Indian Property News on 'November, 2009'

Govt has approved 190 New FDI Proposals this Year

The government today said that the country has received as many as 238 Foreign Direct Investment (FDI) proposals so far this year. “During the year 2009, (up to November), 238 proposals were received,” Minister of State in the Ministry of Commerce and Industry Jyotiraditya M Scindia said in a written reply to the Lok Sabha.

Out of the 238 proposals, the government has approved 190, while 13 were rejected and 6 were withdrawn or closed. Around 29 proposals are either listed for consideration or to be listed in the fourth session, the minister added. During the last three years, Foreign Investment Promotion Board (FIPB) has received a total of 1,102 FDI proposals, out of which 286 were received in 2006, 393 in 2007 and 424 in 2008, he added. Read More »

Vatika looks to Raise Rs 125 cr from Real Estate Investment Firm Brahma Capital

Delhi based real estate and hospitality company Vatika Group, which raised Rs 1,000 crore from a group of international financial institutions such as Goldman Sachs, Baer Capital and Wachovia Bank in 2007, is in talks to get fresh funds from real estate investment firm Brahma Capital, a person familiar with the matter told ET.

When contacted, Pritam Chivukula, principal-real estate, Brahma Capital, said: “While we are active and looking at a couple of deals in the northern capital region, this is a mere speculation.” Although the exact deal size could not be ascertained, a senior executive in the private equity space said it is likely to be in the range of Rs 100-125 crore. Read More »

Low Rentals Boost Commercial Real Estate Sales

Following the correction in commercial realty rates in metros by 20% to 40%, top builders expect sales to improve by 50% in Q3 and Q4 of 2009-10. In the first two quarters of the fiscal, sales of office space rentals grew 10% to 15%. To tap the growing opportunity, large builders in various metros are offering ready-to-possess offices, shops and commercial plots, and under-construction offices at 15% to 20% discount. The correction in commercial real estate rates comes at a time when the general sentiment is buoyant. There is ample cash flow in the market. However, the correction in the office space rentals is 15%— lower than that of the residential real estate sector.

According to Harinder Dhillion, vice-president (marketing) of Delhi-based Raheja Builders, “New Delhi followed by Gurgaon and Noida have witnessed 15% increase in sales of commercial space since the second quarter of this fiscal. As a result, we are planning to offer price discounts of up to 10% to 15% on office space rentals through our commercial properties based in Gurgaon.” Mumbai-based Royal Palms India has recently launched ready-to-possess offices, shops and commercial plots as well as under-construction offices for corporates at 3,999 per sq ft at Goregaon East, Mumbai. Royal Palms has a total of 4 lakh sq ft of office space/plots. Depending on the need of the buyer, the company can offer offices or buildings ranging from 400 sq ft to 80,000 sq ft. Read More »

Faced with Recession Blows Real Estate Companies Hiring Smartly

Recklessness seems to have been thrown out of the window. Faced with severe blows in recessionary times, real estate companies are now taking the flight to safety particularly when it comes to taking more people on board. Not only are they keen on recruiting the right candidates for multiple vacancies, they also want to ensure that hiring is in sync with their broader gameplan.

Many of the leading real estate companies including Unitech, DLF, Omaxe, Vipul and Raheja Developers that SundayET spoke to said that they were back in the hiring mode albeit differently. Omaxe, for instance, is more open to hiring people from diverse educational background and experience who are equipped with skills for challenges in multiple establishments. Read More »

Throwaway Real Estate Prices in US Luring Indian HNIs

The throwaway real estate prices in the US have been attracting high net worth Indians in a big way. And now it seems, there’s more reason to look at investing in America for HNIs. The Obama administration has recently extended the regional centre investment programme, which is part of the permanent residency, EB-5 category by three years. Simply put, this programme allows investors a fast-track to US green cards and permanent residency. Under the scheme, investors who put in $1 million (about Rs 5 crore) into designated regional centre real estate projects and create at least 10 jobs in the US, are entitled to green cards along with their families. If they are willing to put money into a business carried out on in a designated backward area, the investment required is even lower at $500,000.

The EB-5 programme is attracting a large number of hospitality entrepreneurs from Gujarat who are keen on setting up shop in the US. Many of the Gujarati hotel entrepreneurs also have strong family links in the US. “The falling dollar has increased the number of applications in the EB-5 category in addition to access to branded hotel deals that are trading at 30-40% discount. This is definitely the time to buy as the US real estate market is slowly recovering,” says Sachin U Patel, managing principal of real estate development company American Life Inc, which operates the EB-5 regional centres in Seattle, Tacoma, and Everett. The regional centres are diversified funds or private business development projects that allow EB-5 investors to infuse the required funds and in return acquire a small ownership interest. Read More »

Affordable Housing- Supply Outstrips Demand

After the euphoria, “affordable” realty developers are faced with the reality of excesses. In May this year, property developer Jaypee Greens put the sold-out sign within hours of launching its affordable project Aman on the Greater Noida expressway. The 3,000-odd apartments were priced at Rs 2,100 per square feet. Another Jaypee Group company, which was offering flats along the same expressway for Rs 4,500-6,000 a sqft, was finding the going tough.

Developers are now having to deal with a situation where they have to carry forward the stock as supply has far outstripped demand. As a result, in Hyderabad, almost two in every three sub-Rs 30 lakh apartments that came into the market in the 12 months ended October 2009 remained unsold. In Kolkata, Bangalore and Gurgaon, the situation is only marginally better with one in every two houses yet to find a buyer. It’s an all-India trend. Data collated by real estate research firm PropEquity shows that developers who had rushed to launch affordable housing projects are sitting with over 40 per cent unsold stock. Read More »

Govt to Pass Real Estate Regulatory bill in Winter Session

To bring the Indian property industry on par with the global real estate sector, the Indian parliament is gearing up to pass the much talked about real estate regulatory bill in the winter session. The industry is keenly watching out for this one as the first draft was found to be faulty and rather lopsided , excluding the government bodies from its purview. So while the experts feel that it is time to have a single-point regulatory body on the lines of SEBI or TRAI, which would prove beneficial in the long run to the endusers and developers, there is also a cry for bringing total objectivity and professionalism in the workings of the body, to truly achieve its goal. Developers also point out the dangers of overregulation in an industry that already faces several stumbling blocks.

The bill seeks to grant approvals to projects on certain parameters and also expedite all the approval processes mandatory for projects to take off. It is expected to help improve transparency in the sector by rating developers on their financial strength in terms of turnover, liquidity and profitability, scale of operations, intellectual expertise based on the qualification and experience of the management team, and past performance. According to Ashutosh Limaye, associate director (Strategic Consulting), Jones Lang LaSalle Meghraj, “The stock market has SEBI to provide guidelines, define conduct and processes, provide a redressal system for both buyers and sellers and install necessary consistency and standardisation. The proposed real estate regulatory body intends to do the same for the Indian property market, which currently presents a rather under-organized picture.” Read More »

16 Real Estate Firms to come up with 9000cr IPO in Three Months

At least 16 real estate firms are set to come with their initial public offerings to raise Rs 9,000 crore in the next three months. “Going by the DRHPs submitted by the 16 real estate companies, they are planning to raise at least Rs 9,000 crore. This is going to be raised in the next three months,” Knight Frank India Chairman Pranay Vakil said on the sidelines of a Ficci-organised summit here. Vakil said that among the 16 issues, five-six are from the Southern India and a few from Northern India. Informed sources said that Sahara plans to raise Rs 3,450 crore through the IPO, Lodha Developers Rs 3,000 crore, Godrej Properties Rs 600 crore, DB Realty Rs 1,500 crore and Kumar Builders Rs 450 crore among others. Emmar MGF has also filed the DRHP with the SEBI and plans to raise Rs 3,850 crore.

Hoping that the issues would be reasonably priced, he said, “Hopefully, people will now realise that you can’t take away every single money from the market and they will keep something from the investors”. The Knight Frank Chairman said that there was ample liquidity, both from domestic and international sources, for the issues to sail through, but in case, one or two fails, it would be a disaster to the entire market. Vakil said that the banking sector lending to the real estate sector was going to be limited now as the apex bank raised provisioning norms. RBI had on November 5 proposed to increase the provisioning requirement for advances to the commercial real estate sector from 0.40 per cent to one per cent. Read More »

Real Estate Sector is Recovering- Ernst and Young

Driven by price corrections, softening of interest rates and improved liquidity, the real estate industry is on the path of recovery on the back of improved demand in the residential segment. “After a rough phase that lasted for over a year, the Indian real estate industry is on the path of recovery. The residential real estate segment, which is leading the recovery, has witnessed a revival in demand, primarily due to improved affordibility,” a Ficci - Ernst & Young report said. The two-pronged strategies of the developers- improving balance sheets and focusing on developing self-funded projects - are now bearing results and helping in the recovery of the industry with a revival of demand in the residential sub-segment.

The demand in the residential segment has witnessed a revival primarily due to improved affordibility and was a result of lower interest rates, decline in property prices and the availability of small-sized affordable apartments. The report, however, said that the commercial, retail and hospitality segments were still struggling due to the subdued demand from the IT/ITeS sectors and multinationals, which are halting expansion plans in the country. “In the aftermath of the global economic slowdown, most reatilers have deffered their expansion plans in India, since the slowdown has resulted in a decline in their revenues and profitability,” the Ficci - Ernst & Young report said. Read More »

Cash-Strapped Realty Companies Eye Rs 15K-crore mop-up

Cash-strapped real estate companies looking for succour from the capital market are likely to run into headwinds on the pricing front. Market watchers say unless the promoters price their issues a bit more realistically, they are likely to see a tepid response from investors. Some of the high-profile new issues over the past few months were felt to have been priced expensively, resulting in the stocks faring poorly on listing.

Nearly a dozen real estate companies are looking to mop up over Rs 15,000 crore through public offerings in the coming months. Godrej Properties, DB Realty, Emaar MGF, Lodha Developers, Sahara Prime City, Kumar Builders, Ambience, Ashoka Buildcon are among the companies which have filed their draft red herring prospectuses (DRHP) with Sebi. Those in the pipeline, but which have not yet filed their DRHPs, include Nitesh Estates, Prestige Constructions, BPTP and Oberoi Constructions . Read More »