Indian Property News on 'December, 2006'

NOIDA Property Bubble

A known part of the National Capital region, Noida enjoys the status of being the largest planned industrial city of Asia. For the last decade, a number of commercial spaces have come in here. Driven by an exceptional growth in the economy and large scale investments in IT, ITes, and BPO sector, real estate in Noida is ostensibly flourishing.

Noida boasts of a phenomenal demand for residential units, in addition to massive commercial and retail space demand. Adding to the demand for dwelling units in Noida is number of factors that include presence of world class brands like Ebony, Lee Cooper and Flying machine. The industrial city also features an array of happening places to hang around with Sector 18 known as the “heart of city” and often touted as the “South Extension of Noida”.

Property rates in Noida have more than doubled because of the soaring price of land here. The boom in the property sector has attracted several potential investors, all set with their deep pockets to gain high returns. While naysayer may say that the people have invested with the prospect of digging gold in mind, they may not be wrong after all.

If you are scouting for the most productive land in Noida for your investments, take a look at the below chart to get to know about the property rates in Noida at a glance.

NOIDA Property Rates

** Price as per the market value in Dec 06
** Property Rates are subject to change due to market vagaries and may differ by virtue of location and project, depending and facilities and other factors.

Real estate boom to mark another milestone in 2007

Thanks to the magnetic charm of Indian real estate that the booming sector has again fastened its seat belt to make another mark. As per the data showcased by studies conducted by Assocham (Highest body of the Chambers of Commerce of India), the property market is likely to attract foreign investments worth Rs 8,000 crore in 2007.

Transparency and the improvement shown by the real estate sector in 2006 have impressed most potential international investors who are waiting to establish their presence in the Indian property market, say the industry body.

The sector would provide high quality employment opportunities which are likely to benefit a large fraction of the job seekers in these areas. This underlines the growing capacity of the market that would continue to show its mettle in 2007. Moreover, factors like easy availability of finance, increasing urbanization, rising income levels are believed to be the key drivers contributing the growth.

Assocham forecasts that the realty sector would grow from 12 billion dollars in 2005 to 90 billion dollars by 2015. With lots of investors pumping in Indian real estate, the demand for property is boosting at its best. Despite the odds weighing heavily against the bubble, foreign investors are lining up.

Renowned conglomerates such as Royal Indian Raj International, Blackstone, Goldman Sachs, Emmar Properties, Pegasus Realty, Citigroup Property, Lee Kim Tah Holdings, Salim group, Morgan Stanley and GE Commercial Finance are showing large interest in bringing substantial foreign capital into India.

Property Prices Soar in Chennai

Soaring prices of property in Chennai has forced property developers there to scout the city outskirts for new business prospects. The demand for dwelling units is shooting up as if there is no tomorrow. According to property surveys, Chennai will require at least 50,000 new homes by 2020.

With such a strong demand for houses, there is a stiff competition in the market which has spurred significant price and rent increases. Non residential activity is also at its best with demand for commercial and retail properties seeing appreciation. A square foot of space in the city’s upscale Pose Garden apartment now costs Rs.14, 500.

A multitude of multinational companies have spread their wings to Sriperumbudur, the place strategically placed on the Chennai –Bangalore highway. Also, many other giant conglomerates are planning to set their establishments in the fast flourishing Chennai. The list includes Rs.220 billion Alliance Group that is all set to develop a 300-villa project west of Chennai. The apartments in this villa will cost in between Rs.6 million – Rs.50 million.

Vishranti Homes’ is believed to be the costliest of all residences with a 4,200 sq ft home costing about Rs.60 million. Real estate market in India is currently valued at $12 billion and its annual growth rate is turned out to be 30 per cent. Property market of South cities is flourishing as no other. Tamil Nadu real estate has attracted an investment of worth Rs.30 billion. The potential of property sector expansion here is high, says Manoj Namburu, managing director of the Alliance group.

Most realtors in Chennai run their real estate business on small scale. The Vijay Shanthi group, recently offered only 15 apartments, each costing Rs. 40.25 million. Likewise, the Fern, close to Siruseri located in south Chennai, has developed 48 villas on seven acres of land.

Staying in step with the booming mall culture, Chennai also features some of the best malls such as Shoppers Stop, Spencer Plaza, Lifestyle, Westside, Landmark, Globus. All these listed shopping arcades are planning to expand their horizons.

FDI in India on High Growth Path

Needless to say, Foreign Direct Investment plays a critical role to add to economic growth of the country. India has been rapidly stepping into a liberal mode from a restrictive regime. The country received high FDI in the year 2006, with equity inflows expected to cross $11 bn. The amount is believed to be twice of what has come last year, says data revealed by Commerce and Industry Union Minister Kamal Nath.

Mr. Nath also shed considerable light on India’s industrial policy and trade promotion took place during the year.

In case, the reinvested earnings of foreign companies is also taken into account in FDI inflows, the total FDI inflows in 2006-07 will shoot up to $14 bn whereas it was $7.7 bn last year.

According to the facts and figures, India’s manufacturing sector has witnessed a growth rate of 23.4 per cent in the year 2005-06 which is the highest among the past three years’ records. Industrial production has grown by leaps and bounds during April-October 2006.

Software industry and financial services are likely to see great cooperation from the potential foreign investors in the next coming years. Investments made in the manufacturing industry is considered as the ‘first mile investments’ and are expected to be followed by more funds to finance projects, added Nath.

Real Estate Investments in Gurgaon

Gurgaon, a city in the northern eastern state of Haryana, has now become much famous as India’s Outsourcing Capital. The impressive growth that this cyber city has shown is hardly comparable with any of what its counterparts have accomplished.

Earlier, Gurgaon was known to be a sleepy town on the outskirts of the capital city. Today, the situation has largely changed with several big buildings and shopping arcades doting on this suburb which has witnessed a major real estate boom for the last few decades.

Gurgaon property has reached such a niche which seemed impossible a few years back. Today, a common man needs to think twice before purchasing a house here. Apart from commercial property in Gurgaon, the residential sector is seeing an equal rise in its values.

The existing population of Gurgaon is considered to possess large purchasing power which has further created a large demand for housing thereby giving a puffy boost to the property prices in Gurgaon. Real estate industry naysayers have opined the transport a chief bottleneck hampering the transportation of this fast flourishing cyber city. However, these niggling hurdles are soon to be crossed with the plans to extend Delhi Metro to Gurgaon.

Flying high on the wings of booming real estate, property in Gurgaon has become a dream for every potential investor looking forward to dig high profits and prospects.

Check out the following chart to update your knowledge on the current property rates in Gurgaon.

Gurgaon Property Rates

** Price as per the market value in Dec 06
** Property Rates are subject to change due to market vagaries and may differ by virtue of location and project, depending and facilities and other factors.

Indian Realtors Raising More Money Overseas

Growing by leaps and bounds, the booming Indian real estate has now succeeded in raising more equity money overseas as compared to the domestic market in the year 2006. The amount has been estimated to cross a whopping USD two billion.

According to the data showcased by London Stock Exchange’s Alternative Investment Market (AIM), 11 Indian property developers has floated on AIM in the past two years to satisfy their insatiable appetite for the booming real estate. The total amount raised by them was $1.25 billion.

A majority of Indian companies listed on AIM are trading below their issue prices. The last trading price of Hicro Plc was 428 pence as opposed to its issue price which was 500 pence. Somewhat similar is the case with Unitech which is down to 93 pence against an issue price of 100 pence. Indeed, the trend is being followed by many other companies. However, there’s always an exception. Here, it is West pioneer, which last traded at 101 pence, while its issue price as 81.5 pence.

Some of the funds like Eredene and Saffron, which had raised the money on AIM last year, are similar to mutual funds. Both the conglomerates had raised capital to fund real estate projects in India. The fresh listings like Ishaan, Unitech and Hirco have identified projects for which they have raised the capital. If any company does not invest in the listed projects for some reason, the capital will be available to pump in elsewhere.

As marked by such an excellent response the AIM has received from Indian property developers, industry watchers see a continuance in popularity of this sub market of the LSE. Unlike other stock exchanges, AIM does not stipulate stringent rules and regulations thereby simplifying the process for the companies interested to float the money, says a source in the investment banking community. This is one of the reasons encouraging Indian companies to tap AIM.

Another facet in favor of AIM is the depth it offers. Two issues raised a total of $1.5 billion very close to each other. Contrary to this, a recent large issue – Cairn India – faced problems in getting fully subscribed.

The Largest Commercial Space to Develop On Noida Land

Demand for Noida land is likely to reach an all time high with the Noida Board planning to develop one of the largest commercial spaces in the region. Conglomerates, both Indian and Multinational, scouting for commercial spaces, would now breathe a sigh of relief as the industrial heart of Asia is all ready to welcome them with its arms wide open.

The project will take shape on 225 acres on the Noida-Greater Noida Expressway and the scheme will be launched in the month of January. The land is located in the sector 94 and 124. According to the estimates, the area will accommodate the construction of 6,000 offices, each of 100-200 square metre.

The proposed project is believed to be three-and-a- half times the size of the Nehru Place district centre, the Capital’s prime business district, says a senior Delhi Development Authority (DDA) official.

Delhi sealing has emerged as one of the factors accountable for rising demand for office and commercial spaces in places like Noida. In keeping with this, industry watchers see it as a high growth period for Noida. This is primarily because of land scarcity in Delhi.

Proximity to Delhi is an advantage that Noida enjoys over its other counterparts including Gurgaon and Greater Noida. Also, better social infrastructure is another add-on to the list of the features owing to popularity of Noida.

The ongoing sealing drive has added to the rates of commercial property in Delhi. Few days back, the DDA sold a 7,232 square metre commercial plot in the Rohini twin district centres, sector 10, for a whopping amount of Rs 231 crore. It is believed to be one of the most expensive land deals for a commercial plot in Delhi.

Income Tax Department Eye India Realty Pie

Indian real estate, the common hunting ground for potential investors and builders has now caught the attention of income tax sleuths who are all set with their dragnet for builders who have not paid their share of corporate tax.

Apart from conducting search operations, investigation wing of the IT department carries all the data regarding the investments made by these companies. This has resulted in considerable tax deposits by property developers. The Omaxe Group deposited Rs.30 crore as tax. The group had not deposited any advance tax by December last fiscal. Parsvnath Builders deposited Rs. 50.8 crore, as against Rs 9.5 crore during the corresponding period last fiscal.

The initiative of the IT department has been successful in spreading ‘tax awareness’ among the well-off builders, says a senior official. It seems that the government has also set its eyes on the Indian real estate boom with an opportunity to gain a whopping amount.

Following in footsteps of the counterparts came the Eros Group and GTM Builders with tax payment of Rs 40 crore and Rs 20 crore respectively. The action came after the investigations conducted by IT officials.

The income tax department has received over Rs. 1,000 crore as additional tax deposits and the amount is likely to shoot up with the current boom in real estate and increase in housing loans.

Of the 25 corporate tax paying companies, eight are from the banking sector including the big names like State Bank of India, Punjab National Bank, and Bank of Baroda besides private sector banks like ICICI, Standard Chartered, HSBC, HDFC and Citibank.

Ansal Properties to Build Hi -Tech city adjoining Greater Noida

Ansal Properties & Infrastructure Limited (APIL), announced to develop a hi-tech city on 2504 acres of land adjoining Greater Noida. The proposed project will require an investment of over Rs. 20,000 crore. A Memorandum of Understanding has already been signed between the Government of Uttar Pradesh and APIL, who is serving as a prime consortium.

Heralding eighteen holes golf course to be designed by Mr. Martin Hawtree, who has designed over 750 golf courses worldwide, the city will also feature a number of sporting facilities including Mahesh Bhupati Tennis academy, a polo and an equestrian club. There are plans to create a world class stadium where amateur sportsmen and athletes can avail proper training. The city will also have five star hotels, serviced apartments, a convention center, and an exhibition hall.

Fifty percent of the total area of this ‘Hi Tech city’ has been reserved for green spaces that will enrich the beauty of the township thereby by making it an attractive location. A lot of revenue is likely to be produced from the project. A number of domestic as well as international companies are expected to step in with their establishments in the township. This will generate great employment opportunities catering to the requirements of various job categories.

This ‘Hi- Tech City’ will combine the best of design, aesthetics, and architecture by some of the most renowned national and international town planners. After completion, the project is believed to be one of the largest real estate projects in National Capital Region and accommodate a population of over 30,000 people. A part of the project cost will be financed by the newly concluded qualified institutional placement (QIP) amounting to Rs. 681.75 crore.

Bhagyanagar India Ltd. sells out land for Rs 54 cr

Hyderabad-based Bhagyanagar India Ltd., doing diversified business of metal and component manufacturing, is selling a part of it to Mumbai-based unlisted company Himadri Enterprises for a whopping amount of Rs 53.52 crore.

Also, the company has sold out 5.76 acres at Uppal, an industrial suburb near Hyderabad, to Himadri that has paid Rs 3 crore to Bhagynagar beforehand. As learnt from sources, Bhagyanagar is holding talks with different well off companies including Reliance Properties, Godrej Properties, Suncity, and others regarding property development projects.

Bhagyanagar Metals, a unit of Bhagyanagar, had recently spent large amount of money to purchase 25 acres at Gadchibowli near Hyderabad. Gadchibowli is a home to a multitude of software and hardware companies. The company is also planning to use its 25 acres land at Hitech city, Hyderabad, for the construction of IT parks and dwelling units.

The company has also pumped in 6.22 acres near at Shamshabad. The land is to be utilized for the development of a hotel project. In addition to making a substantial presence in Indian real estate, Hyderabad based Bhagyanagar is all set to venture into production of non conventional energy by setting up windmills with 2.5 mw capacity.