Indian Property News on 'September, 2007'

Govt. to Bring a Regulator for Delhi Property Market

Stepping up the efforts to bring greater transparency in Delhi real estate, the Union Government is considering setting a regulator to address builder-consumer complaints in the Capital. The plans will be reinforced and executed within six months, says Mr. Jaipal Reddy, the Union Development Minister.

The regulator will be a quasi-judicial authority to be headed by a famous personality, informs the minister while addressing the inaugural session of an international real estate conference summit, organized by Federation of Indian Chambers of Commerce and Industry.

The regulator would be established with the backing of model legislation. However, the issues such as the land prices would not be handled by the regulator.

The Union Government requires encouraging State Government to pursue the suit, as land was a State subject, with whatever changes they would find suitable to incorporate.

Setting up a regulator for Delhi real estate is a welcome step by the Government. Builders who follow fair practices say that some common consumer complaints were registered of the same property in the names of two or more buyers and not delivering the promised.

DLF Secures Fourth Position in World’s Realty

Indian real estate giant, DLF, has secured the fourth position for itself amongst the world’s largest realty players. The rank has been given on the basis of market capitalization. DLF’s market cap is Rs 1, 28,563 crore.

Also, the company has recently listed on bourses raising $2.4 billion of funds. Having appeared in the list in such a short span of time has been the biggest milestone for the DLF.

Other players in the list are Hong Kong based Sun Hung Kai, Country Garden, and Cheung Kong, and Japan-based Mitsubishi Estate Co. DLF accounts for 7% of the total profits earned by the top five companies and 4% in terms of sales and contribution. The phenomenal market cap is an indicator of the high valuations by investors because of the growth witnessed by DLF.

Indian property market has come of age. There was a time when Emaar Properties and Capital Land, the biggest developer in South-East Asia, were seen as the unbeatable competitors in Indian industry. Today, DLF has left everyone behind in the race.

Indian Realty to Grow by 33% by 2010

The real estate market in India is expected to grow at 33 percent between 2005 and 2010, and increase its worth from $12 billion to $50 billion.

Indian property market is likely to grow at 33% between by 2010. There is a significant increase in its market size from $12 billion to $50 billion. Total housing spend is likely to grow at a CAGR of 18.60% from Rs 171,800 crore in 2005 to Rs 403,400 crore in 2010.

With properties in Bangalore, Hyderabad, and Chennai zooming upwards, other Indian cities are also surrendering to the allure of booming real estate market.

Needless to mention is the support and the boost given by the IT/ITEs companies, with a capital flow into commercial real estate in these cities over the next three years estimated at more than Rs 23,200 crore.

Bangalore had the highest absorption of land at 11.5 million square feet, and Hyderabad emerged as the main competitor to come ahead with Bangalore.

Following in footsteps of Mumbai and Pune, the real estate market of Mysore will help the city to become a twin city to Bangalore. Southern states continue to lead in economic performance due to the IT industry.

The tier-II cities are also gaining in popularity with IT companies looking forward to expand. However, the biggest roadblock for them is the lack of infrastructure and smaller workforce.

Retail sector in India has numerous opportunities to grow. Delhi has 41% of the share in real estate retail; Mumbai 20%, whereas Bangalore and other southern cities lack behind at 5%.

Emaar to raise $1.5bn through an IPO

Emaar MGF Land Private Limited is planning to sell 10% stake through an IPO in India, which is expected of raising around $1.5 billion (depending on the market condition) to make it the country’s biggest listing.

40% of the company is owned by Dubai’s Emaar Properties whereas MGF Development has 60%.

Formed by Emaar Properties PJSC and MGF Developments Limited of India, Emaar MGF had filed a prospectus with the India’s market regulator. The company would offer up to 111.74 million shares in the sale, including a pre-IPO placement at a price to be decided through a book-building issue.

The regulator will take around a month to approve the issue. Once the company gets nod, it will then offer shares in the next three months, inform bankers.

The market condition will decide about the prices of the issues to be released.  In case, the market rises to 18,000 or 19,000, it would be a different story altogether, says a banking source.

DLF to Adorn Kolkata Realty with Rs 700 Cr project

DLF, the most prominent name in Indian real estate, is all set to its second IT Park with an investment of Rs 700 crore.

The Park will come over a large area of 25 acres and will accommodate 2.5 million square feet of IT/ITes companies. The project will be developed in different phases.

The first phase of the IT Park is likely to be completed by 2007-end.

The IT Park will cater to the requirements of the both domestic and foreign IT/ITes companies.

And, the project is believed to generate large job prospects for around 40,000 individuals, directly or indirectly, informs DLF.

Yatra to raise capital for realty projects in India

Yatra Capital, a Euronext listed Indian real estate fund, will raise $211 million to make investments in commercial, residential and retail property in the country.

The funds will be raised by selling shares to institutional investors, informs Ajoy Veer Kapoor, Director, Yatra Capital.

Investors are bullish on putting large funds in Indian property market. And their appetite to make investments is growing day by day, adds Kapoor.

India is also attracting large interests from cross-border investors as there is a surge in demand for commercial and residential spaces.

The market is likely to grow 8.5 per cent in the year to March, following an average 8.6 per cent growth over the past four years.

In 2006, Yatra raised Euro 100 million by selling shares to investors such as Aviva, Fortis, and Standard Life, a unit of ING Group.

The fund expects to grab the attention of the investors from UK and Europe.  India’s real estate development market may increase more than sevenfold to $90 billion by 2015 from $12 billion in 2005, Moody’s Investors Service said in June.

Yatra has invested €88 million to develop residential, shopping malls, and hotel properties in Bangalore and tier-II cities including Pune, Nashik, Indore, and Bhavnagar.

Companies like the Housing Development Finance Corp (HDFC), Infrastructure Leasing & Finance, and Kotak Mahindra Bank are also looking forward to raise funds to invest in unlisted developers’ projects in the country.

Swan Mills to start real estate projects in Mumbai

Mumbai based Swan Mills Ltd is planning to come up with commercial and residential real estate projects in the city with a total saleable area of 1.85 million sq ft.

Among the projects, the most notable ones would be a residential project at Sewari in Central Mumbai and a commercial project in Kurla. Both the projects will have different saleable area; 950,000 sq ft for the Sewari project and 900,000 sq ft for the Kurla project.

These projects are scheduled to be completed by March 2009. The company has joined hands with Peninsula Land Ltd for the management of the real estate projects in Mumbai.

The role and responsibilities of Peninsula India Ltd. will be limited to management and marketing of the projects. And the cost of the two projects will be in books of Swan Mills Ltd.

Peninsula will be given 22% of the total revenue to come from Mumbai projects. 70% of the flats in Sewari project have already been completed whereas the Kurla project is yet to start, informs a senior company official.

Tier-II/III Cities Continue to Fuel Real Estate Growth

Of cities nominated for the emerging markets for real estate investment, Surat has topped the chart, says the data showcased by the FICCI- Ernst &Young, the India-US CEO Forum.

The city has been making rapid strides on the back of its residential property sector for the last couple of years. There is large residential development in the localities of Vesu and Damas.

The Gujarat Government has recently signed a Memorandum of Understanding worth 1.418 crore rupees with builders to develop integrated townships in Surat. According to the report, land prices in the city are also zooming upwards and appreciated by 30 to 50 percent over the past year.

Also, the study shows positive signs about the peripheral areas of Punjab such as Mohali and Panchkula.

Chandigarh has attracted a whopping investment of Rs 4,322 crore, which is likely to give another strong boost to the city real estate.

Close on the heels of these cities is Nagpur which is nowadays being regarded as another good bet for property investment. The city is a favourite among IT companies after Mumbai and Pune.

Other Indian cities joining the upcoming destinations for property investments are Vishakhpatnam, Vadodara, Jaipur, and Tiruvanthapuram, followed by Kochi, Nashik, Indore, and Ludhiana.

DLF bids highest for Tidel-II

DLF Ltd, India’s largest real estate development company, has emerged as the highest bidder for establishing the Tidel-II, the second IT/ITes SEZ in Chennai.

DLF made a bid of Rs 26.07 crore an acre for the 26-acre property at Taramani and take the total bid amount to Rs 660 crore in the closed bids called by Tamil Nadu Industrial Development Corporation.

DLF bid at a rate of Rs 5,757 per sq ft for the property including 11.32 lakh sq ft. Other real estate developers bidding for the property were Ascendas, RMZ Corp, and Prestige Group.

The property is located adjacent to American International School off the IT corridor. The land will see over 2.6 million sq ft built up space. There was a stiffer competition among the developers as the project is likely to be one of the significant landmarks in Chennai.

Since monthly IT space lease rents in the area hover around Rs 47-50 per sq ft, the bid is believed to be an attractive investment. It could be well covered under the project with cost including the land costing Rs 1,500 crore.

The project is likely to strengthen Chennai’s position as a centre for IT/ITes companies. With a high proliferation of IT companies in Chennai, demand for commercial properties or rental properties are likely to increase.

Walton St Cap, Starwood Cap to join hands with Shriram Properties

Shriram properties, a prominent name in South India property market, is partnering with funds sponsored by Walton Street Capital and Starwood Capital Group to develop a Rs. 5,000 crore integrated township in Kolkata.

The company seems highly excited about the venture with Walton Street Capital and Starwood Capital, both of which enjoy substantial presence in constructing destination properties. These management firms will definitely give a major facelift to Kolkata real estate.

Their first project in a joint collaboration will include 20 million square feet of residential, commercial, retail, and civic infrastructure. The project will come up on the land that previously belonged to the Hindustan Motors plant in Uttarpara.

Starwood Capital and Walton Street Capital will remain closely involved in working with Shriram Properties for execution of their first project. The design for the project has been created by the largest US based architectural firm, HOK.

The company is taking care of every aspect to make the Kolkata project successful. Walton Street has been developing a relationship with Shriram Properties for past few months, says Sourav Goswami, Managing Director of Walton Street Capital India Private Ltd.

Based on the partnership between firms of international repute, the project includes highly complex real estate transaction. Starwood Capital is committed to play a significant role in creating an integrated Township featuring the world-class facilities.