrow it from retail investors at 12%”.

He added that if the developer borrows from a bank, he will have to pay back, but under this scheme he removes risk from the very beginning.

The face of Indian postal department is changing, under pressure from modern communication systems. Gone are the days when post offices were used for screening and distributing letters. Today, it is entering into every possible business segment, be it money exchange or logistics. With a network of 1,55,516 post offices in every nook and corner of the country, India Post is all set to conquer new frontiers.

Indian Post used to be one of the prominent pillars of the country’s communication infrastructure. This, however, is no longer the case with the emergence of telecom and Internet as the preferred mode of communication. Courier services have also made a dent into the revenues of the postal department. With an aim to revive its past glory, the Department of Post (DoP) has planned a series of initiatives including rapid induction of information technology, introduction of logistics post air, tie-up with commercial banks and launch of new mailing and money-order schemes.

The department also plans to strategically leverage its vast network of over 1.5 lakh post offices across the country, the largest in the world. From railway reservation to spreading education on the government’s social sector schemes, the neighborhood post office plans to become a single gateway for almost all official purposes.

Further, with an aim to leverage upon its vast real estate assets, the Indian post is also planning to form a special purpose vehicle (SPV). The SPV would be responsible for planning and execution of commercial utilisation of vacant plots of land and buildings. The special purpose vehicle would be a 100% subsidiary of the DoP.

“Commercial exploitation of the real estate properties would provide Indian Post the much needed revenue for taking the modernisation plans,” communications minister A Raja said.

After low-cost airlines, budget hotels, cheap cell phones, low-cost computers et al, it’s now time for branded low-cost houses. Delhi-based real estate major Omaxe is planning to invest Rs 8,000 crore in next five years in affordable housing projects. The company has floated a subsidiary National Affordable Housing and Infrastructure which will be building the affordable houses. In all, Omaxe plans to build about 10 lakh low-cost houses.

Omaxe CMD Mr. Rohtas Goel, said, “We are investing from the internal accruals. Going forward, we will also look at SPV level equity from India and abroad”. The company is also looking at slum redevelopment model to build affordable houses. For this, proposals have already been sent to the state governments of Delhi, Madhya Pradesh, Punjab and Rajasthan. The company has earmarked Rs 200 crore for slum rehab projects. Such projects will help Omaxe in acquiring land at a cost which will make development of affordable or low-cost houses a feasible option.

For affordable or low-cost houses, it has already acquired land in Neemrana, Ghaziabad and Lucknow. Mr. Goel said, “The land for the affordable housing projects will cost us around Rs 100-200 per square feet depending on the city, while the cost of construction will be Rs 700 per square feet. The units will be sold at Rs 1000 to1100 per square feet”. The first project, in Neemrana, will be launched after three months and will be completed in a span of 2-3 years.

The company plans to build low-cost houses on slum land. However, analysts believe that it might not be a very feasible model. Mr. Anuj Puri said, “Slum rehab is very popular in Mumbai. Real estate developers are now eyeing a similar model in other cities too as land is becoming scarce and expensive. But it’s tough to make profits if low-cost houses are made on the balance land as slum dwellers need to be rehabilitated for free and developer needs to cover that cost which can be done only by making luxury apartments”.

In Mumbai realty developers such as HDIL and Akruti City have developed slum redevelopment projects. Omaxe has also launched an international design competition for efficient and economical structural design and optimum space utilization. It has also tied up with the London School of Architecture.