Realty Players Preparing For Top Business Schools

July 3, 2008 – 7:10 am

Real estate developers like Lodha, DLF, Unitech and Raheja have begun ramping up their presence in Business school campuses in the past two years in a move to have a more professional image. The move coincides with the growing interest of business school graduates in the real estate sector.
The real estate firms have sold promising careers to the students by offering competitive compensation packages. They usually hire students with prior work experience so that within two years they are ready to hold fairly senior posts.
Lodha, one of the highest paying companies on campuses made offers approximately in the range of Rs 16 lakh per annum. Real estate companies have felt a need to keep pace with growth and build organizational capabilities. Unitech has roped in McKinsey to conduct a study to on the balanced ratio between professional and family work force.
Unitech general manager of corporate planning, R Nagaraju said, “Although family continues to handle board level positions, senior strategic positions were taken by professionals. There is a higher level of delegation now at the professional level.” Unitech hired around 15 students from IIMs and ISB this year. This number was similar to last years.
Having had an experience with the Indian real estate majors, B-schools are now looking at luring foreign real estate companies. Many are looking at real estate companies based in Dubai and Singapore as potential recruiters. Some are already strengthening ties with existing players.

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Government Relaxing Entry Restrictions For foreign Players In Hotel Construction

July 3, 2008 – 7:07 am

In a move that could help curb hotel room crisis ahead of Commonwealth Games 2010, the government is considering relaxing entry restriction for foreign players in construction of hotels and resorts. It is looking at a suggestion to bring down minimum development rule of real estate from existing 50,000 sq feet to 20,000 sq feet for hotels included in ‘mixed’ real estate projects. This would set the ground for players with smaller net worth to invest in Indian hospitality sector.
With Commonwealth Games just 2 yrs away, the Capital needs thirty thousand further rooms to accommodate an expected 1.5 lakh tourists. Similarly, other states also require additional rooms to tackle the influx of tourists in India in 2010. According to sources, the department of industrial policy and promotion (Dipp), at present, is considering relaxing entry norms in case of hotels only. However, the Investment Commission had recommended to the government to relax the entry restriction in the entire sector, which includes housing and shopping arcades as well.
The Dipp has already circulated a Cabinet note proposing waiver of two conditions — the 3 yr lock-in on foreign investment and the minimum investment criteria of five million dollar for joint ventures or ten million dollar for wholly-owned ventures. This waiver has also been sought for hotel related real estate projects.
However, the country has been seeing an asset bubble since the beginning of the current fiscal. According to realty verticals head R. Ahuja“With real estate prices heading southwards, tardy stock market, high interest rates especially for the real estate sector, the sector will continue to remain low for sometime”.

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Starwood Hotels & Resorts Worldwide Inc Plans Upscale Brand Aloft In India

July 2, 2008 – 4:44 am

Starwood Hotels & Resorts Worldwide Inc, a hospitality and leisure chain, plans to roll out its upscale brand ‘Aloft’ in India. “We have tied up with a few developers and Citibank subsidiary for the Aloft brand,” said Larry Malarkar, regional director, sales and marketing, India, Nepal and Bangladesh, Starwood Asia Pacific Hotels & Resorts Pte Ltd. “They will come up in Chennai, Bangalore and a couple of Tier II cities including Pune, Ahmedabad starting 2009,” he added.
The company is also in the process of finalising plans for its other brands including five star luxury brand St Regis, W Hotels and four star brand Four Points. Currently, the company has its brands including Westin, Sheraton, Le Meridien and The Luxury Collection in the country. It has no plans to get the Element brand to India. ITC Hotels has been Starwood’s partner in India for more than 30 years. It has 10 year franchise agreement with the US-based Starwood Hotels and Resorts for re-branding its seven hotels and bringing them under latter’s ‘Luxury Collection’.
“We are in talks with a real estate company for a property in Mumbai for St Regis and will probably tie up with a developer for a multi-hotel pan India deal for Four Points,” he said. He added that the company sees big potential for the Four Points brand in India while it will be very selective for its W Hotels brand. “No concrete plans for the W Hotels as of now,” he said.
Asked if Starwood plans to partner with the Anil Ambani Group for St Regis brand, the group was reported to be looking at joining hands with Starwood for the brand, Malarkar said, “The group has expressed interest to enter the hospitality sector. People have been asking us if we plan to tie up with them. Earlier, we used to say no comments but now I can say there are no such plans.” Typically, a St Regis hotel has 300 rooms. Starwood sees huge market in Tier I cities for its luxury brands. “There are no hard and fast plans to confine brands to a few destinations only, but the luxury brands will only be sustainable in the major metros to begin with. We do not see big market for luxury brands in Tier II cities,” Malarkar said.
For its Westin brand, the company has tied up with real estate companies including Mumbai-based real estate company Oberoi Construction for property in Mumbai and Vatika group’s subsidiary, Vatika Hospitality Pvt Ltd, for properties in Delhi and Gurgaon. “We have also signing one more property with Vatika for property in Bangalore ,” he said. By 2011, the company plans to add 30 hotels to the bank of 23 at present in the country.

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DLF To Develop Eight Malls This FY

July 2, 2008 – 4:44 am

Country’s largest real estate developer DLF Ltd will develop eight shopping malls under leasing format in the metros this financial year.

DLF Retail only leases out space in its properties. Company would also open four shopping malls in current year, of which three would be in Delhi NCR and one in Chandigarh.

Chandigarh mall will be smaller one, while the three malls in the Capital will have three-to-four lakh square feet leasable area per mall.

Leaving the price of the land, the construction cost is around Rs 3,000-4,000 per square feet.

DLF is focusing primarily is on the metro cities like Bangalore, Chennai, Hyderabad and Delhi. DLF will also look at smaller cities in future. DLF is in discussion with many big retailers, but nothing has been finalized yet. DLF Retail currently has five operational malls.

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Real Estate Transparency Of India And China

July 1, 2008 – 2:53 am

India and China have significantly improved their levels of real estate transparency, an indicator of real supply and demand in the sector, over the last two years.

According to real estate transparency index complied by professional services firm specializing in real estate, Jones Lang LaSalle, the biggest improvers in Asia Pacific are India, China and Vietnam.

The index, which provides a framework for comparing the level of real estate transparency in eighty-two markets around the world, shows that nearly half of the countries surveyed in 2006 demonstrated a significant improvement in their transparency score two years later.

Indian emerging real estate cities are ranked in the semi -transparent level along with China’s Tier 1 Cities, which is the third category after highly and transparent levels in the index.

Besides, India’s Tier III cities have also improved their levels and joined the low transparent level along with Tier II and Tier III cities of China.

It added that China had exhibited maximum improvement, moving up to the semi-transparent level and is now considered more transparent than India.

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Punjab Government Urged The NRIs To Make Huge Investments

June 30, 2008 – 11:51 pm

Advocate General Punjab Hardev Singh Mattewal stated that the Punjab Government was committed to safeguard the rights of the Non Resident Indians (NRIs).

This was disclosed by Mattewal while talking to media persons during his private visit to London. He said the Punjab Government was making all out efforts to resolve the issues pertaining to NRIs. He urged the NRIs to make huge investments in the states’ development programmes. He pointed out that during his visit to London he called upon the NRIs to come forward to invest in Punjab in a big way. He also met various deputations of NRIs there and assured them of state government’s fulsome support and cooperation.
Appreciating the historic decisions taken by the Badal Government for the welfare of NRIs during the NRIs Sammelan held in Punjab, Mr. Mattewal termed it as a ’step in the right direction to win over the confidence of NRIs’. A high level committee was also constituted during this Sammelan which had so far resolved many vexed issues relating to the problems of the NRIs, said Mr. Mattewal.
Mattewal said that Punjab was making rapid strides under the stewardship of Chief Minister Mr. Parkash Singh Badal. He hoped Punjab would soon emerge as the most preferred investment destination and a Commercial Center as the diverse sectors of Industry, Real Estate, Education and Health Services in Punjab had recently witnessed huge expansion in these fields..
Replying to a query raised by the media persons, Mr. Mattewal said that he was here on the private visit and not on official one. He said he had come here to participate in a religious function organized by the London based Gurdwara where he was honored by the local Gurdwara Prabandhak Committee.
To another question Mr. Mattewal said that Mr. Badal had already setup special Police Stations for the NRIs in the state to redress their complaints and grievances on the priority. He said he was given war welcome by the NRIs settled in London and would ever cherish these memorable moments throughout his life. “I have personally realized the hardships being faced by the NRIs here and would soon take up this matter with the Punjab Government for their immediate and solution on the top priority, said Mr. Mattewal.

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L&T Ready For Realty Drive

June 30, 2008 – 6:40 am

Engineering and construction, L&T, currently has real estate projects worth $2 billion in hand, said sources familiar with its plans. Most of these projects are in the form of special purpose vehicles, joint ventures and contracts. The SPVs also include a Rs 2,500 crore project in Chandigarh, sources told.

Separately, Larsen & Toubro announced that it has bagged a Rs 1,557 crore order from Andhra Pradesh Power Development Company Limited (APPDCL).

In the morning trade on 30th June(Monday), L&T was trading up by 0.5 % to Rs 2,277 in the early noon deals.

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Disha Direct Celebrates 5 Successful Year In Real Estate

June 30, 2008 – 12:51 am

Disha Direct, pioneers of the second Home concept productively full five years in real estate industry.
Disha Direct nowadays offer services around the entire field of real estate be it residential properties in cities and towns, second homes away from the city, plots of developed land, commercial properties, expansive acres of land or some rare charismatic homes. With all mod cons with a team of over one hundred seventy professionals, seven brands, ten offices, eight finished projects, twenty eight current projects and three thousand five hundred satisfied customers; Disha Direct is an organization spreading its arms in the realty sector.
On the occasion of its anniversary celebrations, Disha Direct properties remain devoted to its five strong factors – Zero Risk Property, Realistic & Fixed Price, Disha Care – a property management group, Go Green – an attempt to provide projects set in the greenest of places and three thousand five hundred satisfied customers.
In this month-long celebratory event, Disha Direct plans to add to the customer’s convenience by making itself accessible at the distance of a phone call. Customers interested in latest projects can just make a call and be rest assured that a Relationship Manager will visit them with a complete presentation of the project of their interest. Property buyers in this celebratory period can enjoy the exclusive privilege of availing flat five percent concession on any property they choose from a wide collection of properties sponsored by Disha Direct. Apart from these, during the month long celebration property buyers can expect a bag full of surprises and other eye-catching offers.
All in all the anniversary celebrations at Disha Direct come as ‘Happy Hours’ for the property seekers.
Disha Direct is a foremost real estate marketing organization. Having made its foray into real estate marketing five years before specializing in second homes in scenic localities away from the city, the company has established itself as the preferred name in the real estate industry. Currently the company has seven different brands covering different real estate properties.

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National Housing Bank To Raise 110 Billion Rupees

June 30, 2008 – 12:50 am

India’s National Housing Bank plans to raise one hundred ten billion rupees during the year to March 2009 to meet its loan demand. According to the chairman and managing director S. Sridhar declared that out of this one hundred and ten billion, it will raise thirty billion rupees through zero coupon bonds and another ten billion rupees via retail deposits.

The housing finance regulator also plans to set up a mortgage guarantee firm in four months, in which it will be the single largest stake holder.

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Unitech In Search Of Telecom Partner

June 28, 2008 – 1:27 am

Real estate tycoon Unitech Limited declared that it was planning to sell a 26% stake in its telecom arm.
Mr. Sanjay Chandra, managing director of Unitech said, “We are planning to sell a 26% stake in the telecom operations”. However, he did not detail on the potential buyer.
Further he said that Unitech is also planning to raise one billion dollar from private equity funds over the next year, including three hundred fifty million dollars for hotels and additional funds for its Mumbai projects. Read More »

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Industry Gambles On Long-term Prospects Of Real Estate

June 28, 2008 – 1:26 am

Increasing interest rates and a declining demand may dent the realty market in India. However, the long-term forecasts for the sector continue to be good, senses the industry.
At a seminar on the real estate market in India here on 27th June, most of the realty players confessed that there was a liquidity crunch due to the increase in interest rates. However, this is not going to discourage long-term investors from investing in India, they added.
Termed as “Elephant Investors,” these investors such as pension funds and endowment funds are just waiting in the groups to enter the Indian market, said A. V. Kapoor, managing director of Saffron Asset Advisors Pvt Ltd.
“There are around 21 India-dedicated real estate funds that are raising money in the international market. In the next 9 months, I believe nearly $7 billion will be entering the country through different India-dedicated funds,” Kapoor said.
“While long-term players are look at India, small-term players based in the US & Europe, for example the hedge funds and private equity players, are further interested in their local markets,” said Alex Hayim, director of REIT Property Management India.

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The Loan Against Property Rates & Their Effects

June 28, 2008 – 1:25 am

The loan against property rates are fixed by the loan amount, credit ranking of the borrower and the equity of the pledged security. All these three reasons affect the interest rate directly.
The modification of 1991 marked the dawn of Indian financial system. Capped with professionalism, hi-tech IT applications and diversification, Indian financial and loan market has now at its highest altitude. The entry of overseas banks has supported the system to get better its services. Now, competition is at all time high in the Indian housing finance business. With the improved contest, the customer has a number of alternatives to select his housing finance company (HFC) to apply for a loan according to the need.
The loan against property is on the rise in the attractiveness chart as more and more Indians are nowadays taking these loans as the most cost effective solution for their needs. The banks have two prime concerns while providing a loan against home:-
1. Repayment capacity of the borrower credit risk involved in the loan deal.
2. Title of property(If it free from any legal hassles or not).
The borrower to whom the bank is lending should have the capacity to pay the loan amount back in the assigned time period. Repayment capacity is a major concern of the bank while lending funds to anyone. In case of salaried loan applicants, the borrower needs to have a cheque salary which can be verified by the bank. A track record of salary entries in a bank statement reflects consistency and genuineness of the income source of the borrower.

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Impact Of Interest Rate On Real Estate And Housing Loan

June 27, 2008 – 6:08 am

Indian real estate firms expect a hit on margins for the next few quarters as the central bank’s move to raise interest rates this week will push up costs and keep potential buyers away from the market.
Developers, already facing a demand slowdown, have refused to lower the price line as they seek to make up profits despite high land costs and curbs on funding. However, higher interest rates in the economy could push them to choose survival over pride.
The Reserve Bank of India late on 24th June raised its key lending rate and cash reserve requirement by 50 basis points each to curb price pressures. Inflation jumped to its highest in more than 13 years in mid-June to 11.42 percent.
As a result, lending rates of banks are seen close to 13 percent, levels last seen nearly a decade ago, while interest rates on home loans could go up by 50-100 basis points, putting off a large segment of middle-class buyers.
“Real estate prices had already started slackening, this move will lead to more slowdown,” said Ramesh Jogani, managing director at India REIT Fund Advisors, which has invested in several projects. “We see a 15-20 % fall in prices.”
Analysts say the slackening of demand is raising concern over future realizations, which is reflected in the performance of real estate stocks, with most close to their lowest level in a year and 40-60 % off their peaks.
“In the near term, we think affordability will be a bigger driver and a 20% correction in property prices will be needed by the year end to revive volumes,” UBS Investment said in a research note.

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Proposal For Farmers In Mysore

June 26, 2008 – 6:39 am

Mysore city authorities have a proposal for farmers who own land in and around the city: Part with your plot for nothing and get 18% of it back after it is developed and potentially more valuable.
The Mysore Urban Development Authority (Muda) thinks it’s offering a good deal to farmers as it competes with private developers for land to build public housing in a city where property prices have doubled in 18 months. Whether the offer will find takers is in some doubt.
A. Rudrappa, joint director (planning) at Muda said, “The objective is to give back farmers 18% of their own land, after it is developed, so that they get to retain the asset”. Further he said, “It will also prevent them from being cheated by builders who often don’t pay them the entire amount.”
Muda has 1.5 lakh applications pending for public housing in Mysore, the largest city in Karnataka after Bangalore, the state capital and India’s Information Technology hub. The agency’s inability to pay market price for farmland has driven landowners to private developers and sent property valuations soaring.

The 18% land-back offer is based on the average cost estimation of developed and undeveloped land that showed farmers would benefit even if they get back less than one-fifth of their original holding, according to officials at the urban development department in Bangalore.

Developed land would include access to amenities such as electricity, water and sewerage, enhancing its potential for commercial development.

Sudarshan Rao, a Mysore property consultant who has brokered land deals said, “For many farmers, land is a liability and they want to sell it off quickly to repay debt or start some new business. They wouldn’t wait for a period of two-three years till the land gets developed and he gets partial ownership of it”.

According to farmers, land demand is huge. Farmers are not sure what kind of development will happen and what would they earn after selling their land.
Developers have bought up large parcels of agricultural land in areas such as Nanjungud Road, T Narsipur Road, Hunsur Road and HD Kote Road in and around the city, in the belief that Mysore was the next real estate market.

In the last one year, top developers such as Unitech Ltd, Emaar MGF Land Ltd, Sobha Developers Ltd, Nitesh Estates and Total Environment System have acquired land in and around Mysore. But while developers rushed in and property prices soared, little development has taken place. Most projects are yet to break ground in the city that is still waiting for its first shopping mall.

Developers say that they are waiting for an opportune time to launch their projects. said Nitesh Mani, chief executive officer of Nitesh Estates, which plans to develop an IT park in Mysore, “Though many developers have bought land, no one is jumping into development right away”. Further he said, “It is important to choose the right kind of project in Mysore.”

Praveen Kumar, associate director at property consultancy Jones Land LaSalle Meghraj said, “Selling the land to private developers at market value would be a better option for landowners because they don’t know what is the kind of development and infrastructure that would come up on that land once they get it back”.

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Ishaan Real Estate Loss In FY 08

June 26, 2008 – 1:00 am

Ishaan Real Estate Plc. swung to full-year pretax loss because of the cost of investment advisory fees and provision for promote fees to be paid to the investment adviser.

However, it said it remains confident of continuing with the improvement made on assets development and also the pre-letting of the projects already initiated within its portfolio.

For the year to end-March, 2008, the India-focused real estate investment company informed a pretax loss of 1.83 million pounds against a profit of 1.73 million previous year.

The company’s net asset value (NAV) declined to 95.5 pence per share from 96.3 pence per share, however its adjusted NAV rose to 151.1 pence per share from 107.9 pence per share previous year.

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Hilton Hotels Corp Plans To Add 300 Hotels In Asia

June 26, 2008 – 12:59 am

Hilton Hotels Corp plans to put in three hundred hotels to the existing forty seven in Asia over the subsequent decade, as the firm looks for to catch up with its competitors and cash in on the boom in business and leisure travel in India and China, a media report on 25th June said.
According to The Wall Street Journal Hilton, with nine brands ranging from the opulent Waldorf -Astoria Collection to the thriftier Hampton Inn, expect to administer the majority of these new hotels and leave the investment and ownership of them to others.
“The Asia region is one of our absolute top main concerns for our business and development. The plan is to put about three hundred new hotels in the region. We’d like to do better than that, but that’s our goal,” the report said quoting Hilton’s Chief Executive and President Chris Nassetta.
He also anticipated the value of these planned hotels to be in “the tens of billions of dollars.”
Hilton Hotels is a foremost worldwide hospitality company with more than three thousand hotels in seventy four countries and territories.
The newspaper quoting Nassetta said Hilton is concentrating initially on India, where it has a joint venture with local property firm DLF Ltd. that aims to open seventy five hotels within the subsequent five years.
“Starting in India’s big cities, where population density limits the availability of appropriate land for international -standard hotels, Hilton plans to set up its Hilton Hotels, Homewood Suites by Hilton and Hilton Garden Inn brands,” it noted.

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SRS Group To Invest Thousand Crores

June 25, 2008 – 6:54 am

The SRS Group declared that it will be investing over thousand crore rupees in the next three years and also come out with its public issue by the end of the current financial year. It also disclosed its three upcoming projects, which are, eight hundred crore rupees five-star hotel in Haryana, an IT park and a multi-storey residential complex.

Addressing a press conference here, SRS Group Chairman Anil Jindal said that the Faridabad-based firm would invest five hundred crore rupees in the expansion of its retail business, Rs. 350 crore in setting up multiplex cinemas and Rs. 150 crore in the expansion of the food and beverage business. Read More »

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Services And Real Estate Are Biggest FDI Attractions

June 25, 2008 – 1:30 am

India received a massive $20.8 billion of foreign investment in energy, services, construction and real estate sectors during the last four financial years as high economic growth lured multinational companies to set up or expand operations. The services sector witnessed the biggest spurt in foreign direct investment (FDI) flows, from $444 million in 2004-05 to $6.61 billion in 2007-08. Real estate sector, which was opened up for foreign investors in 2004-05, saw FDI leapfrogging from nil to $2.17 billion in 2007-08.FDI inflows in the power sector were $967 million in 2007-08. The sector lagged in attracting foreign investments due to lack of clarity in government policy at both central and the state level. Now, with the firming up of the policy guiding setting up of ultra mega power plants, the sector is expected to attract more FDI. Read More »

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Land sale Talk Buoys Maharaja Shree Umaid Mills

June 24, 2008 – 1:27 am

Maharaja Shree Umaid Mills is close to selling off its 22000 square yards of property in downtown Jaipur, which housed its registered office. According to market sources, property is fetching the company around Rs 200 crore. Mr L. N. Bangur, Chairman and Managing Director of the company, told that until the company received the consideration nothing could be divulged officially.

Market grapevine suggests that the payment is likely to be received shortly. The company has already got necessary approvals for shifting of headquarters to Kolkata. Mr Bangur said, “The next board meeting is likely to formally announce the decision”. Read More »

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Actis Will Invest $300 Million In Indian Real Estate

June 24, 2008 – 1:25 am

Bangalore-based real estate developer Vaishnavi Infrastructures has received an investment of $25 million from private equity investor Actis for its Rs 350 crore Bangalore project, an investment bank official said.

The proceeds of the investment will fund the construction and development of approximately 925,000 square feet of high-end residential and retail space at Yeshwantpur, a Bangalore suburb.

This is the first investment by Actis India Real Estate Fund, a $300 million fund sponsored by Actis.

“Actis has taken a significant minority stake in Vaishnavi’s Bangalore project as it is situated at the perfect location. With current realty market conditions private equity players prefer to invest in projects as they can get the right valuations,” T R Srinivas, director at o3 Capital told from his Bangalore office.

Srinivas added that, for further funding, Vaishnavi would take the “debt route” rather than sell more stake in the project.

With the current turmoil in the real estate market, it is becoming increasingly difficult for realtors to raise debt from banks. Industry experts believe many developers are paying interest of around 30% for new loans.

To address the problem, developers are hunting private equity investors to sell stake in their projects.

Recently, the New Delhi-based Unitech said it would sell a 50% stake in the first phase of its Mumbai project (near Bandra-Kurla complex) to Lehman Brothers for $175 million.

However, another Delhi-based developer Parsvnath Developers said it has no liquidity issues for its current project.

“I have Rs 300 crore in fixed deposits and over Rs 500 crore is unutilised and sanctioned debts available with us. I do not see any liquidity issues and am in a comfortable position,”
Parsvnath’s chairman Pradeep Jain said. He added that the average cost of the funding is around 12% for Parsvnath.

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