REAL bElow STATE of demand
Real estate firms are forced to sell smaller offices by dipping demand. Some of the prominent property developers like Wadhwa Group, Hubtown, Lodha Developers, Kanakia, etc. have started selling of their smaller office spaces. Continue reading
Trump’s eponymous real estate group expects to sign multiple deals for Indian residential projects and hotel contracts over the next five years, despite a market riddled by regulatory uncertainty and bureaucratic red tape.
“India, among other emerging markets, is the biggest push for our organisation,” Donald Trump Jr, an executive vice president of The Trump Organization, said on Wednesday.
Trump, whose portfolio includes projects in South Korea and Turkey, in addition to hotels and skyscrapers in the United States, is close to signing a couple of deals with Indian developers, the younger Trump said without providing details.
“Equity investment will depend on individual projects and partnerships but first we would like to form relationships which allow us to understand the processes and spectrum better,” the 34-year-old said on the side-lines of a hotel conference.
The developer entered India last year with a joint venture partnership with Rohan Lifescapes to build a 45-storey luxury residential tower in Mumbai.
However, work on the tower, which will bear the Trump name but involves no equity from the U.S. developer, has been halted for about nine months since authorities said it lacked the necessary permits, a common problem in an industry wrapped in red tape.
Indian developers are often hit by changing regulations. In Mumbai, for example, the scrapping of a rule granting extra floor space in exchange for providing public parking facilities has meant many projects must reapply for clearances.
But Trump, whose father is worth an estimated $2.9 billion, according to Forbes, says the lure of an emerging India outweighs the regulatory headaches.
“The Indian market is starved for a good luxury product and it needs a brand like ours,” he said.
“I like the regulatory changes I am seeing. It may slow things down a bit but will create a level playing field and will help in eliminating the unknown for an outside investor coming in,” he said.
The company plans to focus expansion in the country on luxury residences and hotels, and would look at cities including Mumbai, Delhi, Bangalore and the state of Goa.
Some local players such as privately held Lodha Developers and Godrej Properties are emerging as strong brands in India’s luxury housing space, but the market remains fragmented.
And despite a slew of interest rate hikes that have cooled India’s overall property market and hit luxury developers particularly hard, Trump is bullish.
Since the home prices continue to surge in the financial capital of the country, one of the leading real estate developers of India, Lodha Developers have come up with the tallest residential tower in Mumbai. For the financial support, Lodha is negotiating with foreign as well as local financiers.
A banker informed that the Lodhas have approached the property fund of mortgage giant HDFC for over Rs 1,000 cr. and the leading Singapore funds, GIC and Temasek.
Presently, the world’s tallest residential tower is in Australia, known as Queensland Number One which has a height of 322.5 metres. While due to the market downturn, some of the major projects in the West are put on hold, there’s some movement in the Middle-East. Dubai is to come up with a tower of height 516 metres having 120 floors.
The New York architects,Pei Cobb Freed and Partners, who have designed some of the most lavishing architectural marvels across the globe, around 200, are to be hired by the Lodhas for this tower. Some of their famous marvels are Bank of China Tower in Hong Kong, Louvre Pyramid in Paris and John Hancock Tower in Boston.
Since now days, land is the most promising resource, the developers are ready to pay any price just to get into the realty business.
Here are some of the major deals in the field of land:
1. The Lodha developers had a deal of Rs 4,053cr for a plot of 25,000 sq mts. The sq per mtr cost is about Rs 81,818.
2. Next closest deal was by Sunteck India. It was a deal of Rs 3,465 crore. Following Sunteck was Indiabulls Real Estate at Rs 3,327 cr which was backed by Gaurhari Estate at Rs 2,251 cr.
3. In 2008, BPTP, a Delhi based builder had a deal of Rs. 5000 cr for a 95 acre plot in Noida. Unfortunately the deal could not get through.
Lodha Developers plan to launch a 650 million dollar IPO in the end of this year. Also, they plan to build a residential building worth Rs. 10,500 cr in the center of Mumbai.
Luxury Property
The super luxury housing segment whose range was from Rs. 4 cr to Rs. 30 cr and which had taken backseat during the slowdown is now coming back. The demand for these residential properties has risen by 30- 40 percent.
The real estate firms such as Lodha Developers, Orbit Corporation, and Skyline Constructions are taking advantage of this demand hike and plan to cash in on a rather specialized alcove- the boutique homes category.
According to the national head (residential agency) Knight Frank India, Anand Narayanan KB, the sales of such luxury boutique homes are much higher as compared to volume luxury properties since there is limitation in this segment.
The HNI segment is to be hit by these homes. This includes senior professionals, CEOs, wealthy non-resident Indians and entrepreneurs in new-age businesses who are seeking for house in India. The CEO, Homebay Residential, Jones Lang LaSalle Meghraj, a real estate services firm, Mr. Raminder Grover noticed that the prices of luxury homes has gone up by 20%.
However, he also added that the prices should not rise now and become stable or otherwise the demand will go down again.
Lodha Developers Ltd. has been selected as one of the India’s top ten builders on the basis of a survey conducted by Construction World, India’s premier magazine for the construction sector.
The survey was conducted over a period of 4 months among a spectrum of handpicked audience comprising industry professionals from across India.
Mr. Abhisheck Lodha, Director, Lodha Developers Ltd. said, “Our selection as one of the top ten builders in India by the Construction World is recognition to our standards of excellence in every aspect of our services and our presence in varied segments like high-rises to mid-income luxury, in the real estate sector”.
Instituted by ASAPP Media, the award is recognition of exceptional work done by architects and builders in various aspects of infrastructure and real estate industry over the years.
Emaar MGF, Godrej Properties, Lodha Developers, Sahara Prime City, Nitesh Estates and Sriram Properties will all hit the capital markets in the current year, declaring that the worst may be over for an industry that virtually cratered in the global economic storm last year.
With market conditions still tight, it will be tough for these issuers to demand substantial premium from investors. Looking at the present volatile market, it would be really difficult to predict the premium.
The last to be listed, Mahindra Holidays and Resorts, debuted on BSE 7 percent higher than its issue price. Godrej Properties, the real estate arm of the Godrej Group, plans to sell around 10 percent through its maiden public issue. Before that, the company will place a 3.5 percent equity with select institutions.
The IPO is expected to fetch the company anywhere between 450 crore and 600 crore rupees. It will use the proceeds for building low-cost housing. ICICI Securities and Kotak Mahindra Capital are the merchant bankers to the issue.
Lodha Developers’ Rs 657.9-crore bid for the 10.3-acre Finlay Mill property in central Mumbai has not been cleared by the asset review committee of the National Textile Corporation. Bid was placed on 16th of this month. NTC’s asset review committee was to take a decision, as it was much lower than the reserve price. The committee could not arrive at decision, as many members were against awarding the land parcel at a price lower than the reserve price.
NTC MD K Ramchandran Pillai said, “The asset committee had the power to take a decision. Now, the NTC board will decide whether to award the Finlay Mill land to Lodha.” On July 16, the Finlay Mill property received two bids from Lodha and Indiabulls for Rs 657.9 crore and Rs 520 crore, respectively. This was widely viewed as a revival of the real estate.