Indian Property News on 'October, 2007'

Sobha Carnation’ in Pune

Bangalore based Sobha Developers Limited is soon to come up with its first residential project ‘Sobha Carnation’ in Pune. Located in NIBA/V Khondwa area, the location has scenic surroundings and picturesque beauty in the background

The project would be developed in phases. The first phase will spread over a large area of 5.7 acres of land. It will feature 116 luxurious 3-4-bedroom apartments, a few duplex apartments and penthouses.

The company boasts to provide world-class amenities to make it to a luxe living experience for residents. The project cost is around Rs 120 crore and is scheduled to be completed by December 2009.
Interesting Facets of Project
Sobha is bringing the project on 17 acres with dedicated green cover. The land will have 4 penthouses, 16 four-bedroom duplex houses, high-rise residential blocks with expansive 64 three-bedroom/32 four-bedroom apartments..

There will be a state of art club measuring 1,000 sq mt for leisure lovers. Other highlights of the ‘Sobha Carnation’ are a gymnasium offered with steam, sauna and Jacuzzi, multipurpose party hall, table tennis room, reading, card and carrom room, and creche.

The ongoing developments show that Sobha Developers has certainly fastened its seat belt to make it BIG in Pune residential sector.

A View at Puravankara’s Net Profit

Puravankara Projects (PPL) records a hike of 114% increase in its combined net profit for the second quarter (Q2) ended September 30, 2007. The company’s consolidated net profit for quarter (Q2) of the current financial year stands at Rs 60.21 crore whereas it is Rs 28.19 crore for the corresponding quarter in the previous fiscal

There is a sharp increase in PPL’s net profit margins that are believed to have escalated to over 42%. Revenues have increased by 45% to Rs 141.01 crore from Rs 97.34 crore because of the developable area of current projects increasing to 14.90 million sq ft with projects in cities including Bangalore, Chennai, Hyderabad and Mysore.

Net profit margins have considerably risen to 40% in the current quarter owing to higher gross profit margins and low sales. And, there is a decrease in general and administrative expenses, which have been accounted to reduce to 7.36% of revenues, this quarter.

As far as operating results are concerned, Puravankara Projects show satisfactory signs for both the quarters. The company has significantly strengthened its position in the market, thereby carving a niche for itself. The cash balance of Rs 550 crore of the company is further supported by negotiated bank borrowing limits, along with fully paid high quality land bank

DIAL Attracts Interests of Hotel Majors

The proposed project of modernizing Delhi’s airport By Delhi International Airport Private Limited (DIAL) is attracting large interests from leading players in Indian and international real estate and hospitality industry to develop 45 acres of commercial land near the international terminal.

The company has so far considered 15 applications, of which, 9 have been short listed and four will participate in a competitive bidding process.

The list of short-listed list includes the prominent hotel chains such as Delhi-based Claridges, European hotel chain Accor and US-based Starwood (which owns the Le Meridien and Sheraton brands). As far as short-listed real estate firms are concerned, they are Emaar MGF, Parsvnath, Omaxe, Vipul, DB Realty, Pacifica and Marathon.

Applications under consideration are from top hotel chains ITC, Indian Hotels and Lemon Tree and engineering and construction giant Larsen & Toubro.

DIAL had invited 45 applications to develop hotel under different categories of the ‘hospitality district’ to come up near the international terminal. The district will feature premium, budget, business, upscale, and convention hotels to cater requirements of all visitors.

Mumbai Properties for Just A Few Thousand Rupees

Here’s something about Mumbai properties which is truly surprising.

Many millionaires pay a few thousand rupees annually as lease rent for some of the most expensive Mumbai’s properties they hold. The leases for such properties have been expired long ago but the state government was in no mood to take any initiative to renew.

Indeed, the bungalow of the famous actor Shah Rukh Khan is leased out to him at mere Rs 2325 per year. The property is located in one of the costliest areas of Mumbai. Incidentally, he bought the property on an expired lease.

The issue is not just restricted to residential property. Many business houses and hotels in areas such as Mahalaxmi, Juhu, Bandra, and Dadar are rented out by the government on 3 to 99 year leases.

There are 53 such expired leases in Mumbai that accrue only Rs 7 crore to the state government.

The government is planning to release a new policy to calculate the rental value. The leasers started seeking legal assistance when the official asked them to renew the market value. The consultants hired by the government will recalculate the amount, by the end of December, says Rajendra Shingane, MoS, Revenue Department, Maharashtra Government.

Hirco to Invest $198 mn in Mumbai Township

Indian property developer Hirco put $198.1 million in a 280-acre mixed Township development project in proximity to Mumbai.

The Panvel Residential Township, which comprises 18.3 million square feet of planned residential and retail space, is situated near the planned second Mumbai International Airport. The project is very close to Mumbai’s Central Business District.

The Township is designed to cater increasing demand of residential property from India’s middle classes in Mumbai-Pune growth corridor. The company is likely to offer flats, townhouses, villas, healthcare facilities, and other amenities required to create an excellent structure.

The Township will be located adjacent to the Panvel Commercial Township development which the Hirco began in July.

The combined Panvel site was recently given the title of Special Economic Zone (SEZ), a status which brings special tax privileges on investors and occupiers.

The township was first identified as a possible investment opportunity at the time of Hirco’s admission to London’s junior stock exchange, AIM, in December 2006.

The Township was earlier seen as an excellent investment prospect at the time of Hirco’s admission to London’s junior stock exchange, Alternative Investment Market (AIM) in December 2006.

Uppal Housing to Invest Rs 1,500 Cr in Hotel properties

Delhi based Uppal Housing Private Limited will invest a whopping Rs 1500 crore to develop hotel properties in India over the next 2-3 years.

The Group is planning to set up five star hotels in Pune, Hyderabad, Bangalore, Goa, and Chennai and has two five-star hotel properties under development in Gurgaon and Chandigarh.

The Group may tie up with prominent names in the hospitality sector to manage new properties. It will raise capital through debt, internal accruals and by raising funds from private equity players. If required, the company may garner funds through the IPO route.

Uppal will soon develop an exclusive mall to be christened as Centra Mall and luxury apartments called Uppal’s Marble Arch in Chandigarh. These projects will involve the investments of Rs 100 crore and Rs 250 crore respectively.

Airport Project to Hit Castor Areas in AP

The booming real estate of Hyderabad has brought a bad time for the agriculture sector in the city. The new airport project at Shamshabad has hit the castor crop field in Mahboobnagar, which leads in castor area in Andhra Pradesh.

Out of the normal area of 1.42 lakh hectares, castor has been in 1.24 lakh ha during the Kharif season, which ended earlier this season.

The total castor area in Andhra Pradesh for the year is put at 2.35 lakh ha this year against 2.02 lakh ha last year. The average for last three years is 2.70 lakh ha. The state has acquired some new castor fields in districts like Kurnool; the loss in the traditional areas could not give a push to its national share of 25%.

The proposed airport project falls in Rangareddy District. Castor area has already reduced by 30-40% in the past to years here and Nalgonda district. Now, the project will force the farmers to loose the remaining area as well.

No farmer will grow castor if they would be getting a whopping Rs 1-2 crore for an acre, says Mr. Rajender Prasad Agarwal, President, AP OIL Millers’ Association.

Akruti Plans Rs 1,500cr for Pune Realty

Akruti City (formerly known as Akruti Nirman), a prominent name in Indian real estate is considering expanding its activities in Pune by developing high end buildings to cater to commercial as well as residential requirements, IT Parks, and Special Economic Zones (SEZs).

The company has already started the development of a SEZ for IT sector in a joint venture with DLF, the real estate major. The project will come up at Hinjewadi near Pune.

The first phase of the project is already sold, informs Hemant Shah, Chairman, Akruti City. The company holds a land bank of around 150 acres around Pune and will commission a multitude of other real estate projects which are schedule to be completed over the next three years, says Shah.

The total area of development will be around 12 million sq ft for which a capital of Rs 1,500 crore is planned, he adds.

Akruti City plans to enter high growth property markets of Bangalore, Delhi, Gurgaon, and Gujarat. The land acquisition in these markets is being actively pursued and some projects are likely to be announced in near future.

Ishaan Picks Stakes Worth Rs 1,082-Crore In K Raheja Projects

Ishaan Real Estate, the first real estate fund listed in the London Stock Exchange Alternative Investment market (AIM), has acquired 40% stake each which makes a total of Rs 1,082 crore in eight construction projects by K Raheja Corp.

The list of these projects are as follows: Inorbit shopping mall in Hyderabad, Inorbit shopping mall and IT park in Pune, Mindspace IT park in Hyderabad, Mindspace IT park in Navi Mumbai, two Mindspace IT parks in Hyderabad, Commerzone IT park, hotel and retail development in Bangalore, and Viverea residential development at former Hindustan Spinning & Weaving Mills site in Mahalaxmi at Mumbai.

The projects include three IT Parks, two shopping malls, and a hotel. In November 2006, the company raised a whopping £180 million in its first phase from the AIM market. The capital was to be used in K Raheja’s properties in India.

At present, Ishaan’s portfolio in India has a total of 15 million sq ft. The company has also secured leasing agreements for over 1 million sq ft. Currently, Ishaan shares are trading at around £104.

RBI Asks Govt to ban automatic FDI in Real Estate

The Reserve Bank of India has asked the government to open the doors for Foreign Direct Investments (FDI) into real estate sector only after the clearance from Foreign Investment Promotion Board (FIPB).

Currently, up to 100% FDI is allowed in realty projects on automatic route if it complies with certain conditions like a three year lock in period on investments and minimum capitalization of $5 million.

The RBI wants to take property market out of the sectors which allows FDI through the automatic route. It wants inflows routes such as participatory notes and private equity contained. SEBI is planning moves to curb funds coming through P-notes.

The government however supports the SEBI action but may not change its mind regarding other suggestions, especially restricting FDI.

Since the property market received large quantum of inflows in April-July, 2007 i.e. $627 million, surpassing the total inflow received in the last two years: $38 million in FY06 and $467 million in FY07, the concern of RBI is justified.

Since construction companies don’t have the permission to raise external debt, they are using other tools such as compulsory convertible debentures and offshore SPV for borrowing the capital abroad and then funneling the funds to the parent in India as FDI.