With companies, particularly in the IT and BPO industry, holding back their expansion plans due to slowdown fears, the commercial real estate market posted a lackluster show in the 2nd quarter of 2008.
The June quarter saw office space demand lagging far behind the supply levels of 18.07 million sq. ft. across major cities, as companies turned cautious.
According to Cushman & Wakefield, the demand in the quarter was at 9.74 million sq ft, dominated by absorption (where companies move-in or begin fit-outs) of 6.36 million sq ft, and only 3.38 million sq ft in fresh pre-commitments. “There are certain micro-markets like Noida (NCR), and Rajiv Gandhi Salai (Chennai), which recorded excess supply for this quarter thus increasing the overall vacancy rates,” it said.

The 2nd quarter witnessed stable rental values across micro-markets in the major cities with some central business district (CBD) and off-CBD locations witnessing rental hikes of 3-5 % over the previous quarter. Some peripheral locations in NCR (National Capital Region) and Chennai, however, saw a correction in rentals largely because of excessive supply as well as deferred development plans of various proposed projects.

With inflation touching 12.98%, realtors here are finding it difficult to hold their price line and plan to increase rates for residential units by Rs 100-500 per sq ft later this month.
According to Confederation of Real Estate Developer’s Associations of India (Credai) Bengal, there has been a 25% increase in the construction cost of residential buildings over the last one year, almost double the increase during last year over 2006.
“Construction cost has increased from Rs 1,265 per sq ft in 2006 to Rs 1,811 per sq ft in July 2008, or by 43%,” said Pradeep Sureka, president of Credai Bengal. The city has added almost 10 million sqft of real estate space in last one year.
While steel prices have gone up by 107% in the last two years to Rs 45,500 per tone, cement has become dearer by 39% at Rs 4,900 per tone. “Even cost of bricks has doubled in the last two years to Rs 4.40 per piece,” Sureka said.
In April this year, Prime Minister Manmohan Singh had asked steel companies not to increase prices and the big steel makers had responded by holding the price line for three months.
“If the steel companies start increasing prices after August, prices could go up by Rs 500 per sq ft,” said S. Rungta, VP of Credai.
According to Credai estimates, direct and indirect taxes add nearly 27% to the cost of a six-lakh sq ft residential project with 30-40-metre high buildings. For a property selling at Rs 2,600 per sq ft, a buyer has to shell out Rs 211 as stamp duty and registration charges. Indirect taxes have already added around Rs 483 per sq ft.
Realtors said their sales have come down by more than 30% in the first quarter of 2008-09. Many of them will be gauging the customer mood at a property fair scheduled to open on August 11.
“We have requested Credai members to hold prices till Home Front-2008,” said Sushil Mohta, executive body member of Credai India, referring to the annual event.
However, banks said housing spends in West Bengal pick up after the second quarter, after people have done their festival spending.
According to SK Goel, chairman and managing director of Kolkata-based Uco Bank, the demand for housing in Kolkata and West Bengal starts picking up after the festive season.

While foreign portfolio investors have been selling stocks of Indian companies, overseas venture capitalists continue to invest in Indian assets.

In a sharp contrast to foreign institutional investors (FIIs) selling shares worth Rs 15,000 crore in the first quarter, foreign venture capital (FVC) investors have invested close to Rs 17,000 crore in Indian assets during the April-June quarter.

The spurt in foreign venture capital investments has been attributed to dipping asset prices, the presence of more India-dedicated venture funds, besides the slide in the stock market. While IT companies continue to account for a majority of foreign venture capital investments, the proportion of non-IT investments, both by activity and value, has gone up.

Sebi’s data shows that FVC investors have invested Rs 1,545 crore in various IT firms in the first quarter of the current fiscal. Real estate and the services sector have received Rs 1,424 crore and Rs 1,259 crore, respectively, in the first quarter. FVC investments are increasingly focusing on alternative energy, media, retail and other consumer demand-led sectors as well. This is at variance with foreign equity portfolio investors, who have been drastically reducing their holdings in manufacturing concerns, real estate companies and telecom set-ups.

According to Navin Wadhwani, director at investment bank NM Rothschild, “FIIs invest only when stocks gain some sort of an upward momentum; they also make it a point to exist when the downturn starts. FVC investors invest in assets when prices cool off, but they hold on to their investment for a longer term. Indian assets have become more appealing with capital markets trending down and valuations becoming more realistic”.

According to Dow Jones VentureSource India Venture Capital Report, venture capitalists invested some Rs 3,712 crore through 80 deals in 2007. As a matter of fact, FCV investors, alone, have surpassed last year’s net venture capital investments in flat three months. Overall venture capital investments (domestic players included) during the first quarter is pegged at Rs 32,379 crore.

According to Axis PE CEO Alok Gupta, Mr Gupta added, “Compared to Europe and the US, India is becoming an attractive destination for overseas investors. The investment market in Europe and the US has been wiped out because of subprime and a probable slowdown; their mainstay — the leverage buyout market — is virtually dead. Growth investing is becoming more popular as opposed to leverage funding among global investors”.

The fall in the stock markets has also done a world of good for venture capital investors. With the average six-month stock price (calculated while making stake placements in a listed company) coming down drastically, investors are able to find good deals in publicly-listed companies as well, industry officials said. Estimates show that of all Indian companies that received venture funding in 2007, nearly 73% are already generating revenues or are profitable.

Arun Natarajan of Venture Intelligence said, “Funds with global mandates have always dominated the venture capital segment. By value terms, over 50% of total venture capital inflows originate from global funds; India-dedicated venture funds account for the remaining portion”.

Mr. Natarajan added, “From what we understand, on contrary to late-stage investments, which could dry up if there is a persistent global recession, venture capital investments will continue for a longer term. This is because there are more than a hundred overseas funds that only has the mandate to invest in India”.

Cento International Investments, UK based real estate consultants have organized ‘Invest India Tour London 2008 to showcaseinvestment potential in India.’

Cento along with Baron Group International, a UK based property investment company and E- eighteen, the marketing division of Network eighteen have organized this tour which they say will provide a platform for real estate developers from India to interact with foreign investors and help promote the country as a lucrative investment hub.

Baron Group MD Nayan Bavishi said that the UK with a population of fifteen million has an untouched market of investors for the real estate in India.

Bavishi said, “There are a number of road shows that happen with developers from India going to the UK. But these road-shows are limited to targeting NRIs who are 2.5 million in number in U K, which has a population of fifteen million”.

Bavishi said, “These investors from UK have already invested in markets like Spain, Portugal, Carribean and Dubai and are looking at India as a potential for investment. But they are skeptical of doing so because they do not have knowledge of the market in the country”. Further he added that these investors need someone who has the whole chain covered for them.

The government may soon come out with new investment norms for venture capital (VC), private equity (PE) and hedge funds to make their operations transparent and create a level-playing field for both the domestic and foreign players.

Joint secretary in the finance ministry KP Krishnan said government is likely to revisit norms for VC funds and talks have already been held with the market regulator SEBI towards this end.

Efforts are also on to create a legal framework so that venture fund investments should not land in a few sectors only and equitable distribution takes place. The government is specifically worried about huge fund inflow in sectors like real estate, which has affected investments in other hi-tech sectors like software and biotechnology. At the same time, it has led to appreciation in the prices of real estate in the country.

Government, it is learnt, is considering to give some new tax incentives to venture funds and PE funds to invest in high-risk areas.

Venture funds invest in the equities of high growth companies to earn hefty returns. At present, foreign funds have an advantage over their domestic counterparts under the existing tax system of the country.

Head of financial services at PWC India, Punit Shah said foreign VC funds are at an advantageous position against domestic ones, while investing other than nine hi-tech sectors like biotechnology, software and nano technology. Government gives tax sops (no capital gains tax on profit) to domestic funds if they invest in these nine sectors but not others.

But sectors like real estate is not included in this list. Therefore, when a domestic venture fund invests in an unlisted real estate company, he pays tax on the capital gains earned while exiting the company, Shah added.

But, foreign funds registered in tax heavens like Mauritius and Cyprus do not pay any tax on the capital gains earned such transaction because of the double tax avoidance treaty. The new initiative, according to Krishnan, would ensure that same tax rule apply on both foreign and domestic VC, PE funds to achieve a level-playing field. Besides, the move will also make the investments by these entities transparent. For this purpose, the government would like to redefine VC, PE and hedge funds.

On its part, SEBI will make it mandatory to register VCs and PEs after compiling data about their investments in sectors like real estate, ITeS, education. SNI director TC Nair said that at present the market regulator has no definite source about the exact investments of PEs and VCs.

Despite the real estate market being confronted with a short-term depression as real interest rates hovered between 12 – 16%, the Associated Chambers of Commerce and Industry (Assocham) has projected a twenty one billion dollar spurt in foreign direct investment (FDI) in the real estate market in the next 10 years.

The general economic slowdown has started impacting the commercial real estate sector as was obvious by slower uptake during the April-June period of the year.

JPMorgan, internationally well-known investment bank, considers putting in over one billion dollar in Asian property sector over the next 3 years, as Indian and Chinese real estate developers crave for more funds to finish their forthcoming projects. Property prices all across the globe, especially UAE, have been on ascendancy to the amusement of many potential investors.

JP Morgan’s Asia real estate head, Bryan Southergill said: “It’s a fantastic chance for us at a time when a no. of our competitors is scaling down due to difficulties accessing their balance sheet.”
Infact, Colliers International recently stated that real estate prices in Dubai rocketed 42 % in the space of three months, between the last quarter of 2007 and the first quarter of 2008.

JPMorgan plans to invest more than $1 billion in Asian real estate over the next three years, hoping to fill a gap as Indian and Chinese developers crave funds and lenders and rival investors recoil from property markets.

The investment bank, which has fared better than some Wall Street rivals because of smaller exposure to subprime mortgage investments, is using its global special opportunities group to finance Asian property firms and their projects.

Bryan Southergill, group’s Asia real estate head, told “It’s a fantastic opportunity for us at a time when a lot of our competitors are scaling down because of difficulties accessing their balance sheet”.

Southergill said, “In the next three years we aim to invest north of a billion dollars in this part of the world, if market conditions allow”.

Further he said, “We’re cautious about equity, aggressive on mezzanine financing, and we’ll take our time during this period of market consolidation to build long-term relationships with companies we’re going to invest with”.

Many Chinese and Indian developers are struggling to complete ambitious projects because local banks have clamped down on lending to the construction industry and a stock market slump has closed off equity raising through initial public offerings.
Foreign investors are also shying away from markets where risks, as well as returns, are traditionally high. But because of a shortage of funds, developers are starting to offer plum deals.

Rising interest rates, shrinking pool of home buyers and anticipated fresh supply of DDA flats has set off what could be termed as early signs of panic among real estate investors in Delhi and its suburbs.

A large number of investors are wary of holding the property any longer and are turning it back to developers or pushing property dealers to find buyers fast. Industry experts, however, feel end-users should not rush into buying property at present and wait till the festive season, following which there could be a major price correction.

HDFC executive said, “A rising home loan rate has badly dampened consumer sentiments. July was bad and August will be worse. The latest round of loan rate hike would sink in over the next few weeks and its impact on home buyers could be visible by the end of this month.

He said that home loan inquiries have fallen by 35-40% in Dwarka, one of the biggest colonies of Delhi, which offers a large supply of apartments. Dwarka, which has seen prices move up almost four times in the past five years, is witnessing fewer transactions these days. Besides rising borrowing cost, an anticipation of DDA house allotment too is keeping buyers out of the market, say property dealers. DDA is likely to allot 5,500 one, two and three bed room apartments across Delhi over the next few months.

A shrinking pool of buyers has made investors a little jittery in Delhi, Gurgaon, Noida and Ghaziabad. Many investors, fearing that the markets may worsen in the coming months, want to exit with the gains they have already made. Some of them have turned the property back to the developers. In many cases, investors have an option to sell the properties back to the developer at an agreed rate. In a market, where an investor thinks his property may not fetch more than the agreed price, he sells it back to developer. A Ghaziabad-based developer recently bought back over 25 apartments.

Despite early signs of scare setting in among investors, prices remain stable in Delhi but have corrected by 10-15% in suburbs. Experts feel a deeper correction could be in the waiting. Knight Frank India chairman Pranay Vakeel said, “What we are seeing today is only the tip of the iceberg. We may see a deeper correction in November”. He says end users should wait, as developer intend to hold prices till festive season. Further he said, “Developers are banking on festive season to lift sales. But if it fails, they will have no option but to cut prices to sell”.

Parsvnath Developers, the Delhi-based realtor, plans to invest up to Rs 500 crore for land acquisitions in fiscal 2009. However, it will not be aggressive in ramping up its land bank and would acquire land for its projects.
In its latest quarter, the BSE-listed Parsvnath added 66 acres of land.
Pradeep Jain, chairman at Parsvnath, said the focus is to acquire land for setting up integrated townships. “We are not very aggressive in acquiring new land to boost our land bank”.
Jain said, “I think we would invest Rs 400-Rs 500 crore out of internal accruals, depending on liquidity …to acquire land in this financial year”.
The realtor further added that land acquisition for its 8 special economic zone (SEZ) sites is complete. These are at Dehradun, Indore, Kochi, Gurgaon, Nanded, Hyderabad, Mysore and Jaipur.
He said, “Construction for most of the SEZs will start in two months”.
Parsvnath is setting up a 370-acre pharmaceutical SEZ in Nanded, Maharashtra. It is also in advanced talks to sell stake in its SEZ projects to fund its developmental plans.
The realtor is in talks with at least five private equity funds, including Saffron India Real Estate Fund.
The formal announcement for the stake dilution is expected in a month.
The developer plans to build nine five-star and 4 four-star hotels. It also expects to open hotels in Shirdi and Mohali within 9-12 months.
For its retail foray, Parsvnath plans to open five to ten stores with formats including hypermarkets, convenience stores, food joints etc during the current fiscal. It is in talks with a major retailer for a joint venture, and the announcement is expected within a month. Per store costs would be around Rs 3,500-4,000 per square feet.
For its latest quarter, Parsvnath posted a 27% decline in net profit at Rs 73.97 crore from Rs 102 crore a year earlier. Sales fell to Rs 381 crore from Rs 414 crore.

Burn Standard Company Ltd is looking to raise funds by unlocking the value of its real estate property in Alipore.
The land, which National Buildings Construction Corporation Ltd (NBCC) is set to buy at the current market rate, will be valued by an independent agency. NBCC plans to develop the plot for a premium housing complex.
The market value for the 11-acre plot could range between Rs 110 -160 crore.
“We have agreed to pay Burn Standard at the current market rate after the valuation is done by an independent agency. NBCC will develop the project on a self-sustaining basis and the profits will be equally shared between the two. Since both are public sector companies, we do not see any problem,” said Arup Roy Choudhury, chairman and managing director of NBCC.
However, Burn Standard, which is under the Board for Industrial and Financial Reconstruction (BIFR), is awaiting approval for the project.
The next BIFR meeting will take place on September 30. Burn Standard’s relief package is in excess of Rs 1,500 crore.
There are also other hurdles such as shifting the existing guest houses, residences and offices. Burn Standard has operations in Bengal, Jharkhand and Tamil Nadu.
NBCC is also developing a Rs 1,500-crore 38-acre township at Mozakulai near Howrah.
“Real estate is one of our major areas of focus in the coming years. We will be building complexes and townships across the country. Our township projects will be different as we plan to provide employment to the locals. Bengal is one of the states where we have a few projects lined up,” said Roy Choudhury.

NBCC has signed a memorandum of understanding with RK Millen in 2007 for a 50:50 joint venture for the Mozakulai project. The township will have commercial and residential spaces, IT parks and malls. There will also be a special employment centre for the local zari workers.

Essar Realty Holdings—the real estate arm of the Essar Group—has won the bid for building a Rs 500-crore five-star hotel, utility centre and a multiplex at the upcoming Multimodal International Hub Airport in Nagpur.

The realty firm has also formed a joint venture with the US-based hospitality group Accor Hospitality to develop and manage the hotel project.

A few months back, the Maharashtra Airport Development Company (MADC), the nodal agency for developing the air cargo hub in Nagpur, had invited bids for the hotel cum conventional hall project. Essar Realty bid for the project through its subsidiary company Yojna Realties. G L Raheja group promoted Raheja Constructions was the immediate bidder for the project.

Essar Realty’s managing director Chirag Ramakrishna said “The MADC deal would reinforce our long-term commitment to the realty business as we continue to look at more opportunities in the realty sector.”

The five-star hotel would be developed in a 10-acre area adjacent to the National Highway VII on the Nagpur-Wardha road. The hotel would have a capacity to house 1,000 people. It would also have a service apartment to cater to the needs of executives who stay on for long tenures. MADC’s project is the second largest property deal struck by Essar Realty during the past six months. Earlier, the firm had acquired Peninsula Land’s (PLL) Kurla commercial project for close to Rs 1,200 crore.

Peninsula Land sold approximately 9 lakh square feet of commercial space to Essar Realty Holdings at its upcoming Peninsula Tech Park project. The proposed Nagpur airport project with an investment of Rs 3,000 crore is to be completed in four years, adding a new dimension to India’s capability of handling air cargo.

India’s air cargo traffic has inched up from 7.97 lakh tonnes in 1999-2000 to 8.4 lakh tonnes in 2001-02 and over 10.6 lakh tonnes now. MADC has already signed an MoU with Deccan Cargo for running the cargo hub at the international airport in Nagpur.

When a London-based real estate marketing firm recently held India property road shows in the US and UK, they were zapped to find Ahmedabad rubbing shoulders with Goa and Mumbai when it came to attracting the highest number of non-resident Indian (NRI) queries.
At a time when the appetite for Indian realty is growing in the US and UK with NRIs now accounting for nearly 15-30 % sales as against 5-15 % three years ago, Ahmedabad is emerging as a hot spot, says Rajeev Goenka, chairman and CEO, Axiom Estates, which focuses only on marketing Indian realty to NRIs and has been conducting such shows for the past five years.
“Of the nearly 300 property developments from 20 Indian cities being showcased, just half a dozen Ahmedabad properties were on offer. Yet, they observed the maximum response,” explains Goenka, who is all charged up about opening a full-fledged Ahmedabad office to cater to the soaring NRI demand.
That’s possibly why nearly 80 city realtors are headed to the US next month as part of Gujarat Institute of Housing and Estate Developers (GIHED)’s first international property shows in New Jersey and Chicago. “After the US sub-prime crisis NRIs have become more bullish on India, where they see better future appreciation. And with realty still going cheap in Ahmedabad, it is now catching their fancy,” says GIHED vice-president Suresh Patel, explaining that mainly high-end properties like bungalows , luxury apartments and golfing realty would be pitched to NRIs.
Meanwhile Rajni Ajmera, president, Credai feels that NRIs are also sold on Ahmedabad because of the good quality of life and superior infrastructure it provides in terms of roads, power, healthcare and retail.

It’s time for the city’s developers to go green. With the Center’s green rating project scheduled to be launched on August 6, environment watchdogs have decided to encourage commercial buildings that will meet energy saving norms.

If developers want to know whether their buildings are meeting the green norms, they can get the energy efficiency levels evaluated by Tata Energy Research Institute (TERI) under the project. Those who pass the test will get a green energy certificate from TERI. In fact, West Bengal Green Energy Development Corporation (WBGEDC) wants the evaluation to be made mandatory for all commercial and IT buildings.

The green rating project will be launched by WBGEDC in the presence of TERI’s director R K Pachauri, who also heads the Nobel Prize winning Inter-governmental Panel on Climate Change. He will also discuss environmental issues with chief minister Buddhadeb Bhattacharjee.

WBGEDC managing director S P Ganchowdhuri said the concept of this green rating project is to make both developers and the public aware of the amount of green energy being used to curb consumption of conventional energy.

“The project will cover all upcoming and future commercial buildings in the state. Developers will have to apply to TERI for evaluation of the energy efficiency level of their buildings. The green certificate will come once TERI finds them taking necessary steps to save energy in their buildings. This evaluation will help developers know what they need to do to construct a green energy building and how to minimize the use of conventional energy,” he said.

The director said they want this certification scheme to be made compulsory for all commercial buildings in the city.

“With many commercial and IT buildings coming up at Rajarhat and Salt Lake, we want the green rating to be made mandatory. We will place this proposal before the state government,” he said.

The government has been emphasizing on environmental issues such as air pollution and climate change due to global warming for some time. Chief Minister Buddhadeb Bhattacharjee recently declared at a World Environment Day programme that he had invited Pachauri to visit the city and suggest ways to control pollution and save the environment.

Bhattacharjee had said he wanted state agencies like the environment department, disaster management authority and science and technology department to work together and formulate a strategy. The state’s Expert Appraisal Committee has already made rainwater harvesting mandatory for all new multi-storied real estate projects to prevent an imbalance in the groundwater level.

Ahmedabad Attracting NRI

When a London-based real estate marketing firm recently held India property road shows in the US and UK, they were zapped to find Ahmedabad rubbing shoulders with Goa and Mumbai when it came to attracting the highest number of non-resident Indian (NRI) queries.
At a time when the appetite for Indian realty is growing in the US and UK with NRIs now accounting for nearly 15-30 % sales as against 5-15 % three years ago, Ahmedabad is emerging as a hot spot, says Rajeev Goenka, chairman and CEO, Axiom Estates, which focuses only on marketing Indian realty to NRIs and has been conducting such shows for the past five years.
“Of the nearly 300 property developments from 20 Indian cities being showcased, just half a dozen Ahmedabad properties were on offer. Yet, they observed the maximum response,” explains Goenka, who is all charged up about opening a full-fledged Ahmedabad office to cater to the soaring NRI demand.
That’s possibly why nearly 80 city realtors are headed to the US next month as part of Gujarat Institute of Housing and Estate Developers (GIHED)’s first international property shows in New Jersey and Chicago. “After the US sub-prime crisis NRIs have become more bullish on India, where they see better future appreciation. And with realty still going cheap in Ahmedabad, it is now catching their fancy,” says GIHED vice-president Suresh Patel, explaining that mainly high-end properties like bungalows , luxury apartments and golfing realty would be pitched to NRIs.
Meanwhile Rajni Ajmera, president, Credai feels that NRIs are also sold on Ahmedabad because of the good quality of life and superior infrastructure it provides in terms of roads, power, healthcare and retail.

Essar Arm Wins Nagpur Hotel Project

Essar Realty Holdings—the real estate arm of the Essar Group—has won the bid for building a Rs 500-crore five-star hotel, utility centre and a multiplex at the upcoming Multimodal International Hub Airport in Nagpur.

The realty firm has also formed a joint venture with the US-based hospitality group Accor Hospitality to develop and manage the hotel project.

A few months back, the Maharashtra Airport Development Company (MADC), the nodal agency for developing the air cargo hub in Nagpur, had invited bids for the hotel cum conventional hall project. Essar Realty bid for the project through its subsidiary company Yojna Realties. G L Raheja group promoted Raheja Constructions was the immediate bidder for the project.

Essar Realty’s managing director Chirag Ramakrishna said “The MADC deal would reinforce our long-term commitment to the realty business as we continue to look at more opportunities in the realty sector.”

The five-star hotel would be developed in a 10-acre area adjacent to the National Highway VII on the Nagpur-Wardha road. The hotel would have a capacity to house 1,000 people. It would also have a service apartment to cater to the needs of executives who stay on for long tenures. MADC’s project is the second largest property deal struck by Essar Realty during the past six months. Earlier, the firm had acquired Peninsula Land’s (PLL) Kurla commercial project for close to Rs 1,200 crore.

Peninsula Land sold approximately 9 lakh square feet of commercial space to Essar Realty Holdings at its upcoming Peninsula Tech Park project. The proposed Nagpur airport project with an investment of Rs 3,000 crore is to be completed in four years, adding a new dimension to India’s capability of handling air cargo.

India’s air cargo traffic has inched up from 7.97 lakh tonnes in 1999-2000 to 8.4 lakh tonnes in 2001-02 and over 10.6 lakh tonnes now. MADC has already signed an MoU with Deccan Cargo for running the cargo hub at the international airport in Nagpur.

A little known realty firm Young Builders has bought Delhi Metro Rail Corporation 2-hectare land plot at Vishwavidyalaya metro station in North Delhi for Rs 220 crore in an auction.

It will construct a residential complex at the site, which is currently being used for parking. The developer has bought the land on a 90-year lease and is likely to get a developable area of 3.5 lakh square feet, which will translate into a land acquisition cost of around Rs 6,200 per square feet.

Parsvnath Developers’ residential project near Vishwavidyalaya metro station is being sold at Rs 10,000 per square feet.

HDFC Property Ventures is investing $20-25 million into South India’s largest central business district (CBD) mall developed by Nitesh Estates in Bangalore. The move probably marks the $900-million HDFC Property Ventures’ foray into retail infrastructure in a rather tight-market environment.

HDFC Property Ventures will pick up around 20-25% stake in the 6-lakh sq ft Nitesh Mall, which is being designed by Seattle-based Callison. Nitesh Mall, which is the Bangalore-headquartered real estate firm’s first retail play, is estimated to be a Rs 300 crore project.

The Nitesh Mall will come up on a 5.5 acre patch near hotel Leela Palace, off the Indiranagar 100-feet road that is considered one of Bangalore’s high-street retail hubs, with most big brands operating their flagship stores there. When contacted Nitesh Estates’ director, development, LS Vaidyanathan declined to comment on the deal. HDFC Property Ventures CEO KG Krishnamuthy could not be contacted immediately.

The development comes at a time when private equity funds are believed to be staying away from real estate/retail investments on account of the weakening consumer sentiments and an economic slowdown. HDFC Property Ventures is Nitesh Estates’ third PE partner. Last year, the firm attracted investments from New-York based Och Ziff Capital and Citigroup Property Investors, with the latter co-developing the Ritz-Carlton hotel in Bangalore with Nitesh.

Nitesh Estates had announced that it has identified property in southern cities of Chennai, Thiruvananthapuram and Kochi for similar retails initiatives. Construction of the mall in Bangalore is expected to be completed by 2009-end.

The current retail rentals on Indiranagar’s 100ft Road is estimated at Rs 200/350 per square feet.

The Nitesh Mall will easily be the biggest retail infrastructure in Bangalore where the other prominent malls are The Forum (3.5 lakh square feet), Garuda (1.5 lakh square feet) and UB City’(1 lakh square feet). It must be mentioned that HDFC Property Ventures has signaled its interest in organized retail in the past, and interestingly, unconfirmed media reports earlier have linked HDFC Property Ventures to global retail biggies like Carrefour.

ITC is ramping up its hospitality business with new hotels in Chennai and Kolkata. The tobacco-to-snacks major would build a 1.2 million sq ft hotel in Kolkata at an estimated investment of Rs 860 crore and has already started work on the 600-room property ‘Grand Chola’ in Chennai.

Besides, ITC has bought land for building hotels in Ahmedabad and Hyderabad and would construct another just outside Delhi, its chairman Y C Deveshwar said on the sidelines of the company’s e-choupal launch at Sivaganga.

“We invested Rs 4,000 crore in our hotels business in the last two years. We would invest more (than Rs 4000 crore) this year and next year,” he said. The company is investing not just in hotels but in several other assets and is open to joint investments in the space, he stated. ITC, which has a tie-up with Starwood Hotels & Resorts, would run the operations in several of the new hotels.

The Chennai hotel, coming on the ‘Campa Cola’ property in Guindy with an estimated investment of Rs 1,200 crore, is expected to be completed by 2010.

ITC’s second hotel in Bangalore would be ready in 2009. Though, the company had bought land for building a deluxe hotel in Hyderabad, it would require clearance from the Supreme Court, Deveshwar said.

The Chandigarh-based Alchemist Group is planning a big bang foray into the hospitality sector with an investment of Rs 1,300 crore over the next two years. The plan includes a huge fine dining, quick services restaurant chain and five-star hotels.

The Rs 7,000-crore conglomerate, which has interests in real estate, food processing, healthcare, pharma and aviation, will build five brands including fine dining restaurants specialising in varied Indian cuisines. The group will open 100 restaurants under these brands in Indian cities and overseas markets like Geneva, Dubai, Los Angeles, New York and Chicago.

As a part of its debut in food & beverage (F&B) retail, Alchemist Group is also setting up 1,000 quick service restaurants (QSRs),Republic of Chicken (ROC),across the country at an investment of Rs 800 crore.

The group claims to be a quality supplier of safe poultry products and wants to carry the same marketing plank for ROC launch. Earlier this year, it had signed up actor Mithun Chakraborty as brand ambassador for the new brand. ROC will be franchise based, with outlets of varied format including takeaways and dine-in. The company has identified locations and will initially focus on the chain’s roll out in North India, particularly in NCR. “We see great potential in F&B retail and will go it solo in our foray,” says Alchemist Group chairman Kanwar Deep Singh.

According to industry sources, Indian food & beverage retail market is valued at Rs 25,000 crore growing at 25% per annum. Also on the anvil is expansion of the Group’s hospital chain. Currently, Alchemist operates two hospitals, one each in Gujarat and Punjab set up at a cost of Rs 100-crore each.

NEW DELHI: At a price almost 40% less than private developers, Delhi Development Authority’s offer to sell 5000 flats beginning Monday would mean a bonanza for the few who manage to get in.

Out of the 5,000 flats, 352 are three-bedroom flats, 889 two-bedroom ones, 3,231 one-bedroom and 286 expandable. In space-starved Delhi and amidst skyrocketing property prices, these flats will be available in areas like Vasant Kunj, Rohini, Dilshad Garden, Paschim Vihar, Motia Khan, Dwarka and Pitampura.

At a time when property prices and escalating EMIs have made the dream of owning a house in the capital a distant dream, these flats would cost anything between Rs 7.2 lakh and Rs 77 lakh.

According to DDA, 60% of these flats are new constructions. The rest include flats that were either allotted to the government and have now been vacated or the ones which have been surrendered owning to non-payment by the allottee.

There are also those which were under construction for some time.

There are 3,231 one-bedroom flats. The cheapest in this category is in Narela Sector 9A and carries a price tag of Rs 7.20 lakh while the costliest is in Dwarka’s Sector 18B and would cost around Rs 24.80 lakh.

DDA is expecting a big turnout this time considering that in 2006 when it had put up 3000 flats on sale, there were 1.90 lakh applications.

Of the 5,000 flats, 28% are reserved for various categories, including 17.5% for SCs, 7.5% for STs, 1% for war widows, another 1% for physically challenged and 1% for ex-servicemen.

Neemo Dhar, director, press and information, DDA, said, “Till date DDA has allotted 371215 flats of various categories under 42 schemes. On Monday it will throw open the application process which will continue till September 16. The DDA hopes to declare the result through a computerized draw of lots after three months from the last date of application”.

Among the areas where the flats are available are Shalimar Bagh, Jhilmil, Narela, East of Loni Road, Nand Nagri, Peeragarhi, Sarai Khalil, Lok Nayak Puram, Bindapur and Zafrabad. The size ranges from around 39.39 square meters plinth area in Rohini Sector 18 to about 158 square meters plinth area in Motia Khan.

Real estate observers said some people would get really lucky. The rates beign offered in Pitampura, Dwarka, Vasant Kunj and Rohini are almost 40% less than the market rate. The average rate per sq metre comes to around Rs 3000 while the market rate at which private developer sell at most of these places is around Rs 6000-7000.

According to DDA officials, the increase in cost of flats over 2006 when 3000 flats were sold is not more than 25%. DDA flats are cheap because there is no profit to be made.

In 2006, DDA had put up 3000 flats for sale in areas like Rohini and Dwarka and the costliest was around Rs 38 lakh in Dwarka. This time it’s Rs 77.80 lakh for a flat in Motia Khan. It’s because of its size and location.

The Board of Approval (BoA) for Special Economic Zones (SEZs) cleared a total of 29 proposals to set up SEZs, including three proposals for conversion of in-principle approvals into formal ones. The Board recommended grant of 23 formal and six in-principle approvals.
Prominent among the formal approvals are four IT/ITeS SEZs in Kerala by Kerala State Information Technology Infrastructure Limited, another two IT/ITeS/electronic hardware SEZs in Andhra Pradesh by Godrej Real Estate Private Limited and S2tech.com. Two more IT/ITeS SEZs were approved to be set up in Gujarat by Strength Real Estate and Gaurinandan Property Holders.
Two biotechnology SEZs in Andhra Pradesh by Lahari Infrastructure and a Biological E were also approved.
An SEZ for non-conventional energy, including solar energy equipment/cell SEZ in Gujarat by Euro Multivision was also granted formal approval.
An engineering SEZ in Tamil Nadu by Township Developers India was converted from in-principal to formal approval.
In-principle approvals were granted among others for a multi-product SEZ in Madhya Pradesh by Reliable Smart City.
The airport and aviation sector, including maintenance, repair and overhaul (MRO) SEZ in Tamil Nadu by Taneja Aerospace and Aviation Limited, was given in-principle nod as also a free trade warehousing zone SEZ in Tamil Nadu by Vikram Logistics and Maritime Services.

With RBI hiking the repo rate, home loans under the floating rate regime have witnessed a hike of .75 %. Leading housing finance providers like HDFC and ICICI Bank have again raised the interest rates. Who spares a thought for the loanee?.

HOME LOANS have again become dearer, no thanks to the hike in interest rate (repo rate) effected by the Reserve Bank of India (RBI) when it released the first quarter review of its Annual Policy Statement, 2008-09. Just over a month ago, HDFC and ICICI Bank raised the interest rate on home loans. They have done it again in respect of housing loans provided under the floating rate regime.

HDFC, the country’s largest home loan provider has hiked the interest rate applicable to the home loans provided under the floating rate regime by .75%. Fortunately, on those who have availed of home loans under the fixed rate regime, no interest rate hike has been imposed. Earlier this month, the company hiked the interest payable by those belonging to the fixed rate regime to 14 %. Fortunately, these loanees have been spared a second dose of hike. The country’s second largest bank, the ICICI Bank which is also into housing finance, also announced a similar hike in interest rates on its home loans. The hiked rates will come into force from August, 2008.

New Delhi:The Center cleared twenty-three new special economic zones (SEZs), including seventeen projects for setting up information technology and IT-enabled services (ITeS) zones, besides giving in-principal approval to six proposals.
The Board of Approval of the Special Economic Zones, headed by Union Commerce Secretary G. K. Pillai, considered a total of thirty-four SEZ proposals, including three proposals for conversion of in-principle approvals into formal approvals.
It cleared four IT and ITeS Special Economic Zones in Kerala that would be set up by the Kerala State Information Technology Infrastructure Ltd., while two IT, ITeS and electronic hardware SEZs of Godrej Real Estate Private Ltd. and S2tech.com Private Ltd. were approved in Andhra Pradesh.

Maharashtra, also referred to as the ‘Power House of India’, is the industrial hub of India. Commanding the industrial development of the country, Maharashtra has already established a trend in the growth of real estate in India. Economic development has resulted in the rapid development of both residential and commercial property in Mumbai, Solapur, Pune and Nagpur. The demand for Maharashtra real estates is considerably high in Aurangabad and Nashik. Maharashtra Industrial Development Corporation has already come up with several industrial townships in different parts of Nagpur, Pune and Dhule.

As per ECA International report, Mumbai ranks seventh among the most expensive cities of the world. Owing to its perpetual hike in the property prices, the demand for real estate has gone up in Mumbai. Increased demand for residential property is one of the reasons for the hike in property cost. Growth of other business centers in India is another reason for such a rise in property prices. To meet the demands of the low-income group, Matheran Realty Pvt Ltd (MRPL) has declared a mega township project in Karjat.

Pune is also witnessing a on-going development in the real estate sector. The soaring land prices is the consequence of the great demand for land. The bonanza in Pune real estate market is promoted by government of India’s decision to grant 100% Foreign Direct Investment in the real estate sector.

The value of real estate is increasing day -by-day in Nagpur, Maharashtra. The real estate property brokers help their clients to evaluate the exact price of the property and sell it at a good rate. They also assist in finding out and purchasing suitable property with uncomplicated agreement terms. All these factors have led to more and more real estate investment.

A buoyant real estate market last year saw several realty firms foray into the hospitality sector. But with slowdown hitting real estate and choking cashflow, several small realty firms have been forced to put at least half a dozen hotel projects on the block.

A developer has put on the block a 200-room hotel project in Ahmedabad that has a management tie-up with a reputed international hotel brand. Work on the project is around 60% complete. Similarly, two mid-size hotel projects in Bangalore, which are in the early stages of construction, and one each in Pune, Chandigarh and NCR have been put on the block. Almost all the projects are mid-size. Some developers are looking at completely exiting the hotel projects while others are looking at stake sale.

Cushman And Wakefield director (hospitality) Akshay Kulkarni said, “The developers are looking for equity dilution and are now willing to settle for lower valuation in their hotel projects”.

Till six months back when the going was good, several realty developers, who had parcels of land at strategic locations, were trying to get into the glamorous hotel business. With hotel room shortage taking room revenue to new levels, the hospitality business looked very attractive. And with foreign hotel chains looking to aggressively expand in India, even small developers could easily tie up with them for a management contract.

“The initial excitement is over. The hotel room rates are sliding. Moreover, the hotel projects are capital-intensive and payback period is very long, compared to other assets such as housing or commercial,” says Knight Frank India chairman Pranay Vakeel. Most of the properties put up for sale belong to small developers, who don’t have the holding power. They are now approaching bigger developers for a buyout.

In several cases, where actual construction work has not begun, developers have deferred the projects. Marriott area vice-president Rajeev Menon said, “Developers are now looking at a longer timeframe for their new projects”. Marriott has six operational properties in India and plans to add 15 by the end of 2009. The company only has management tie-ups with local hotel owners and developers.