OBEROI CONSTRUCTIONS PLAN A MASSIVE RS. 4,000 CR. IPO
Mumbai-based property developer Oberoi Constructions, led by billionaire Vikas Oberoi, is planning a Rs 4,000 crore ($1 billion) initial public offer by year end.
Oberoi Constructions has hired investment banking major Morgan Stanley to value the company. The real estate developer plans to issue fresh shares under the IPO, however, the exact dilution of the stake is not known. The company plans to use the IPO proceeds for land acquisition and fund upcoming projects including the Oberoi Garden City and four and five-star hotels across the country.
“We have executed many major projects in Mumbai and have a good land parcel in the heart of the city. We will not go for pre-IPO placement of shares,'’ said Vikki Oberoi, managing director of Oberoi Constructions.
The company has a land bank of 130 acres mainly in the western suburbs of Mumbai. It has eight residential, commercial and retail projects under construction with a development potential of 21 million sq ft, he said.
On volatility in the stock market and hammering of realty stocks, Oberoi said, “Stock markets will distinguish between the performers and non-performers. We are confident of a good issue,'’ he said.
The company is building Oberoi Garden City, an 80 acre composite realty project including office complexes, malls, schools and residential townships with expected revenues of Rs 8,000 crore (Rs 80 billion).
The company has plans to build such projects in all the major cities including Chennai, Bangalore and Hyderabad among others.
These projects will be spread over 80-100 acres. Based on land prices in different cities, these projects have a land acquisition cost of Rs 400 crore (Rs 4 billion) to Rs 500 crore (Rs 5 billion) and a construction cost of nearly Rs 2,000 crore (Rs 20 billion).
“We are expecting revenues of Rs 4,000 crore from these projects in three years,'’ said Oberoi. The company has also placed a Rs 2,000 crore order with construction major L&T for executing its realty projects.
Oberoi has tied up with Westin Hotels and Resorts of global hospitality major Starwood Hotels for its five-star hotel at Oberoi Commerz in Mumbai.
The company has acquired land for four more hotels in Mumbai and Pune. It is also scouting for properties wherever the company is building Garden City projects. The company will have five hotels, in the four-star and five-star categories, in the next five years, he said.
“Our first hotel will open by 2009 beginning. We have plans to open one hotel every year for the next five years. Starwood will be a preferred partner for our hospitality venture,'’ Oberoi said.
Apart from the IPO proceeds, the company is planning to use internal accruals for the development of upcoming properties. Oberoi also added, “the company would also go for infrastructure projects if they contain real estate element”.
BPTP SAYS, “PRICE JUST RIGHT FOR NOIDA DEAL”
BPTP Group, a Delhi-based real estate developer, said the price it paid for the Noida property i.e. Rs 130,207 per square meter, is reasonable and was thought through. “We had decided on the amount well before, it was not a knee-jerk reaction to compete with other bidders (such as DLF). The location, infrastructure and connectivity makes it an ideal commercial place,” director Sudhanshu Tripathi.
BPTP on Tuesday won the rights to develop 94 acres of commercial land at Noida, in the National Capital Region, by outbidding the country’s largest realtor DLF Ltd, which offered Rs 1,17,000 per square metre, and Omaxe, which bid Rs 80,100 per square metre.
BPTP plans to create “the financial hub of north India” in the area, called Bank Street, which will include five-star luxury hotels and corporate offices. Tripathy said upon completion, office rentals in Noida would be more than its arch rival city Gurgaon.
The construction cost for the financial city will be around Rs 3,000 crores and the total cost of the project is expected to be around Rs 9,000 crores.
BPTP also has 2,000 acres of land bank. “We will have the building plans ready in the next 6-7 months,” Tripathi said. The company, which does not have any “immediate” plans to go for projects in South India, said it is in talks with the UK-based renowned architects Foster and Partners and Germany’s Aedes for the project.
The office space in Sector 94, running along the Noida and Greater Noida Expressway, would cater to the needs of a commercial place of companies and will not include any IT parks or buildings. “It is going to be 100% corporate offices and will not include any IT buildings or BPO call centers as they pay better rentals. There are no corporate offices in Noida, and with this deal, we plan to change that,” Tripathi said.
PROPERTY SHOW IN PUNE ON THE MARCH 15, 16
Pune is witnessing tremendous growth in real estate sector, both in commercial and residential space. With an objective to showcase the finest properties of Pune, a leading online real estate company is organizing a two-day property show, for the first time on March 15 and 16 at Royal Western India Turf Club, Solapur Road, Pune. Around 20 leading real estate developers will be participating in the show and over 5000 property seekers are expected to visit this mega property show in two days. The Pune property show is expected to do deals worth 18 crores.
Pune is amongst the fastest growing cities in India and is experiencing a rapid need for increase in infrastructure. The city has seen rapid increase in real estate activities over the last couple of years. The city accounts 12% of all the traffic coming on the portal, with more than 10000 listed properties from the city.
Affordable housing: There is a large demand for houses and projects below 60 lakhs, developers are still focusing on premium projects above this value. This trend for affordable housing will continue for the next 1.5 years, and developers will have to come up with more projects within the 60 lakhs bracket until the premium projects have some very exclusive features to attract. So this concludes that there is a difference in the demand and supply requirement.
LIC HOUSING TO LAUNCH RS 3.5 BN FUND
Life Insurance Corporation Housing Finance (LICHF) is set to launch a new venture capital fund for realty projects.
The size of the fund, which is awaiting regulator approval, is likely to be Rs 3-3.5 billion. LICHF`s new realty fund is expected to invest in residential projects. LICHF had taken a 5% stake valued at Rs 75 million in the new Rs 1.5-billion credit card arm of LIC, which is likely to begin operations in six months.
As part of its overseas expansion plans, LICHF will open a new office in Singapore. Currently, it has branches in Dubai and Kuwait. Meanwhile, LICHF Care Homes, a subsidiary of LICHF, is planning to open residential units for senior citizens in Punjab, Orissa, Kerala and West Bengal. The first project was unveiled in Bangalore.
During April 2007-February 2008, the company sanctioned Rs 73.85 billion against Rs 48.88 billion in the same period last financial year. Disbursements stood at Rs 59.41 billion compared to Rs 41.99 billion.
Indian Real Estate rush lures foreign investors
HONG KONG India will have at least 50 property-related initial public offerings in the next year as the real estate industry booms, according to Anish Jhaveri, the head of equity sales at HSBC Holdings in India.
“With the opening of the real estate sector, there’s a lot of need for funds,” Jhaveri said in a recent interview in Hong Kong. “The government has been giving very proactive support to the whole sector.”
The real estate market in India is worth about $12 billion and is growing at about 30 percent a year, Ernst & Young said in a report last month commissioned by the Federation of Indian Chambers of Commerce and Industry. Rising incomes, easy financing and population growth are driving demand for housing and luring overseas investors.
“The appetite for real estate IPOs will be there,” K.K. Mital, chief investment officer at Escorts Asset Management in New Delhi said a phone interview Friday. “The young work force is looking for real estate investment, and the financing is available, the banking system is supporting this growth.”
Jhaveri said that venture capitalists and overseas investors were poised to invest over $5 billion in the Indian real estate sector, without providing more details. “People are seeking more clarity” on possible changes to property regulations before investing, he said.
His forecast takes into account the possibility that India could allow real estate investment trusts, or REITs, to invest in the nation’s property industry. Still, of the 50 real estate related IPOs that he predicted would take place in the next year, he only expected a “small” number to be REITs.
In the past year, India had eight initial share offerings by engineering and construction companies, which raised $478 million, according to Bloomberg data. That compares with the six initial public offerings raising $304 million in the previous 12-month period.
Indian billionaire Kushal Pal Singh’s real estate company, DLF Universal, is seeking to revive the biggest Indian share sale once regulators decide on a complaint by shareholders. The New Delhi-based company plans to submit offer documents to regulators, paving the way for an offering by early December, Saurabh Chawla, the finance vice president of DLF, said in a phone interview Friday.
India is short of 20 million housing units, according to a study by Housing Development Finance. That shortage will get worse, according to UBS analysts, citing the growing population and increasing affluence. Asia’s fourth-largest economy grew 8.9 percent in the three months to June from a year earlier.
ICICI Home bullish on Kolkata realty
ICICI Home Finance expects Kolkata to contribute in a big way to the residential financing market in the next 3 years.
“Although the residential financing market space in India is about Rs 1 lakh crore and the market in Kolkata is around Rs 2,000 crore, it is expected to grow at a much faster rate compared to the other metros in the next 2-3 years,” said Sunil Rohokale, the managing director and CEO of ICICI Home Finance.
Saturation in other markets will give a boost to the market in Kolkata. Mumbai leads the residential financing market with a share of 10 per cent, followed by Delhi and Bangalore with 9 and 7 per cent respectively.
“Slowly, but steadily, the other markets are getting saturated and the Kolkata market, being relatively cheaper, provides a better alternative,” he added.
Rohokale also attributed Kolkata’s rise to the state government’s proactive role in promoting lower and middle income segments, where affordable housing is possible.
“The West Bengal government is looking for inclusive growth and by providing incentives, by encouraging public private partnerships not only in the higher-end segment like commercial buildings but also in the middle and lower segments as well, which consist of mostly small housing projects,” he said while talking to Business Standard on the sidelines of an interactive session at Credai Bengal Real Estate Conclave.
It would be in the affordable housing segment, where most of the private investment is going to come, feels Rohokale.
In the last two years, the real estate market attracted an investment of around $7 billion, including $3 billion from equity. Of this, the share of Kolkata was around 3.5 per cent, amounting to $150 million.
“There is a huge demand in Kolkata for affordable housing flats, which range between Rs 15 lakh and Rs 25 lakh, but the developers are most active in the premium-range flats between Rs 25 lakh and Rs 50 lakh. Hence with the state government providing incentives, affordable housing space looks most attractive in Kolkata,” Rohokale added.
Source: http://www.business-standard....
DRIVEN BY DEMAND FROM THE RETAIL SECTOR, THE GROWTH IN RESIDENTIAL REAL ESTATE COULD ACCELERATE
According to a report by propertyvertical.com, retail growth will not only push demand for commercial property but will drive demand in the residential segment as well. The report, commenting on the causal relationship between growth in the commercial segment and the demand for housing, asserts that rapid commercial development in Delhi and the NCR has led to a spill over of housing growth from Noida to Greater Noida. Gurgaon to Meerut, Bhiwadi and Ghaziabad to Manesar.
The report goes on to state that the next best bet for investors in the NCR is Manesar. Emerging as one of the biggest industrial hubs around NCR, Manesar has become an attractive investment destination. In fact, it is likely to be one of the biggest growth centres in the NCR. The report further states that it has all the ingredients of being the next commercial hub, after Gurgaon, with better infrastructural facilities and tax incentives. It is also likely to emerge as one of India’s major outsourcing hubs, with corporate entities like Honda, Baxter, Suzuki, Stanley, Mitsubishi, Nippon, Toyota and Maruti Udyog setting up shop here. Naturally, such massive corporate and industrial activities not only triggered the need for office space, but have also created a huge demand for residential properties from people who are employed here, and also from those likely to be inducted by emerging corporate sectors.
Ghaziabad, too, has received a major boost due to the Commonwealth Games 2010. There are major hotels with international standards under construction as also huge commercial malls, with some having hotels on top floors. These will be operational in areas like Indirapuram, Vaishali, Kaushabhi and Vasundhra.
The Metros is another development here and has certainly resulted in the appreciation of land prices along the route. According to the report, in the last nine months, residential property prices in Indirapuram have gone up from an average of Rs.1600 per sq.ft. to over Rs. 3200 per sq.ft. This clearly depicts Ghaziabad’s increasing popularity, which will certainly give boost to the commercial segment once residential properties are developed and inhabited.
Benefiting from Metro extensions, expressways, wider highways and release of land parcels, Delhi and NCR promise to be sought after destinations
REALTY REGULATOR FOR DELHI SOON
Announcing this perhaps for the umpteenth time, the Ministry of Urban Development has said that will set up a Regulatory Authority to monitor and curb malpractices in real estate activities in Delhi and the National Capital Region (NCR) area as also address the grievances of builders and developers, which will come into effect by early 2008.
Disclosing this at the Assocham conference on ‘Urban Land Markets & Finances’ held in Delhi this week, Union Minster for Urban Development Jaipal Reddy also announced that the proposed authority would work as a role model for other states to follow, particularly in view of growing real estate activities throughout the country so that the consumers get a fair deal.
OFFICE STAKES IN BIG METROS
Decline in the growth of office rental values in South Delhi is attributed to new supply that has entered the market this year. On the other hand, rental values in Mumbai’s Bandra Kurla complex rose by 22% from January to September 2007, marking it the fast emerging new central business district of the metropolis
Location | Current average office rentals | Average rental increase | |
| Rs/sq.ft./mnth | Q1 to Q3 2007 | Q1 to Q3 2006 |
| NCR |
|
|
|
CBD-CP | 317 | 20% | 76% |
South Delhi | 217 | 15% | 50% |
Gurgaon | 113 | 20% | 65% |
| MUMBAI |
|
|
|
Nariman point | 400 | 33% | 40% |
Worli | 400 | 33% | 72% |
Bandra kulra complex | 295 | 22% | 93% |
| BANGALORE |
|
|
|
CBD/OFF CBD | 70 | 19% | 31% |
Suburban | 48 | 14% | 21% |
Whitefield/Electronic city | 27 | 0% | 8% |
Source: Cushman & Wakefield | |||
Return on investment
The value of a plot of land in any particular location depends on what the government will permit to be done there, and on the success dynamics of the society in which the land is situated.
You cannot add to the value of land as you can to a structure - value derives from the dynamic community that makes the land desirable. Therefore, a plot's value will appreciate if there are developments in the vicinity to make this happen. Sometimes, investors purchase land based on anticipated value – something like a mall, multiplex or office block is scheduled to come up nearby If the anticipated development fails to materialise, or if the location does not receive water or electricity supply, the plot will fail to appreciate.
Land will also fail to appreciate if it is in danger of being taken over by the government for its own purposes.
No matter how good a plot looks, or how reasonable the price, one must check everything. The price may be low because certain legal sanctions or complications incurred during a previous ownership have rendered it a non-selling proposition.
Other factors to investigate.
Ø & nbsp; Availability of ground water
Ø & nbsp; Soundness of electrical supply in the area
Ø & nbsp; In case of residential land – avail ability of schools, colleges, medical facilities, domestic markets, public transport, etc.
Ø & nbsp; In case of commercial land – avail ability of retail outlets, post offices/couriers, telephone connectivity, other reputable commercial establishments in the vicinity.
Ø & nbsp; Availability or non-availability of the above will substantially influence the property's overall appreciation potential. Investment in commercial or residential land in an established growth sector with all of the above factors in place definitely makes a lot of sense.
Where are the best land deals today?
The most sought-after land for sale in India is in the metros. However, due to the extreme supply crunch, the rates are invariably completely out of reach for any but corporate or institutional investors. As a rule, the only ‘good deals' in central Mumbai, Bangalore, Delhi and Kolkata comprise of purchasing available plots at exorbitant prices and then cashing in on their immense appreciation potential.
For smaller investors, buying a plot in an upcoming suburb or a potential-rich Tier II or Tier III town is a far more feasible option – especially in context with larger plots, which are out of question in metros.
& nbsp; &n bsp; &nb sp; &nbs p; ; & nbsp; &n bsp; &nb sp; &nbs p; ; & nbsp; &n bsp; &nb sp; &nbs p; ; & nbsp; &n bsp; &nb sp; Courtesy: HT, 12th Nov. 2007
INVESTING IN LAND NEEDS DILIGENCE REAL ASSET
There is increasing interest in investing in land rather than constructed properties. This trend has merit, since land value appreciates while the value of a construction depreciates. In other words, buying land in a growth sector always makes sense. However, one should approach such land purchase with due caution and prior research.
Investment horizon
Purchasing land as an investment usually pays off only as a long-term venture, with a minimum holding period of between 5-10 years.
Safe purchase parameters
In general terms, it is definitely not safe to buy land without thoroughly acquainting oneself with the local market, and the legislative dynamics of that area.
Buying land situated near a housing scheme calls for extreme caution, since one may inherit the covenants and restrictions applicable to the housing scheme.
Ø & nbsp; While buying a plot as an investment, one should ensure reason able proximity to key roads and access to water and electricity.
Ø & nbsp; One should also acquaint oneself with the development plan for the chosen area – this can be established from the local administrative body.
Ø & nbsp; One should be very clear about what taxes one will incur and whether the plot has a permit for raising residential/commercial structures. Raising large structures is not an option on agricultural plots, which are cheaper and have a lower tax burden. If the plot is the agricultural kind, one should establish whether its status can be converted for construction purposes later on, or not.
Ø & nbsp; Before purchasing land, one need to investigate possible multiple ownership issue and zoning restrictions such as CRZ, NDZ etc.
Delhi Real Estate Witnesses The Financial Showers
New Delhi, the national capital of India is one of the prime cities in the country which has witnessed the economic development plans being drafted in the Parliament house to the effects that economic growth has spurred on the real estate and other service sectors in Delhi. Incorporated as one of top three investors’ choices for real estate investment in Asia, New Delhi continues to be one of the most competent and healthy competitor amongst the property markets across the region. And as investors and buyers make a beeline for acquiring the best chunk of real estate market, the finance sector in India has evolved as the possible gainers.
The banks in India which initially did brisk business with their saving schemes has now opted for the housing finance section as a more profitable business, since the real estate scenario in Delhi shows an upswing. The demand for properties in New Delhi touches new heights arising mainly due to the requirement for a large number of residential and commercial spaces as a large number of investors are seeking investments in the Delhi region or the nearby NCR areas. Delhi evolving as a popular investment destination for investors in the residential and the retail sector has lead to escalation of property prices many-fold and are still on the rise thereby making investment in the capital city of India a deal worth to be clinched.
But the bulk of disposable income generated by the employees in the corporate sector along with easy funding by every finance company in India has of late made property investments a not so formidable task. Easy loan facilities and a horde of finance companies offering some of the best deals and dipping interest rates have also been responsible for increase in Delhi real estate investments. Almost all the major financial institutions like ICICI, HDFC, IDBI and HSBC, to name a few have successful operational bases in the city making housing loans a competitive business. This competitive market has in some ways being beneficial to the consumers and if the trend continues, the real estate scenario in Delhi is bound to offer investment opportunities for buyers and developers who would want to capitalize on this growing opportunity. And if industry experts are to be believed, New Delhi is yet to see major transformation in the real estate market as the city gears up to remodel itself for the 2010 Commonwealth Games shedding its reputation of being a ‘walled city’ to a ‘World City’ of the future.
India 16th most expensive retail spot
India has been ranked as the 16th most expensive retail ‘high street destination’ in the world by a latest report. According to the report ‘Main Streets Across the World (MSATW) 2007′ by real estate consultants firm Cushman & Wakefield, Khan Market in New Delhi is the most expensive retail destination in the country with rentals of Rs 950 per sq ft per month in the second quarter. It witnessed an annual growth of 35.7 per cent over the same period last year.
“Khan Market is the biggest riser in the ranking of the world’s most expensive shopping locations in terms of retail rents, moving up eight places from last years 24th position,” the report said.
New York’s Fifth Avenue retained its title as the world’s most expensive shopping destination followed by Hong Kong’s Causeway Bay and Avenue des Champs Elysees in Paris.
“Retail is going through a revolution in India, although a part of the increase in rents is due to lack of high-quality space in the right location,” Cushman & Wakefield India national head (retail) Rajneesh Mahajan said.
The report said India also figured among the world’s top 10 locations that witnessed highest rental increase in local currency terms.
Connaught Place in Delhi is the highest gainer in Asia and second only to Chicago’s East Oak Street across the world, with an annual growth of 87.5 per cent.
Kemp’s Corner in Mumbai has also witnessed high rental growth of 78.2 per cent, making it the fourth highest riser of rental growth.
Greater Kailash in Delhi and Fort/Fountain and Colaba in Mumbai were also among the highest rent rises recorded with increase of 57.1 per cent, 55.2 per cent and 51.1 per cent respectively.
In the period, the rental in the Connaught Place was Rs 750 per sq ft a month, while the same for Kemps Corner was Rs 490 per sq ft per month, the report added.
Source: http://inhome.rediff.com ...; & nbsp;
Destination Navi Mumbai
Apartment spread cross 6,500 sq ft with private parking bays on each floor, exclusive elevator for each apartment, ultra-luxurious amenities and a manicured garden thrown in. The building is Ellora Castle, the price of each apartment is Rs 6 crore and the location is Palm Beach Road of Navi Mumbai.
Ellora Castle is just one among the 119 stalls at the ongoing Haute Property exhibition in Vashi (November 16 to 19 at the exhibition grounds outside Vashi station), which is mainly targeted towards homebuyers from the Mumbai metropolis.
“From being a low-cost housing destination, Navi Mumbai is now the preferred option for many high net worth individuals because of the quality of life it has to offer,” says Bhupendra Shah of Bahamian Group, part of the exhibition’s organising committee.
Till a few years ago, Navi Mumbai promised affordable housing and a lot of people shifted from Mumbai to bigger flats in the satellite city. Today, the real estate prices in areas of Navi Mumbai like Vashi and Palm Beach are on par with or even higher than the suburbs of Mumbai. For those with large families, Navi Mumbai is the one of the few places where one can afford a palatial penthouse or a four-bedroom flat with a view.
For the others, most nodes of Navi Mumbai offer row houses, independent houses and flats at affordable rates. Shopping malls, wide roads, good schools, sprawling markets and good connectivity are the key factors that make Navi Mumbai an attractive housing option.
“The infrastructure of Navi Mumbai is improving with each passing month,” says Nerul-resident Naresh Sawant. In the last two months, three major malls have been inaugurated in the city, giving the local residents lot to choose from for the weekend outing. Educational facilities are also a major reason for people preferring Navi Mumbai. There are about 10 engineering colleges in Navi Mumbai, apart from medical, degree and catering colleges and institutes.
Prakash D’Mello, who moved to Koparkhairne from Chamber, reminisces, “We bought this house about 11 years ago and have seen the place develop. What I like about Navi Mumbai are the educational facilities. They are far better from most schools of Mumbai and affordable too.” His wife Sujata adds, “The bus depot is just a couple of minutes away that connects us to the rest of the city and Mumbai.
Navi Mumbai is also quite spacious with with a lot of greenery around. This is what we call luxury” While educational facilities are the preference of some people, others prefer the peace that Navi Mumbai offers. Rakesh Sharma, resident of Belapur is very happy with his house in the Artists Colony “With the extra FSI, our house is much bigger now. For me the serene surroundings itself are inspiring and I sometimes wonder how people live surrounded by busy roads and continuous traffic in Mumbai.”
Source: Hindustan Time
The Land of Oppurtunity
With a growth rate of 30 per cent and projected figures of 90 billion US dollars, by 2015, it can be safely said that the real estate sector in India is booming.
India is being acknowledged as the one of the fastest growing economies in the world and in this current economic scenario, real estate has emerged as one of the most appealing investment areas for domestic as well as foreign investors. And this high growth curve in the real estate sector owes some credit to a booming economy and liberalised Foreign Direct Investments (FDI) regime in the real estate sector.
In March 2005 the government of India amended existing norms to allow 100 per cent FDI in the construction business. This liberalisation act cleared the path for foreign investment, to meet the demand of development of the commercial and residential real estate sectors. As per the new rules, the minimum land area for development by foreign investors was lowered from the earlier floor of 100 acres to 25 acres.
Also, the economy continues to grow rapidly, hitting 9.3 per cent in the first quarter of 2007, following the 9.4 per cent growth recorded for the whole of last year. Then there’s the rapidly expanding service sector, FDI growth, a surge in exports, rising global competitiveness and increasing domestic demand, all contributing to a strong economy. This pace of economic growth shows no signs of slowing.
With forecasts of economic growth rates of at least six to seven per cent per year, India is expected to become the world’s third largest economy (measured in purchasing power parity) by 2010. With the fundamentals of the Indian, economy apparently sound, and prospects for continued growth very good, the real estate industry can only flourish.
One of the main propellers of this growth is also the rapid urbanisation of Indian cities. The Indian government has estimated a shortfall of 20 million accommodation units. This quantum of demand, coupled with a short supply, ensures that there’s a great requirement for residential realty. This in turn translates into great opportunities for real estate companies providing quality township projects.
It is also estimated that India will need 475 billion dollars in the next five years to upgrade its infrastructure. This level of investment opportunity hasn’t gone unnoticed by global investors and has drawn the heavy weight investors to India. Sunil Gomes, director of development real estate, Istithmar, shares how India maybe a high risk market for some but it’s also a high return one.
But the real story lies in the deeper changes within Indian society, that are expected to have an even greater impact on real estate. India has a young profile today. Half of its population is under 25 years and the country’s median age is 24 years (2005);compared to 33 in China and 43 in Japan. The country is urbanising at a rapid rate of 2.5 per cent per year.
The number of cities over one million is expected to double from 35 in 2001 to 70 cities by 2025. Mumbai and Delhi is projected to be the world’s second and third largest cities by 2015. Tier 2 cities like Pune, Hyderabad and Chennai are becoming increasingly important in this scenario.
However, Tier 3 cities like Mysore, Mangalore, Kochi still lack liquidity. India’s large population is now being viewed as one of its key strengths, especially a young and urbanising population. More importantly, this young customer base has an evergrowing demand for products and services and is providing massive labour market opportunities as well. This new brand of consumer’s rising disposable incomes is also being generated towards lifestyle products, real estate included.
The trend towards urbanisation is part of a long-term structural change in the Indian economy. Where now, less than 30 per cent of the population live in cities, that figure is expected to double by 2030. While India is still considered under performed as compared to China, as far as investments are concerned, it’s also interesting to note that unlike in China, higher FDI inflows are the effect, and not the cause, of high growth rate in India.
The obvious inference is that while policy, institutions, incentives and regulations do matter, it is the perception about investment viability that is the most significant determinant of FDI. India, attempted development of infrastructure, simplification of procedures and a gradual change of mindset, which has led to its increased attractiveness to investors.
The Indian real estate market is expected to have access to about $10 billion (Rs 41,000 crore) in private equity (PE) funds this year, which should help cash-strapped developers overcome conservative lending by banks, stricter rules for placements before share offers and tougher guidelines for overseas borrowings.
All this activity has also encouraged several large financial firms and private equity funds to launch exclusive funds, targeting the Indian real estate sector. Besides increasing professionalism in the sector, it would bring in advanced technology and help in the creation of healthy and competitive market environment for both, domestic and foreign investors.
Also, the entry of Real Estate Mutual Funds (REMFs) or Real Estate Investment Trusts (REITs) will definitely ensure more availability of funds to the developers and faster growth of real estate sector, according to industry experts.
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India’s hospitality sector to emerge as key area for investors
Real estate services firm Cushman & Wakefield has partnered with MIPIM Asia to bring out the 2007 Asia Pacific Investment Report. According to the report, India’s hospitality sector is expected to emerge as a key area for investors over the next few years, due to a demand-supply imbalance and a lack of quality infrastructure.
Covering Australia, China, Hong Kong, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam, the report provides a broad overview of the key factors, risk assessment, regulatory changes, economic prospects, return expectations and market trends that play a major part in property investment decision-making.
The report says that the Australian office, industrial and retail markets are all expected to perform strongly over the next 12 months. Overseas property investors in China will start looking at a broader range of product types and investment scenarios and a much wider range of geographical locations.
Other highlights of the report: a resurgent Japanese economy and strong demand from investment funds, particularly foreign funds, is driving commercial land prices upwards; there is a new sense of optimism in Singapore brought on by an improving economy, emerging high-impact tourism and iconic real estate projects.
Courtesy: The Hindu Business Line
RedHawk plans techno township near Hyderabad
The Colorado-based RedHawk plans to develop about 30 million sq ft of built-up area on a 600-acre site, which the company’s local partner Dreamland has already acquired with an investment of about $50 million (about Rs 200 crore).
FUNDING
Addressing a press conference, the Chief Executive Officer of RedHawk, Mr Bipin Agarwal, said that the company plans to raise funds through private equity and through debt to fund this project, which is to be completed in a phased manner.
“Unlike some of the speculative real estate projects in Hyderabad, who have pegged each square feet of built-up space ranging between Rs 2,500 and Rs 5,000, which is unaffordable to most of the sections of society, we are looking at benchmarking prices ranging from Rs 1,500 to Rs 5,000 per sq ft, with the higher priced ones targeted at the office space,” he explained.
Of the 30 million sq ft of built-up space, 26 million will be for residential accommodation of all types, flats and villas, three million square feet for four-five major companies for their office space and the rest three million sq ft for common infrastructure including retail, hospital and educational institutions.
The idea is to create a township that would host not just work space but living accommodation and serve as a self-contained township. “We have signed up with a company and expect to freeze four more within three months,” Mr Agarwal said. “This project is to be located off the Vijayawada highway along the Outer Ring Road project,” he said.
Courtesy: The Hindu Business Line
India, a destination for continued investment, says Morgan Stanley
The firm has got a merchant banking license from the real estate regulator SEBI for its arm in India. It is also looking forward to expand its asset management and proprietary business.
Morgan Stanley has appointed Narayan Ramchandaran as CEO and country head for the company in India. Mr. Ramchandaran is currently working as the head of investment management in India (MSIM).
Four senior officials from DSP Merrill Lynch will be working with Morgan Stanly to establish its wealth management business in India. The names are Amitava Neogi, Partha Basu, Himangshu Bhagat and Himangshu Jain. The company has plans to recruit 100 more private bankers for the same.
A multitude of investment banks is considering to kick off their operations in India. The list includes the prominent names such as Goldman Sachs, Lehman Brothers, and Credit Suisse. The merchant banking license will help these firms to offer on-shore investment banking, advisory, and underwriting services.
India is a main priority for the firm and the most preferred area of continued investment. Morgan Stanley has been running its real estate advisory business in India lately and is trying to take it to new high.
Courtesy: Indianrealtynews.com
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