Real estate business is still not in full swing like other cities such as Hyderabad and Bangalore in south India. Builders are slowly shifting their attention towards real estate businesses in the city of Chennai. Only since the past decade, the Chennai builders have been securing the city with good looking ventures. The basic theme of the ventures built in Chennai is apartments/flats. Many huge projects are erected in the city.
Some big names involved in real estate business are: Appaswamy Real Estates, Golden Homes Pvt Ltd, M/s. Jain Housing & Constructions Ltd and many more. To name some prestigious ventures built by these construction companies are: Golden Altius, Golden Tassles, Golden Chime, Golden Fortune, Golden Kings mead and many more. All these ventures have added to the scenic beauty of Chennai and also the city of such infrastructural advancements.
Most of high end residential projects comprise in-built gyms, parks, swimming pool, tennis court, auditorium and many more. All these facilities encourage people to own a residential unit in such happening townships or colonies. Chennai is metropolitan city with luxuries like frequent sub-urban railway service, Meenambakam International airport, cool beaches etc have made life easy in Chennai. As many banks plying from Chennai are ready to procure its customer’s with loans, buying and constructing of a house has become easy compared from the past.
The Chennai builders are known for their quality certification. Each unit under construction in a particular project is carefully supervised and well furnished. The commodities required for construction are of optimum quality which outplays the customer’s expectation. All these features and facilities enhance one’s desire to own a house and there is no place better than Chennai, the capital city for the state of Tamilnadu. The rate of increase in the real estate business activities promises Chennai a great future.

The serviced apartment trend has started ever since the hotel rooms became unaffordable or unavailable. For companies involved in this business of running corporate guest-houses or serviced apartments – the business is growing at a minimum of 15 to 20% year on year. These figures come from Mr Sunil Nayak, CEO, Radha Krishna Hospitality Services (RKHS) who have been in the business for the last eight years.Mr. Nayak avers, “About five years ago the cost of hotels went up steeply. Concurrently there was a shortage of hotel rooms – in the region of 8000 to 10000 room nights countrywide; it was at this time this industry boomed. We are currently looking after over a thousand rooms pan India, where we service the guest-house to the extent of leisure activities too. Long-staying guests can get bored or cooped up in hotel rooms and this option works out well in terms of costs too. The savings can be anything between 30 to 50%. The availability is ensured, and service can be personalized.” Today, RKHS has Dell, TCS and HSBC on its client rolls.

In the exclusive serviced apartment field is new entrant Signature Crest, a chain of fully furnished service apartments across the country, a subsidiary of TravelOrg Holidays Pvt Ltd.

Mr Venkatesh K, CEO, TravelOrg says, “This industry has everything going for it. Talking to any corporate will give an accurate picture – today just one company has over a hundred people traveling every single working day. We started less than two years ago and today have 128 corporate clients.

We first tested the market in tier two cities like Indore, Pune and then ventured into metros like Mumbai. The demand has only risen, and we have now diversified into leisure destinations like Shimla and Mussoorie. These apartments are spread in eighteen destinations across India and abroad. We plan to add ten more locations to our profile by the end of this financial year”. He has also extended this concept at the global level with UK, USA, Middle East and Far East countries, with ‘Signature Crest’s plush Service Apartments’.

The deal with the corporate house is worked out on an annual basis, leaving all the details to the service provider. All the guest has to do is to sign in. They provide incentives on the personal level like an exclusive Signature Card for frequent visitors, wherein they give a two-night stay at a leisure destination against twenty nights spent at any serviced apartment.

A comparative study states that a single hotel room of 250 square feet can be translated into an apartment of even 650 square feet, with lower costs incurred. The higher end is even better with a three-room suite of 750 square feet translating to an apartment of up to 2000 square feet.

Apart from this is the comfort of being able to step out for breakfast in nightclothes and even a customized late night meal, as against having to dress properly for the hotel buffet. Mr Nayak pointed out, “There are different ranges of such facilities provided, and it is not all about luxury and pampering. There are mid and low range facilities which are used for greater convenience”. The latter work well, especially in the case of factory premises, where the company has the option to build an extra structure for junior or mid level management to stay and work out of. Leasing it to a service provider makes business sense as they can then focus on their core business.

Travel to and from the workplace is another area where costs can be thus controlled. The numbers of companies stepping into the fray are growing with the organization of this sector. There will be a lot of multinationals coming into India in the near future, so branding is now gaining importance. For instance Patman & G, a well-known service provider, recently tied up with Aramark, one of the leading facility management companies worldwide. It is likely that one will hear about many such tie-ups, as the market grows.

Indian marketers’ search for the next big emerging markets ends here. There are 51 districts in the country, like Tiruchirapalli (Tamil Nadu), Amravati (Maharashtra), Bhavnagar (Gujarat), Kamrup (Assam) and Jabalpur (Madhya Pradesh), with at least one major town with a population above 5 lakh, that offer huge market potential for anything from mass products like soaps and toothpastes to high-end durables like LCD Television and cars.

These 51 districts have market potential almost twice that of total market in the top four metros combined – Mumbai, Delhi, Chennai and Kolkata.

Additionally, around 60 districts offer an attractive combination of an emerging small-town (population under 5 lakh) surrounded by prosperous rural areas like Gurdaspur (Punjab), Puducherry, Shimoga (Karnataka), Idduki (Kerala) and Wardha (Maharashtra). Prioriting of marketing efforts in these 111-odd emerging districts in the country can create a market which can be almost thrice the size of the total market in the top four metros combined, according to ET exclusive insights from the 2008 edition of RK Swamy BBDO Guide to Market Planning.

The guide evaluates not only the absolute market potential (Market Potential Value; MPV) which in certain geographies can be high, but also the per capita potential (Market Intensity Index; MII), which can be another important determining variable for intelligent market planning. The guide covered 515 districts (out of a total of 593) in 21 states and three union territories. A total of 24 parameters – like income, ownership, formal employment, bank credit et al – were chosen for urban and rural areas to assess MPV and MII.

On an all India basis, Mumbai district (Mumbai, suburban Mumbai and Thane town) remains the biggest market in the country, followed by Delhi, Kolkata, Chennai and Bangalore. Interestingly, amongst top ten markets nationally, even though Pune registers a bigger market size (based on MPV), Hyderabad has better quality market (its MII at 202 is higher than Pune’s 173). The top 10 here contribute around a fifth of the country’s total market potential.

British Midland, a UK government-funded organisation, dedicated to attracting international businesses to the region comprising East Midlands and West Midlands, is eyeing around 40 investors from India across various sectors in the next three years.

East Midlands Development Agency’s Director David Wallace said,”We are looking at investors especially in sectors such as automotive, aero-space, transport technology and IT among others,” .

It is more advisable to invest in Midland rather than in London as property prices are lesser by 50 % and labour costs are lesser by 25 % than London, he said.

Moreover, the manufacturing base has all international operations besides availability of skill-sets, he said.

Commenting on China, he said that significant investments were not expected from the country in the region in the next three to four years, although it is considered as an important destination. “Our focus on China has been more on trade and business than on investment into our region,” he said.

Some important Indian companies that have invested in the British Midlands are Tata Consultancy Services, Tata Motors, Tata Steel, State Bank of India, Bank of Baroda, Brunton Shaw UK Limited among others, he said.

“Signs of a slight slowdown in decision-making in investments will be witnessed in the coming years due to the US recession and credit crunch,” he said.

It would be a global phenomenon as investors would be careful about investing, he added.

Projects worth millions are running on slow pace. As many as three major projects, including that of Chandigarh initial master plan are still in the drawing board. An 11-storied building, as envisaged by Le Corbusier, a multi-crore multimedia city and the only theme park from Turner International in the country are some of the prime projects of the Chandigarh Administration. All of them are moving ahead on a very slow pace.
People dose to the developments say that the government processes are taking their time but the projects are moving ahead. Government officials say that projects of such a grand scale take time and it is not just up to the government to expedite the process.The Chandigarh Administration had invited developers to bid for the 11 – story building in City Centre Plaza in Sector 17, the hub of commercial activity in the city. With a covered area of approximately 5 lakh square feet on 1.54 acres will be a modern entertainment and commercial shopping mall and office complex.
In February, a pre-bid conference was organized such that the pre-qualified bidders are allowed to participate in subsequent bidding process. The project had attracted many developers – as many as 12 companies had submitted bid documents. The companies included Parvesh Developers Ltd, A B Movies Pvt Ltd, LIM1 (India) Infrastructure, DLF Universal Ltd, L&T Pragnya Fund 1 Consortium, PLL-CEC Consortium, Nagaarjun Cons 1 ruction Co Ltd, Emmar MGF Consortium, Uppal-GGL Consortium, M/s Mega Projects & Ventures (I) Pvt Ltd, Tata Housing Development Co Ltd and IVRCL Infrastructures & Projects Ltd.
The bids are to be scrutinized by a committee to fulfillment of all qualifications criteria. Pre-qualified bidders would submit architectural drawings/design bids and financial bids.
The design bids of all pre-qualified bidders would be assessed by a committee of renowned architects to ensure that these are in conformity with the concept and architectural principles as laid down by the planners of this city.

The real estate sector might have hit a rough patch of late, but that has not stopped India’s rich and mighty from striking housing deals in Delhi’s elite areas at fancy prices.

Three low-profile but high-value transactions worth Rs 300 crore have been closed in Central Delhi’s posh Golf Links locality, where infrastructure major GMR, a prominent auto dealer, former prime minister IK Gujral’s son Naresh Gujral and a politician have each bought a house in the past two months.
GMR has bought a house for over Rs 70 crore in the Golf Links from McDonald’s India (north and east) managing director, Vikram Bakshi. A privately-held firm of the GMR group is said to have closed the deal with Mr Bakshi, who has been living there for years.

In another deal, a leading Delhi-based auto dealer has reportedly bought a house adjacent to his own in Golf Links for around Rs 100 crore. Naresh Gujral has also reportedly bought a house in the same area. Another politician, whose identity couldn’t be ascertained, has bought a 575 sq yard house in Golf Links for around Rs 50 crore. At this valuation, the buyer may have paid at a rate of around Rs 8 lakh per square yard, perhaps one of the highest-ever paid in Delhi.

According to property consultancy firm Cushman & Wakefield, the average prevailing rates for Golf Links could be one of the highest in Delhi at Rs 7 lakh per square yard, marginally lower than Chanakyapuri’s Rs 7.25 lakh per square yard. Prices in both localities have shot up four-and-a-half times in the past three years and by over 50% in a year.

Lutyens’ Delhi, including Aurangzeb Road, Prithviraj Road, Mansingh Road, Shahjahan road, and the nearby posh localities of Chanakyapuri, Golf Links, Jor Bagh and Sunder Nagar have long been the preferred locations for India’s rich and powerful.

The past few years have seen quite a few deals in these localities, one rivalling the other in terms of value. Two years ago, industrialist and parliamentarian Navin Jindal bought a house for around Rs 150 crore on Mansingh Road. In another expensive deal, Bhushan Steel chairman Sanjay Singhal bought a bungalow at Amrita Shergill Marg for Rs 137 crore from the Dutch Embassy.

Bharti Airtel’s Sunil Mittal owns a house in the same locality, which he bought for Rs 40 crore. Steel tycoon LN Mittal, one of the world’s richest, also bought one in Aurangzeb Road a few years ago.

Hyderabad : With the rejection by Andhra voters of the Telengana Rashtra Samiti, real estate business is now picking up again in Hyderabad after the recent elections.

The non-residents of India (NRI)’s and the foreign direct investors have started taking interest in the real estate because the demand for a separate State does not seem to be on the cards.

Some believe that if the Telagana state was possible, then the prices would have gone down heavily but now the situation is different and people hope that the separation of the State is not on the cards.

“Some of the people in the coastal regions had withdrawn their investments but now they have come forward and want to invest further which will definitely give a boost to the real estate business,” said E. Peddi Reddy, TDP leader.

Since people are clear that Telangana would not be formed, a number of new ventures has risen in the city. Some builders believe that the Telangana factor was not the reason for the rise in investing. The reduction in the rate of interest by banks and the increasing value of dollar are some of the reasons for boom in the city.

“Two months after the by polls there was a little lull and it was a wait and watch situation. After by polls a lot of NRIs, foreign direct investors are showing interest. The ‘T’ factor impact should not have been there in the first place but for the past few days, we are getting a lot of calls and there is a lot of prospect to buy property,” said Y.Kiron, Suchir India Private Limited.

A day after HDFC chief Mr. Deepak Parekh stated that environmental clearances were leading to time delays and hence cost overruns in housing projects, industry body Confederation of Real Estate Development Association of India (CREDAI) has put a number to it.

CREDAI Secretary Rohit Raj Modi said that these add at least 10% to 15% to costs, which ultimately has to be passed on to consumers.

CREDAI Chairman Kumar Gera also concurred with the view that environment clearances leads to escalation in the cost of houses developed by builders. He said that this goes contrary to the government’s intention of providing houses for everyone in the country.

All housing projects with covered areas of more than 20000 square meter have to apply for environmental clearance to the Ministry of Environment and Forest (MOEF). If the project is of less than 150000 square meter cover area, the application can be filed with the state committee, if there is one. For larger projects, applications are processed by the central committee in Delhi.

President of National Real Estate Development Council (NAREDCO) Rohtas Goel, who is also CMD of Delhi-based real estate company Omaxe Ltd, argued that environment clearances within a city development area where a master plan has already been prepared are totally unnecessary and only cause delay in the completion of the project.

The developer is supposed to prepare a voluminous report of environment impact assessment (EIA) and Environmental Management Plan as well as filling up a long questionnaire of around 150 questions.

Under the rules, all appraisals are supposed to be finished within 60 days of being taken up by the committees. That might sound like a reasonable time-frame, but the problem is that the queue is often long. One major reason is that state level committees have not been formed by many state governments as a result of which most projects come to Delhi for appraisal.

The usual issues for environmental clearances in housing and construction sites are usage of groundwater without recharging, lack of sewage treatment facility, lack of municipal connection for supply, inefficient power utilization, blocking of existing water catchments in the area, noise pollution caused during construction, safety of construction site, parking facilities, commons and green space provision in projects and solid waste treatment systems.

All these issues, developers point out, are already discussed and provided for in the process of town planning for a township. So, they ask, why go through the entire exercise again. CMD of Parsvnath Developer Pradip Jain, who is also president of CREDAI’s NCR chapter, said the time required to take all the mandatory environment clearances is normally anything from six months to a year. As a large number of projects are being launched, developers are waiting for their turn to come to make their presentation before the committee and it is only after this that the appraisal process even starts.

Mr. Jain said that the most irrational thing is that even if a developer has bought land in established townships like Noida and Gurgaon in an auction conducted by the government to develop a particular project, the developer still has to approach the MOEF for clearances.

Mr. Gera said that when a master plan is prepared, the town planners take everything into consideration including the environment factors related to the development of the project. Seeking permission from the MOEF means nothing but the duplication of the whole thing again, leading to escalation in costs.

Mr. Modi, who also heads Ashiana Developers, said that even a one-year delay in the project because of environment clearances leads to increase in the cost of development by at least 10 to 15%. That’s because developers can apply for clearances only after acquiring the land. Since the land typically accounts for 60% of the total project cost, this means a year’s interest, often about 18%, gets added to the cost.

Mr. Gera accepted that environment clearances could be made mandatory for new townships where developers acquire land from farmers. In such cases, the developers have to apply for land use change as well. However, he said all environment clearances should be issued within a month.

The urban development ministry has already mooted the idea of expediting environment clearances and proposed that all such clearances should be issued within one month. But that guideline remains on paper while house buyers pay the price for the red tape.

HDFC chairman Mr. Deepak Parekh has advocated the need for a real estate regulator in an attempt to protect the interest of property buyers in the country.

In his letter to HDFC shareholders, Mr. Parekh has written, “The real estate sector has been growing rapidly and is a sensitive sector given its strong inter-linkages to other industries in the Economy. I have advocated the need for a real estate regulator, though I understand this proposal has been met with stiff resistance from certain members of the developer fraternity. Though land is a state subject and would therefore require regulators at each state level, there can be a mechanism whereby there is an apex national body, which can oversee the functioning of state-level real estate regulators.”
Mr. Parekh has written that developers rarely offer any warranty for the flats and in case of disputes, consumers have only the consumer or civil courts as recourse – both of which may take ages before a case can even come for hearing. Delays in handing possession of the property to a purchaser have become the order of the day. Needless to say, the developer community is free from any liability in case of any delay.
He wrote, “The Indian housing market may have saved itself from the contagion effect, but this should not relegate the need to advocate transparency in the real estate market.”
He further stated, “Stimulating a rental market will go a long way in providing affordable housing. Developers need to be incentivezed to build rental accommodation”.
Parekh conveyed that the sub-prime crisis has also brought to light the fact that there is no substitute for cautious and prudent lending. The basic tenets of home financing are simple – lending must be done according to earning capacity, which is on a cash flow basis and not on asset values.

India’s second-biggest property firm, Unitech, has scrapped plans to list a US$600 million ($824 million) real estate investment trust here.Its big rival, DLF, which is India’s biggest developer, did likewise in March, announcing it would delay its listing plans.

However, Indiabulls Properties Investment Trust went ahead and listed last week, only to be disappointed.

It raised less than what was hoped for in the IPO despite extending its offer deadline by a day in hope of attracting more retail investors. Its units then dropped 10 per cent on their debut last week and then needed to be supported by the IPO manager Deutsche Bank on day two of trading.

All these, despite the trust being backed by billionaire Lakshmi Mittal, one of the world’s richest men.

Instead of listing in Singapore, Unitech Managing Director Sanjay Chandra says his firm will seek US$300 million from private equity firms to build hotels and shopping malls in India this year.

Unitech said yesterday it had sold a 50% stake in a Mumbai project to Lehman Brothers Holdings’s real estate fund for US$175 million.

Mr Chandra did not say when or whether the Singapore trust listing may be revived.

As of last week, 12 of the 15 new shares listing in Singapore this year were trading below their offer price.

The last firm to scrap its listing plans was Grand Pacific Properties earlier this month.

However, it’s not all bad news. Last week, it was reported that China-based New Century Shipbuilding plans to raise up to US$1 billion ($1.4 billion) in a Singapore initial public offering (IPO). This would be Singapore’s biggest IPO of the year to date.

Real estate firm Orbit Corp Ltd expects to add new projects worth 8-10 billion rupees in 2008/09, as it sees strong demand for redevelopment projects in South Mumbai, its main area of operation.
The developer, focused on selling high-end apartments and offices in the city’s affluent areas, sees revenue growing at least 25 percent this fiscal, despite reports of a demand slowdown in Mumbai, its finance head said on Tuesday.
The company is now leveraging on the demand to set up beach-front projects further up along the Mumbai coastline, and is also acquiring land for a 200-acre coastal township at Mandwa, south of Mumbai.

The GMR Group-backed Delhi International Airport’s (DIAL) plans to develop a 45-acre hospitality district in the capital have hit an air-pocket. Airports Authority of India (AAI), which owns 26% in DIAL, is unwilling to raise the required fund of one thousand crore rupees for the proposed real estate development.

It was decided that all the stakeholders in DIAL would bring in funds in proportion to their equity holding in the company to part finance the project. This arrangement was opted after AAI raised its objection to GMR’s plan to collect security deposits from realty developers. DIAL is a joint venture between GMR (50.1%), AAI (26%), Fraport and Malaysian Airports (10% each) and IDFC (3.9%).

“AAI has said it would not pump in Rs 1,000 crore for the proposed real estate project. This would further hold the hospitality project at the airport,” a government official said. The dispute between AAI and GMR began last year when the former floated a subsidiary — Delhi Aerotropolis (DAPL) for the hospitality district. As per the plans, DAPL was to receive deposits of about Rs 2835 crore in lieu of leasing land to developers.

This revenue-generation model was objected by AAI saying it would reduce rent from realty developers and hence result into significant revenue loss to them.

The agreement stipulates that AAI will receive 45.9% of the revenue collected by DIAL. DIAL had earlier planned to build 3000-room hotel complex at the capital’s Indira Gandhi International (IGI) airport before the Commonwealth Games in 2010.

According to an estimate, Delhi currently faces a deficit of about 30000 hotel rooms. The airport developer is allowed to do commercial development at 5% land of over 5,000-acre Delhi airport. In the first phase of modernization, DIAL plans to invest Rs 8,900 crore in building new terminals and a new runway.

About fifteen major infrastructure and real estate companies have shown interest in being part of the proposed Multimodal Tranport Hub to be developed by government of Delhi at ISBT, Dwarka. Some Big names of this list are, BLS-ILFS consortium, Unity Infraprojects, Lanco Infratech, Nagarjuna Constructions, CMC Constructions, Parasvnath Developers, Zoom Developers, Sun City Projects, Somdutt Builders, Pawha Infrastructure and SMS Infrastructures and so on.

The project will be developed on a public-private partnership basis at an estimated cost of four hundred crore rupees and will be on a BOMM (build-operate-maintain-manage) basis for a period of forty years.

The proposed transit system will be developed about eleven hectares near the world class convention centre developed by DLF and IGI International Airport. Government intends to make this project operational before coming Commonwealth Games.
This will be the first integrated transport hub of its type in the country that will provide inter-connectivity between multiple modes of public transport like inter-state buses, Delhi metro, and the proposed light rail transport system to be introduced by the Delhi government.
The ISBT is designed in such a way that it can handle five thousand buses every day. It will have around 175 bays for inter-state buses and around hundred for local buses, besides a single-storey underground parking for buses and cars. The project also envisages the development of a three-star hotel with three hundred rooms, besides other passenger amenities like food stalls, dormitory, drinking water, air-conditioned waiting halls, ATMs, bank counters, department stores and phone booths.

There is going to be a major price correction in the real estate market in the subsequent three months. Land owners and builders are holding on to the selling price of their properties due to the ongoing monsoon but post-monsoon, prices would nose-dive 15-20%. Builders and property consultants preach that monsoon season is considered to be a lean season for the real estate market when barely any buying or selling of properties happens.

Once the monsoons pass though, land acquirement cost will dip by 15-20% in the subsequent three months, and as a consequence, land owners will be able to enter into land deals at less significant cost. This is when the real estate market will see a price correction.
Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj says, “Nationally, the real estate market will witness a twenty percent dip in land acquisition costs in the subsequent three months. Till then, the market will continue to be stable. The price corrections will be seen after the completion of the monsoon.”
Real estate developer, Hemant Shah, chairman, Akruti City too preachs that the real estate rates will continue to be firm for the subsequent three months and will see price correction only after the monsoons. Abhishek Lodha, managing director, Lodha Group says that the real estate prices will continue to be firm in Mumbai even though Markets such as Delhi and Bangalore have started observing a decline in prices.
Talking on recent reports that real estate firms are defaulting on bank loans owing to a fall in the segment, Vakil comments, “It is due to some real estate developers have borrowed bank loans at far above the ground interest rates.”

Goldman Sachs, the global financial powerhouse, has picked up a minority stake in Sterling & Wilson, a Shapoorji Pallonji group company, for $50 million. No further financial details were available.

Sterling & Wilson is one of the leading mechanical, electrical and plumbing (MEP) contracting companies in the country. It is one of those few companies in India that offer this kind of services, people acquainted with the industry said.

The fund infusion by Goldman Sachs would supplement the existing support from the Shapoorji Pallonji group and enable the company to increase its growth plans both domestically and internationally, a top company official said. Avendus Capital was the financial advisor for the transaction.

While realty industry as a whole is estimated to grow at an annual rate of about 20% for the next few years, there’s a growing trend towards consolidation and organized structure.

Lehman Brothers Real Estate Partners has agreed to invest approximately US$175 million to acquire a 50% stake in the initial phase of a master-planned project on the Western Expressway of Mumbai.

The project is being jointly developed by Unitech Ltd. and their local Mumbai Partners (the Western Expressway JV).
The initial phase entails development one million square feet of office space of the total developable area of about 18 million square feet.
Lehman Brothers Real Estate Partners and the Western Expressway JV will each contribute 50% of the construction cost.
World renowned architecture firm Skidniore, Owings & Merrill (SOM) has been retained to design the master plan for the broader project which envisions a 100+ acre mixed-use development containing office, retail, residential and hotel components. With land availability being the biggest challenge for developers and investors in Mumbai, the ability to control and shape a 100+ acre development presents a rare opportunity.
The JV aims to capitalize on this by creating one of the most high profile developments in Mumbai, with a unified character and management along the lines of Roppongi Hills in Tokyo, Canary Wharf In London, and Battery Park in New York.
With Mumbai’s commercial and social life being “re-centered” around Worli and Bandra, the Project’s proximity to the established Bandra Kurla Complex business district (BKC), the affluent northern suburbs of Bandra, Khar and Santacruz, as well as the airport, road & public transport links, make it one of the most attractive office locations in Mumbai.

Property prices in and around Calcutta could shoot up by as much as 15 % as city developers contemplate a basket hike in product prices to combat a steep rise in input costs. The real rise in realty rates, though, could be tempered by a slack market.

According to Pradeep Sureka“There’s no way we can absorb the entire burden of escalation in the cost of steel and cement, the two basic raw materials in real estate construction. We are in dialogue with our members and prices for new properties are set to be revised upwards soon,”.

Cement prices have gone up 20 %, while steel is dearer by 40 %, followed by the recent hike in petroleum products, to push builders into a corner since they are forced to absorb the 20-25 % rise in construction costs in pre-sold projects.

However, given the demand slowdown in an inflation-hit market, increased interest rates and the specter of dearer home loans, real estate developers could find it difficult to go for a one-shot rack rate hike.

“Yes, builders might be forced to spread the hike across installments, given the cautious consumer mindset,” felt Pradip Chopra of the PS Group, former secretary of Credai Bengal.

Members of Credai Bengal are scheduled to meet next week to discuss the sale price hike of upcoming properties. Builders in Bangalore and Pune have already announced a rack rate increase, while Mumbai is set to follow suit on 16th june.

Sureka feels the prices of new flats in city core areas would go up by five to seven per cent while in suburbs, where construction cost is often 80-90 % of the project cost, thanks to cheaper land, property prices could soar even 10-15 %.

“Prices are bound to go up, sooner than later, and the LIG and MIG segments would be the worst-hit,” agrees Chopra. He feels there would be a scramble for price correction in new projects and unsold stocks as developers rush to recover losses incurred on pre-sold products with no escalation clause.

Not just cement, steel and oil, but rising labour and contractor fees plus transportation cost have also contributed to the difficult situation, points out Piyush Bhagat of the Space Group. The city realty firm has already announced a 12 % rise in the sale price of a housing project in Belur.

“The quantum of hike has to be left to individual companies, because the profile of the product and the location all matter,” says the Credai Bengal president whose company, the Sureka Group, has announced an upward revision of Rs 100 per square foot in two of its Rajarhat projects.

Around 2,500 flats are being built in city core areas and 6,000-7,000 in the suburbs.

June 12 Marks the biggest and first of its kind tie-up in the private sector, Real Estate major K Raheja Corp is working with former US president Bill Clinton-led Clinton Climate Initiative (CCI) to retrofit their buildings across the country to cut greenhouse gases.

Mumbai is one of the cities listed from India, where K Raheja Corp has started work on Inorbit Mall in Malad and a hotel in Powai, first in their list of 20-odd buildings to be retrofitted.

While the concept of constructing green buildings is fairly established, retrofitting existing new buildings is comparatively a new concept. And the real estate group, which plans to retrofit all its properties, is not only looking at cuts in energy bills but also at a savvy international image.

Mr. Shabbir Kanchwala, associate vice-president, K Raheja Corp, said, “We have signed a first-ever project development under the Clinton Climate Initiative and are working on the energy audit with Johnsons Control, one of the companies introduced as the leading energy efficiency provider by the CCI. And it’s not just about energy saving”.

Further he added, “Not only will we cut our energy expenditure by 20-25%, but will also save up to 20% water. Moreover, this is also building for the future as we don’t sell any of our properties. Instead, we lease them out to big companies like Microsoft, which like to work in savvy, eco-friendly buildings. We are the first ones to retrofit our buildings, but we are also the first to gain this competitive edge”.

Work has started in Mumbai and Hyderabad, and according to the company, 50 lakh square feet of built space will be retrofitted. For the process, smarter glass varieties (which let in light, not heat) and better suited air-conditioning systems are used. Sewage treatment is also done to conserve and recycle water.

While some government buildings have been retrofitted for cutting carbon emissions, the concept is still picking up in the private sector. Mr. Sanjay Seth, Energy Economist, Bureau of Energy Efficiency, said, “Many government buildings under the CPWD have been retrofitted, like the Rashtrapati Bhawan and the Prime Minister’s Office. The concept is catching up now in the private sector as retrofitting to cut emissions is a win-win situation”.

An uninspiring opening and an even worse close towards the end of the day marked Indiabulls Properties Investment Trust’s debut on the Singapore Exchange on 11th june.
During the day, it went down to as low as 0.88 cents and closed 10% below the issue price of S$1. The stock could not breach its issue price of S$1, reports Supriya Verma in Mumbai.
The trust sold shares at S$1 each, the bottom of the proposed range, after delaying the sale by a day, According to a June 6 statement, the division had aimed for as much as S$388.3 million from selling shares at S$1-1 .10 a piece.
Indiabulls Properties had to go ahead with FY10E distribution yields of 9-10 %.
Indiabulls Properties Investment Trust is the first international offering in this year by any Indian developer. Spiraling property prices, higher interest rate for the past 6 yrs and impending volatility in global markets had led to other prominent developers like DLF and Unitech to postpone their offerings.

Leading real estate players together with DLF, Parsvnath, Omaxe, TDI, Ansals and Unitech have shown interest in joining hands with the Punjab government in its bid to provide ‘reasonable houses costing not more than One lakh rupees each’ in the state.
Real estate and infrastructure players who attended a conference with Punjab chief minister Parkash Singh Badal on 12th June to come out with ‘real plans for houses for all scheme. The meeting were attended by several top level management members of Companies like Ambuja cement, Ansal API, DLF and many other.
Badal in the meeting said that the state government’s will give its proper support to the corporate sector for a joint bid to provide every poor and needy person a roof over his head in the state. The real estate developers had come together for the interactive meeting organized by National Real Estate Development Council (NAREDCO).
The chief minister pronounced the creation of a separate ‘state shelter fund’ to be used completely for the construction of economically weaker section (EWS) houses by the Punjab Urban Planning and Development Authority (PUDA). All urban development authorities will contribute fifty percent of the license fee collection to the fund. Having an interaction with the stakeholders in coordination with NARDECO prior to freezing the policy on ‘affordable housing for all’, Badal listed a no. of path breaking actions taken in the housing and urban development.

Chandigarh is a city with plenty of options available as per the rental market is concerned. The real estate trade has scaled new heights and to attain the break-even to the supply side. Chandigarh is one of well developed cities in India. As a result purchase of an own house to a common man has become a costly affair. This scenario aids the rental market in the city which is already on an upswing. Since this city is capital for both the states of Punjab and Haryana, many people would prefer Chandigarh as the destination for self-upliftment. Many prestigious educational institutions are also present here. Many parents, for sake of better education for their children are now shifting to Chandigarh. All these people need space to live in which again is providing a great feed back to the rental market.

The city of Chandigarh also has accounted well on the feed back and is equipping itself with surplus rental properties. Many flats or apartments have come up in the recent times only to provide rental service. Also many upcoming ventures are slated to serve the same purpose. In the interior of the city, many properties have undergone lucrative face lifts and appealing for better rental options. The range of rental homes starts from single bedroom flats to independent luxurious bungalows or villas. Each range of accommodation is planned to meet a certain budget and expectations. One can go around the city and choose a house on rent which is apt for his budget, requirement and lifestyle. Some builders have taken up the business of undertaking or constructing residential properties so as to lend them on lease or on rent. With so many options one might not be able to decide on which house and locality, he wishes to stay. Then an expert who takes care of rental formalities and also helps the person in finding best value for his money is much needed. Many websites are providing this brokerage service for minimal commissions which solve the problem to a great extent.

Country Club India (CCIL) has pronounced the getting hold of properties in Tier II cities. Driven by its focus on pan India presence, CCIL has added Lucknow, Jaipur, Indore, Surat and Pune to its fold taking the total to forty four own clubs in the two hundred two club network including franchisees.
Y. Rajeev Reddy, Chairman and Managing Director, CCIL, told on 11th June that plans were on the anvil to invest one hundred crore rupees in Gujarat and Madhya Pradesh to strengthen its functions. Elaborating on CCIL’s development plans abroad, Mr. Reddy said the acquisition of Chelsea Hotel (now re-christened Country Club Dubai) was a significant part of its one thousand one thousand crore rupees strategic expansion plan in the next three years.
The Dubai property, acquired at a cost of One hundred seventy five crore rupees, was fully operational, he said. CIIL had made its foray into satellite clubbing under its brand Country Klub 2007 (CK 27), a concept for intra-city penetration. The first one, developed over forty thousand sq. ft. in Surat, was already operational. A 2nd such club in Koramangala (Bangalore) has been announced. The company has also initiated a global card which entitles members to a host of privileges at the newly purchased Country Club Hotel in Dubai and other CCIL properties. CIIL has initiated a project in association with Kairali Group for medical tourism and has lined up more similar projects.

Indian Hospitality Corporation (IHC), a joint venture of Gordon House Hotels, Mars Restaurant and SkyGourmet Catering formed last year, plans to spend as much as $1 billion to acquire hotel groups and restaurant chains.

The company has hired Ravi Deol as chairman and chief executive of Mars Restaurants, the hotel and food services division of IHC, to initate acquisitions. Deol is the former managing director of Barista and ex-chief executive of FieldFresh Foods.

Mr. Deol told, “We are looking to add 2,000 hotel rooms across 17 cities, including metros and towns such as Lucknow, Amrtisar, Raipur, Chandigarh among others. We may acquire hotel groups having 5-7 properties. We are also looking at acquiring restaurants or restaurant chains and then take them to the leadership position”.

All these acquisitions will be done by Mars Restaurant. Mr. Deol said”We may go for a rebranding of an existing hotel chain as and when we acquire them”.

IHC has formed a $200-million ‘hospitality opportunity fund’ and $220 million worth of warrants to be converted into equity. The balance amount will be raised by selling equity or through borrowings.

Mars Restaurants has brands Such as Tendulkars’ (a 50:50 joint venture with cricketer Sachin Tendulkar), China Joe, The Pizzeria, Dosa Diner among others, while Gordon House is a venture of Mars Restaurants and currently has three properties in Mumbai and Pune. The acquisitions will add to the portfolio of Gordon House hotels.

The Indian leisure and hospitality industry is set for high growth, according to the World Travel and Tourism Council. According to industry estimates, the Indian hotel and hospitality industry generates foreign exchange earnings of Rs 35,000 crore each year in addition to Rs 10,000-12,000 crore generated from Indian customers.

The market size of branded fast-food and dine-in restaurants is estimated at over Rs 600 crore. This segment is growing in double digits annually attracting players like IHC.

According to sources, popular north Indian restaurant chain Nirulas along with Clarks hotel chain may be on the radar of IHC for acquisition and subsequent re-branding.

On the air-catering front, IHC is looking to expand SkyGourmet to 11 cities from six metros at present. SkyGourment will soon set up its air catering facilities in Kochi, Jaipur and Amritsar among other cities.

Mr. Deol said, “We will also expand our air catering services globally when Kingfisher goes international. We are already catering for Jet Airways, Kingfisher Airlines, Air India Express, Indian Airlines, Malaysian Airlines and Air France. We are looking at providing catering to Emirates and Lufthansa too”. Sky Gourmet was incorporated in 2002 and is headquartered in Mumbai and employs about 1150 people.

According to experts, the killing in stock markets, where realty stocks have taken a beating along with the rest, may speed up the slowdown in the real estate market over the next six months.
Balaji Rao, managing director, Starwood Capital India Advisers, said, “The market is already slowing as high property prices have affected sales”.
Even as realty stocks are quoting at huge discounts to their issue prices (DLF at Rs 479.85 against Rs 525 issue price; and Omaxe, Parsvnath and Puravankara at 40-50% discounts) realty is suddenly looking scary for investors.
Many investors are thus opting to book profits by selling their flats at up to 15% lower than the builders’ rates. These are investors who don’t want their notional profits to be eroded if the rates decline.
A recent report by Credit Suisse says that though developers insist that prices have remained stable or are increasing, they are finding it difficult to raise funds from the equity and debt markets.

City-based real estate developer PS Group is setting up an IT park in Sri Lanka with an investment of $80.4 million.

The company has entered into a joint venture with Sri Lanka Institute of Technology and Infinity Parks Ltd, another city-based real estate company, to develop this project.
Mr. Pradip Chopra, chairman and managing director of PS Group, said, “This is our first international project and we feel there are lots of such opportunities in neighboring countries. This IT park project will provide direct and indirect employment to 20000 and 80000, respectively”.
PS Group will be developing 1.6 million square feet for the technology park for which the Sri Lanka Institute of Technology will provide 16 acres.
In the first phase, around 500 million square feet will be developed for the project, which is expected to attract around 20 to 50 companies.
The company has also tied up with a US-based hedge fund, which will be investing in their future projects.
Mr. Chopra said, “We have also been approached by Sampath Bank Ltd, one of the largest Sri Lankan banks to help develop their properties through similar joint ventures”.
In Chennai, the PS Group is developing a 4 lakh square feet residential project. It has also entered into joint ventures to develop 11.5 lakh square feet of retail space in Coimbatore and 9 lakh square feet of residential complex in the same city.
An IT special economic zone (SEZ) of 2.5 million square feet is also being planned in Chandigarh.
PS Group is involved in a service sector SEZ, which is being planned in collaboration with farmers at Hinjewadi, Pune. Mr. Chopra further said, “We are doing this project in collaboration with the farmers who will be stakeholders in the project in various ways. It is very difficult to repeat that model in Bengal as the land holdings are fragmented and the urban and agricultural land ceiling act makes it very difficult to follow such a model”.