Mumbai real estate price witnessed a slight fall in recent years. Knight Frank a well-known Market Research Firm reported that the property price has gone down in many Mumbai markets. Many realty firms suffered loss as sale has gone down by 70%. Higher growth of interest and the stingiest Housing Loan Schemes pulled the demand down. It is estimated that around fivefold increase in the interest rate happened during 2008 to 2012. Moreover the RBI keeps very strict with providing house loans. The housing loans are reduced with a view of curtailing the over flow of money. Continue reading
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IL And FS PE Plans Fund For Yatra Capital
IL&FS Investment Managers Ltd (IIML), the country’s largest home-grown private equity firm by assets under management (AUM), is planning to launch a fresh fund under the banner of Amsterdam’s Euronext-listed Yatra Capital.
Yatra Capital is an India-focused real estate investment firm, promoted by Saffron Capital Advisors.
Archana Hingorani, chief executive officer and executive director of IIML, told “We are in the process of getting shareholder approval at its upcoming annual general meeting. After the approval comes and depending upon the capital markets, we will be able to raise fresh money for the same.”
IIML would be hoping to be second time lucky.
This involved renaming the existing shares of Yatra Capital as ‘real estate shares’ whereas the new share class was to be christened as ‘infrastructure shares’. This would have developed Yatra Capital as a multi-class fund house with a strategy to invest in Indian infrastructure through debt and equity components, as against its present strategy of primarily equity investments in the Indian realty sector.
Yatra Capital has invested across asset class but its maximum exposure is in the retail segment where it has invested in market city projects of the Mumbai-based realtor Phoenix Mills Ltd. It also has enterprise level stake in Saket Engineers Pvt Ltd and the Phoenix Mills.
After the proposal was submitted, a number of amendments were suggested by the concerned shareholders and the board had later determined that until a final position was reached on the potential amendments to the proposal, it would not be implemented. This happened in spite of the board getting what it called a ‘broad’ investor support.
Delhi: Homes Sells Faster Than Mumbai
Mumbai may be second to Delhi in unsold homes, but it will take longer to sell them. Real estate developers in the financial capital must wait over three years to clear 1.13 lakh units or 120 million sq ft as high prices deter potential buyers, shows a study released by Liases Foras, a real estate rating and research consultant.
The study covers units in Mumbai Metropolitan Region (MMR) — including Mumbai city, Thane, Kalyan and Navi Mumbai — National Capital Region in Delhi, Pune, Hyderabad, Bangalore and Chennai. NCR, with 232.57 million square feet or 1.60 lakh units of unsold homes — roughly double Mumbai’s —will likely sell homes much faster, in 23 months.
“The NCR market is primarily an investor market and has very little comparison with Mumbai,” says Om Ahuja, chief executive officer (residential services) at Jones Lang LaSalle India. “The real estate market in areas like Gurgaon or Noida attracts a lot of money from neighbouring states like Punjab, UP and Delhi as people invest in residential properties.” Among the six metros, Pune homes will be sold the fastest, taking just 14 months to sell its 43.06 m sq ft at the current pace of buying. A steep rise in interest rates in the last 18 months was seen as the key reason for low sales as buyers try to avoid high home loan instalments.
The Reserve Bank of India cut key rates by 50 basis points last month, forcing lenders to lower their retail lending rates which could push sales.
Anand Rathi and Knight Frank Eye the Second Realty Fund
Anand Rathi Financial Services and property consultancy Knight Frank India are planning to launch their second real estate fund by end of this months and looking to raise around Rs 500 crore (~$100 million), sources close to the development told VCCircle. Unlike its peers who are hitting foreign shores to raise new funds, the joint fund rental yield and appreciation portfolio (RYAP) fund will be raised from the domestic market. Like its predecessor, it will invest in commercial assets in tier I cities which include Mumbai, Pune, Bangalore, National Capital Region (NCR) and Chennai.
The fund would be targeting returns of 10-12 per cent from its investments and expects to stay invested in an asset for four-five years. A senior executive of the joint venture fund house who did not wish to be identified, said, “We are waiting for final Alternate Investment Fund (AIF) guidelines as right now there is no clarity on registration of funds and other norms. Once we have clarity on the same which we are expecting by mid-May we will register and start our fund raising process.”
In April 2, markets regulator Securities and Exchange Board of India (Sebi) had unveiled its final norms to regulate AIF’s in the country. Fund managers expect the detailed guidelines to be issued in the next two weeks.
Knight Frank India and Anand Rathi Financial Services had joined hands two years ago to raise Rs 225 crore rental yield fund. It has invested Rs 135 crore from the existing fund in two projects including Hub town Ltd’s commercial project in Mumbai and Cerebrum IT park development by Pune-based Kumar Urban Development Ltd.
Commercial Realty Offers Big Opportunities in Mumbai
The number of high net worth investors (HNIs) and corporates seriously looking to invest in Indian office space has increased manifold in the last few years. Mumbai continues as India’s numerous office space investment destination, with companies from all over the world unerringly zeroing in on the financial capital.
As South Asia’s only true financial hub, Mumbai is among India’s best places to invest in commercial real estate. In times of global economic uncertainty, investors flock to markets that have consistently proved their long-term stability and fundamentals.
In a scenario wherein institutional investors are showing reduced preference for commercial real estate in their portfolios, Mumbai continues to present HNI and corporate investors with myriad growth opportunities in office properties. However, the multitude of options also gives many enthusiastic investors heartburn -where on Mumbai’s vast and complex map are the low-risk/high returns locations?
Today, Mumbai as a city for commercial space investment reveals a high rate of vacancies in many locations. The rental yields in these micro-locations are expected to decrease marginally over the next 12 months.
While this seems to present a depressing scenario on the surface, the fact is that we are now looking at the bottom of the curve. In other words, these markets are expected to bottom out over the next one year and will consequently start to move up again. These locations have significant long-term capital value appreciation potential, and well-informed investors are keeping a close eye on them.
Report: DLF in talks to sell Mumbai land
DLF, India’s top-listed realtor, is in talks with three Mumbai-based real estate companies — Lodha Developers, Runwal Group and Sheth Creators, to sell a piece of land in central Mumbai, according to a report on Friday.
While DLF is seeking a valuation of 30 billion rupees ($571 million) for the 6.8 hectare property, the potential buyers are negotiating at between 20 billion and 22 billion rupees, the newspaper said, citing an unnamed person.
“Even as all the parties had talks with DLF, the developer is yet to make up its mind, as it is expecting higher valuations,” it quoted the person as saying.
DLF bought the land for 7.02 billion rupees in 2005 from state-owned National Textile Corporation.
Abhisheck Lodha, managing director of Lodha Developers, said the company was not in talks with DLF while an executive at Runwal group also responded in the negative, the paper said.
DLF does not comment on market speculation, the company’s spokesman told.
Realty projects, roads focus to help build-up for Unity Infraprojects
Healthy order book, strong balance sheet and the potential to unlock value from real estate projects make Unity Infraprojects a decent investment idea on a medium-term basis. Mumbai-based Unity Infraprojects is a small-sized construction firm operating in buildings, water and roads segments. The company is also developing real estate on its land parcels in Nagpur, Bangalore, Pune, Kolkata and Goa. The total saleable area from these projects is nearly nine million square feet.
Unity Infraprojects stands to gain by unlocking the value in its real estate projects. It was not able to monetise any of its real estate projects due to delays in execution by over a year. However, it is now in an advanced stage of securing approvals for launching its Bangalore residential project. Unity has a total saleable area of nearly 3 million square feet in this project, which it intends to launch in another three months.
After this it will focus on monetising its real estate in other cities. The current order book of the company in its construction business stands at Rs 4,700 crore, which are 2.75 times its FY11 revenues. These orders are to be executed over the next three years. The company has been increasing its exposure to the roads segment in the last few years. Although the roads segment is highly competitive, Unity’s backward integration in terms of owns machinery has allowed the company to garner better operating margins than its peers.
In the nine months ending December 2011, the company has maintained an operating margin of 15.5%. Another factor that augurs well for the company is its strong balance sheet. As of September 2011, the company had a debt-equity ratio of 1.1, which is one of the best among its peers. Unity Infraprojects’ stock is trading at a P/E of 3.9 while similar-sized rivals like Pratibha Industries and Supreme Infrastructure India are trading at a P/E of 5.9 and 5.2, respectively. Considering its growth potential and the relative discount to its peers, the stock looks attractive at this level.
Dhanlaxmi Bank says will cut costs, not shutting branches.
Indian private lender Dhanlaxmi Bank said it does not plan to shut down branches or shrink operations, but has initiated steps, including salary cuts, to control costs as it grapples with pressured margins.
“We have no plans to shut down any of our branches. We want to grow,” PG Jayakumar, the bank’s chief executive, told reporters.
The small-sized bank also plans to surrender excess real estate in metros and major cities.
Last week, the Economic Times newspaper reported that the bank plans to shut 30 branches in major cities as part of a revival plan.
The bank swung to a net loss of about 370 million rupees ($7.2 million) in the December quarter as costs soared and revenues shrank.
Consumers and businesses have rushed to park their money in long-term deposits, burdening banks with high costs, while lenders have been struggling to grow their loan books to boost profits.
“Strain on profits in one or two quarters is not going to affect us badly,” Dhanlaxmi said in a statement on Monday.
It plans to focus on loans against gold, small and medium enterprises and retail businesses for growth and expects a net interest margin of 2.5-3 per cent in the current financial year that ends in March.
The bank said it plans to raise 2 billion rupees each of tier 2 and tier 1 capital in the fiscal first and second quarter, respectively.
Shares of the bank, which has a market capitalisation of $126.3 million, ended down nearly 2 per cent in a weak Mumbai market on Monday.
Piramal Realty Acquires Gulita For 452 Cr From HUL.
Piramal Realty has acquired Gulita – property in south Mumbai from Hindustan Unilever for R452Cr. Piramal Realty is planning to develop high-end luxury apartments on the one-acre land and Ajay Piramal might keep a part of it for his personal use, given the premium location, according to ET.
Gulita is a one-acre property in Worli Seaface, which used to house a training centre and private residences of senior executives of Unilever’s Indian arm.
Gulita was built in 1968 and the land was taken on a perpetual lease from the Brihanmumbai Municipal Corporation–the Mumbai civic authority. The property was put on the block after the company set up a new campus in the suburbs of Andheri and shifted its training facilities there.
Since HUL put the building on block, it has attracted several buyers which included Anil Ambani, Gautam Adani, Oberoi Realty and Sahara.
Last year, Piramal Realty acquired a plot of land in Mumbai from Mafatlal Industries Ltd for about R760Cr. Khushru Jijina – MD of piramal Realty said that the company plans to develop five residential projects in Mumbai at an estimated investment of about R1500Cr. The company will develop about 30 million sq. ft. through land acquisitions funded from its own sources.
Recently in real estate space, Housing Development and Infrastructure Ltd sold 2 acre plot in Mumbai to Adani Enterprises for R900Cr to repay its debt. Ascendas Property Fund Trustee Private Limited, the Trustee-Manager of Ascendas India Trust (a-iTrust) has acquired two operating Buildings in Hitec City 2 Special Economic Zone in Hyderabad, India, from Phoenix Infocity Pvt Ltd for R176.5Cr; while IL&FS Investment Managers bought Logix Group’s four office buildings in Noida for R600Cr.
JLL: Residential Realty Market is set to appreciate in 6 months.
Jones Lang LaSalle India, a global research firm in the real estate sector, says that prices of residential units in India in the next six months should witness marginal appreciation. JLL says: “Over 60% of residential launches in the Top 7 cities (mostly in cities other than the NCR and Mumbai) are priced in the range of Rs 2,000-4, 000 per sq. ft., which meets the demand of middle-income buyers.”
At the same time, the RBI has given sufficient indications of probable cuts in key rates during second half of 2012, which will improve affordability for homebuyers and provide lower interest costs for developers. This will help in increasing the demand for residential units in the country. JLL also argues that even in the present bad condition, prevailing absorption rates are at nearly 10-12 %, which translate into an average absorption period of 8-10 quarters for a residential project. “This implies that at average prices, any average residential project should be sold out before construction is completed in around three years from the launch.”
JLL says that new project launches, which were slow in Mumbai and the NCR in the first half of 2011 due to approval and land acquisition issues, have now started to pick up. This should improve cash flows for developers having large land banks during 2012. A number of builders have acquired huge land banks on borrowed fund. As the builders pay huge interest rates, nearly 15-18 % on the borrowed fund, the servicing of debts has put huge strain on their finances. Any improvement in off-take is likely to release them from the financing pressure.
In the present slowdown condition, despite bad financial conditions, builders are not cutting the prices as in most parts of the country; they have priced their projects at nearly cost prices. “With rising input costs, developers do not want to sell below a threshold, which does not justify their minimum replacement returns,” JLL says. “This leaves home buyers with a small window of opportunity – the next six months – when home prices should witness marginal appreciation. After six months, a second wave of high appreciation is predicted.
However, in some of the micro markets in Mumbai and the NCR, the appreciation in prices was even sharper. In the last two years, in some of the markets like Gurgaon’s Dwarka Expressway, prices have almost doubled.
Overall, the Indian real estate market went through a slowdown in the last one year. But, all the predictions of a hard landing for the residential property market in 2011 and 2012 have failed to come true, so far.
Two Indian Real Estate Deals in Asian Top Ten list.
Two real estate deals in India — the sale of Leela Kempinski Kovalam and Noida’s deal with Wave Mega City Centre – have been ranked among the top ten in their categories across Asia according to a recently published study by Real Capital. Both deals took place in August 2011.
Real Capital tracks and analyses real estate deals worth over $10 million across apartments, hotels, retail, industrial, office and development projects over the world. The Purchase of Leela Kovalam by Saudi Arabia-based industrialist Ravi Pillai, which was pegged at about Rs 500 crore ranked 10th in Asia-list of largest hotel sellers.
Bangalore and Mumbai have been named among the most active Asian markets in the office space.
Delhi was ranked sixth and Mumbai eighth in the most active Asian apartment markets. Tokyo tops the list followed by Singapore, Hong Kong, Osaka and Beijing. While Chennai comes in at eighth position among active hotel markets, India did not rank in the big league when it comes to retail deals.
HUL sells leasehold rights for Mumbai property
FMCG major Hindustan Unilever Ltd (HUL) on Wednesday said the company has sold its leasehold rights of a property in Mumbai for Rs 452.5 crore to Ajay Piramal Group firm Piramal Realty.
HUL and entities of Piramal Realty have signed an agreement for assignment of HUL’s leasehold rights of the land and building named ‘Gulita’ situated at Mumbai for Rs 452.5 crore, HUL said in a filing to the BSE.
The consideration includes both fixed and variable components, it added.
According to sources, realty consultant Jones Lang LaSalle India negotiated the deal on behalf of Piramal Realty.
The property was taken on lease from Maharashtra government by HUL and used as a training centre, a source said, adding Piramal Realty will use the premises to develop a new residential complex.
In the past few years, HUL has been selling off some of properties it owns, including some in Gurgaon and Mumbai, to unlock value.
Shares of HUL today closed at Rs 399.55 on the BSE, down 1.08 per cent from its previous close.
Real Estate Sector: A look at urban investments in Mumbai.
India’s growth story has many facets; one of the integral parts of growth – and arguably the most important one – is urbanization. In fast-growing economies, cities are significant investment and employment generators, which in turn carry the growth momentum forward. The sustainability and liveability of any city depends largely on the quality of its infrastructure and real estate stocks. Needless to say, cities also require large sums of money to create urban asset stocks, including buildings and infrastructure.
Over last decade, India’s population grew by 18% while its urban population grew at almost double that rate (at 32%). Currently, about 31.2% of India’s population lives in urban areas. The country’s share of urban population has increased by almost 3.5% over the last decade. What is even more astounding is the increase in the built-up real estate stock in its cities and towns.
Data from the 2001 census shows that about 110 million ‘Census Houses’ exist in the urban areas, which indicates an increase of 39 million over the last 10 years. In other words, real estate stock shows a compounding growth of 4.5 % per annum as against the growth rate of 2.8% in urban population. Obviously, such massive growth needs adequate support from infrastructure.
However, the state of affairs with infrastructure in Indian cities is not very encouraging. Most of the cities still have to deal with issues in terms of roads, public transportation, sanitation, storm water drainage, solid waste management systems, etc. on a regular basis. With the volume of real estate stock increasing inexorably in the cities, there is an acute problem with the basic needs like energy and water in the store for urban India.
The private sector contributes most of the development of real estate stock; however, the responsibility of infrastructure development lies squarely with public sector entities such as ULBs and other utility companies – most of which are Government agencies. The investment pattern in our cities shows a similar trend – the private sector invests in the development of real estate stocks, while the public sector invests largely into infrastructure development.
The quantum of investments in most infrastructure projects is huge, and the agencies responsible for its development are seriously under-financed. They depend either on domestic grants like JNNURM or on intercalation financing involving bilateral and multilateral agencies. In some instances, funds are mobilized from private sources in the form of Public Private Partnership. The private sector generally tends to shy away from investments into city-level infrastructure projects, as most of these projects are considered non-remunerative. They prefer to focus on investing into the development of real estate stock.
Mumbai, India’s financial capital attracts massive investments – largely in the real estate sector. The city being the nation’s epitome of high real estate prices and land scarcity, huge sum of money keep chasing land in the city – while infrastructure augmentation lags behind. Way behind.
Mumbai offers little hope for home buyers.
In a recent report, Jones Lang LaSalle said that Mumbai seems to be in a tighter spot with Rs275 billion being sunk in land since FDI (foreign direct investment) was allowed in real estate in 2005; most of which has failed to yield returns. Even many investments done in South Bombay once named as one of the hottest and costliest property location in the world have met the same fate. Read Mumbai has sunk Rs275 billion in lands since 2005, the reason is known to all. Sky high prices have put off customers. In Mumbai, an average flat costs more than Rs10,000 per sq. ft. and even in Navi Mumbai, in less populated areas, there are many projects that have flats priced at over Rs1 crore.
Add to that the confusion created by the new DCR (development control rules). Many builders now have to make fresh plans to accommodate the proposed changes about FSI; and the worst affected are those whose projects are already underway. Many of the launches have been put on hold, and construction has been stalled in many places. And for people who have already invested in these projects, the longer the deadlock lasts, the more they have to pay.
Buy or not to buy? Despite a profusion of analyses and research reports on housing prices and their future direction, home buyers remain as confused as ever. So it is little wonder that 37 lakh of flats remain vacant in Maharashtra, of which 4.79 lakh are in Mumbai. The Census Directorate data says that even Thane district has more than 5 lakh vacant flats.
“Why doesn’t the government or RBI (Reserve Bank of India) understand that the more they squeeze liquidity by raising interest rates, it raises returns on black investments even higher. If our country can bring down black element out of property, rents will fall, property prices will fall,” said a commentator.
The home-buyer, however, is at a loss. The Budget came as a flop, and a recent Crisil report says that prices of steel and cement will go up, which will probably be passed down to the end-user. And then, there is the proposal to hike on leave-license, which is going to make rentals expensive. There are some who expect matters to improve.
Pankaj Kapoor, MD, Liases Foras also had echoed similar thoughts. “The high prices are not fault of only the builders. The hike in stamp duty was uncalled for and it is too revenue-centric and indicates a short term vision.” Read Maharashtra Stamp duty hike: “Neither can you afford to own a home, nor take it on rent”
However, as most experts say, one can buy a home any time. “You never know what will happen next. And honestly, there is little evidence to suggest that customers have waited for better home loan or price options when they have to buy a home—because it is a necessity. So if you want to own a home, there is no bad time,” said an analyst.
“India is a top focus for Realty Moghul” says Trump Scion.
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.
ICICI Bank and Sahara eye Parsvnath’s prime land in Delhi.
Real estate major Parsvnath Developers may soon be able to reduce a significant chunk of its debt, thanks to certain corporate giants showing interest in buying a prime piece of property it owns in the national capital.
The Sahara Group is engaged in discussions with Parsvnath to buy its commercial land near Connaught Place in New Delhi, according to sources. ICICI Bank is also among the contenders for the piece of land, it is learnt.
The 1.18-acre plot at Kasturba Gandhi Marg was bought by Parsvnath in 2008 for about Rs 200 crore, with the aim of constructing a retail-cum-office complex. But the realtor is now looking to sell it to cut mounting debt, currently at Rs 1,300 crore.
Although the Parsvnath management is looking for a price of Rs 700 crore, the interested parties are ready to sign a deal at Rs 600 crore, sources said. Property consultant Jones Lang LaSalle is advising Parsvnath on the deal.
Pradeep Jain, chairman, Parsvnath Developers, did not respond to repeated calls and e-mails. Mails to Sahara spokespersons did not elicit any response.
An ICICI Bank spokesperson said, “ICICI Bank has no plans to acquire this property.”
According to sources, ICICI is exploring the possibility of constructing a corporate house in the locality in partnership with Parsvnath, without acquiring the land.
Earlier, as part of its fundraising exercise, the company had entered into various deals with private equity funds.
In January 2011, Parsvnath signed an agreement with SUN-Apollo India Real Estate Fund LLC for an investment of Rs 100 crore in its premium residential project at Ghaziabad—Parsvnath Exotica. SUN-Apollo had acquired 49.9 per cent stake in the project SPV.
Then, the company sold a minority stake in Delhi-based residential project Parsvnath La Tropicana to JP Morgan for about Rs 150 crore. Through the deal, the previous investor, Red Fort Capital, made an exit. The company had plans to construct an office complex at Connaught Place along with the PE firm.
According to realty experts, demand for land at prime localities has risen as corporate houses look to move their headquarters to such locations.
Anuj Nangpal, director-investment advisory, DTZ India, a real estate consultancy, said, “Organisations are increasingly signaling their arrival or resurgence by moving their presence into the centre of metros. The branding benefit of such ownership of prime real estate far outweighs the costs. Further, employees are also increasingly assessing their jobs and future basis of their office infrastructure and the pride in occupying prime real estate clearly impacts long-term retention.”
Earlier, Business Standard had reported on the discussions being held by textiles major Alok Industries with various large corporate groups to sell its property at Peninsula Business Park in central Mumbai. Alok was looking at a deal in the range of Rs 900-1,000 crore.
Leela Kovalam, Noida, one of the top high-value sellers in Asia.
The sale of Leela Kempinski Kovalam was among the top 10 hotel deals in Asia during the past one year, shows data from the US-based research firm Real Capital Analytics.
Real Capital, which tracks and analyses real estate deals worth over $10 million across apartments, hotels, retail, industrial, office and development projects over the world, has also named Noida as a top site for sales in the development site category for a deal with the Wave Group for a mega mixed-use project. Mumbai and Bangalore also figure among the active office markets in Asia. In apartments, Delhi and Mumbai are part of the top league in the year ended March 31, 2012.
The Leela Kovalam deal, pegged at about Rs 500 crore, was the 10th in the Asia-list of largest hotel sellers during the one-year period. The Kovalam beach property was sold to Saudi Arabia-based industrialist Ravi Pillai last August.
The other big hotel players in Asia which sold properties at high value include Japan Hotel, LaSalle, Kingdom Holding, Hines and Shui On Group.
Even as Indian entities don’t figure anywhere in the top 10 global list vis-à-vis high value real estate deals in the financial year that just gone by, many of them have made it to the Asian hall of fame.
Noida, the industrial development area next to Delhi, is fifth in the development site sellers’ list in Asia. This was for a deal with industrialist Ponty Chadha-promoted Wave Group for the mixed-use project, Wave Mega City Centre, at an estimated price of $1.4 billion (about Rs 7,140 crore at the current forex rate), according to Doug Murphy, director (analytics) at Real Capital.
In the office space, Bangalore and Mumbai have been named among the most active Asian markets. “There were a number of locations for office sales in Bangalore and Mumbai, the largest being the Embassy Manyata Business Park transaction in Bangalore for about $537 million (Rs 2,738 crore) and Citibank building in Mumbai for about $224 million (Rs 1,142 crore),” Murphy said. Both transactions took place in August 2011.
Delhi and Mumbai are part of the most active Asian apartment markets. While Delhi is ranked sixth, Mumbai is eighth. Tokyo tops the list in high value apartment deals, followed by Singapore, Hong Kong, Osaka, Beijing, Delhi, Fukuoka, Mumbai, Nagoya and Kuala Lumpur.
India is nowhere in the retail top league where deals in Asia are concerned. Among hotels, Chennai is seen as an active market in the eighth position. Singapore leads as the most active hotel market in Asia, followed by Hong Kong, Shanghai, Tokyo, Beijing, Seoul, Osaka, Chennai, Kuala Lumpur and Suzhou.
Chennai leads Indian Realty Sector.
In a recent report, property broking and real estate consulting firm Jones Lang LaSalle said the Indian property market is poised to attract about US$3 billion, almost double last year’s US$1.6 billion, from overseas buyers this year.
The Indian property market will see more investment from overseas this year as it still remains an attractive investment destination globally.
Of this, one-third would be from home buyers and the balance from investors. This is despite the fact that property prices in India are at an all-time high.
According to a recent National Housing Bank (NHB) survey, property prices in big Indian cities have increased by as much as 43 per cent to 166 per cent in the last four years.
NHB, wholly owned by the Reserve Bank of India, lends to home-mortgage companies. It also regulates and refinances social housing programmes. In its report, the bank said Chennai had seen the highest rise in prices at 166 per cent. Bhopal was second with a hike of 117 per cent and Mumbai was ranked third with an increase of 87 per cent.
What then brings overseas investment to Indian property, when prices are skyrocketing? The answer is simple: Despite the global turmoil because of the financial crisis, the Indian economy has remained robust, largely due to domestic-driven demand.
According to Jones Lang LaSalle, India’s strong economic growth, rapid urbanisation, growing middle-class population, demographic advantage and increased thrust on infrastructure has worked in its favour. Buying property is especially popular among Indians living abroad, who all seem to want a piece of the homeland. That is why Indian property shows are burgeoning around the globe.
Dubai-based Sumansa Exhibitions has been holding Indian property shows across five countries. And every year the number of developers taking part in the shows and the attendees has grown rapidly.
Sumansa Exhibitions’ chief executive officer Sunil Jaiswal says: “We have held shows in the UK, South Africa, Hong Kong, Dubai and Singapore. They have been very well received by both exhibitors and visitors alike.”
This year Sumansa will hold the Indian Property Show in Singapore on April 14 and 15. It will be held at the Suntec Exhibition Centre’s hall 401 and nearly 40 developers from across India will be part of the show.
More than 200 properties will be showcased during the two-day exhibition. Sumansa expects the number of footfalls at the event to be much larger than the 4,000 that turned up at its last year’s event.
Preferred Bidder for 42 Marriott Hotels in UK is an Indian investor.
Indian property investor Blue Mountain Real Estate Advisors has been selected as the preferred bidder for 42 Marriott hotels throughout Britain after it offered almost 750 million pounds, a media report has said.
The holding company for the portfolio of hotels collapsed under the weight of about 900 million pounds of debt, most of it held by Royal Bank of Scotland (RBS).
Blue Mountain Real Estate Advisors, a part of the Mumbai-based India Blue Mountain group, is understood to have been granted a period of exclusivity by RBS to put together funding for a deal, The Times said in a report.
The proposed sale to Blue Mountain comes as a surprise as, according to the report, the front-runners in the latter stages of the auction had been RB Capital and Sahara, the Indian group that bought the Grosvenor House on Park Lane just over a year ago for 470 million pounds.
Real Estate Sector in Bangalore may see 25 per cent growth.
The real estate sector in Bangalore has grown to a large extent in the past one year. In the year ahead, the city’s realty is expected to grow by 25 per cent, estimates the Karnataka Chapter of the Consortium of Real Estate Developers’ Associations of India (CREDAI).
“We are expecting the realty to grow by 25 per cent in the coming year. Last year too we have witnessed a similar growth,” said Sushil Mantri, president, CREDAI Karnataka.
As per studies conducted last year, the city is likely to absorb about 7.1 million sq. ft. of office space against a supply of 7 million sq. ft. While demand for office and commercial sales in the city saw a rise, residential sales remained slow.
Experts said that the city witnessed a great strength in high street leasing and rent, and capital value has increased nominally in a few sub-markets. Also, there was a rise in rental value as demand by retailers remained strong.
With commercial office space developers offering favourable options, predictions for 2012 are that several IT companies in the city will look at pre-leasing office space.
However, analysts opine that office space supply will outweigh demand.
“FDI in multibrand real estate is expected to catalyse a lot of demand from international retailers. International luxury brands will restrict their growth plans to Mumbai, Delhi and Bangalore,” states a projected report by Jones Lang LaSalle India, Realty Intelligence firm.
The report states that the mid-end and affordable housing segments will record healthy appreciation in capital value in short term from a low base.
Stamp duty hike report in Maharashtra for the Real Estate Sector.
Shares of real estate companies with significant exposure in Mumbai slumped in a weak market today after media reports surfaced that the Maharashtra government proposes to hike stamp duty for properties.
Shares of realty players like India Bulls, Oberoi and HDIL today slumped as much as 6 per cent after reports that the state government is planning to hike stamp duty by as much as 160 times.
India bulls Real Estate slumped 4.53 per cent to a low of Rs 65.25, Oberoi Realty tanked 2.32 per cent over its previous close to Rs 250 and Housing Development and Infrastructure Ltd was down by 6.64 per cent to Rs 89.15 on the BSE.
If the hike comes into effect, it will increase prices of both residential and commercial leave-and-licence properties, by a huge margin, market analysts said, adding that it will affect the already-sluggish Mumbai real estate demand.
“This news is going to be negative and stock prices of realty companies who have exposure in Mumbai took a hit. The cost of property in Mumbai will move up it will worsen the situation as there are already very few takers at the present interest rate regime,” Ashika Stock Brokers Research Head Paras Bothra said.
Moreover, weakness in the broader market also battered these stocks to some extent, market analysts said. The 30- share benchmark index Sensex was trading at 17,113.62, down 248.12 points at 1321 hours.
According to media reports, Maharashtra government proposed to hike stamp duty on leave-licence to 0.1 per cent on market value or 1 per cent of the average annual rent or deposit paid, whichever is higher, for residential properties.
For commercial properties, the duty for lease agreements over 60 months is 0.4 per cent.
This is a whopping hike from the previous fixed amount of Rs 25,000 for residential and Rs 50,000 for commercial properties for 60 months.
Indian developers will present properties to NRI investors at Doha exhibition.
Indian developers are all geared up to offer NRI investors a wide choice of properties across India at an exhibition which is going to start on 16th March 2012.
It is the 20th India Property Exhibition in Doha on Friday which will showcase more than 100 projects spread across New Delhi, the National Capital Region, Jaipur, Mumbai, Pune, Goa, Hyderabad and several other cities.
The $12 billion realty market in India is on a high growth curve, because of the fast growing economy, increased participation of global players in the Indian market and new technological innovations.
According to organisers – Indus Fairs and Events (India) and Apex Business Solutions, Doha – the investment portfolio includes apartments, independent houses, bungalows, luxury villas, farmhouses, commercial properties, beach resorts and plots.
Residential Growth Sustains Prices, but Outlook’s Changed
The real estate market has witnessed more or less a stable pricing scenario in the last 03 quarters after seing a sharp increase in the 02 years that followed the subprime crisis of 2008.
A Delhi based research result for real estate, the volume growth in the residential segment has improved inspite the increase in the interest rates. This keeps the property prices at higher levels. The Chennai real estate market tops the chart with increase in demand from both commercial and residential segments.
However, the Mumbai market has witnessed a correction in the last 03 quarters due to a delay in project approvals. The outlook on future price trends is mixed. Also, a drop in property prices looks distant in cities with lower inventory. On the financial front, most real estate players have reported better results on the back of higher sales volume.
Real estaters normally have execution issues which impact their debt repayment schedules. To tackle such issues and achieve greater transparency, companies are focusing more on product positioning and improving project execution certainty. On the other hand, qualitative factors such as hassle-free land bank and developer’s goodwill in getting land approval will improve company positioning with customers.
Buying a House During Monsoon is Beneficial
The monsoon is usually considered as a lean season in terms of sales for the developers. It’s not just the weather that affects the purchase of property, but also because it is considered inauspicious to buy anything for about two weeks during this period (because of shraadh or pitrapaksh). Buyers prefer to wait till the festival season to buy real estate. So, in order to increase sales, developers are willing to offer ‘monsoon discounts’.
Many people postpone buying a house during these months. This adds to the existing inventory of the real estate developer. The builder, on their part, wants to get relieved from it so he can start a new project in the upcoming festival season. Also, they would need some liquid cash in hand for the new projects.
While only a handful of developers advertise it as a ‘monsoon discount’, most are willing to offer lower rates to serious buyers. The significant of discount varies for different cities, depending on how badly it is affected by the monsoon. So, in Mumbai and Kolkata the quantum of discount is likely to be higher than that in Delhi and Chennai. In Mumbai, a buyer can expect discounts ranging from 10-20%, a Mumbai-based real estate marketing company.
Besides the entice of discounted property prices, buyers can also avail of the monsoon special offers on home loans by banks.
Acron Infra Projects Constructing Residential Complex at Pune
Acron Infra Project, Mumbai-based developing company is building a large residential multiplex at Karvenagar which is in the heart of Pune, a 3-hrs drive from the metropolis of Mumbai. They are building a big, affordable residential complex with a total of 2,800 apts spread over a 24-acres green campus. The Director of Acron Group said the fund for the INR 800-cr project will be raised through internal accruals of the company and bookings.
This residential multplex will be developed in six phases.During the first phase, a total of four 25-storey buildings will be built within 18 months which includes 800 apartments. The two-bedroom apartments with an area of 900 sq ft at the rate of Rs 6,000-7,000 per sq ft will cost about INR 40 lac- Rs 50 lac. The registration and stamp duty will be an additional cost to the buyer. This project will develop eco-friendly apartments targeted at upper middle class home buyers looking for comfortable and affordable housing in the heart of the city and the housing complex will offer all the modern conveniences and amenities such as a clubhouse, swimming pool, jogging park, children’s park and a green surrounding environment.
With two decades of experience in construction, Acron Group brings to the table a wealth of experience, modern techniques, state of the art building materials and institutional knowledge, engineering, management, talent and skill, especially in the area of green building development. Acron group with branches in Bangalore and Goa is an EPC company engaged in real estate development, infrastructure and hotels.
The project has already begun and the apartments will be ready for possession on schedule. “We want our clients to appreciate that housing development happens at Acron Infra in tandem with nature,” Meghnani said.