Indian Property News on 'May, 2008'

Country Club India Buys UAE’s Chelsea Hotel for Dh165m

India’s largest leisure and infrastructure company, yesterday announced the takeover of Dubai-based luxury hotel, Chelsea Hotel for Dh165 million.

Following the takeover, which could mark the beginning of large-scale participation by Indian hospitality industry majors in Dubai’s booming hospitality sector, Chelsea Hotel was re-christened The Country Club Hotel.

CCIL’s buyout of Chelsea Hotel marks its first step towards global expansion. Dubai, with its strategic location, would house CCIL’s international headquarters. Additionally, through acquisitions and joint ventures, CCIL will set up similar club facilities in other parts of the UAE and the Middle East region.

Rajiv Reddy, Chairman, Country Club (India) Limited, said: “Being one of the most dynamic cities in the world, Dubai is truly a melting pot of different cultures and it is the ideal location for businesses intending to cater to an international audience. Moreover, with a visionary like His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE and Ruler of Dubai, in charge with a clear mandate for promoting tourism, the hospitality sector in Dubai shows a lot of promise. Similarly, we see immense potential for tourism growth in the entire region.”

Elaborating on CCIL’s expansion plans he added: “The acquisition of Chelsea Hotel is just a significant part of our Dh1 billion strategic expansion plan. In fact there have been several important acquisitions by CCIL in the recent past, which have kept us on a high growth curve. These acquisitions running into Dh175 million over a period of four months, saw CCIL take over properties in cities such as Mumbai, Chennai, Pune, Delhi, Kochi, Kolkata, Ahmedabad, Vadodara and Surat. Additionally, we have identified Mauritius, Singapore, Malaysia, Poland, and other European countries for our global expansion,” he added.

Foreigners Violated FEMA to Buy Land in Goa

The investigating officer of the Enforcement Directorate (ED) has completed the inquiry and submitted the report to the Adjudicating Authority in 12 cases of foreigners having violated provisions of the Foreign Exchange Management Act (FEMA) while buying land in Goa.

The investigation officer A K Singh, who is the assistant director of Enforcement Directorate, has submitted the report in 12 cases and the final outcome is expected in near future. “We have concentrated only on the big cases involving the citizens of Russia and United Kingdom,” Singh told Herald in a telephonic conversation from Mumbai.

He further said that these deals have run into crores of rupees and the Adjudicating Authority would decide on the penalty depending on the nature of the deal.

“If there are any illegalities found the Authority will decide whether to attach the properties,” he said. However, he refused to divulge how many such cases have come to his knowledge during the course of investigation.

He said the RBI and the ED will now start doing the needful in the cases. Asked about the fate of remaining cases, totally 286 in number, Singh said that he has been working on them one by one.

“As you know the foreigners come only during season for hearing and the investigations are on hold for long but we have completed the major job and the reports are likely to be submitted soon,” he replied. According to the RBI guidelines, foreigners can acquire immovable property in India — provided the individual has established a branch office or place of business in India.

EMI Holidays Drive Flat Housing Sales

Faced with declining demand for properties, real estate developers are courting buyers with a new offer: EMI holidays.

This trend is catching up in cities like New Delhi and Bangalore where real estate markets face stagnation. Under an EMI (equated monthly installment) holiday scheme, the buyer only needs to make a down payment of 10-15 per cent of the flat’s cost and does not need to pay EMI till he gets possession. However, the buyer has to arrange the loan and the builder will pay the interest till the flat is handed over, in about 18-24 months.

According to a recently released report by Citigroup, developers like Parsvnath, Uppal’s, RPS Group, Gaursons India, Triveni Infrastructures and KDP Infrastructure are offering this scheme in select projects in NCR Delhi.

“We see these schemes as substitutes to discounts for boosting transaction activity,” Citigroup analysts Ashish Jagnani and Aditya Narain wrote in their report on the Indian realty sector. “While this is expected to indirectly impact developer realizations by 18-20 per cent, it will provide near-term funds for construction.”

Big developers, who are still flush with funds, are yet to join the bandwagon. Developers, which are facing credit crunch due to lack of funding from private equity players, appear to be exercising this option.

“We are giving the monthly installments towards loan, provided the customer has opted for down payment and not construction linked and the loan tenure is for 20 years,” said Praveen Jain, chairman and managing director, Parsvnath Developers. The schemes is aimed at insuring the timely delivery of flats besides providing them (buyers) the comfort of not paying rent as well as monthly installments simultaneously, he added.

Others are packaging discounts in the form of EMI holidays. “We are giving a discount of 15 per cent for down payment customers, which is industry trend,” said Rahul Gaur, managing director, Gaursons India. “In case customers borrow from financial institutions, we are offering discount equal to 24 months monthly installments through post-dated chouse.” The situation is different in Mumbai, which is yet to see this trend, but which experts believe should make an entry into the city soon.

“It is yet to be implemented in Maharashtra but several builders are thinking to start offering EMI holiday scheme here,” said Mahesh Mudda, chairman of the Mumbai chapter of Builders Association of India (BIA). Most developers will hold on to high prices in the short-term. Things may change in the medium-to-long term, according to real estate industry experts.

However, experts also warn that buyers should wait before committing for such a deal as prices are set to crash in the next few months. Developers are holding on to their higher price levels despite a dip in demand for properties.

“Buyers are advised to understand this trend before buying a house, even in the light of special offers like EMI holidays,” said Raminder Grover, CEO, Sandalwood Residential Services, Jones Lang Lasalle Meghraj a global real estate consultancy.

“It is possible that the area they have chosen may see a drop in rates over the next six to eight months.”

According to Manohar Shraff, a real estate agent in Navi Mumbai, Diwali could be the right time to test the patience level of builders.

“Small builders here are in the lurch but they will hold on to the price line till Diwali,” he said.

Hit by Slowdown, UK Property Investors Look to India

As property prices continue their downward spiral in Britain, NRI investors here are looking to India, which is increasingly seen as a hotspot due to rising real estate prices across the country.

Every week, leading mortgage lenders and estate agents publish figures of declining prices, higher number of houses on the market, fewer buyers and smaller numbers of new mortgages being advanced.

Except in several areas of London, property prices all over Britain have recorded at least a two per cent drop in the last year due to the credit crunch.

The slowing of Britain’s property market has led to several individual and institutional investors looking to India and other international hotspots.

India is also seen as an attractive destination due to the Indian government’s recent decision to relax rules for foreign investment in the housing sector.

Several India-specific investment funds have been set up, while British citizens of Indian-origin are increasingly investing in places such as Gujarat, Gurgaon, Bangalore, Chandigarh, Pune and Jaipur.

The investors here are also courted by Indian builders and property agents who organise exhibitions in London, Manchester, Birmingham and Leicester.

Merrill Lynch consultants have predicted a 700 per cent increase in the Indian property market by 2015.

IT, Non-IT Rental Gap Widens in India

The rental gap between IT and ITes office space and others is widening as per the latest report by real estate consultant Jones Lang La Salle, leading to a severe supply crunch for the non-IT segment.

The rental gap, the report says, between the two space types in the same or similar locations, was widening due to the relatively lower development of non-IT office stock, that has led to a severe demand-supply mismatch, increasing the rentals for non- IT office space, both grades A and B, to unprecedented levels in a record timeframe.

IT and non-IT space across India’s major cities ranges from a low of Rs 10 to 20 per sq feet respectively per month in the tier II cities of Pune and Hyderabad to a high of Rs 40-60 in tier I cities of Delhi and Mumbai.

Over the last six years rentals have been growing at a differential rate of 9.4% and 16.5% for non-IT space respectively, resulting in a widening gap between the two.

The trend is present in all the major cities across the country. Around 47 million square feet of space in the IT/ITES sector would be added in the next two and a half years, while the non-IT space addition is pegged at only 12 million for the same period, thus further increasing the already wide gap between the two rentals.

Walk to Work – The new Mantra of Pune, SEZ.

The Blue Ridge IT/ITES SEZ is an international 2.88 million sq. ft. SEZ with an integrated township. Located in the Silicon Valley of Pune-Hinjewadi and being the first notified SEZ in Phase-I it is built on the principles of Facilities, Flexibility and Freedom, the Blue Ridge SEZ is unique in more ways than one. As a customer you get facilities that exceed expectations, flexibility to choose your space and freedom to explore and optimise.

In close proximity to the Pune-Mumbai Expressway, the upcoming automobile hub of Talegaon and Chakan and a mere 2 hours from Panvel, the Blue Ridge SEZ offers top-notch amenities and international work spaces.

A quick drive into this mega project takes you onto a 7 lane road, which ensures zero-bottlenecks and easy vehicular movement. This leads into the 2 level basement car parking. A unique mouse shaped covered waiting area is also planned for those who are waiting for their bus/car pick. There is also a provision for food courts and coffee parlors. Once inside, hi-tech security ensures that your employees and your data is safe and secure. Some of the many elaborate security systems include the analogue addressable fire-alarm system, CCTV, access control system, manned security desk, and a master control room to monitor the entire premises. Of course there’s also a detailed perimeter security to ward off intruders. A specific electric sub-station and 24X7 Generator backup enables you to work round the clock.

The construction of this IT/ITES SEZ is uniquely catered to the customer. The flat plate construction of the SEZ allows for zero beams and no column capitals. Moreover, ranging from15,000 sq. ft. to 50,000 sq. ft. the floor plates are built to suit your varied needs.

A plethora of centralized amenities like the Centralized Business Centers-conference & training rooms, food courts of approx. 40000 sq ft., Gym, Creche, Marina, Malls, Multiplex, 5 Star Hotel and a sprawling Golf Club rounds off this sublime experience.

K Rahea ties up with ServCorp

K Raheja Corp, one of India’s leading real estate and retail companies, has entered into an exclusive franchise agreement with Servcorp, global leaders and pioneers of the fully functional serviced offices and virtual offices’ business, to establish a presence in the fully serviced offices business in India.

Mr Chandru L Raheja, Chairman, K Raheja Corp, informed, “We feel happy to be associated with Servcorp. They are one of the global leaders in the serviced offices and virtual offices business and have a proven track record in the markets worldwide. Servcorp will strengthen the Group’s objective of providing an end-to-end business logistic support to our clients in India. And further grow our breadth in the Realty and Consumer business.”

Mr Taine Moufarrige, Executive Director, Servcorp, added, “We are pleased to announce our tie-up with K Raheja Corp, one of the leading real estate players in India. Since opening our first location in Sydney, Servcorp has grown into a global network of exceptional office facilities. With an unwavering commitment to deliver premium quality business solutions, Servcorp always establish their facilities in premier buildings with unparalleled addresses located in the most dynamic cities worldwide. We hope to extend the similar levels of quality in India too.”

Mr Sunil Hingorani, Senior VP-Finance, K Raheja Corp, who is leading this venture, said, “The partnership will offer fully functional serviced offices to the new ventures. We will offer state-of-the-art Business Centers across major cities in India. The first two centers are located in Hyderabad and Mumbai. The Indian economy is growing at very fast pace and there are enhanced opportunities available for entrepreneur fraternity today. Backed by Servcorp’s international expertise, we are sure that this partnership will be frontrunner in serviced and virtual offices business space.”

Servcorp is about providing total business solutions and offering maximum flexibility to the business ventures. It offers everything that a new business would require, allowing them to focus on the day-to-day running of their business in a cost effective way. All meeting rooms and administration services run on a “pay for what you use, only” basis. Elegant boardrooms, executive offices and a full range of professional and technical support staff, customized to meet the needs of every business contribute to clients gaining a competitive advantage and developing a global corporate image.

To support those businesses that do not have a requirement for physical office space, Servcorp offers Virtual Office packages. Virtual Office clients can take advantage of the prestigious addresses utilizing it on business cards and letterheads, be assisted by a dedicated receptionist who’ll answer calls in their company name or gain international access to boardrooms and meeting rooms. Everything you’d expect from a professional office environment – without actually having an office!

Their state of the art product “Hottdesk” is an internet based platform that allows the delivery of services and products online and in real time. Clients can check emails, make boardroom bookings, request translations, utilize a remote data storage system, and print to any Servcorp office worldwide, book a courier and much more. Servcorp clients can access “Hottdesk” wherever the internet is available.

Mumbai Airport Upgrade to Open up Mega Retail Space

The Mumbai airport’s upgradation will open up a humungous 5.7 crore sq ft or about 132 acres of real estate (almost seven Oval maidans), exclusively for non-aeronautical purposes like retail, commercial and hospitality. The area is mainly around Sahar village, Kurla and Kalina.

According to a Cushman & Wakefield report on Airport Realty, the modernization and upgradation of 47 airport projects across the country is expected to generate 78 million sq ft (1,790 acres) for commercial purposes by 2015.

In Mumbai, about 28% (1.6 million sq ft) of the 132 acres will be for retail, 50% or about 2.87 million sq ft will be for hospitality and 22% (1.26 million sq ft) will be reserved for office space. About 3,200 hotel rooms will come up in mainly five and four star hotels.

The Cushman & Wakefield report said nearly 50% of the estimated 78 million sq ft of airport realty in India will be concentrated in just three cities of Mumbai, Bangalore and New Delhi. These three cities alone will receive about 14 million sq ft of office space and about 10,200 hotel rooms. All over the country, roughly 27,525 hotel rooms will be generated from development of airports.

At a time when the global growth rate of the airport sector has been about 9% per annum, India has seen an average annual growth of 35% over a period of six years. Non-aeronautical revenues are expected to increase from 35% to 54% by 2015.

“As airports have the advantage of 24-hour activity with very high people traffic, they are crucial locations for next generation retail and entertainment centers as well as business and hospitality zones,” the report said.

Last year, a Mumbai developer was awarded the project to clear 276 acres of land under slums from around the Santa Cruz airport. A large chunk of this land will be freed for commercial and retail development.

“Real estate zones in closer proximity to the terminals boast of a location advantage and capitalize on it to command a premium. This obviously goes for land rates, too. However, it does not necessarily make these regions the most expensive,” the report observed.

Anil Nanda co Akme to go for JV with MPC

Anil Nanda Group Company Akme Projects Ltd today announced joint venture with private equity firm MPC Synergy Real Estate to develop seven premium housing projects with an equity investment of about Rs 1,000 crore.

The 50:50 joint venture, named Akme Rhine River Projects will develop seven projects at Ludhiana, Mohali, Greater Noida and two each in Bangalore and Gurgaon by 2012. The JV is expecting a total sales turnover of Rs 7,000 crore by then.

MPC Synergy Real Estate is a JV between Geneva-based private equity investment fund Synergy Asset Management Fund and MPC Capital, the largest listed fund in Germany with over $ 18.5 billion assets under management.

“The total equity investment by joint venture in all the three phases will be close to Rs 1,000 crore in 50:50 partnership,” Akme Projects Chairman and Manging Director Anil Nanda told reporters here.

“We are looking at a sales turnover of Rs 7,000 crore by 2012 from all the phases,” he added. The JV would develop more than 7,600 apartments and 400 villas in 7 projects, which will be launched in the current fiscal, company’s Chief Operating Officer Sonal Nanda said.

The Ludhiana project was launched today, which will be followed by Mohali and Bangalore in first phase. The JV would develop 1,700 high-end flats, costing about Rs one crore, in first phase with an expected turnover of Rs 1,900 crore.

When asked about the total investment which would be made to develop these seven projects, company’s CMD Anil Nanda said the projects for second and third phases were at still drawing board so it would be difficult to arrive at total cost.

However, he said both the partners were open to put in more equity if required to build these projects.

High Real Estate Prices hit Adidas India Plans

Expansion plans of footwear and apparel major Adidas India has been hit by high real estate prices ruling in the country, a company official said.

Adidas India Marketing Private Ltd’s Managing director Andreas Gellner told reporters, “Rise in real estate prices has been affecting our growth plans in India”.

The company’s was planning to increase the number of retail stores from 325 at present to 450 by the end of 2008. It operates the stores through franchisee route.

Talking about real estate prices, he said that the prevailing rentals were not realistic. Typically, the rentals should be around 15-17 per cent of turnover per square feet.

However, the rentals at the moment were more than 20 per cent per square feet. In some cases it was around 40 per cent per square feet, he said.

Gellner said Adidas was not keen to spend that high an amount since the brand was not new to India. “We are in India for the last 13 years.”