Indian Property News on 'March, 2007'

Where is Indian Real Estate lacking?

Indian real estate is raising the bar of performance a notch higher each day. But the industry is known to be unorganized and is dominated by a handful of players and supply of manpower.  There is definitely a lack of required professionals; one, at the first line supervisory and project manager level; and two, at the workmen or entry level.

The shortage is more acute at higher level. Actually, there are few people with the kind of professionalism needed to stay in step with the growing number of real estate projects. They are the prime targets for poachers both in domestic and international market.  The economic boom has caught India when it was unprepared and everybody is competing for the limited supply of skills.

There are around 1,300 engineering colleges that have been approved by All India Council for Technical Education. Near about 4 lakh students pass out every year from these colleges. Of this, civil engineering graduates account for a mere one tenth. Contrary to this, the highest strength is of computer science graduates and information technology.

However, the lack of manpower exists at all level thereby hampering the growth of the sector to a large extent. As far as real estate companies are concerned, several large players are there who resort to in house training.  For example: L&T holds campus recruitment for both graduates and polytechnic engineers at the entry level.  It provides training to about 1,000 people every year in its Chennai Centre whereas the need seems to shoot up in future.

The National Academy of Construction has begun several training programmes for skilled trades at institutional level. Likewise, the industry has adopted it is in Indian states like Punjab, Haryana, and Himachal Pradesh to redraft the curriculum to cater to the demanding needs of the country.

Finally yet importantly, the Indian real estate industry needs quality manpower then the mere workers claiming to hold proficiency. There is no uniformity maintained in the absence of necessary laws. What the sector actually needs is licensing of construction workers the way it is for drivers.

Real Estate Academy for Developers to Come Up in Pune

Pune’s property developers are soon to establish a Real Estate Academy for Developers (READ). The move is taken to stay in step to fulfill the requirement of qualified and trained professionals to manage the growth.

The Promoters and Builders Association of Pune (PBAP) is looking forward to set up a real estate project worth Rs.1.48 crore. The institute would use its own capital and has its own faculty. The institute will nurture the future leaders of Indian real estate sector.

Undoubtedly, Indian real estate is making rapid strides. But, the lack of professional assistance is what hampering the growth of the industry thereby lacking in the sources to cater to demanding business needs and handle critical aspects such as financial management and project management.

The first academic year of PBAP will start in June 2007. READ will be an independent institute which would offer an 18 month full time post graduate diploma in real estate business management. Considering the needs of working executives, the institute will offer a 12 month part time advanced diploma and a course for family businesses.

The institute is also planning to tie up with global education institutes including National University of Singapore, Institute of Real Estate Management, Hong Kong, Lincoln Institute and the German Technical and Vocational Cooperation programmes.

READ will be an addition to already existing prestigious institutions in the city of Pune, which includes the name like National Institute of Construction Management and Research.

DLF Enters JV with UAE Co Nakheel

India’s prominent real estate developer, DLF and Nakheel, a large builder from the UAE, signed a 50:50 joint venture for two integrated townships which would come up over an area of 40,000 acres in India. The project will use a handsome investment of USD10 billion.

Nakheel is a private enterprise that operates under the umbrella of Dubai World. At present, the company has 17 major construction projects worth more than $30 billion. Nakheel’s portfolio comprises of a number of projects in UAE such as The Palms, Dubai Waterfront and The World.

JV envisages constructing 20,000 acres each in cyber city of Gurgaon, Pune, and Maharashtra. The construction work is likely to be on track this year and the first phase of development is expected to be over within three years. Contrary to this, the development may take a decade to be completed, says Bloomberg.

The land will cost up to 40 percent of the USD10 bn investment. However, 70% of the land is believed to be under DLF.

Emmar-MGF is known to be Nakheel’s main competitor in residential development in Dubai. Emaar operations in India as a 50:50 venture partner in Emaar-MGF. The JV plans to compete with DLF in Gurgaon. By the time DLF awaits the nod from the Securities & Exchange Board of India for its Rs 13,600 crore IPO, the company has in the past one year announced more joint ventures.

Also, it has plans to step into the life insurance segment with a 74:26 joint venture with US based Prudential Financial.

The other JV partners of the company include the prominent names such as Hilton Hotels, Feedback Ventures and the UK based firm Laing O’Rourke.

Timely Payment with Timely Allocation of Land, Says Parsvnath

Parsvnath Developers, one of the leading real estate development companies in India, is to be considering the issue of payment of a whopping Rs 100 crore to the Chandigarh Housing Board (CHB) after the controversial issue of less allocation of land to them for the development of a residential project at the IT Park. This may put execution of the project on hold.

CHB officials would provide some alternate land plots to property developers. The issue is under the consideration of the board. However, the developer cannot delay the payment of installment, says a senior CHB official.

Parsvnath Developers require paying a total amount of Rs. 821 crore to the CHB. The amount has been divided into six installments. The next payment of Rs 100 crore is to be paid by April 6, 2007.

Other issues related to allocation of land have come into limelight after the UT administration and Haryana Urban Development Authority (HUDA) decided on to conducting a joint survey. Data showcased by the survey reveals an allocation of 1.24 care of land to property developers. The figure was out of 123.70 acres of land. Earlier, the UT Administration did not conduct demarcation of land in an apt way and less land allocation was found during the survey.

The company has written to the CHB regarding the issue, says PK Jain, Advisor, Parsvnath Developers Private Limited. The decision of making the payment to CHB largely depends on the allocation of land which will further encourage the timely execution of the project.

Increasing Real Estate Projects in India

A substantial increase has been seen in the number of real estate projects in India which have shown a mark appreciation from around Rs 30-60 crore, to between Rs 500-2,500 crore at present day.

Apart from the 200% growth in the past few years, real estate projects including commercial, residential, and retail is likely to reach sky high. This is one of the leading factors accountable for increasing property prices across the board. The first phase of the 2,504 acre hi Tech Township by Ansal Properties and Infrastructure Limited in Greater Noida, is estimated at Rs 20,000 crore.

However, such exclusive real estate projects are an addition to the prevailing projects ranging from Rs 500 crore to Rs 2,500 crore. Unitech, a leading property developer in India, is making an investment of Rs 2,500 crore in a mega integrated residential project, also in Greater Noida.

Natraj Buildwell Ltd. has come up with NRI hills-International City at Jaipur. The project contains the investments of Rs. 1,000 crore. The cost of Alpha G: Corp’s Project, Alpha International City, Karnal is determined to be 600 crore. Different projects of the renowned property developer, Parsvnath include Parsvnath Privilege at Greater Noida (Rs 35 crore ), Parsvnath City at Dahruhera (Rs 450 crore), a 5 star hotel and multiplex-cum-mall at Vijalpur, Ahemdabad (Rs 250 crore) and a shopping arcade at Rohini ( Rs 231 crore).

These high prohibitive real estate projects give an indication of the next real estate boom. Replying to the same, Manish Uppal, MD, Uppal Housing, holds positive perspective about the real estate growth in the country.  However, the factors that are playing a critical role in the rising project costs include increasing cement prices and the developers’ vision to offer newer and quality construction.

Nandigram Issue to Affect the Real Estate Growth

The newest real estate trend in India, which talks about construction of special economic zone (SEZ), has proved itself a catalyst in boosting the economic growth of the country. And, the Nandigram (West Bengal) debacle has come up with some serious issues. The most important of all is to put aside the common interests of common man for the mere sake of profitability.

Likewise, the property developers must see to safeguarding the interests of industrialization and economic liberalization from limited profiteering angles. The real estate industry must look towards the implication of more important parameters on the development of SEZs in addition to the prevailing ones. The whole issue is far too vague.

The Nandigram issue is certainly going to have a negative impact on the domestic and international investor community. It could be a major step backwards in terms of the country’s stand of being able to maintain progressive economic growth. No potential investor would like to spoil his rapport by being a part of such issues by ways of due compensation to and rehabilitation of original landowners.

After Delhi, Bangalore to be the Next Maximum City

The Garden city of India, Bangalore is to witness amazing developments in its residential sector. Real estate developers are known to have fastened their seat belts to offer exclusivity to prospective buyers in the city.

With a European style villa, skyscraping residential complex having a single apartment on each floor, and an apartment with its own helipad, the days are not far enough when Bangalore will be counted among the most sought after cities in the world.

Demanding requirements of the status conscious populace and their westernized tastes of better quality accommodation and non resident Indians pondering over to return back to roots are some of the leading factors encouraging real estate developers to come up with the decision.

After Mumbai and Delhi, it is now the turn of country’s IT hub Bangalore to witness the trend of residential resorts. Earlier, these cities did not have the adequate supply of high end developments even in peripheral residential localities. Prominent property developers capitalized on the growth of a high society people who are ready to shell out large money to pay a premium for a quality product that almost promises an exclusive neighborhood.

What was unique, perhaps unheard of even in Mumbai and New Delhi, was that the developers selected the occupants of the apartments themselves, making the neighbourhood exclusive. Each floor has a single 5,500-odd sq-ft apartment. The first apartment was sold for Rs 3 crore, and the last, Rs 9 crore.

The trend got the track when the city based real estate developer, Mantri Developers came up with its Rs. 40 crore, 17 floor super premium residential project ‘Mantri Altius’ to be built over an area of 85,000 sq ft in one of the central locations. The project was launched in 2006. The decision of the developers to choose the occupants of the apartment themselves makes the Alitus first-of-its-kind residential complex.

Interestingly, Altius turned out to be a big success, and drawn large demand for such elite apartments. High-end apartments are those priced in the range of Rs 1-3 crore. It paved the way for such more projects in the city.

There would be 500 apartments (combined); one would come up in South Bangalore, while the other will be in North Bangalore.

SEBI Tightens IPO Norms for Real Estate Companies

The stock market regulator has tightened the disclosure norms for real estate companies raising money through shares thereby putting an end to unsubstantiated claims regarding the extent and valuation of these companies’ land banks.

The Securities and Exchange Board of India (Sebi) has also made it compulsory for all initial public offering (IPO) to be rated by the agencies and the grading of IPO will come into effect immediately.

All real estate companies raising money through stocks will require disclosing the details about their land banks. In addition, they will have to submit the ownership status or an agreement to purchase the land.

These companies must project the valuation of land bank on the basis of the land’s current value irrespective of the future appreciations, says Sebi Chairman M. Damodaran.

The decision taken by the regulators holds significant importance, says Sameer Kamdar, country head of Mata Securities India Pvt. Ltd.

Real estate companies are to raise Rs 16,000 crore in 2007 through IPOs. And, near about 35% of the Rs. 45,000 crore was likely to be raised through about new listings. Taking a walk back in the year 2006, around Rs. 20,000 crore was raised from the public by 73 companies. Of this, Rs 4,000 crore was believed to be raised by the real estate companies.

Property developers who have already filed permission to launch IPOs may be asked to submit substantial details before giving them the final nod. The shift is believed to bring transparency in the fragmented real estate market in India.

An Introduction to HUDA

The Haryana Urban Development Body (HUDA), a statutory body of Haryana Government, was constituted to promote development of urban states with the prime authority to manage, sell and dispose off the lands/properties to the best advantage of the states and government.

Apart from undertaking construction works, the authority is also committed to make available developed land to for providing houses to economically weaker sections of society. With the efforts taken up by the HUDA, Haryana is today standing on the threshold of development. The cyber city of the state, Gurgaon, is a prime example that serves as a role model for a number of other upcoming cities.

HUDA has various wings including Urban Branch, Engineering, Town Planning and Architecture, Financial, Legal and Monitoring, all of which makes an excellent administrative set up.

HUDA has recently auctioned a five acre plot for a hotel site in Gurgaon. The plot has fetched Rs. 255.20 crore and the reserve price for this site was pegged at Rs.163.9 crore.

The authority keeps on announcing different housing schemes from time to time. Recently, financing for the free hold residential plot scheme by HUDA in 19 urban states of Haryana, has emerged as a golden opportunity for the banks in the region. The authority itself envisages earning a whopping amount as interest on earnest money.  Indeed, HUDA got 20 lakh application forms printed for this scheme, which ended on 22 March 2007.

Applicants having application receipt number can check the status of their case online by browsing through the following link:

http://huda.nic.in/result.html

A View on Delhi Hotel Industry

Driven by an increase in number of leisure and business travelers, hotel industry is likely to zoom away in near future. With an array of hotel projects across the metropolitan cities like Mumbai, Delhi, Chennai, and Bangalore, hotel rooms in India are likely to grow even beyond their current highs.

Catering to the demanding requirements of its increasing tourists, Delhi has a multitude of luxurious hotels offering top notch hospitality and leaves an everlasting impression on the visitors’ minds. Hotels in New Delhi are better known for their royal treatment of guests and worlds class services.

The hotel industry in Delhi has been categorized into various segments including five star hotels, four star hotels, three star hotels, budget hotels and others. Most of the hotels in New Delhi are positioned in proximity to the tourist attractions and business areas. The place where you can find all these variations is Connaught Place, the heart of Lutyen’s Delhi and the most happening place filling tourist’s cup of delight.

Apart from providing the guests with an outstanding experience embracing history delicately supported with the comfort of modern conveniences, hotels in Connaught Place offer inexpensive accommodation as well.

Among the most famous hotels are the luxury hotels of New Delhi which include the prominent names such as Hyatt Regency, Maurya Sheraton, Le Meridien, Hotel Ashoka, InterContinental the Grand, and Hotel Taj Ambassador.

Despite the availability of good hotels in New Delhi, the scarcity of hotel rooms is likely to persist well beyond the Commonwealth Games to be held in 2010. This has encouraged a number of hotel majors to plan to build premium hotels in the region.

Consequently, more budget hotels including two, three, and four star hotels and convention centres are likely to be come up in the NCR of Delhi which will take the pressure of room tariffs following the five year tax holiday.

A major part of the development in Gurgaon and neighboring Noida is owing to the Commonwealth Games to be held in NCR in 2010.