Propertymart News  

Mumbai, India, January, 2008 - RREEF, the global alternative investment management business of Deutsche Bank, advised by Deutsche Asset Management (India) Pvt Ltd, has made its first real estate investment in India. RREEF has substantially completed the purchase of an undisclosed stake in Bangalore and Hyderabad-based real estate development company, Golden Gate Properties Ltd, for US$ 70 mn (Rs. 2735 mn).

New Delhi, India, January,2008 - Speaking at the inaugural session of the UK-India Infrastructure Conclave on January 16, organized by the Confederation of Indian Industry (CII) and UK Trade and Investment (UKTI), in Delhi, Digby, Lord Jones of Birmingham, UK Minister for Trade and Investment said that his country wants to be a genuine partner in developing India’s infrastructure and not just a contractor. Given India’s rising stature in the global sphere, he also endorsed India’s membership of the UN Security Council and the G-8. He said that several British companies such as Bombardier and Mott McDonald are already engaged in developing India’s infrastructure. He projected UK as an attractive and open global financial centre, ready to share its expertise and participate in India’s PPP ventures in the infrastructure sector.

Mumbai, India, January, 2008 - The Future Group, whose flagship company Pantaloon Retail operates over 1,000 stores nationwide, is looking to maximise the value of its locations through selling real estate and healthcare.

Mumbai, India, January 2008 - Pantaloon Retail India Ltd has announced that the Board of Directors of the Company at its meeting held on January 22, 2008, inter alia, has approved setting up wholly owned subsidiary Companies for Big Bazaar and Food Bazaar, Speciality Retail Business Activities and Property & Mall Management Division and transfer the respective businesses of the Company on a going concern basis to the respective subsidiaries, subject to receipt of all requisite statutory and other necessary approvals.

Mumbai, India, February 2007 - Leading private sector bank ICICI Bank has announced a rate increase of 1% for its floating home loan customers. It remains to be seen if other private sector banks follow suit or use this opportunity to gain share from ICICI Bank. Meanwhile, the Indian Finance Minister has exhorted public sector banks to keep home loan interest rates unchanged. After ICICI’s increase, home loans rates of PSU banks are around 1-1.5% cheaper.
ICICI Bank announced on February 6 an increase of 1% in its Benchmark Advance Rate (I-BAR) and its Floating Reference Rate (FRR) for consumer loans (including home loans) with effect from February 09, 2007. The revised I-BAR will be 14.75% p.a. payable monthly as against 13.75% at present. The revised FRR will be 11.75% p.a. as against 10.75% at present.

For existing floating rate customers, the increase in Floating Reference Rate (FRR) by 1% will be effective from the respective reset dates. The existing fixed rate customers whose loans are fully disbursed, will, however, not be impacted by the increase and their contracted rates will remain unchanged.

The Bank has also announced an increase in interest rates on 80C Fixed Deposits of value less than Rs 0.10 million by 1.25% for 5-year tenor with effect from February 09, 2007. The revised interest rate on 80C FD will be 9.50% p.a. as against 8.25% at present.

New Delhi, India, February 2007 - INRnews reports that the Urban Development Minister Mr. Jaipal Reddy has signed the much awaited new Master Plan for Delhi-2021. Significant policy changes include providing for greater height and floor ratio norms as well as wide relief from sealing and demolition through mixed land use norms that allows for commercial activities on 2,283 roads.
Mr. Jaipal Reddy also announced that the ongoing sealing drive in Delhi would not resume from Wednesday.

Under the MPD-2021, areas of the capital have been designated as “commercial”, “residential” and “mixed”. This move would benefit a significant number of smaller establishments as well as private practitioners such as doctors and lawyers who have set up businesses in residential areas.

A number of measures are included to allow for redevelopment of existing colonies with new structures with more height and floor ratios to be allowed. 62% additional construction will be allowed in group housing societies. Also private participation has been invited in slum development.

Delhi’s Master Plan-2021 also lists an eight-point action plan for cleaning the Yamuna river.

With Delhi said to have a shortage of 24 lakh dwelling units, the notification of MPD-2021 is likely to create a construction boom of sorts. Owners and developers are likely to rush to take advantage of the liberalised height and floor ratio norms to create more built-up area. The liberalised norms are also likely to push up land prices but could have a dampening effect on apartment prices as more supply comes into market.

Bangalore, India, February 2007 - The Karnataka government has succeeded in attracting interest from many large real estate developers for the 106 acre, Rs.350 crore biotech park project in Bangalore. The proposed “Helix” park located in Electronics City Phase 3 on the Hosur Road aims to attract biotech companies, including startups, by providing infrastructure such as office space and educational and research facilities within the vicinity.
Requests for Proposals have been issued to 16 companies including DLF, Gammon Infrastructure, IVRCL Infrastructure, L&T, Punj Lloyd and Mahindra Gesco amongst others. The government plans to issue a work order by April.

Hyderabad, February 2007 - The Hyderabad Urban Development Authority (HUDA) has awarded a Rs.3,500 crore Satellite Township project at Tellapur near Hyderabad to a consortium comprising Nagarjuna Construction, ICICI Venture Funds and Tishman Speyer Properties.
The project is located on a 400 acre site. The consortium bid Rs.4.21 crore per acre.

New Delhi, India, February, 2007, - UK-based private equity firm Actis plans to set up a $300 million India real estate fund, on top of two other existing funds with an estimated equity of $475 million. The firm is already in talks with real estate players for making these investments according to Donald Peck, Managing Partner of Actis.

New Delhi, January 03, 2007 - The real estate boom of 2006 is set to multiply itself in 2007 to get India a foreign capital of over Rs. 8000 crore with leading international investors establishing their presence in its richly rewarding real estate development, providing new employment opportunities for over 2 lakh skilled and unskilled workforce, according to estimates made by The  Associated Chambers of Commerce and Industry of India (ASSOCHAM).

According to ASSOCHAM, overseas real estate giants such as Royal Indian Raj International, Blackstone Group, Goldman Sachs, Emmar Properties, Pegasus Realty, Citigroup Property Investors, Lee Kim Tah Holdings, Salim group, Morgan Stanley and GE Commercial Finance are likely to bring in a collective capital of US $ 80 billion investments to suitably reward  them benefits with India’s opening up of its real estate sector to 100% FDIs.

The ASSOCHAM  estimates point out that the US-headquartered investment bank Morgan Stanley already forayed into India’s booming real estate sector in March 2006 through its real estate investment arm Morgan Stanley Real Estate investing Rs 300 crore (around $68 million) in Mantri Developers Pvt Ltd, a Bangalore-based real estate developer. Morgan Stanley plans to invest more than $1 billion over the next 4-5 years in the Indian real estate sector.

It also points out that Tishman Speyer’s tied up with ICICI Bank to invest $1 billion in the country, while Kotak India Real Estate Fund closed its domestic tranche raising $100 million and this trend will continue to lure many more such investors to retain their interests in domestic real  estate business.

The Chamber is of the view that as the government allowed 100 per cent Foreign Direct Investment in real estate, an efficient regulatory framework, simpler tax regime and proper regulations are imperative to boost public-private participation and bring in managerial and technical expertise.

According to findings, the biggest US pension fund, CalPERS, hedge fund Farallon Capital Management, US-based developer Tishman Speyer and NRI fund Trikona Capital too have drawn plans to invest in the booming market. Domestic funds including Kotak Realty Fund, HDFC India Real Estate Fund, Pantaloon Retail’s Kshitij Real Estate Fund and UTI Venture Fund were also very active.

The two most active investor segments were High Net Worth Individuals (HNIs) and Financial Institutions. Both these segments were particularly active in commercial real estate. With the rules related to investing and repatriation relaxed to a large extent, an estimated 25 million Non Resident Indians (NRIs) living across 125 countries are investing in immovable property in India. NRIs have been keener in investing in residential properties than commercial Properties.

Strong economic growth, rising income levels, growing middle class, increasing urbanization and improving transparency brought resurgence for the Indian real estate sector in 2006 which will continue to grow further in 2007 with easy availability of financing facilities growing still further.

The Chamber forecasts that real estate growth will go from $12 billion in 2005 to $90 billion by 2015. Greater integration with the global economy and the increase of domestic as well as foreign investments are encouraging demand for real estate. Despite ill found doubts of a bubble, foreign investors are lining up.

While HDFC introduced real estate mutual fund in its sector specific mutual funds, Industry major Parasvnath Developers Limited came up with Initial Public Offer, DLF decided to bring IPO, Global big names such as Morgan Stanley, Lehman Brothers, HSBC and ABN Amro queued up to pick up stake in local realty firms, Year 2006 truly belonged to Realty.

Though criticized as an opportunity for the builders to grab land, Special Economic Zones offered tremendous opportunity for the Industry both for the commercial sector as well as for the industrial and logistics sector. The government finalized the guidelines for the development of social infrastructure, besides setting criteria for developers. The Reserve Bank of India directed commercial banks to treat exposure to Special Economic Zones as lending to commercial real estate sector. “However, there is case for relaxing the guidelines for the sector”, stated ASSOCHAM President, Mr. Anil K Agarwal.

According to Chamber, emergence of IT and ITES sector and organized retail are the major growth drivers. Growth of IT and ITES created vast demand of office space and appearance of malls all over the country tendered huge scope for land development. Analysts peg the total demand for commercial office real estate in Bangalore, Chennai, Delhi-NCR, Mumbai, Pune, Hyderabad and Kolkata alone to be over 25 million sq ft in 2006.

Booming hospitality with the booming economy brought additional reasons to cheer for the Real Estate developers. Tier II cities such as Nagpur, Ahmedabad, Vadodara, Indore, Raipur, Jaipur, Agra, Siliguri and Kochi emerged as investment destinations in the current real estate scenario. The development of suburbs such as Navi Mumbai also generated immense opportunities.

“With stock market being highly volatile, investment in real estate has begun to look attractive and competitive with typical yields being 20-25 per cent per annum. Real estate will offer a good investment alternative to stocks and bonds over the coming years” added the President.

Markets also welcomed real estate with a cheer. The public issues of Parsvnath Developers and Lanco Infratech was oversubscribed by more than 50 times and 10 times, respectively. Parsvnath Developers Ltd. made a debut at 80 per cent premium to the offer price of Rs 300 on the BSE. The stock opened at Rs 540 on the BSE. The initial public offering of Sobha Developers Ltd was also subscribed 108.51 times on the bourses.

Eredene, a private equity fund raised $ 100 million earlier this year followed by another private equity fund Trinity Capital, which raised $500 million through AIM. Ansal Properties & Infrastructure Ltd, garnered Rs 681.75 crore through QIP, the overall book was subscribed by over two times. IVRCL Infrastructures & Projects Ltd raised Rs. 555 crore in a private placement via QIP route. The issue was oversubscribed multiple times. IVRCL is the first infrastructure construction company to raise equity through the QIP route.