Indian Property News on 'August, 2008'

Developers wooing buyers with incentives

Many real estate developers are offering incentives to potential buyers to counter the high interest rates and inflationary pressures slowing down demand. Ajmera Realty & Infra India Ltd, for instance, has introduced a customised advanced disbursement fund (ADF) scheme for its clients. This is to provide the clients more benefits and to alleviate the concerns prevailing in the market as interest rates on home loans soar. According to Dhaval Ajmera, director–Ajmera Realty & Infra India Ltd, “Under this scheme, Ajmera Ltd bears the interest applicable on the home loan taken by the client for the purchase of the apartment before the possession of the apartment. In normal situations, a client has to bear the interest as well as the principal amount when they pay the EMI. By doing this, we are fulfilling our commitment to all our clients for providing affordable housing. This presents an ideal win-win situation wherein the customer is benefited and the sales are not affected.”

Bangalore-based Puravankara Projects is planning to launch mortgage finance schemes for the potential buyers of apartments, Ravi Ramu, director, Puravanakra Projects. “We are evaluating various options in launching mortgage finance schemes for apartment buyers soon.” Prakash Gurbaxani, managing director and CEO, QVC Realty said, “What we would be looking at, is focusing on providing long term benefits to potential buyers in terms of quality of homes and whole buying experience, rather than offering short-term incentives. We are working with various banks for making our projects pre-approved. With the move, banks will be making payments to potential buyers.” Read More »

Real estate developers tying up with Construction firms

Many real estate developers are tying up with construction companies for timely delivery, cost saving and achieving a competitive edge in the market. Realty companies such as Omaxe and Indiabulls Real Estate are entering into alliances with construction majors, following in the footsteps of biggies such as Ansal API, Emaar MGF and DLF. And some like Uppal Group have tied up with another real estate developer, Chadha Group, for specific projects.

As per global real estate consultancy, Jones Lang LaSalle Meghraj (JLLM), some developers are giving turnkey contracts to construction companies to benefit from the lower borrowing cost at which construction companies can raise money from banks. “If developers try to raise finance from banks on their own, they would normally incur a borrowing cost of around 14-15%, whereas a construction company would be able to raise funding at lower rates, depending on various factors.”

INFOSYS BPO CAMPUS SET UP AT MAHINDRA SEZ

Mahindra City SEZ recently witnessed the inauguration of the BPO campus of Infosys. Infosys announced an investment of Rs 171 crore during the initial phase. Rajasthan Chief Minister Vasundhara Raje, who kicked off the plant, stated that it was not the matter of land or funds, but she had to altered the attitude of people especially bureaucratic set up. “Though we are lagging behind in the race of SEZ set up, but it is an amazing effort that the goal was accomplished in less than 2 years of its inception,” she said. Infosys CEO and Managing Director Kris Gopalakrishnan said, “Jaipur is becoming an exciting destination for the IT-ITeS industry. Raje has proactively put in place progressive policies and has invested in infrastructure to ensure rapid growth.” The novel BPO campus at the special economic zone (SEZ) would cover up more than 42 acres of land with a total investment of Rs 531 crore to be made in phases, he said.

Mr. T V Mohandas Pai, Infosys HR Director stated that their campus at Sitapura near Jaipur has been operable since August 2006 and seen an investment of around Rs 22.77 crore with a capacity of 890 staff. The Sitapura BPO made revenue of USD 15 million, Pai said. He also said that there was a requirement for thousands of more IT grads in Rajasthan for BPO and other IT segment jobs in SEZ and the state got a smaller amount of engineering colleges as compared to South India.

UAE developer to build homes for homeless in India

A leading United Arab Emirates real estate developer will be building houses for the homeless in India and three other countries in the Islamic holy month of Ramadan. For this the Dubai-based ETA Star signed an agreement Sunday with US-based not-for-profit organisation Habitat for Humanity International (HFHI). ETA Star is being partnered by its new development Dubai Lifestyle City, home furnishing chain Homes r Us and cement manufacturer Star Cement. The property developer will donate one percent of its total earnings during Ramadan towards building homes for the destitute in India, Pakistan, Bangladesh and Ethiopia, according to the agreement. “The holy month of Ramadan is considered the time for giving, helping the needy,” Abid Junaid, executive director of ETA Star, said while announcing the initiative at a press conference here. “There certainly would be no better way than to help provide shelters to those underprivileged for which the sky is the only roof they can call their own,” he added.

According to Rick Hathway, area vice-president for Asia-Pacific at HFHI, the ETA Star contribution will be used in two projects in Delhi and Maharashtra. “Around 1,000 families will benefit from this,” he said. HFHI India managing director Felix Fernandes added that these projects would come up in a slum area on the outskirts of Delhi and a tribal community in Maharashtra. Among celebrities involved with HFHI are former US president Jimmy Carter, musician Jon Bon Jovi and Hollywood star Bard Pitt. In India, actor John Abraham is its goodwill ambassador. Among the major beneficiaries of its projects are victims of the 2004 tsunami and 2001 Gujarat earthquake, according to Fernandes. “Each house HFHI builds in India costs around Rs.70, 000 to Rs.120, 000,” he said.

Tata may bid adieu to Singur SEZ

The Tata group may soon bid adieu to his West Bengal venture. Chief minister Buddhadeb Bhattacharjee and his core team fought a lonely battle for Tata’s Nano project. No less than six chief ministers have already welcomed Ratan Tata to roll out his Nano project. Be that as may be, but if the Tatas withdraw from West Bengal, it will not only be a major setback for Bhattacharjee’s industrialisation drive, but will marginally boost future socio-political unrest over setting up of mega industries. CPI (M) leader Mr Basu agrees. “Yes, it will be a setback for us. But Mr Tata knows it well how sincere we were in facilitating the project. We have an open mind to talk to anyone and resolve the deadlock,” he says.

In West Bengal, the Tata project became a victim of a tussle between the CPI (M) leadership and the Trinamool Congress. For state chief minister and CPI(M), the Nano project could be a symbol of the new-found spirit of industrialisation in the state, which has over the years lost out to the new hubs of corporate excellence such as Bangalore and Hyderabad. While it could be an icon for industrialisation for Mr Bhattacharjee, for Trinamool’s Mamata Banerjee, it has been a do-or-die battle for getting goodwill of the farmers who were given a raw deal while taking away their farm land. The situation may improve now, if the state government comes out with a better compensation package for the displaced farmers. Read More »

Pune Hospitality sector buoyant

According to a report by Knight Frank, Pune will see 4,500 to 5,000 more hotel rooms across categories by 2010-11. Mr Atul Goel, Managing Director, Goel Ganga Group, says the boom in the hospitality segment is not ‘sudden.’ “And it has nothing much to do with the Commonwealth games planned in Pune. Developers had recognised the need and some had the floor plan ready or in the pipeline. Yes, with the advent of the Games, the acceleration took place in certain areas. The growth of the academic segment and IT/ITES certainly helped, coupled with high disposable incomes. “The manufacturing and automobile units in Pimpri-Chinchwad as well as Chakan and Ranjangaon Industrial areas contribute to an average of 55 per cent of the total room demand while the IT sector in the city contributes 45 per cent. The airline transit crew generates around 2-3 per cent of room nights annually in few four-star hotels.

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Real estate developers to offload hotel land

Real estate developers who had diversified into the hotel sector are in for rougher times as analysts see trouble coming in the third quarter of FY09 when hotel constructions will fall. Sanjay Dutt, the joint managing director at real estate consultants Cushman & Wakefield India Ltd, said that the hotel industry was expected to add 50,000 keys this year but has now dropped the figure to 30,000. “This figure will plunge further,” he said. “There are hotel portfolios that are up for sale where developers who had entered the market in the last three-four years are giving away their properties to established hoteliers such as the Taj or the Saraf Group and to private equity players,” Dutt said.

Soaring crude prices and reduced travel by corporates started affecting the hotel sector early this year. Dutt said that developers saw an occupancy level of nearly 90% when they announced the projects. But a correction followed, plunging occupancy levels to lower than 60%. “Moreover, raising debt is a huge issue with developers whose balance sheets are already stretched,” he added. Most developers and consultants hope that the 2009 general elections and the formation of a stable government will improve the environment. The market is expected to recover by 2011.

Walton to raise real estate fund

Walton Street Capital India, the Indian arm of the US-based private equity (PE) real estate investment company, Walton Street Capital will be raising a real estate fund. The fund, whose corpus is expected to be close to $1 billion, is likely to close by March next year, with the first closure expected within the next couple of months. The global PE fund is raising an India-specific, real estate fund for the first time. Walton Street, which had earlier raised a $2.5-billion global fund, had invested a significant part of it in India. Walton Street has investing in the US, Mexico, the EU and India. It has real estate assets worth $14 billion across the globe.

The PE major is rethinking its investment strategy. “The slowdown you see today or the crash in the real estate prices you hear of so often today is happening only at the micro level,” said Amber Malhotra, executive director, Walton Street Capital India. “Most of the negativity you see is mostly sentimental. There is a lot of opportunity now for private equity,” Malhotra added. Till now, Walton has done a lot of physical underwriting and has invested in SEZs. It also has a stake in a township project of Shriram Properties in Kolkata. Read More »

Gremach receives Govt nod for SEZ

Gremach Infrastructure Equipments and Project’s proposal for setting up a Special Economic Zone for the Metal sector has been approved by the Ministry of Commerce & Industry. The SEZ will be set up at Gadhinglaz Distt. Kolhapur (Maharashtra). Gremach has taken full possession of the land. It was inaugurated by the Honourable Speaker of Maharashtra Legislative Assembly Shri. Baba Saheb Koprekar.

The location of the SEZ is ideal for Metal Industries as it as close proximity to the Iron ore belt of Goa. There are many foundries close to the SEZ location. Looking at the project as a huge opportunity for growth, they are willing to set up their units at the SEZ location as Export Oriented Units.

Shriram Properties to launch retail and hospitality projects

Shriram Properties, a part of the real estate Shriram Group would be developing 15 shopping malls and 70-80 budget hotels in the next three to four years. Each mall would absorb an investment of Rs 250 crore while Rs 30-40 crore would be pumped in for each budget hotel. Initially, the company would develop malls covering two million sq ft with a combined investment of Rs 700 crore in the cities like Chennai, Vizag and Kolkata. M Murali, the managing director of the company said, “We are looking at strategic partners who can also bring value to promote mall and hospitality projects.”

SS Asokan, executive director of Shriram Properties, said that the company is in talks with global players to promote mall and hotel projects. Without disclosing identities, he said that the company held talks with retail and hospitality giants in the US, Europe and Japan. The budget hotels would be promoted both in Tier I and Tier II cities. In addition, Murali said the company also has plans foray into low-cost affordable housing segment in the near future. For the cities like Bangalore, he said the company would launch projects with housing units in the range of Rs 15 lakh per unit. For Tier II cities, budget homes would be in the range of Rs 10 lakh per unit. He said the real estate market has already witnessed around 20% dip and it would decline by another 5-10% in the next 6-9 months, but it would pick up once election in the US and India were over in the next year. In the long term, he said the Indian real estate market is reliable. The company, which currently owns a land bank of 1,520 acres across the country, is developing projects covering 73 million sq ft.