Latest Property News on 'Real Estate Developers'

Real Estate India on Recovery Path

DLF, India’s largest real estate company, announced last week that it won’t be selling many of its real estate holdings, which it had put on the block a few months back.

One reason assigned is the availability of credit now to the company. By January 2009, real estate prices in India had fallen down 25-35 % from their peak prices of 2007. However, now the residential land prices have slowly and silently recovered around 20% up from their bottom prices, to a level which is around 10% below their peak of 2007. Since a large amount of land price in India is paid in cash, there would be no official way to confirm this yet.

Economic Slowdown a Hindrance in Real Estate Growth

A home is the ultimate security that every person wants. Just a year earlier ago prices of house were at an all-time high but soon economic slowdown forced the price to come down. So has real estate finally become affordable and are people buying houses? An own house is what many people dream and plan for, from the moment they enter their first job, earn their first pay cheque or find a life partner. The last eight months though have put breaks to many such dreams. The real estate sector in India has undergone a massive change following the crash in the stock market and the financial slowdown

It all started in June 2008 when the real estate market crashed. The BSE Realty Index became the year’s worst performer, shedding half of the peak it hit in January. India’s largest property firm DLF lost 54 per cent of its stock value. Unitech shed 64 per cent, Parsvnath and Omaxe lost 68 per cent each. The biggest loser in all this was the consumer and people who had invested their hard earned money in the realty sector. Situation become worse following pay cuts and job losses which stopped prospective buyers from investing in new homes. Read More »

Massive Drop of 89.13 per cent in Parsvnath’s Q4 Profit

Real estate firm Parsvnath Developers on Monday reported an 89.13 per cent fall in consolidated net profit at Rs 11.61 crore for the fourth quarter ended March 31, 2009. The company had a net profit of Rs 106.86 crore in the March quarter of FY’ 08, Parsvnath Developers said in a filing to the Bombay Stock Exchange.

Revenue also declined to Rs 19.96 crore in the latest quarter from Rs 506.77 crore in the same month last year. For the full year ended March 31, 2009, the realty firm reported a net profit of Rs 112.90 crore as against Rs 424.39 crore last fiscal. Parsvnath’s revenue decreased to Rs 710.62 crore in the fiscal year ended March 31, 2009, from Rs 1,802.46 crore in the previous fiscal. Read More »

Indiabulls Plans to Invest $500 Million in New Projects

India’s third-largest listed property developer, Indiabulls Real Estate plans to use more than $500 million raised from a recent share sale to launch projects, at a time its peers are struggling to raise funds and repay debt. Gagan Banga, chief executive of the group’s flagship, Indiabulls Financial Services said that the developer aimed to launch 6-7 residential projects in the financial year ending in March 2010 on the back of an expected recovery in demand. “We would like to pursue some large and interesting projects, which we hope to get at a decent value given the fact that we are sitting on cash and the rest of the market is not,” Banga said in a telephone interview on Monday. In addition to its realty portfolio, the company is developing 3 power plants of 6,600 MW capacity in western and central India and needs about 15 billion rupees ($310 million) in the near term as equity contribution.

The company raised $556 million in May through a share sale to institutions, including TPG Capital and Fidelity. “Some portion may be used for infusing the equity component for the power projects. Apart from that there are some real estate auctions we would like to pursue,” Banga said. Unlike its peers, Indiabulls has always been quick to spot opportunities to raise money from public offers. Last year, it raised $257 million from its property trust in Singapore– which holds its two largest projects for developing 5 mln sq ft office space in Mumbai, even as larger rivals DLF and Unitech shelved similar plans. Read More »

LIC Plans Real Estate Focused Venture Capital Fund

Mortgage lender LIC Housing Finance plans to launch its real estate-focused venture capital fund along with its parent Life Insurance Corp of India by September-end, its top official said on Monday.

“We are looking for another partner. Talks are on,” Director and Chief Executive R.R. Nair said. The real estate venture capital fund would have an initial corpus of 5 billion rupees, he said. The fund would be initially looking at financing real estate projects in India, Nair added. At 11.41 a.m., shares in LIC Housing Finance were up 0.47 percent at 583.10 rupees in the Mumbai market.

Mohali Real Estate Agents Involved in Rs 14cr Tax Evasion

Income tax sleuths on Friday detected tax evasion worth around Rs 14 crore from five developers-cum-real estate agents of Mohali. This is considered to be the biggest detection made by the department during the current financial year. I-T men expect the figure to go up further after scrutiny of account books and computers impounded during surveys carried out on Thursday and Friday. Inspecting teams comprised around 25 I-T officers and subordinate staff, who carried out inspections on office premises of five real estate developers.

Preliminary investigation revealed that among those who allegedly evaded tax include Parveen Kaushal and Mohit Ghavri of Modage Housing Development Corporation Pvt Limited, and the rest were identified as Harvinder Pal Singh, Preet Inder Singh and Jatinder Singh Virk. The default concerns payments worth around Rs 30 crore made to these developers by the Emaar MGF group for purchase of land stocks in Mohali and Kharar during the year 2005-06.

DLF Decides Against Selling Core Asset, Will Only Sell Hotel Plots

India’s largest real estate company DLF has decided against selling core assets — residential, industrial and commercial plots — which it had put on the block. The company will now sell only the hotel plots, which are non-core to its business. DLF executive director YK Tyagi told ET that the company has pulled back these assets from the market over the past 2-3 weeks, considering that banks lending to the real estate sector has started to ease. A few prime properties in Gurgaon’s Cybercity and Udyog Vihar areas, which have been on the block for sometime now, have been pulled back. DLF had recently told ET that it planned to raise Rs 10,000 crore by selling land parcels, treasury investments and real estate projects in the next 2-3 years.

There has been a change of heart for DLF. “The decision to pull back these core assets from the market was taken considering the fact that banks have become more liberal in lending to real estate companies,” said Mr Tyagi. He also pointed out that after the recent stake sale by the promoters of the company, the company was in a comfortable position. DLF promoters had sold a 9.9% stake in the past month to raise Rs 3,980 crore, which has put the company in a comfortable position. Capital Group picked up close to 5% in DLF, while HSBC, GIC and Fidelity bought smaller stakes. Following the open market transaction, the promoter group now holds a 78.6% stake in DLF. Read More »

Emami to Partner with Zandu for Real Estate Business

Personal care products maker Emami Ltd is likely to merge its real estate business with Zandu Pharmaceutical Works Ltd, the Mumbai-based herbal healthcare firm it acquired last year. An announcement to this effect could be made on Friday after the boards of Emami and Zandu have finalized plans to restructure operations. Zandu’s herbal healthcare business would be carved out and integrated with Emami, and closely-held Emami Realty Ltd would be merged with Zandu, which owns properties in Mumbai and its suburbs, according to R.S. Agarwal, co-chairman of Emami. At the time of launching its unsolicited takeover bid in May-June last year, the management of Emami had valued the headquarters of 98-year-old Zandu, located at Dadar in Mumbai, at Rs350 crore.

“The restructuring will lead to creation of two focused companies and, in turn, to better price discovery of shares of the two companies,” Agarwal said. “It would unlock value for shareholders of both Zandu and Emami.” ICICI Bank Ltd, the country’s second largest commercial bank that also offers corporate advisory services, has been advising the two companies on the proposed restructuring. Management consultancy Ernst and Young has also been hired to advise the companies on integration of their herbal healthcare and personal care products businesses. “We’ll soon start selling some of Emami’s products under the Zandu brand and vice versa. Both Zandu and Emami would emerge as stronger brands because of this restructuring,” Agarwal said. Read More »

Unlisted realty Firms take the QIP Way

As listed real estate firms brace to raise about $2 billion (Rs 9,600 crore) through qualified institutional placement routes, their unlisted counterparts are not far behind. These closely-held real estate firms, which are typically family-run enterprises that build limited projects in suburbs of large cities, are also learnt to be tapping qualified institutional buyers (QIBs) and high net worth individuals (HNIs) to raise money for such projects, in exchange of higher returns.

The amount involved in such a fund raising is also high, totalling about $1 billion (Rs 4,800 crore), according to at least four real estate firms that ET spoke to, signalling a trend where institutional investors are not shying from investing in unlisted family-owned building projects. The move also indicates a return of confidence in the realty space, as builders cut down on frills and come up with affordable, viable housing projects. Most of the deals with such investors are being negotiated via the special purpose vehicle route where HNIs or QIBs take a share of the profit once the building project is completed, thereby reducing the investment period compared with a pure private equity deal. Read More »

Indian Developers Seek Share Sales to Settle Debts

India’s real estate firms are seeking share sales to settle debt and meet working capital needs as valuations improve, but the funds won’t be enough to salvage them if sales don’t pick up, say industry watchers. Since the start of 2009, almost $1.7 billion has been raised by home builders, according to Thomson Reuters data, while up to $2 billion more has been called for by realtors via share sales, especially qualified institutional placements (QIPs). “It is an over-leveraged market…the overall market is too huge. This (money) is nothing. It’s small peanuts. It won’t suffice,” Pankaj Kapoor, founder of Liases Foras Real Estate Rating & Research, said. Realty firms piled up debt as they rushed to launch projects amidst a three-year bull run in the sector. But, sales began slumping in 2008 amid a global meltdown and reluctance among buyers at higher prices, leading to a severe cash crunch. Sentiment improved with the successful share sales by Indiabulls Real Estate Unitech and India’s largest listed real estate firm DLF, prompting more builders to seek board approval to raise money via share placements.

“They don’t have an option,” Shobhit Agarwal, Joint Managing Director, Capital Markets, Jones Lang LaSalle Meghraj, said, referring to QIPs. “If you go to private equity, which is the other extreme, this kind of size is not available.” “They have no further capacity to raise debt… or to service that debt,” he added Outstanding bank loans to real estate firms rose to 623 billion rupees in FY08, up about 38 percent from a year earlier, the latest central bank data shows. Confederation of Real Estate Developer’s Association of India (CREDAI) estimates that listed companies account for over half of those loans. Read More »