Indian company Sahara India Group said it will explore business prospects in the UAE. Subrata Roy chairman of Sahara will be in the UAE to look for prospective projects in different sectors.

Sahara India Group, which puts the market value of its property at more than fifty billion dollar, has diversified business interests in areas like finance, real estate, media and entertainment, tourism, and services.
Roy will meet well-known business people and industrialists of the region and look at a variety of large-scale ongoing projects in the UAE. The focus of his visit will be on discovering business and investment opportunities in UAE as well as in India, company spokesman Abhijet Sarckar said in a statement.

Sahara is a well-known player in the real estate industry of India and owns a huge land bank. It is developing two hundred seventeen townships across India ranging from 100 acres to 300 acres each.
Sahara owns three entertainment television channels, one national news channel, 36 regional news channels and publishes various newspapers and magazines in Hindi, English and Urdu.

India’s emergence as a leading IT and ITES destination has witnessed a huge demand for high quality office space. Again, the dependence on one sector could also have a serious impact. Knight Frank’s Vakil said that there is already a slowdown as far as commercial property is concerned.

The scenario presents a few interesting constituents. Vakil said, “There is no demand for an outright purchase and a lot of people are going for the lease option. In a falling market, that is a more practical solution”. IT and ITES, according to him, account for 80 % of all commercial space in India. Further he added, “Besides, 70% of that industry is dollar denominated”. That’s exactly what is affecting Bangalore, India’s IT capital and to an extent Hyderabad as well.

Retailers themselves are going easy and a lot of large players have been pretty vocal about it. With higher rentals, the pressure on margins is far greater. Retailers form a significant part of the overall commercial scene and that proportion is merely getting larger. Kishore Biyani, managing director, Future Group said, “Ultimately, it is a question of affordability in retail”.

There are not too many ways to get past the zooming commercial rates. Biyani, when questioned about this, points out that his group signed up for properties much before the boom. He added, “To that extent, we were protected. Actually, we have been quite docile over the last six months”.

A significant development was actually when five plots were offered for sale in Bandra Kurla Complex (BKC), Western Mumbai’s business district. That was in March this year. Out of the five plots, two each were for residential and commercial while one was reserved for a clubhouse. One of the commercial plots was picked up by Jet Airways at Rs 3.44 lakh per square meter against a reserve price of Rs 3 lakh. Strangely enough, there was no other bidder in the fray.

Both the residential plots were won by Star Light, a joint venture between the Ajay Piramal Group and Suntech Realty. Here, the price paid was in excess of three times the reserve bid price. The story did not quite end there. The worrying part was that one commercial plot and one for the clubhouse remained unsold. These two plots together had an area of a little over 12,500 square metres with a reserve price of Rs 3 lakh per square meter.

A report put out by Enam Securities after the bidding process was completed makes a clear mention of what could possibly have gone wrong. “The lack of interest among developers for commercial space in BKC, while disheartening, is primarily attributable to the high reserve price.

Indiabulls was another player in the news when a significant amount of mill land in central Mumbai was put on the block. That was in 2005 when the company acquired an impressive 22 acres of land for what was then a massive Rs 720 crore.

Today, with so much of talk on a slowdown in real estate — in more pessimistic quarters, the whispers of a crash as well — it will be interesting to see how the company has viewed that investment. Mr. Gagan Banga, CEO, Indiabulls Financial Services, declared, “We have had an encouraging response. We are getting rental offers at around Rs 300 per square feet which is in line with what we had set out for ourselves”.

Today, there is talk of a slowdown as buyers are taking just a little longer to decide if they want to go ahead and take that decision now. Pranay Vakil, chairman, Knight Frank said, “Without a doubt, interest rates have made a difference. After all, the monthly outgo will increase”.

Taking a closer look at what’s going on in Delhi and the National Capital Region (NCR), it is observed that transactional volumes for residential projects have witnessed a drop of 20-25% over the past six months. Among these are the upscale projects like Emaar MGF’s Palm Street project in Gurgaon, the Uppal Group’s Plumeria housing project in Greater Noida, Unitech’s project on Taj Express highway and BPTP’s Parklands project in Faridabad.

Developers themselves are not too kicked about the state of affairs. While maintaining that inflation and interest rates have been the key factors, they are not too optimistic about the way forward. Vipin Aggarwal, executive director, Omaxe said, “There is a slowdown and this will continue for at least a year and half. Besides, the real estate sector is itself facing a cash crunch. There are many companies that are focusing on completing the project at hand instead of increasing the size of their land-banks”.

By contrast, Mumbai story has been quite different and this has been led by the fact that demand far exceeds supply. According to Dharmesh Jain, chairman, Nirmal Group of Companies, that is a point that cannot be ignored. He pointed, “Supply is meager and that is a huge problem”. This demand-supply disequilibrium has helped the process of making Mumbai among the most expensive property locations globally.

Property prices in up-market areas like Malabar Hill in South Mumbai have moved up from around Rs 12,000 per square foot in 2003 to twice that figure this year. More importantly, there was a deal struck at Rs 60,000 per square feet earlier this year.

Across the country, there have been up-market projects coming up at a frenetic pace. Not surprisingly, a large player like DLF is playing down the slowdown story. “Our properties are developed according to the current market needs. In order to stimulate demand, we are also coming out with affordable housing and, therefore, we have not witnessed much of an impact on account of a slowdown,” says a DLF spokesperson.

India’s IT capital, Bangalore has also been witnessing a drop in sales volumes. According to J C Sharma, managing director, Sobha Developers, home sales have dropped this year compared to 2007. Further he said, “Like any other industry, real estate is going through a cycle”.

Although the debate for the renovation of a tea estate into a real estate project, Uttorayon township, a project of Luxmi Group, in partnership with Siliguri Jalpaiguri Development Authority (SJDC) and West Bengal Industrial Development Corporation (WBIDC), and managed by the Ambuja Group, at Chandmoni in Siliguri, has completed two phases of development, and is scheduled to be complete by 2011.
According to Rudra Chatterjee, executive director of Luxmi township Hotel Hindustan International, Kolkata-based five star hotel groups and the Elgin, heritage hotels operational in north Bengal, have been tied in for hotels in the township.
This apart, Neotia Elbit will be setting up a hospital and a City Center mall, which will be ready by 2009.
According to H. Neotia of Ambuja Realty Group, “Most of the flats in the first two phases of the project have been sold out. We look forward to another two phases to be completed in two years.”
The 17.6 million square feet zone will be sixty acres of parkland.
The direct project price of the township is about one thousand crore rupees with ancillary investments likely to be two thousand five hundred crore rupees, claimed Chatterjee.
“In the beginning the project took time to start. There was no precedence of something in this scale. Yet, the West Bengal Government, SJDA and WBIDC have played a important role in motivating this project to a state where it can practically provide the platform for the growth of IT, health and other knowledge networks in North Bengal,” said Chatterjee.

While the Indian real estate industry is growing by leaps and bounds where foreign investment and growth is concerned, the tremendous potential of something as important as fire safety, has not yet been understood yet. Optimists feel that this is changing slowly but surely. M C Muthanna, Chief Operating Officer, Firepro Systems, said, “India is a reasonably domestic consumption driven market. Gradually as awareness is setting in, people are realizing that fire safety actually touches all segments. Builders are moving beyond statutory needs, so also the consumers, who want more safety features”. In any case, the need to protect family and property will never change. So whether the properties concerned, is worth Rs 5,000 or Rs 50,000, there will always be the need and urge to protect it.  Differences in global and Indian practices come to the fore easily. In general, the Indian real estate industry is on par with the developed world, in providing some basic systems. The key difference is the amount of spending. Sophisticated systems like addressable fire detection systems and automatic gas suppression systems are being used in the protection of offices in commercial buildings. But in residential apartments, the spending for installing the life safety equipment is still very low and the equipment used is still basic in design.

Options in fire protection and suppression, in residential as well commercial property, are varied but useful to the core. In commercial property, hydrant and hose reels are used for the entire building premises, while addressable fire alarm systems are used extensively for office space, along with sprinkler systems. For data centre rooms/ control rooms which are manned by people, clean agent gas suppression systems are used. Water cannot be used for fire protection at such premises. So inert gases are used to avoid data loss or damage.

Fire protection and suppression systems in commercial spaces can be installed in retail malls, airports, cinema theatres and multiplexes, auditoriums, convention centres, convenience stores, storage warehouses, hotels and restaurants — thus, preventing loss of life and property to a great extent.

Real estate and infrastructure management sector saw Private Equity (PE) deals worth $2.32 billion in the first half of 2008, nearly 3% higher than the same period of previous year, even as the average deal size fell over 9% reflecting the sluggishness in the market.

According to Grant Thornton, 33 deals were inked in the first six months of the 2008 compared to 29 deals in the same period of 2007.

PE deals, during the month of June, stood at about $247.5 million, almost half the level seen in May 2008 when about $ 478 million of PE money was infused into different projects.

“The valuations are definitely down as the market is in the midst of a slowdown”.
“With access to capital market out of question and bank debt getting tighter, we see more and more developers tapping PE sources to bridge the fund gap for projects”.

“Although in the short-term PE players may take a careful stance, over a one year horizon, the number of PE deals is likely to go up,” says Mr Subhash Bedi, Director and Partner, Red Fort Capital

Red Fort Capital has concluded seven transactions in the first half of 2008 compared to six deals during entire 2007.

Earlier in June, Lehman Brothers Real Estate Partners had pronounced an investment of seven hundred forty crore rupees ($185 million) for 50 % stake in the initial phase of a Unitech project, located on the Western Expressway of Mumbai.

During the same month, Axis Bank too invested two hundred fifty crore rupees in Lavasa Corporation, a subsidiary of Hindustan Construction Company, in the form of convertible preference shares and convertible debentures.

An industry official pointed out that while investors were still interested in the real estate market, they had adopted a careful approach towards projects.

“With more projects on the negation table now, and given the current market sentiments, PE players will pick and choose. Only those projects which have the required approvals in place would hold their interest,” the officials said.

Maytas Hill County SEZ, the first IT/ITES SEZ of Maytas properties, a property development company headquartered in Hyderabad, has been launched.

The company is planning to build two more IT and ITES SEZs, each at Gopannapally and Gundlapochampalli. Coming up in a 74-acre plot at Bachupalli with an investment of Rs 2,500 crore, the Hill County SEZ will have a total built-up area of about 8 million square foot.

The first phase of the project bringing in 1.3 million square feet of built-up area will be ready for occupation by Oct-Dec next year and the company had already signed its first client, Wells Fargo & Co, US, in its incubation center, the first building coming up in the SEZ.

The total incubation space will be 60,000 square feet out of which the first client will have one-fourth area. The entire project to be taken up five phases will take 8-10 years to complete.

Maytas Properties CEO K Thiagarajan said that all the SEZs of the company would have adjoining integrated townships and promote walk-to-work, walk-to-shop and walk-to-restaurant concepts to avoid long commutes to work places and provide more time to spend with family.

Further he said that the Maytas Hill County Township, of which the SEZ is a part, offering apartments, villas, retail spaces and entertainment infrastructure, educational spaces, hospitality and medical facilities is fast coming up. Some of the dwelling units are ready for occupation.

On the affordability of living spaces in the township to lower-rung IT staff, the CEO said that the township would have various types of accommodation, including service apartments and rooms.

With rise in prosperity and disposable income of the middle class people in cities due to high economic growth, India is witnessing a retail boom.

This has led to the growth of organized retailing, which is changing the way shopping is done, particularly in big cities like Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad among others.

The most visible symbols of organized retailing are the swanky malls, which have mushroomed in most of the large and medium size cities across the country. In cities like Delhi, with extreme weather conditions, malls have become a runaway success.

Even at the height of summer season, when temperature soars up to 42 degree Celsius, shopping is no more an unpleasant exercise. Instead, these malls in various part of the city have made it a pleasurable exercise, in fact, it has become a way to relax and chill out in an air-conditioned environment!

This mall phenomenon had given rise to apprehensions that high street shops were heading for an ignominious death. But, a recent survey done by Jones Lang LaSalle Megharaj, a global real estate consultancy firm, found that despite rise in number of malls in a city, high street shops continue to flourish.
The survey suggests that the presence of new malls within an established high street increase the retail appeal and attractiveness of the entire stretch. It allows malls and high streets to equally benefit from a growing footfall base of consumers flocking to such a street where they can find a combination of both high street retailing and climate controlled shopping in new malls.

The report says, “Though it is early days, the initial evidence does suggest the fact that departmental stores as well as malls and high streets can indeed play to each others strength.”

The report said that the anecdotal evidence of the complementarity of high streets and malls comes from the few instances that were found in Bangalore, Chennai, Hyderabad, Kolkata and Pune where informal feedback from retailers along the shopping high street as well those in the operational malls suggested that both of them are benefiting from the presence of the other.

A senior consultant with the firm Tanaji Chakraborty says that the high street shops, which were facing tough times some time back, have come back with a vengeance. Particularly, in the fully developed area, where further expansion of retail outlets is not possible, the existing high street shops have regained their charm.

In the last couple of years, since consumerism is on the rise, these high street shopping areas are getting revitalized either by the association of shopkeepers or by municipal corporations to enhance the consumer experience.

This results into augmentation of retail attractiveness. The report said that revitalization of streets globally is a very serious issue and often this is linked to the issue of regeneration of entire region. Typically stakeholders of streets, retailers, property owners, mall developers, development authorities, local council, all collaborate to map out a regeneration strategy with a view to improve the economic and image impact of the street.

Report said that this movement is at a very nascent stage, though undoubtedly as economic interest refocuses on prime inner city areas, which typically have superb locations but suffer from run down image, there would in future initiatives regenerate to unlock value.

Connaught Place in Delhi has been regenerated by NDMC. The process to beautify its Central Park has already been completed by the municipal authority. The walk-way and the main building are now also being done up by the concerned authority.

Similarly, Khan Market has been revitalized by the association of shopkeepers. The report said that with the possibility of shopping street revitalization becoming an increasing reality across markets in coming years, the retail pitch of high streets is expected to be enhanced in future, thereby allowing for inclusive growth of retail along these prime corridors in Indian cities.

This is also evident from the fact that rentals of high street shops have doubled in the last couple of years. The rentals in Khan Market, which was quoting at around Rs 650 per square feet per month in 2006, has gone up to Rs 1,300 per square feet per month in the first quarter of 2008.

The report said that the increase in prime shopping street rents have almost doubled across the board, with the rise in rentals ranging between 30% and 100% over the last few years. Rental value growth over the years in other leading cities has been no less impressive.

At such levels, the report said, some of the top-rung Indian shopping streets, especially the likes of Khan Market and Connaught Place in New Delhi, and Linking Road in Mumbai are slowly but steadily creeping into the league of expensive high streets of the world. However, Chakraborty said that this is not a very healthy sign as it suggests the lack of availability of good infrastructure and quality retail space in the country.

Chakraborty said that the development of high street mall takes time as it evolves with the growth in the population in the area. On the other hand, malls are developed on standalone basis. They attract customers from far-flung areas also.

Therefore, in most of the new townships, developers raise malls to provide shopping infrastructure to the inhabitants of the township, while at the same time they attract customers in the nearby catchments to survive in the initial years.

But, over a period of time, the high street shop will also come up and flourish in the same township. Therefore, he said that it is not either mall or high street shopping center but it will be both that will flourish as the economy will grow in the country.

According to Financial Chronicle’s interview with Prabhat Pani, CEO, Ginger Hotels, the Ginger Hotels group plans to launch 60 to 70 properties in India, within the next three to four years. The company has adopted a new method of refurbishing existing properties, instead of buying land for new hotels.

So far, investment in the Indian expansion has been Rs 250 Crores. The group’s first Delhi property (13th Indian property) is the hotel group’s maiden collaboration with a government body like the Indian Railway Catering and Tourism Corporation (IRCTC). Ginger Rail Yatri Niwas, which is an upgraded version of the pre-existing hotel, launched under a PPP model.

In North India, Ginger Hotels has a property under construction in Ludhiana, which is coming up on the fourth and fifth floor of a mall. The company is developing its business model, as well. The hotel group will look to enter Lucknow, Faridabad, Ajmer, Noida, Baddi, Kota, Bhilwara, Jodhpur, Gurgaon etc. Pani declined to comment on international developments.

Unitech International Real Estate Fund is learnt to have raised $300 mn which will be deployed in Unitech’s residential projects. The new fund will help the country’s second-largest, listed developer tide over the liquidity crunch dogging almost all real estate firms.

A senior Unitech executive, who didn’t wish to be named, told that an European pension fund, a Japanese bank and some Europe-based HNIs have invested in the Unitech fund. Unitech International Real Estate Fund is an independent fund launched by Unitech on the lines of Unitech Corporate Park (UCP). It is an AIM-listed entity which owns Unitech’s IT parks.

Unitech’s asset management arm, Unitech Realty Advisors, will advise on the deployment of fund, which has a horizon of 10 years. The entire corpus of $300 mn will be deployed in Unitech’s residential projects spread across the country in the next few months.

The real estate sector is facing a tough time, with residential segment being the worst hit. Housing sales have declined by up to 80% in most markets across the country leading to a major cash crunch for developers.

Residential projects in India generally work on the self-finance model, with home buyers making payment in advance for the houses to be delivered usually three years later. But with fewer home buyers in the market, several developers are stuck with projects, raising the probability of late deliveries. A sluggish demand and the rising cost of capital and construction have forced investors to shun real estate on Dalal Street too. The shares of realty firms have been in a free-float mode, touching all time-lows, in most cases.

Unitech’s scrip touched a 52-week low of Rs 135.10 on BSE on 16th July before closing at Rs 137, down 11% from the previous close. Unitech has lost almost 75% off its January peak. Country’s largest realty developer, DLF, is faring no better. The company was prompted to announce a buyback of its shares after its scrip plunged to Rs 350 on July 2, a decline of 71% this year.

Analysts have been routinely downgrading real estate sector, given the rising inflation and interest rates and sluggish demand. Credit Suisse cut its rating for DLF from ‘neutral’ to ‘under perform’ and Unitech’s to ‘neutral’.

After being scanned for Foreign Exchange Management Act (FEMA) violation, many foreigners intend to sell their properties in Goa and return back, but have to stay back as Goa authorities have banned any related transactions.
Few of the foreigners who have invested in Goa getting jittery after the show-cause notice from the directorate of enforcement and investigations into the deal intends to do away with the property.
But the state government has with-held any further transaction in their properties forcing them to sit with the fingers crossed.
This month itself, the notary services and state registrar department have received two applications by foreigners – UK and Russian each – who want to sale their properties. The applications contend that their property is legally purchased and hence should be allowed to be sold.
“We have forwarded their applications to the debt management unit who will have to take further stand on the issue,” a state registrar official stated.
Goa woke up to the grim reality of around 480 properties being purchased by the foreigners and the number swelling every passing month.
The authorities prima facie had found that the properties were purchased in violation of FEMA and scoring on the loopholes in Goa’s property registration system.
The state government-constituted Anupam Kishore committee had identified 480 such cases, of which 298 cases were referred to directorate of enforcement as prima facie FEMA violations were noticed in them.
The directorate of enforcement has begun investigating into all sale deeds including those executed by forming an Indian company with foreigners as its directors.
“After the issue has cropped up, we are not even allowed to move an inch. Our investment is blocked here,” a Russian national, whose property in Siolim, is in question, reacted.
The Russian, who refused to be identified, said that he had purchased an ancestral house in the name of the Indian company but the local authorities refuse him even to repair it.
“I am stuck here with my money. I can’t even sell off the property as sale deeds cannot be executed,” he said.
Few of the UK nationals, who invested in Goa, after reading the advertisement back in their country which lured them with good offers, feel cheated.
A south Goa-based foreign couple, who too do not want to be named, has written letter to the registration department seeking to sell their property after the probe began.
“How can they be allowed to sale the properties? Their old sale deed is being questioned that means the property may not have been legally transferred. So how can we allow them to sell it to next party,” Swapnil Naik, additional collector, who is also a member of Anupam Kishore committee, reacted.
He said that those properties which are not being questioned and are legally purchased can be sold out with proper permission.
The directorate of enforcement which is probing into the transactions has already asked the state government not to allow further transactions in case of seven properties – all in north Goa.
“The DE has specially instructed that there will be no further sale deed or transfer of the property,” Naik said.
The registration department, which was criticized for allowing innumerable properties being purchased without proper checks, feels that the state government should appoint an authority which will go into all the details of the application, when foreigners apply for buying the property.
“We can’t check his visa details. If we sit with it, we will be registering only one deed a day and then we will be accused of being slow and corrupt,” an official commented.
The law mentions that for a foreigner to buy property in Goa, he needs to be staying here for 182 days and should have business, vocational or employment visa. The reserve bank of India’s nod is also mandatory.

Emaar Properties, the leading real estate company in the Middle East, is set to inject $150 million for a 20-25 % stake each in three real estate developments in India.

According to Company spokesperson Emaar and MGF Developments of India set up a joint venture in 2005 called Emaar MGF, which presently accounts for India’s largest foreign direct investment in real estate through projects with a combined development value of US$1bn.

Emaar is now considering establishing three separate special purpose vehicles which will then develop two retail properties and one office property in Gurgaon and Mohali.
Emaar holds 41% in the Emaar-MGF joint venture while MGF holds 56%.

Real estate developer Parsvnath on 15th July tied up with Sabeer Bhatia, co-founder of  Hotmail, to develop a Rs 50,000-crore knowledge city project in Haryana.

The Parsvnath Nano City project would come up in Panchkula near Chandigarh. The realty firm would invest about Rs 400 crore in the form of equity and debt in the project, Parsvanath Developers (PDL) Chairman Pradeep Jain told reporters here.

“It is a public-private partnership project in which Haryana government will have 10% equity stake, Parsvnath developers will have 38 % and the remaining 52 % will be with Sabeer Bhatia promoted group,” he added.

The project, spread over 1,000 acres of land and modelled on Silicon Valley, would be completed in two phases over the next 10 years, where the company would develop 5,000 acres in the first phase and the remaining would be developed in the second phase.

Indo Rama Retail Holdings Pvt. Ltd, the retail venture of the promoters of Indo Rama Synthetics (India) Ltd will be setting up 200 stores across the country over the next three years.
Announcing the launch of the company’s store in Chennai, Mr Ashok Srivastava, chief operating officer, Indo-Rama Retail Holdings said, “Any company spends close to Rs 400 per employee on stationery and other office materials. With IT, education, financial, media sectors booming we are confident there will be a huge demand for our products.”
The company will be setting up close to 50 stores in tier-2 and tier-3 cities by the end of 2008. He pointed out, “Our investments per store would vary depending on the real estate value. We will be investing around Rs 15 lakh to Rs 40 lakh per store”. We are targeting cities such as Madurai, Coimbatore, Trichy and Salem in Tamilnadu. Further he said that the company is also eyeing entering SEZ’s in these cities. To a query on funding, he said that the funding would be through internal accruals.
The market for office products in India is estimated to be around $10 billion growing at 15% year on year. Office1 Superstore is targeting to capture 5% of market share in the organized sector.
The company clocked revenues worth Rs 5 crore last year and is confident of achieving Rs 1 crore business from each store that they set up.

In the biggest real estate deal in the redevelopment space, Mumbai-based Narang Developers is believed to have struck an agreement with Bombay Taximen Colony one of the oldest housing societies in Kurla, for around Rs 1,100 crore.
According to the source Bombay Taximen Colony, which consists of about six hundred residential flats and thirty commercial establishments, had opted for redevelopment early this year.
“The concluding deal is yet to be done. We are in initial talks with Narang Developers,” Bombay Taximen Colony secretary AR Siddique said. Narang Developers declined to comment on the deal. As per the contract, most of the society members will vacate their flats after accepting the deal offered by the developer.
According to sources, the nine hundred crore rupees deal which Pune-based Kumar Developers signed with residents of Khira Nagar in Santacruz (W) for redeveloping six hundred forty flats in sixteen buildings, was seen as the biggest in the redevelopment space. However, the deal got stuck because of title disputes.
Redevelopment of old buildings in Mumbai is seen as a big business opportunity, with the government introducing new incentives, including higher FSI and tax incentives. Mumbai has an estimated sixteen thousand buildings that qualify for redevelopment.
Under the redevelopment scheme, old and dilapidated buildings are knocked down to build taller residential buildings and produce space for commercial activities, thereby boosting returns from the project.
Residents of many housing societies, mainly in the western suburbs, have been signing agreements with numerous builders since January 2007 to move out of their apartments in exchange for megabucks running into a couple of crores.
The Bharatiya Bhavan Co-operative Housing Society, tucked away in a corner of 17th Road, Khar (W), received a fabulous offer from a little-known developer from Navi Mumbai called APA, who upstaged many prominent builders when he offered Rs 180 crore for the 37 flats in six buildings. The deal, however, fell through.
Another big housing society near Bandra Talao, Nutan Nagar, created waves when a developer offered the society a whopping Rs 451 crore for the cluster of low-rise residential buildings. This deal, too, failed to go through.

Ceylon Glass Company, a unit of India’s Gujarat Glass, has revealed it plans to sell a prime property valued at 700 million rupees near Colombo from where it has just shifted its production plant.

“The company plans to sell the 21 acre land located in the heart of Colombo in Ratmalana,” a company statement said.
“The land is strategically located, surrounded by roads on three sides and its proximity to the Galle Road (the main road into Colombo) gives an advantage to any potential developer or industrialist.”
The carrying value of investment property in the accounts is given as 703 million rupees.
Ceylon Glass net profit for the year ended 31st March 2008 fell to 35 million rupees from a re-stated profit of 104 million last year but exports have soared.
The profit came after capitalising 176.8 million rupees of interest relating to the relocation of the production plant to Horana, south of Colombo, from the Ratmalana site, according to the firm’s annual report.
The relocation cost is to be written off over the years.
The statement said that although turnover rose 8.5 % to 2,014 million rupees gross margins fell to 23 % from 25 % the previous year, partly because the firm had to import bottles.
“Due to capacity constraints in the early part of the year, this year too the company was compelled to import bottles at negligible or even negative margin rates in order to satisfy domestic customers and retain customer loyalty.

Exports shot up 160 % last year and now constitute 10 % of turnover, more than double the four percent of the previous year.
“Having more than doubled capacity (with the new plant), the company is now able to meet the demands of the local market as well as to pursue lucrative exports market,” the statement said.
“In exports, the company will be focusing on specialty beverage and food bottles, i.e. short run food and beverage bottles with colouring or decoration for value addition.”
The company said it is well positioned in the Asian market exporting boutique wine and specialty liquor bottles for leading brands in India.

State Bank of India is likely to report an improvement in its asset quality when it presents its first quarter results. According to top SBI sources, the bank has recovered bad loans worth around two thousand crore rupees during April-June 2008.

Top SBI executives, when contacted, refused to comment. SBI managing director S K Bhattacharya said, “We can’t divulge details before the first quarter results announcement”.

SBI’s credit quality had deteriorated during 2007-08, as it booked fresh bad loans worth Rs 2,700 crore, mainly on account of retail loans, and to some extent, mid-sized corporate loans. As on March 31, 2008, the bank had gross non-performing assets (NPAs) of Rs 12,837 crore compared with Rs 9,998 crore, a year back.

On the other hand, the bank is slated to make a provision of around Rs 1,000 crore against mark-to-market (MTM) losses of its investment. Out of this sum, around seven hundred crore rupees is expected to be provided for against depreciation of bonds the bank received from the government on account of its rights issue.

Banks are booking MTM losses against depreciation of bonds and equity investments during April-June 2008 period. Nevertheless, SBI is expected to clock double-digit growth in the first quarter to June 30, 2008 over the corresponding period a year back. This is despite the fact that demand for loans from sectors like commercial real estate and auto has slowed down.

Coming back to SBI’s bad loan management, government’s debt waiver-cum relief scheme would help SBI reduce its bad loans by another Rs 2,000 crore. SBI has waived overdues of around 25 lakh farmers, aggregating about Rs 7,000 crore. “It’s estimated that around 30% of the total waived sum had become NPAs,” another SBI insider indicated. Gross NPA stood at 3.04% as on March 31, 2008 while the net NPA stood at 1.78%.

Hyderabad-based real estate firm SatyaVani Projects and Consultants is in talks with European REITs to raise $150 million in private equity, which will form the bulk of the $190 million it plans to spend on projects in Hyderabad, Bangalore and Vishakhapatnam.

Company’s director Mr. P Surya Prakash said that besides private equity, SatyaVani Projects is looking at raising cash through a combination of internal accruals and private placement. He declined to name the potential investors.

A 5 million square feet medical tourism project in Hyderabad will be the biggest, costing $120 million and consisting of two hospitals, a health resort and service apartments.

In Bangalore, it will establish an eco resort and a housing project at an investment of $50 million. The company will spend another $20 million on residential projects in Vizag.

The closing down of more than 20 textile mills and 15 manufacturing units in the country in the last 6-12 months has led to creation of a surplus supply of industrial real estate. With more than 20,000 workers in the textile sector now jobless, demand for space around industrial belts has slowed down, and more supply is taking prices further south.

The rentals are down by 20-25 % in the industrial belts. It is estimated that more than 15 lakh sq ft of surplus area has been added in the market which is already depressed.

According to sources, with so much supply coming in and few takers, there are very few rental deals happening in the market. For the record, rentals in the Gurgaon industrial belt have come down to Rs 20-30 per sq ft per month from Rs 45-50. Similar is the situation in industrial belts in and around Surat, Tirupur, Kundli, Panipat and Coimbatore.
Says Rakesh Vaid, chairman, Apparel Export Promotion Council (AEPC): “A lot of garment exporters are downsizing their operations and international market slowdown has dented the demand. We are not in a healthy shape and the government is contemplating withdrawing some of the sops given to us at the time of dollar depreciation. Crude prices are on a record high. To add to it cotton is very expensive. Indonesia and China have a very healthy growth rate but we will have to revise our target downward for this year. All these factors are sure to create some problem for real estate also.”

Many in the industry feel that slowdown in real estate in this sector will have major impact overall as many people park their surplus cash in these properties.

Says Pawan Swamy, MD (markets), JLLM: “The impact on the industrial real estate market is definitely there. Many industries are shifting operations to less expensive and more incentivised zones when they can no longer benefit from the economies of scale at their original locations. They leave behind considerable packets of prime land for development. Textile units, for instance, necessarily occupy considerable areas, further enabled with key utilities such as water and electricity.”

These factors have also put a dent on the fresh supply of industrial real estate. Even new plots which are being developed are not finding any takers in the market. Many small developers who are into this kind of development are find tough to sell the built up plots.

Real Estate TV, a 24×7 TV channel committed to real estate and infrastructure, on 13th July said it is in talks with foremost direct-to-home operators, including Dish TV and TataSky, to beam its signals.
“We are at initial stages of negotiations with DishTV, TataSky and Reliance. Most likely by next week we will be finalizing our partner,” Real Estate TV CEO Prem Menon said.
“There are concerns to be sorted out over pricing among others with the DTH operators after which we will come to some conclusion,” he added.
The channel, initiated by Alliance Broadcasting, the media company of the Rs 4,400-crore Alliance Group, is accessible across the country through cable television. Menon said the company also has plans to venture into the overseas countries, including the US, the Middle East, Canada, Australia among others.
By February next year, the channel will be going into the overseas countries to cater to Indian population abroad, he added. In India, Real Estate TV has joined with cable service providers for example Hathway, InCable, Seven Star and Asianet.
Menon said the channel is aiming high net worth viewers in metros through its programmes including newest updates on all aspects of real estate, including infrastructure. Real Estate TV has lately appointed MQ Networks for undertaking its marketing and advertisement proceedings. As per the agreement signed between the two firms, MQ would look after sales promotion, marketing, media sales of the channel.

In what would be the first major fund infusion into the Emaar MGF Group after a failed IPO, one of its promoters, Dubai-based Emaar is learnt to be investing $150 million to pick 20-25% stake each in three real estate projects of Emaar MGF.

This would be separate from its equity contribution in the JV firm Emaar MGF. Emaar holds 41% in Emaar MGF while the domestic JV partner MGF Group has 56%. The remaining equity stake is with private equity (PE) firms and other investors.

The Dubai-based group will pick equity in separate special purpose vehicles (SPVs) which will develop two retail and one office property in Gurgaon and Mohali. The injection of funds is particularly significant for the company, as it has come at a time when raising funds has become extremely difficult for real estate firms.

Debt has become very expensive and is largely unavailable. Emaar MGF, which withdrew its Rs 7,000-crore IPO in February after having failed to elicit investors’ response due to poor market sentiments, is looking at stitching 2-3 private equity deals in the coming months to fund its commercial projects.

Most realty firms have been looking forward to private equity players to fund their projects. However, PE firms too have turned cautious now and are driving hard bargains in the changed circumstances. Unitech too has recently obtained $175 million equity funding from Lehman Brothers’ real estate fund to develop a commercial property in Mumbai.

Slackening demand has multiplied real estate companies’ woes, restricting their cash flows. India’s central bank, battling a double-digit inflation, has hiked interest rates, prompting potential home buyers to defer their purchases. The signs of a slowing economy and expectations of a further fall in property rates have led corporate and retailers to postpone their space booking.

Emaar MGF, which is currently present in 26 cities, has a number of projects across residential, commercial, retail and hospitality sectors. It recently launched Boulder Hills residential project in Hyderabad and an integrated township in Mohali. The company is also executing the 27.7 acre commonwealth games village project in Delhi.

The company plans to develop over 200 hotels over the next 7-9 years. It has two equal joint ventures with Accor and Premier Inn for its hospitality ventures.

Ansal Properties and Infrastructure Ltd, has launched an ambitious 2500-acre township project adjoining Greater Noida, in Uttar Pradesh. The company plans to invest Rs 26,800 crore over the next five years in developing this project.
The township, branded The Megapolis, is extendable to around nine thousand acres, which means that the company has an option of increasing the size of the township to that size.
If the company decides to extend the township, for which it needs government approvals, this would make it among the largest residential projects in India, after DLF Ltd’s proposed residential project, Bidadi Knowledge City on 9,178 acres of land at Bidadi between Bangalore and Mysore.
Other large proposed Indian townships include Ansal’s own 5,000-acre township in Lucknow, DLF’s five thousand acre township in Dankuni near Kolkata and Emaar MGF’s three thousand acre township in Mohali, on the outskirts of Chandigarh.
Most large townships are coming up in smaller cities because land is relatively cheaper there and companies are looking to set up manufacturing plants and offices tocut costs, thus providing potential residents.
The Megapolis, which has been approved by the Uttar Pradesh government, is about 3km from Greater Noida. Land for the project will be acquired directly from the farmers and the government. Ansal will have to acquire 75% of the land directly from farmers, while the rest would be acquired for them by the government.
The company has already bought around 300 acres of land, paying around Rs35-40 lakh for an acre.
P.N. Mishra, executive director, business development, Ansal, said, “Once we acquire 60% of the land for the project, the government will approve the site plan of the project”. Further he added, “we plan to develop the township on 2,500 acres of land for now, but eventually we will expand up to 9,000 acres”.
Ansal plans to fund the project through internal accruals, customer advances and by partnering with financial institutions. It has already partnered with HDFC Bank Ltd, which has picked up a 8% stake in the project.
HDFC has so far invested Rs 500 crore in the project though Ansal didn’t give the total value of the bank’s stake.
Mishra said “We have an arrangement with them (HDFC) according to which HDFC will be our equity partner throughout the project”.
Mishra said, “The investment that has come in now is mostly for funding land acquisition costs”. Ansal is starting on the township at a time when property sales, according to real estate brokers, have slowed by as much as 30% in Delhi’s suburbs of Noida, Greater Noida and Gurgaon. Speculators, who would buy property and sell it within a short period of time to make quick profits, have exited the market and as a consequence, Delhi’s suburbs are seeing slower sales. Ansal says that it is not worried about the slowdown. “Our customers are actual users and not speculative investors”. The company says that it has already sold 200 individual plots in the township.
According to Mishra, the township will have five natural lakes, a canal, sports facilities and an 18-hole golf course which would be designed by international golfer Nick Faldo. The township will have individual plots, villas, bungalows, multi-storeyed condominiums and group housing complexes. The size of houses will range from 1800 square feet to 4446 square feet.
While the company has not fixed a price for the built-up houses yet, the individual plots in the township have been priced at around thirteen hundred rupees per square feet.
Around 900 acres of the project has been set aside for residential development.
The Megapolis will also be an employment-oriented township with space for hi-tech industries, information technology and bio-tech firms. The township will also have convention centers, hotels, schools and colleges.
Ansal’s other township in Lucknow, Sushant Golf City was launched a year ago and much of the infrastructure for the project, such as roads, water and power supply, is ready and construction of the houses has started.

US-based real estate management, investment and development consortium, JNB Investments LLC, has forayed into the Indian hospitality market, with plans to set up 50 hotels in the country by 2015. The company will invest about Rs 2000 Crore in the development, which will be collected through internal accruals and other sources of funding.

JNB will develop properties in the five, four and three star segments. The first few properties will come up in Kochi, Bengaluru and New Delhi. The venture capitalist company is a strategic partner in the joint venture between Interstate Hotels & Resorts and JHM Hotels, for development in the Indian market. The joint venture called JHM Interstate Hotels India, will manage the group’s Indian development initiatives.

Talkint exclusively to Hospitality Biz, T J Barring, President, JNB Investment Company states, “We are aggressively considering hotel development in the tier two cities of India”. JNB is also considering expansion of its hospitality business at potential locations in Mumbai, Goa, Chennai, Amritsar, Calicut, Visakhapatnam and Jalandhar.

The role of facility management is ensuring that everything is available and operating properly for property occupants to do their work. The facility manager generally has the influence upon the quality of life within a facility.
In India, facility management saw its inception as a serious business in the early 1990s. Mr. Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj said, “It was being carried out before that, but primarily on an in-house basis and through petty contractors. This business sector has matured considerably now from the earlier days, when facility management was little more than simple manpower supply”.
Mr. Pankaj Kapoor, CEO, Real Estate Research Agency Liases Foras said that as ‘outsourced services’ become an integral part of the Indian Corporate lexicon, Facility Management has come in and occupied an important space. Further he added, “The role of facility management is ensuring that everything is available and operating properly for building occupants to do their work. The facility manager generally has the influence upon the quality of life within a facility”.
Anuj Puri said that there has been a huge demand for professional facility management by the booming IT and BPO industry, as well as other MNC sectors. Further he added, “This demand comes from the fact that such entities are in India for a specific purpose and wish to focus on their core areas.” Further he said that in such a scenario, outsourcing facility management to expert providers makes eminent sense in terms of time and resource saving. Moreover, multinationals, setting up shop in India requires local representation in terms of manpower procurement and management, and in terms of Indian property laws.
Some of the most advanced projects now offer Computer Aided Facilities Management, in which computers are used to automate the collection and maintenance of facilities management information.

After staying the construction of a shopping mall by the DLF in Chennai, the Madras High Court has ordered the real estate foremost to take away all temporary structures from the site. The First Bench, comprising Chief Justice A K Ganguly and Justice F M Ibrahim Kallifulah, gave the order on 11th July on a petition filed by an industrialist Rajiv Ray, seeking to restrain the DLF from constructing the mall at Ethiraj Salai in the city. The petitioner had submitted before the court that if the DLF was permitted to proceed with the mall’s construction, it would cause great adversity to the residents, who had been already facing lot of problems because of obstruction in the area.