Monday, May 11, 2009
Spreading their wings
Spreading their wings
HT Estates, May 9, 2009, Page 1
A slow moving property market has got sever al developers interest ed in businesses such as education and healthcare.
Diversification is being seen as the way out of the liquidity crunch, a means to bring in the much-needed cash flow. A foray into these so-called “safe” sectors is also a strategy to enhance the value of their core real estate business and draw buyers waiting in the wings to their townships.
While some firms have begun the sale of their noncore assets such as school and hospital plots on existing land banks to generate immediate cash flow, others are looking at these two sectors as a longterm opportunity.
Developers have realised that any residential township needs to have a mix of quality schools, hospitals and basic infrastructure such as power, telecom, water and sewage facilities to become a success. They are, therefore, looking at these verticals as money-spinners and opportunities that create a natural hedge within the group in times of a downturn. The premise is that people would continue to pay for quality education and healthcare.
Designing businesses around necessities is, therefore, the key to success — a natural and sustainable progression.
The popular model being adopted is that of a joint venture wherein the developer provides the basic infrastructure and specialists take over to run the facility. Realty experts say that developers going the JV way should look at a gestation period of 7-9 years before they start to get returns. The other way out is to sell a land parcel and immediately exit. This is comparatively an easy game as it brings in instant liquidity and works as long as the returns are good.
Turning adversity into opportunity
The huge demand supply gap is attracting realty players towards the education sector. While Unitech has announced the sale of school plots varying from 1000 yards to 5 acres for nursery primary and high , schools in South City II, Nirvana Country and Greenwood City, AEZ has recently acquired a 50 per cent stake in Mother’s Pride to help the education group in infrastructure development. The Gujarat government recently allotted 750 acres to Anantraj industries to develop an education city on the Ahmedabad Mehsana highway and Omega Realty, Ahmedabad, plans to set up business schools to be named United World School of Business with a proposed investment of Rs 105 crore.
According to Sanjeev J Aeren, MD, AEZ Group, “It makes business sense for realty players to get into creation of infrastructure for the education sector in these times.
For us, diversification has been a well thought-out strategy and we had started working on it even before the market had witnessed a slowdown.
Besides, diversification into this segment is a foray into more or less a recession-proof sector and is aimed at creating synergies in our fields.”
“The education sector offers tremendous growth potential. There is a shortage of supply in the education sector that we can successfully cater to. However, having been in the education sector for over 20 years now, it would not be fair to say that this is a path taken to overcome the liquidity crunch or beat the current market conditions as it is not a new venture for us. All our education initiatives are under the Chiranjeev Charitable Trust and not under Ansal API. The Trust is looking at investing about 200 crore in higher education in the near future,” points out Pranav Ansal, Vice Chairman and Managing Director, Ansal API. The group started its first school, Chiranjeev Bharti School in Gurgaon in 1991. Today it has three schools in Gurgaon with 4000 students. It runs the Sushant School of Art and Architecture and Ansal Institute of Technology It also has a tie up with e-learning service provider Educomp.
Jaypee Group has its own education division that is into developing schools and engineering institutes.
“Education institutes are a On the health highway Besides education, there are realty firms that are eyeing the healthcare pie. Both education and healthcare are an extension of realtors committing money on golf courses, entertainment facilities, power plants, telecom etc, during the bull run. Basic necessities are today seen as money-spinners, businesses not affected by cycles and a natural hedge within the group. The premise is that when your core is lying low and there is not much activity, the focus should be on getting the ancillary right.
Healthcare is a different ball game and works on specialised skill sets. The success of a healthcare facility in any township depends on brands and on renowned doctors who can draw crowds. There have been companies who've set up healthcare verticals prior to the slowdown and those who are considering it as an important component in their integrated townships.
“We are drawing up a healthcare strategy. We'll be constructing a super speciality, 450-bedded hospital in our township in Noida. This would be run by our own vertical. The hospital is slated to open in 2011,” reveals Dixit.
According to Harsh Neotia, Chairman of Ambuja Realty Development Ltd, “Our group got involved with healthcare and education much before the slowdown, these businesses have, therefore, not been prompted by recessionary trends but driven by our own interest in these two sectors. We've been into healthcare for the last seven years. We are currently constructing two super speciality hospitals in Siliguri and in Kolkata. For the Siliguri Integrated Township there is a multispeciality hospital project that will take two years to complete. My view is that one should get into different businesses based on one's understanding of the business and a credible partner.” The Emami group also has a separate healthcare vertical. The group is building several super speciality hospitals in Kolkata and one in Bhubaneswer under the brand name Amri hospitals.
D.N.Agarwal, Executive Director of AMRI Hospitals, says that though there are opportunities for realty players in the healthcare sector, those wanting to get into it should tread carefully as it is a long-term investment and manpower intensive. It's not simply about constructing a building, he adds. must for any integrated township. We plan to build a J P International School on our Noida project. Besides, there will be at least 15-20 schools inside the township,” says Rita Dixit, Executive Director, Jaypee Greens.
The business of education
HT Estates, May 9, 2009, Page 1
A slow moving property market has got sever al developers interest ed in businesses such as education and healthcare.
Diversification is being seen as the way out of the liquidity crunch, a means to bring in the much-needed cash flow. A foray into these so-called “safe” sectors is also a strategy to enhance the value of their core real estate business and draw buyers waiting in the wings to their townships.
While some firms have begun the sale of their noncore assets such as school and hospital plots on existing land banks to generate immediate cash flow, others are looking at these two sectors as a longterm opportunity.
Developers have realised that any residential township needs to have a mix of quality schools, hospitals and basic infrastructure such as power, telecom, water and sewage facilities to become a success. They are, therefore, looking at these verticals as money-spinners and opportunities that create a natural hedge within the group in times of a downturn. The premise is that people would continue to pay for quality education and healthcare.
Designing businesses around necessities is, therefore, the key to success — a natural and sustainable progression.
The popular model being adopted is that of a joint venture wherein the developer provides the basic infrastructure and specialists take over to run the facility. Realty experts say that developers going the JV way should look at a gestation period of 7-9 years before they start to get returns. The other way out is to sell a land parcel and immediately exit. This is comparatively an easy game as it brings in instant liquidity and works as long as the returns are good.
Turning adversity into opportunity
The huge demand supply gap is attracting realty players towards the education sector. While Unitech has announced the sale of school plots varying from 1000 yards to 5 acres for nursery primary and high , schools in South City II, Nirvana Country and Greenwood City, AEZ has recently acquired a 50 per cent stake in Mother’s Pride to help the education group in infrastructure development. The Gujarat government recently allotted 750 acres to Anantraj industries to develop an education city on the Ahmedabad Mehsana highway and Omega Realty, Ahmedabad, plans to set up business schools to be named United World School of Business with a proposed investment of Rs 105 crore.
According to Sanjeev J Aeren, MD, AEZ Group, “It makes business sense for realty players to get into creation of infrastructure for the education sector in these times.
For us, diversification has been a well thought-out strategy and we had started working on it even before the market had witnessed a slowdown.
Besides, diversification into this segment is a foray into more or less a recession-proof sector and is aimed at creating synergies in our fields.”
“The education sector offers tremendous growth potential. There is a shortage of supply in the education sector that we can successfully cater to. However, having been in the education sector for over 20 years now, it would not be fair to say that this is a path taken to overcome the liquidity crunch or beat the current market conditions as it is not a new venture for us. All our education initiatives are under the Chiranjeev Charitable Trust and not under Ansal API. The Trust is looking at investing about 200 crore in higher education in the near future,” points out Pranav Ansal, Vice Chairman and Managing Director, Ansal API. The group started its first school, Chiranjeev Bharti School in Gurgaon in 1991. Today it has three schools in Gurgaon with 4000 students. It runs the Sushant School of Art and Architecture and Ansal Institute of Technology It also has a tie up with e-learning service provider Educomp.
Jaypee Group has its own education division that is into developing schools and engineering institutes.
“Education institutes are a On the health highway Besides education, there are realty firms that are eyeing the healthcare pie. Both education and healthcare are an extension of realtors committing money on golf courses, entertainment facilities, power plants, telecom etc, during the bull run. Basic necessities are today seen as money-spinners, businesses not affected by cycles and a natural hedge within the group. The premise is that when your core is lying low and there is not much activity, the focus should be on getting the ancillary right.
Healthcare is a different ball game and works on specialised skill sets. The success of a healthcare facility in any township depends on brands and on renowned doctors who can draw crowds. There have been companies who've set up healthcare verticals prior to the slowdown and those who are considering it as an important component in their integrated townships.
“We are drawing up a healthcare strategy. We'll be constructing a super speciality, 450-bedded hospital in our township in Noida. This would be run by our own vertical. The hospital is slated to open in 2011,” reveals Dixit.
According to Harsh Neotia, Chairman of Ambuja Realty Development Ltd, “Our group got involved with healthcare and education much before the slowdown, these businesses have, therefore, not been prompted by recessionary trends but driven by our own interest in these two sectors. We've been into healthcare for the last seven years. We are currently constructing two super speciality hospitals in Siliguri and in Kolkata. For the Siliguri Integrated Township there is a multispeciality hospital project that will take two years to complete. My view is that one should get into different businesses based on one's understanding of the business and a credible partner.” The Emami group also has a separate healthcare vertical. The group is building several super speciality hospitals in Kolkata and one in Bhubaneswer under the brand name Amri hospitals.
D.N.Agarwal, Executive Director of AMRI Hospitals, says that though there are opportunities for realty players in the healthcare sector, those wanting to get into it should tread carefully as it is a long-term investment and manpower intensive. It's not simply about constructing a building, he adds. must for any integrated township. We plan to build a J P International School on our Noida project. Besides, there will be at least 15-20 schools inside the township,” says Rita Dixit, Executive Director, Jaypee Greens.
The business of education
Post slowdown, realtors are looking at education as an anchor to draw in population to their integrated townships.
Experts say that the model may operate well typically in a franchisee context. Education runs on brand or expertise and anchors help in drawing population. Many properties do not get sold because of lack of basic infrastructure such as power, roads, healthcare or education. Once these are provided, those waiting in the wings may be drawn to the townships.
Even in education, not all institutes are profitable. While the K plus 2 level is highly regularised, the play school and the PG diploma sector that requires specialised skill sets is highly profitable. These two segments are, therefore, clear opportunities, points out Ajit Krishnan, partner, Ernst & Young.
Also, there may be land parcels in integrated townships still vacant but earmarked for schools. This may be an opportunity to get rid of idle inventory and put it to profitable use, he adds.
Concurs Anuj Puri, Chairman and country head of Jones Lang LaSalle Meghraj; education is a recession proof sector and developers are looking at providing infrastructure to players in this segment.
“Foray into education or for that matter health care is more of an opportunistic play and a long term play at that. Realtors venturing into these sectors should look at a gestation period of 7-9 years before they can start looking at returns."
Realtors are seeing a steady revenue income from these ventures. If there is demand and a reasonable price on offer, things can work well in a joint venture, says Kaustav Roy, Director (tenant strategies), Cushman & Wakefield, India.
Agrees Sharad Aggarwal, president, Educomp. “Schools can be built by real estate companies but they also need to be run by experts. Joint ventures in this direction are an opportunity as long as both understand each other and are into a mutually beneficial relationship.”
Experts say that the model may operate well typically in a franchisee context. Education runs on brand or expertise and anchors help in drawing population. Many properties do not get sold because of lack of basic infrastructure such as power, roads, healthcare or education. Once these are provided, those waiting in the wings may be drawn to the townships.
Even in education, not all institutes are profitable. While the K plus 2 level is highly regularised, the play school and the PG diploma sector that requires specialised skill sets is highly profitable. These two segments are, therefore, clear opportunities, points out Ajit Krishnan, partner, Ernst & Young.
Also, there may be land parcels in integrated townships still vacant but earmarked for schools. This may be an opportunity to get rid of idle inventory and put it to profitable use, he adds.
Concurs Anuj Puri, Chairman and country head of Jones Lang LaSalle Meghraj; education is a recession proof sector and developers are looking at providing infrastructure to players in this segment.
“Foray into education or for that matter health care is more of an opportunistic play and a long term play at that. Realtors venturing into these sectors should look at a gestation period of 7-9 years before they can start looking at returns."
Realtors are seeing a steady revenue income from these ventures. If there is demand and a reasonable price on offer, things can work well in a joint venture, says Kaustav Roy, Director (tenant strategies), Cushman & Wakefield, India.
Agrees Sharad Aggarwal, president, Educomp. “Schools can be built by real estate companies but they also need to be run by experts. Joint ventures in this direction are an opportunity as long as both understand each other and are into a mutually beneficial relationship.”
Real Estate
Sustainable urban habitat: industry has to take the lead
Sustainable urban habitat: industry has to take the lead
The Financial Express, May 11, 2009, Page 5
fe Bureau
The title says it all. An exploration of sustainability in the provision of basic urban services in Indian cities, is true to its name. Brought out by The Energy and Resources Institute (Teri) in partnership with Sustainable Urbanism International and Arghyam, and with support from Rohini and Nandan Nilekani, the report not only highlights the state of affairs in cities, but also makes recommendations for making cities sustainable. Focusing on sectors like buildings, water, solid waste management, transport and power, the report also makes a case for engaging the private sector either on its own or through public-private partnerships (PPPs) in developing sustainable cities.
For example, corporates have a big role in the construction and maintenance of sustainable buildings. It also offers them strategic business opportunities. Companies can begin with themselves by converting their offices and residences into green buildings. Small, but institutionalised steps like annual water and energy audits would subsequently help in maintaining sustainability. It’s important because buildings consume 30-40 % of the global energy use and emit 24% of world CO2 emissions. About 90% of the energy is used for heating, cooling, lighting and other applications. Construction and material manufacture account for only 10% of the energy used. Improved energy efficiency measures alone can help reduce 30% of greenhouse gas emissions by 2020. Whether it’s industry or transport, all the sectors offer scope for emission reduction.
Similarly, having a preferential policy for purchasing green products would go a long way. Besides, manufacturers can produce resource efficient products, particularly electrical appliances. It’s desirable for companies to test, certify and label their products. Financial institutions can come out with innovating green products. MNCs can facilitate transfer of clean technology. More importantly, corporates and public-private organisations have a role in creating a market for greener products and technologies.
Referring to water, the report recommends laying down institutional mechanisms for PPPs in executing services contracts like billing and collection, management contracts like water treatment and mapping of distribution network. Similarly, in solid waste management, the private sector’s role has been underlined in service improvement and better cost recovery. It calls for capacity building of local bodies to enable them to appreciate the issues regarding processing facilities and landfills before they enter into contracts with the private sector. In fact, they have to be informed not only legally, but also technically.
Though the Teri report fills the knowledge gap in this area in the country, yet it’s only the first step in this direction. Says RK Pachauri, director-general, Teri, in the foreword to the report, “Clearly, recommendations for improved service delivery in cities cannot be complete without appropriate regulatory frameworks and institutional arrangements to empower city governments with adequate financial resources, institutional capacities, and more importantly, good governance practices.”
Making cities sustainable is important because half of the world population lives in cities. The proportion of people living in cities is projected to rise to 70% by 2050, according to the UN-Habitat. It will have significant impacts. Cities contribute the most to a nation’s GDP, which leads to corresponding level of energy consumption and CO2 emissions. So, cities, particularly production and services centres, hold the key to reduce CO2 emissions and check climate change. In cities, most of the energy is consumed by industry; residential and commercial buildings, and services and transport. It’s a little wonder that initiatives like UK’s Sustainable Cities Index 2008, UN-Habitat’s Sustainable Cities Programme and Clinton Climate Initiative’s C40 Large Cities Climate Leadership Group have sprung up worldwide.
The Financial Express, May 11, 2009, Page 5
fe Bureau
The title says it all. An exploration of sustainability in the provision of basic urban services in Indian cities, is true to its name. Brought out by The Energy and Resources Institute (Teri) in partnership with Sustainable Urbanism International and Arghyam, and with support from Rohini and Nandan Nilekani, the report not only highlights the state of affairs in cities, but also makes recommendations for making cities sustainable. Focusing on sectors like buildings, water, solid waste management, transport and power, the report also makes a case for engaging the private sector either on its own or through public-private partnerships (PPPs) in developing sustainable cities.
For example, corporates have a big role in the construction and maintenance of sustainable buildings. It also offers them strategic business opportunities. Companies can begin with themselves by converting their offices and residences into green buildings. Small, but institutionalised steps like annual water and energy audits would subsequently help in maintaining sustainability. It’s important because buildings consume 30-40 % of the global energy use and emit 24% of world CO2 emissions. About 90% of the energy is used for heating, cooling, lighting and other applications. Construction and material manufacture account for only 10% of the energy used. Improved energy efficiency measures alone can help reduce 30% of greenhouse gas emissions by 2020. Whether it’s industry or transport, all the sectors offer scope for emission reduction.
Similarly, having a preferential policy for purchasing green products would go a long way. Besides, manufacturers can produce resource efficient products, particularly electrical appliances. It’s desirable for companies to test, certify and label their products. Financial institutions can come out with innovating green products. MNCs can facilitate transfer of clean technology. More importantly, corporates and public-private organisations have a role in creating a market for greener products and technologies.
Referring to water, the report recommends laying down institutional mechanisms for PPPs in executing services contracts like billing and collection, management contracts like water treatment and mapping of distribution network. Similarly, in solid waste management, the private sector’s role has been underlined in service improvement and better cost recovery. It calls for capacity building of local bodies to enable them to appreciate the issues regarding processing facilities and landfills before they enter into contracts with the private sector. In fact, they have to be informed not only legally, but also technically.
Though the Teri report fills the knowledge gap in this area in the country, yet it’s only the first step in this direction. Says RK Pachauri, director-general, Teri, in the foreword to the report, “Clearly, recommendations for improved service delivery in cities cannot be complete without appropriate regulatory frameworks and institutional arrangements to empower city governments with adequate financial resources, institutional capacities, and more importantly, good governance practices.”
Making cities sustainable is important because half of the world population lives in cities. The proportion of people living in cities is projected to rise to 70% by 2050, according to the UN-Habitat. It will have significant impacts. Cities contribute the most to a nation’s GDP, which leads to corresponding level of energy consumption and CO2 emissions. So, cities, particularly production and services centres, hold the key to reduce CO2 emissions and check climate change. In cities, most of the energy is consumed by industry; residential and commercial buildings, and services and transport. It’s a little wonder that initiatives like UK’s Sustainable Cities Index 2008, UN-Habitat’s Sustainable Cities Programme and Clinton Climate Initiative’s C40 Large Cities Climate Leadership Group have sprung up worldwide.
Real Estate
Coming to terms with reality
Coming to terms with reality
The Hindu Business Line, May 10, 2009, Page 15
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There are positive signs in the market. New projects are being announced and residential construction is picking up. Slow but sure signs of a change for the better.
--------------------------------------------------------------------------------
R. Balaji
Getting the market to face reality is the biggest challenge confronting the realty sector today, according to Mr Kumar Gera, Chairman, Confederation of Real Estate Developers’ Associations of India (CREDAI). The market perception is being moulded by the media based on the performance of listed companies that represent a small fraction of the industry.
Mr Gera, who was in Chennai earlier this week, spoke to Business Line on a range of issues facing real estate developers, the market situation, the prevailing perception of the market, the proposed law to regulate developers, project funding, and infrastructure development to grow the peripheral areas in the urban centres.
Market perception
On market perception, Mr Gera says the challenge is getting the assessment as close to reality as possible. For now, the media focus has primarily been on listed companies whose information is in the public domain. The fact is that the couple of dozen listed companies together account for just about 5 per cent of the market share, but the “entire industry is being painted with the same brush.”
These companies also account for about 60 per cent of the debt from banks and financial institutions, which are biased by “the perception of transparency.” There is a mismatch in distribution of debt and the market share.
On the other hand, over 95 per cent of the market is with a large number of small players — partnerships, proprietor-run and joint venture companies. The bulk of the industry is represented by these “small players with a high equity in the business and little outside funding.”
So what is the reality or the developers’ perception of the market? “It is a buyers’ market,” says Mr Gera. Developers have adjusted to the market conditions. The market is not as bad as it was at the start of the year. Following the global financial crisis towards the end of last year everything came to a halt and the market hit a downturn. Banks were worried that asset prices would fall steeply and cut back on funding, insisted on higher margins to cover for a possible drop and potential customers decided against spending.
But now the market has adjusted to the change — prices are down, banks have brought down interest rates and customers are getting a good deal. There are positive signs in the market. New projects are being announced and residential construction is picking up. Slow but sure signs of a change for the better, he says.
Affordable segment
Affordable housing is one segment where there is some activity. This is not a well-defined segment — effectively, customers find it affordable when they see value for money. This category spans the entire gamut of the residential development and market segments. CREDAI is pushing for Special Residential Zones (SRZs) to bring in organised large-scale development of residential zone.
The governments have to bring in infrastructure and provide utilities upfront. But typically in most cities buildings come up first and people wait for water, power and sewerage facilities. Schemes such as the Jawarharlal Nehru Urban Renewal Mission have to be dovetailed with the development of SRZs.
When infrastructure is well spread out more land becomes available and prices will not spiral upwards. Look at any of the metros — Chennai, Delhi, Mumbai, Kolkata — there is no supply in the main areas of the city and these are all growing in the periphery. Ahmedabad is a good example, says Mr Gera. Infrastructure development in the periphery helps to keep prices down.
Law to regulate
The Central Government has proposed a law to regulate the developers — Mr Gera is a part of the committee framing the draft — which is likely to be drafted in the coming weeks. But the initial drafts focus primarily on regulating the developers. This is essential, he acknowledges, but how about the other parties involved, the buyers, banks, financial institutions and local authorities, he asks.
According to Mr Gera, it would be unfair to blame developers alone for a shortfall in service. Everybody with a stake in the transaction has a responsibility. Financial institutions that agree to fund a project must stick to their commitment; local authorities who have to give approvals need to stick to schedule, provide basic utilities and infrastructure — they profit from levies, charges and taxes. They need to be accountable; banks and housing finance institutions delay disbursements to buyers which in turn hits the developer.
Buyers band together after signing on the dotted line and start dictating terms to the developer. So all concerned have to be brought under the purview of the proposed law argues, Mr Gera. CREDAI will work towards this objective, he says.
The Hindu Business Line, May 10, 2009, Page 15
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There are positive signs in the market. New projects are being announced and residential construction is picking up. Slow but sure signs of a change for the better.
--------------------------------------------------------------------------------
R. Balaji
Getting the market to face reality is the biggest challenge confronting the realty sector today, according to Mr Kumar Gera, Chairman, Confederation of Real Estate Developers’ Associations of India (CREDAI). The market perception is being moulded by the media based on the performance of listed companies that represent a small fraction of the industry.
Mr Gera, who was in Chennai earlier this week, spoke to Business Line on a range of issues facing real estate developers, the market situation, the prevailing perception of the market, the proposed law to regulate developers, project funding, and infrastructure development to grow the peripheral areas in the urban centres.
Market perception
On market perception, Mr Gera says the challenge is getting the assessment as close to reality as possible. For now, the media focus has primarily been on listed companies whose information is in the public domain. The fact is that the couple of dozen listed companies together account for just about 5 per cent of the market share, but the “entire industry is being painted with the same brush.”
These companies also account for about 60 per cent of the debt from banks and financial institutions, which are biased by “the perception of transparency.” There is a mismatch in distribution of debt and the market share.
On the other hand, over 95 per cent of the market is with a large number of small players — partnerships, proprietor-run and joint venture companies. The bulk of the industry is represented by these “small players with a high equity in the business and little outside funding.”
So what is the reality or the developers’ perception of the market? “It is a buyers’ market,” says Mr Gera. Developers have adjusted to the market conditions. The market is not as bad as it was at the start of the year. Following the global financial crisis towards the end of last year everything came to a halt and the market hit a downturn. Banks were worried that asset prices would fall steeply and cut back on funding, insisted on higher margins to cover for a possible drop and potential customers decided against spending.
But now the market has adjusted to the change — prices are down, banks have brought down interest rates and customers are getting a good deal. There are positive signs in the market. New projects are being announced and residential construction is picking up. Slow but sure signs of a change for the better, he says.
Affordable segment
Affordable housing is one segment where there is some activity. This is not a well-defined segment — effectively, customers find it affordable when they see value for money. This category spans the entire gamut of the residential development and market segments. CREDAI is pushing for Special Residential Zones (SRZs) to bring in organised large-scale development of residential zone.
The governments have to bring in infrastructure and provide utilities upfront. But typically in most cities buildings come up first and people wait for water, power and sewerage facilities. Schemes such as the Jawarharlal Nehru Urban Renewal Mission have to be dovetailed with the development of SRZs.
When infrastructure is well spread out more land becomes available and prices will not spiral upwards. Look at any of the metros — Chennai, Delhi, Mumbai, Kolkata — there is no supply in the main areas of the city and these are all growing in the periphery. Ahmedabad is a good example, says Mr Gera. Infrastructure development in the periphery helps to keep prices down.
Law to regulate
The Central Government has proposed a law to regulate the developers — Mr Gera is a part of the committee framing the draft — which is likely to be drafted in the coming weeks. But the initial drafts focus primarily on regulating the developers. This is essential, he acknowledges, but how about the other parties involved, the buyers, banks, financial institutions and local authorities, he asks.
According to Mr Gera, it would be unfair to blame developers alone for a shortfall in service. Everybody with a stake in the transaction has a responsibility. Financial institutions that agree to fund a project must stick to their commitment; local authorities who have to give approvals need to stick to schedule, provide basic utilities and infrastructure — they profit from levies, charges and taxes. They need to be accountable; banks and housing finance institutions delay disbursements to buyers which in turn hits the developer.
Buyers band together after signing on the dotted line and start dictating terms to the developer. So all concerned have to be brought under the purview of the proposed law argues, Mr Gera. CREDAI will work towards this objective, he says.
Real Estate
Better now than ever
Better now than ever
The Hindu Business Line, May 10, 2009, Page 15
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The overall sentiments are changing again. Real estate is looking good and property prices have pretty much bottomed out. - KABUL CHAWLA, MD, BPTP LTD.
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Moumita Bakshi Chatterjee
In March 2008, BPTP Ltd took the industry by surprise when it outbid its larger rivals to clinch the biggest land deal in India. The company snapped-up 95 acres of prime commercial land at Noida, near Delhi, for Rs 5,006 crore. But the realty market crash in the months that followed saw BPTP approach the Noida Authority seeking permission to surrender the land. BPTP’s Managing Director, Mr Kabul Chawla, says that the market crash was sudden and the company soon realised that a smaller 22-acre project at the site may make more business sense.
Mr Chawla shares with Business Line the company’s plans for this year.
Excerpts from the interview:
Looking back, would you say that in bidding aggressively for the Noida land last year you grossly misjudged the real estate market?
At that point when we bid, it seemed that it had been taken for a song. Exhausting the 10 million sq.ft looked easy, and the time span to consume this was envisaged at 7-8 years. The sudden fall in the market was not anticipated. But it was important that we realised in time that we will not be able to use the entire land bank in 7-8 years. So we opted for a smaller project and retained only 22acres .
Of course, we had to pay a penalty of Rs 123 crore. But at least we are still going ahead and executing the project. Also, our cash flows are not locked-up for the future.
Is the demand in the residential market somewhat reviving? Have consumer sentiments improved in the last few weeks?
In April 2008 when the markets were turning, BPTP went out and sold about 2,500 apartments until March. Of course we re-priced the product, as we had to ensure that customers saw value add. I think real estate is a product-specific market.
The sentiments at that time were low, and people were not sure whether developers will deliver on their promises. These were the biggest challenges that we all faced.
Fortunately, we convinced our customers that we will be able to deliver.
But now the overall sentiments are changing again, and it is reflecting on the stock markets as well. I think real estate is looking good.
I believe that there is a demand-supply gap, today. A lot of supply everyone talked about earlier was not achievable.
Besides, many of the property products were not even relevant. If you build a project and there is no accessibility or social infrastructure to support it, then it is not a meaningful project. Only those projects that meet these specifications will attract demand.
Would you say that the property prices have finally bottomed out?
Yes, pretty much. Everyone has come down to margins of less than 20 per cent and people are focusing more on creating value for customers. If your customer does not make money (see appreciation in property value) he will not re-invest with you. It was a tough time for developers when property markets took a beating.
But if you need a house, now is the time to buy it.
Does BPTP plan to raise funds through private placement or an IPO?
The balance in the real-estate portfolio has ensured that we are not an overly-leveraged company today. And we are not under stress.
If we raise funds, it will be primarily for construction of Noida project where we have retained 22 acres of land, and are building a five-star hotel and an office complex. And here too, the construction cost will be less than 40 per cent of the overall product cost.
So a part of it will be funded from borrowings and part from internal accruals. We are not looking at fund-raising right now.
We are not planning an IPO this year.
In fact, I am not sure that the Indian and foreign investors still understand how real estate works in India. I do not think that maturity has come yet. Real estate is a tricky play.
Only those developers who understand the business well, have credibility with institutions, and are focused on their projects, are going to survive.
The Hindu Business Line, May 10, 2009, Page 15
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The overall sentiments are changing again. Real estate is looking good and property prices have pretty much bottomed out. - KABUL CHAWLA, MD, BPTP LTD.
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Moumita Bakshi Chatterjee
In March 2008, BPTP Ltd took the industry by surprise when it outbid its larger rivals to clinch the biggest land deal in India. The company snapped-up 95 acres of prime commercial land at Noida, near Delhi, for Rs 5,006 crore. But the realty market crash in the months that followed saw BPTP approach the Noida Authority seeking permission to surrender the land. BPTP’s Managing Director, Mr Kabul Chawla, says that the market crash was sudden and the company soon realised that a smaller 22-acre project at the site may make more business sense.
Mr Chawla shares with Business Line the company’s plans for this year.
Excerpts from the interview:
Looking back, would you say that in bidding aggressively for the Noida land last year you grossly misjudged the real estate market?
At that point when we bid, it seemed that it had been taken for a song. Exhausting the 10 million sq.ft looked easy, and the time span to consume this was envisaged at 7-8 years. The sudden fall in the market was not anticipated. But it was important that we realised in time that we will not be able to use the entire land bank in 7-8 years. So we opted for a smaller project and retained only 22acres .
Of course, we had to pay a penalty of Rs 123 crore. But at least we are still going ahead and executing the project. Also, our cash flows are not locked-up for the future.
Is the demand in the residential market somewhat reviving? Have consumer sentiments improved in the last few weeks?
In April 2008 when the markets were turning, BPTP went out and sold about 2,500 apartments until March. Of course we re-priced the product, as we had to ensure that customers saw value add. I think real estate is a product-specific market.
The sentiments at that time were low, and people were not sure whether developers will deliver on their promises. These were the biggest challenges that we all faced.
Fortunately, we convinced our customers that we will be able to deliver.
But now the overall sentiments are changing again, and it is reflecting on the stock markets as well. I think real estate is looking good.
I believe that there is a demand-supply gap, today. A lot of supply everyone talked about earlier was not achievable.
Besides, many of the property products were not even relevant. If you build a project and there is no accessibility or social infrastructure to support it, then it is not a meaningful project. Only those projects that meet these specifications will attract demand.
Would you say that the property prices have finally bottomed out?
Yes, pretty much. Everyone has come down to margins of less than 20 per cent and people are focusing more on creating value for customers. If your customer does not make money (see appreciation in property value) he will not re-invest with you. It was a tough time for developers when property markets took a beating.
But if you need a house, now is the time to buy it.
Does BPTP plan to raise funds through private placement or an IPO?
The balance in the real-estate portfolio has ensured that we are not an overly-leveraged company today. And we are not under stress.
If we raise funds, it will be primarily for construction of Noida project where we have retained 22 acres of land, and are building a five-star hotel and an office complex. And here too, the construction cost will be less than 40 per cent of the overall product cost.
So a part of it will be funded from borrowings and part from internal accruals. We are not looking at fund-raising right now.
We are not planning an IPO this year.
In fact, I am not sure that the Indian and foreign investors still understand how real estate works in India. I do not think that maturity has come yet. Real estate is a tricky play.
Only those developers who understand the business well, have credibility with institutions, and are focused on their projects, are going to survive.
Real Estate
Tata Housing eyes Rs 700 cr from low-cost projects
Tata Housing eyes Rs 700 cr from low-cost projects
Business Standard, May 10, 2009, Page 4
Raghavendra Kamath / Mumbai
Tata Housing Development Company, a unit of Tata Sons, expects to earn Rs 700 crore in revenue from low-cost housing in the next four years, a top company official has said.
Tata Housing is launching over 1,000 low-cost houses under the brand “Shubh Griha” priced between Rs 3.9 lakh and Rs 6.7 lakh in Bhoisar, on the outskirts of Mumbai, and plans to launch around 4,000 such houses across other cities in the next four years, mainly targeting industrial workers and other low-wage earners.
The company is targeting Rs 15,000 crore revenue by FY13 from its projects, covering an area of 20 million square feet. It plans to build 10,000-13,000 homes by then. The company aims to earn 5 per cent of its revenue from low-cost houses.
“Low-cost projects have more velocity and can be completed in two years. We see huge opportunity in this space, especially in industrial belts,” said Brotin Banerjee, managing director and chief executive of Tata Housing.
The company is launching two-three such projects in Bangalore and the national capital region in this fiscal and plans joint development with land owners, wherein it will share a percentage of revenues with the owners of the land, and outright of purchase of land in other cases, according to Banerjee.
A host of companies such as Omaxe and Ansal API have launched low-cost apartments to target the low-wage earners and generate cash in the downturn. While New Delhi-based Omaxe has launched 5,000 apartments in Rs 5.99-8.99 lakh range at Mayakhedi in Indore, Ansal API has launched 4,000 low-cost apartments in Jaipur, Jodhpur, Agra and Meerut.
“Our revenues are doubling every year and we hope to continue by being present in different categories and launching innovative products,” said Banerjee. Currently, the company has more than 10 million square feet under development.
Banerjee says more land is now available for developers and land prices have come down to realistic levels. “Earlier, land prices used to escalate within a month. Prices have hit their bottom and I expect them to remain sluggish for the next eight-nine months,” he said.
Real Estate
Business Standard, May 10, 2009, Page 4
Raghavendra Kamath / Mumbai
Tata Housing Development Company, a unit of Tata Sons, expects to earn Rs 700 crore in revenue from low-cost housing in the next four years, a top company official has said.
Tata Housing is launching over 1,000 low-cost houses under the brand “Shubh Griha” priced between Rs 3.9 lakh and Rs 6.7 lakh in Bhoisar, on the outskirts of Mumbai, and plans to launch around 4,000 such houses across other cities in the next four years, mainly targeting industrial workers and other low-wage earners.
The company is targeting Rs 15,000 crore revenue by FY13 from its projects, covering an area of 20 million square feet. It plans to build 10,000-13,000 homes by then. The company aims to earn 5 per cent of its revenue from low-cost houses.
“Low-cost projects have more velocity and can be completed in two years. We see huge opportunity in this space, especially in industrial belts,” said Brotin Banerjee, managing director and chief executive of Tata Housing.
The company is launching two-three such projects in Bangalore and the national capital region in this fiscal and plans joint development with land owners, wherein it will share a percentage of revenues with the owners of the land, and outright of purchase of land in other cases, according to Banerjee.
A host of companies such as Omaxe and Ansal API have launched low-cost apartments to target the low-wage earners and generate cash in the downturn. While New Delhi-based Omaxe has launched 5,000 apartments in Rs 5.99-8.99 lakh range at Mayakhedi in Indore, Ansal API has launched 4,000 low-cost apartments in Jaipur, Jodhpur, Agra and Meerut.
“Our revenues are doubling every year and we hope to continue by being present in different categories and launching innovative products,” said Banerjee. Currently, the company has more than 10 million square feet under development.
Banerjee says more land is now available for developers and land prices have come down to realistic levels. “Earlier, land prices used to escalate within a month. Prices have hit their bottom and I expect them to remain sluggish for the next eight-nine months,” he said.
Faltering at the final step
Faltering at the final step
The Financial Express, May 10, 2009, Page 4
Preeti Parashar
Ashok Bansal was waiting anxiously to be a proud owner of a villa worth five crore rupees in a prestigious luxury housing project coming up in the vicinity of Chandigarh. But looking at the present realty market scenario, he is searching for prospective buyers to sell his dream home. “I took a housing loan worth one crore rupees from a bank to buy this villa. But today I am skeptical of the investment made in this property. The developer has stalled the work and the future of the project is uncertain. So there’s no other option but to sell the property,” rues Bansal.
Like Bansal many more investors who had booked luxury apartments, villas and condominiums worth anywhere between Rs 50 lakh to Rs six crore in various projects in north India and other parts of the country, are now turning to distress selling. But there are no buyers! With the fear of losing his hard earned money, a customer is ready to sell the three-bedroom apartment he booked for one crore rupees at a much lower price. “I booked this apartment for Rs one crore in Amritsar. But looking at the slow pace of development I am ready to sell it. There are other options to invest into rather than blocking such a huge sum of money,” he says.
Realty players going slow
Real estate giants like Parsvnath, Emaar MGF, Ansals and ATS Infrastructure had announced huge investment in housing as well commercial projects in Punjab, Haryana and Chandigarh region. But now these much-hyped projects seem unlikely to take off with some developers ready to withdraw investment. Zoom Developers had announced to invest upto Rs 600 crore in major cities of Punjab for constructing housing complexes, hotels and shopping malls in 2007. But so far the company has invested only Rs 30 crore.
Emaar MGF had announced an investment of Rs 16,000 crore in Mohali in Punjab, which would constitute a major portion of the company’s investment portfolio in India. But with the investors sentiments running low the development work is getting delayed in its largest integrated township — Mohali Hills to be spread across 3,000 acre in Mohali. It is learnt that the company is exploring the semi-urban and rural areas of Punjab for fresh investment in affordable as well as luxury housing projects. The step is being undertaken for incremental sales to happen via people who still are ready to invest.
Cross country effect
In Mumbai, three million square feet of commercial space has been held up while housing projects are in go-slow mode, according to Jones Lang LaSalle Meghraj. Major commercial projects like DLF Towers and Ruby Mills have also been delayed. “Work on DLF Towers, to come up over 17.5 acre in Lower Parel with an investment of over Rs 700 crore, seems to be going slow. Also Ruby Mills to be spread over 10 lakh sq ft of space in Lower Parel worth Rs 500 crore was slated to be launched in 2010, but will be extended to 2011,” says an official.
Major projects in Hyderabad hit by the economic downturn include Maytas Hill County and Lanco Hills Phase II. Lanco Infratech’s Lanco Hills phase II, with over Rs 3,500 crore investment, is awaiting its launch which has been delayed due to the present market conditions.
Chennai is also facing the heat of the downturn with various projects put on hold. As per JLLM, both residential as well commercial projects are going slow in Chennai and its suburbs. DLF’s residential project in Sholinganallur is likely to be delayed along with Mansarovar properties, which was to launch its residential project in the first quarter of this year.
Corrective measures
ATS Infrastructure has offered various options to its investors to make up for the delay of their project — Golf Meadows Prelude in Dera Bassi (Punjab), which will be delayed by six to eight months. The company has given two options to the buyers — to receive an interest of 6.5% (of the apartment cost) per annum at the time of possession or accept additional facilities. “We took this initiative to retain the credibility of the company among the investors,” says RS Bhullar, VP, ATS Infrastructure. Bhullar adds, “We will be incurring extra costs of Rs two lakh per apartment for additional fittings etc and we expect that the overall cost of Rs 100 crore will escalate by 7-10% due to the delay.”
However DLF seems to have adopted a wait and watch mode in launching its projects in Mohali, Mullanpur village near Chandigarh and Panchkula (Haryana). As per company officials, the projects will be announced in the next few months as the company is awaiting approvals for them.
On the brink of withdrawal
Parsvnath’s luxury housing project — Prideasia has been hit due to the lackadaisical attitude of the Chandigarh administration. The project’s fate is hanging in balance with an investment of over Rs 700 crore at stake. Parsvnath had bagged the project at a price of Rs 821 crore in an open auction about two years ago but has failed to pay the balance bid-amount of Rs 304 crore.
Barely 140 units out of the total 1,314 units were sold out and now around 60 investors have already opted for withdrawal of their deposits. Advisor to Parsvnath, PK Jain says, “We are not only losing out our investment but also the customer’s goodwill. Either the administration should approve our drawings or give us the desired land to continue with the project.”
The Financial Express, May 10, 2009, Page 4
Preeti Parashar
Ashok Bansal was waiting anxiously to be a proud owner of a villa worth five crore rupees in a prestigious luxury housing project coming up in the vicinity of Chandigarh. But looking at the present realty market scenario, he is searching for prospective buyers to sell his dream home. “I took a housing loan worth one crore rupees from a bank to buy this villa. But today I am skeptical of the investment made in this property. The developer has stalled the work and the future of the project is uncertain. So there’s no other option but to sell the property,” rues Bansal.
Like Bansal many more investors who had booked luxury apartments, villas and condominiums worth anywhere between Rs 50 lakh to Rs six crore in various projects in north India and other parts of the country, are now turning to distress selling. But there are no buyers! With the fear of losing his hard earned money, a customer is ready to sell the three-bedroom apartment he booked for one crore rupees at a much lower price. “I booked this apartment for Rs one crore in Amritsar. But looking at the slow pace of development I am ready to sell it. There are other options to invest into rather than blocking such a huge sum of money,” he says.
Realty players going slow
Real estate giants like Parsvnath, Emaar MGF, Ansals and ATS Infrastructure had announced huge investment in housing as well commercial projects in Punjab, Haryana and Chandigarh region. But now these much-hyped projects seem unlikely to take off with some developers ready to withdraw investment. Zoom Developers had announced to invest upto Rs 600 crore in major cities of Punjab for constructing housing complexes, hotels and shopping malls in 2007. But so far the company has invested only Rs 30 crore.
Emaar MGF had announced an investment of Rs 16,000 crore in Mohali in Punjab, which would constitute a major portion of the company’s investment portfolio in India. But with the investors sentiments running low the development work is getting delayed in its largest integrated township — Mohali Hills to be spread across 3,000 acre in Mohali. It is learnt that the company is exploring the semi-urban and rural areas of Punjab for fresh investment in affordable as well as luxury housing projects. The step is being undertaken for incremental sales to happen via people who still are ready to invest.
Cross country effect
In Mumbai, three million square feet of commercial space has been held up while housing projects are in go-slow mode, according to Jones Lang LaSalle Meghraj. Major commercial projects like DLF Towers and Ruby Mills have also been delayed. “Work on DLF Towers, to come up over 17.5 acre in Lower Parel with an investment of over Rs 700 crore, seems to be going slow. Also Ruby Mills to be spread over 10 lakh sq ft of space in Lower Parel worth Rs 500 crore was slated to be launched in 2010, but will be extended to 2011,” says an official.
Major projects in Hyderabad hit by the economic downturn include Maytas Hill County and Lanco Hills Phase II. Lanco Infratech’s Lanco Hills phase II, with over Rs 3,500 crore investment, is awaiting its launch which has been delayed due to the present market conditions.
Chennai is also facing the heat of the downturn with various projects put on hold. As per JLLM, both residential as well commercial projects are going slow in Chennai and its suburbs. DLF’s residential project in Sholinganallur is likely to be delayed along with Mansarovar properties, which was to launch its residential project in the first quarter of this year.
Corrective measures
ATS Infrastructure has offered various options to its investors to make up for the delay of their project — Golf Meadows Prelude in Dera Bassi (Punjab), which will be delayed by six to eight months. The company has given two options to the buyers — to receive an interest of 6.5% (of the apartment cost) per annum at the time of possession or accept additional facilities. “We took this initiative to retain the credibility of the company among the investors,” says RS Bhullar, VP, ATS Infrastructure. Bhullar adds, “We will be incurring extra costs of Rs two lakh per apartment for additional fittings etc and we expect that the overall cost of Rs 100 crore will escalate by 7-10% due to the delay.”
However DLF seems to have adopted a wait and watch mode in launching its projects in Mohali, Mullanpur village near Chandigarh and Panchkula (Haryana). As per company officials, the projects will be announced in the next few months as the company is awaiting approvals for them.
On the brink of withdrawal
Parsvnath’s luxury housing project — Prideasia has been hit due to the lackadaisical attitude of the Chandigarh administration. The project’s fate is hanging in balance with an investment of over Rs 700 crore at stake. Parsvnath had bagged the project at a price of Rs 821 crore in an open auction about two years ago but has failed to pay the balance bid-amount of Rs 304 crore.
Barely 140 units out of the total 1,314 units were sold out and now around 60 investors have already opted for withdrawal of their deposits. Advisor to Parsvnath, PK Jain says, “We are not only losing out our investment but also the customer’s goodwill. Either the administration should approve our drawings or give us the desired land to continue with the project.”
With investors delaying payment of installments and developers going slow, the real estate projects in the northern region are likely to miss their deadline of completion, adding on to the woes of the downtrodden industry.
Real Estate
Steel manufacturers shift focus to domestic mkt
Steel manufacturers shift focus to domestic mkt
The Financial Express, May 11, 2009, Page 4
Smita Joshi Saha, Mumbai
With correction of about 60% in the global steel prices due to the economic slowdown, Indian steel players have cut down on their exports and are now completely focusing on growing domestic sales, say industry players.
Steel manufacturers like JSW Steel, Essar Steel and Ispat Industries have confirmed of their focus on the domestic market as exports take a back seat.
Sajjan Jindal, vice-chairman and MD of JSW Steel, while announcing the company’s fourth quarter results said, “The company will reduce its exports to 13% in FY10 from 18% in FY09 and 40% in FY08.” Jindal also sees JSW’s saleable steel going up by 78% to 6.1 million tonne in FY10 and output going up by 72% at 6.4 million tonne in FY10.
Similarly, Ispat Industries’ exports have also remained just minimal from about 13% two year back, agrees Anil Surekha, director—finance, Ispat Industries Ltd.
Declining to give specifics, an Essar steel spokesperson confirmed that the company’s exports have gone down considerably. Globally steel demand is expected to dip by 15%. However, steel demand in India is expected to grow, with World Steel Association predicting that only India will be in a positive growth zone in 2009 at 2%.
According to World Steel Association data, steel demand in China, is seen falling 5% as the ongoing global economic crisis hits the country’s exports. Demand for the metal, used in the construction and automotive industries, is seen falling 36.6 % in the US and 28.8 % in the European Union.
Meanwhile, as the domestic demand in India is growing with improvements in construction and slight improvement in automotive segment, domestic steel players fear dumping of the commodity in India by overseas companies, which would impact the domestic industry.
Steel makers are of the view that there would be avalanche of imports in the coming months as there is generally a time lag of 2-3 months between the import bookings and arrivals.
Hence, domestic steel majors have asked the government to impose safeguard duty on cheap imports of a key steel products, which has started affecting the sector.
The Financial Express, May 11, 2009, Page 4
Smita Joshi Saha, Mumbai
With correction of about 60% in the global steel prices due to the economic slowdown, Indian steel players have cut down on their exports and are now completely focusing on growing domestic sales, say industry players.
Steel manufacturers like JSW Steel, Essar Steel and Ispat Industries have confirmed of their focus on the domestic market as exports take a back seat.
Sajjan Jindal, vice-chairman and MD of JSW Steel, while announcing the company’s fourth quarter results said, “The company will reduce its exports to 13% in FY10 from 18% in FY09 and 40% in FY08.” Jindal also sees JSW’s saleable steel going up by 78% to 6.1 million tonne in FY10 and output going up by 72% at 6.4 million tonne in FY10.
Similarly, Ispat Industries’ exports have also remained just minimal from about 13% two year back, agrees Anil Surekha, director—finance, Ispat Industries Ltd.
Declining to give specifics, an Essar steel spokesperson confirmed that the company’s exports have gone down considerably. Globally steel demand is expected to dip by 15%. However, steel demand in India is expected to grow, with World Steel Association predicting that only India will be in a positive growth zone in 2009 at 2%.
According to World Steel Association data, steel demand in China, is seen falling 5% as the ongoing global economic crisis hits the country’s exports. Demand for the metal, used in the construction and automotive industries, is seen falling 36.6 % in the US and 28.8 % in the European Union.
Meanwhile, as the domestic demand in India is growing with improvements in construction and slight improvement in automotive segment, domestic steel players fear dumping of the commodity in India by overseas companies, which would impact the domestic industry.
Steel makers are of the view that there would be avalanche of imports in the coming months as there is generally a time lag of 2-3 months between the import bookings and arrivals.
Hence, domestic steel majors have asked the government to impose safeguard duty on cheap imports of a key steel products, which has started affecting the sector.
Real Estate
Indiabulls Real Estate to raise $150 million from QIP issue
Indiabulls Real Estate to raise $150 million from QIP issue
Business Standard, May 9, 2009, page 5
BS Reporters / Mumbai
Property developer Indiabulls Real Estate (IBREL) is talking to investors to raise at least $150 million (Rs 750 crore) from sale of shares to select investors as part of its qualified institutional placement (QIP) plan.
The Mumbai-based real estate developer has begun its road show and has hired Morgan Stanley as adviser. A spokesperson confirmed the hiring of the investment banker.
Indiabulls Real Estate had announced last month that it planned to raise $600 million (Rs 3,000 crore) from sale of shares from a QIP issue.
The money from the QIP is expected to be used to fund its power projects, mainly the 1,320 megawatt project planned to be built in Amaravati, Maharashtra.
The company plans to seek shareholders’ approval at a meeting on May 18.
The QIP was expected to be a precursor to the initial public issue being planned by the company, sources said.
Sources involved with the development say the company plans to complete the issue soon after a clear picture emerges on who will form the next government at the Centre.
Indiabulls Real Estate shares have risen 11 per cent this month and 8.9 per cent this year, compared with 23.11 per cent gain that the benchmark sensitive index has recorded this year.
Indiabulls Real Estate had, earlier this week, said it failed to raise Rs 2,322 crore from promoters and key officials as they did not convert the warrants issued to them into equity. The promoters did not convert as the company’s shares were trading about 74 per cent below the conversion price of Rs 540 per warrant.
IBREL had issued 43 million warrants in November 2007 to promoters and joint managing directors on a preferential basis. The last date for conversion was May 4 2009.
Real Estate
Business Standard, May 9, 2009, page 5
BS Reporters / Mumbai
Property developer Indiabulls Real Estate (IBREL) is talking to investors to raise at least $150 million (Rs 750 crore) from sale of shares to select investors as part of its qualified institutional placement (QIP) plan.
The Mumbai-based real estate developer has begun its road show and has hired Morgan Stanley as adviser. A spokesperson confirmed the hiring of the investment banker.
Indiabulls Real Estate had announced last month that it planned to raise $600 million (Rs 3,000 crore) from sale of shares from a QIP issue.
The money from the QIP is expected to be used to fund its power projects, mainly the 1,320 megawatt project planned to be built in Amaravati, Maharashtra.
The company plans to seek shareholders’ approval at a meeting on May 18.
The QIP was expected to be a precursor to the initial public issue being planned by the company, sources said.
Sources involved with the development say the company plans to complete the issue soon after a clear picture emerges on who will form the next government at the Centre.
Indiabulls Real Estate shares have risen 11 per cent this month and 8.9 per cent this year, compared with 23.11 per cent gain that the benchmark sensitive index has recorded this year.
Indiabulls Real Estate had, earlier this week, said it failed to raise Rs 2,322 crore from promoters and key officials as they did not convert the warrants issued to them into equity. The promoters did not convert as the company’s shares were trading about 74 per cent below the conversion price of Rs 540 per warrant.
IBREL had issued 43 million warrants in November 2007 to promoters and joint managing directors on a preferential basis. The last date for conversion was May 4 2009.
Less is more: Low-cost housing projects on the rise in Ahmedabad
Less is more: Low-cost housing projects on the rise in Ahmedabad
The Hindu Business Line, May 9, 2009, Page 17
Virendra Pandit, Ahmedabad
Two days after Tata Housing Development Company announced their low-cost housing project in the price band of Rs 3.90-6.70 lakh, a leading property developer of Ahmedabad on Thursday offered a project of more than 1,000 flats, priced between Rs 3.50 lakh and Rs 5.25 lakh at the basic level, to be completed in the next 18 months.
The Omshantinagar-2 scheme, for low and middleincome groups, will be launched here on Sunday (May 10). In what is Gujarat's first low-cost housing project during the global economic recession, Santosh Associates is constructing these flats in the Vejalpur area, within the limits of Ahmedabad Municipal Corporation (AMC). The Tata Housing project, meanwhile, is some 100 km from Mumbai.
In fact, Santosh Associates has already sold around 1,600 flats, 90 per cent of them low-cost, in different projects developed in the city ever since its inception in 1996, Mr Taral Bakeri, Partner, told Business Line, on the sidelines of a press conference.
WORKING SPACE
The company has nearly one lakh square yards of land bank in Ahmedabad, mostly in labour-dominated areas, where it would be taking up more such projects. He said, although Santosh Associates had signed an MoU with the Gujarat Government during the Vibrant Gujarat Global Investors' Summit in January this year, proposing investment of Rs 70 crore for construction of 2,000 lowcost houses, the company would be actually investing around Rs 100 crore in the next couple of years. After the existing project at hand, Santosh would soon be taking up another 1,000-plus flats scheme, in the next few months, he said.
Ahmedabad, with a fivemillion population, can absorb around 25,000 low-cost houses a year; there is huge demand but inadequate supply, Mr Bakeri said.
The low-cost flats at Omshantinagar- 2 would comprise two rooms with a kitchen (58 square yards) and three rooms with kitchen (75 sq yards) in storeyedapartments.
The company has signed up with leading banks for housing loans. The project would have all the basic facilities such as roads, streetlights, local bus availability, markets, temples and hospitals within the developed area. It would also have safety features such as earthquake- resistant structures, underground water storage tanks and overhead tower, as also common plots for recreational activities for children.
The Hindu Business Line, May 9, 2009, Page 17
Virendra Pandit, Ahmedabad
Two days after Tata Housing Development Company announced their low-cost housing project in the price band of Rs 3.90-6.70 lakh, a leading property developer of Ahmedabad on Thursday offered a project of more than 1,000 flats, priced between Rs 3.50 lakh and Rs 5.25 lakh at the basic level, to be completed in the next 18 months.
The Omshantinagar-2 scheme, for low and middleincome groups, will be launched here on Sunday (May 10). In what is Gujarat's first low-cost housing project during the global economic recession, Santosh Associates is constructing these flats in the Vejalpur area, within the limits of Ahmedabad Municipal Corporation (AMC). The Tata Housing project, meanwhile, is some 100 km from Mumbai.
In fact, Santosh Associates has already sold around 1,600 flats, 90 per cent of them low-cost, in different projects developed in the city ever since its inception in 1996, Mr Taral Bakeri, Partner, told Business Line, on the sidelines of a press conference.
WORKING SPACE
The company has nearly one lakh square yards of land bank in Ahmedabad, mostly in labour-dominated areas, where it would be taking up more such projects. He said, although Santosh Associates had signed an MoU with the Gujarat Government during the Vibrant Gujarat Global Investors' Summit in January this year, proposing investment of Rs 70 crore for construction of 2,000 lowcost houses, the company would be actually investing around Rs 100 crore in the next couple of years. After the existing project at hand, Santosh would soon be taking up another 1,000-plus flats scheme, in the next few months, he said.
Ahmedabad, with a fivemillion population, can absorb around 25,000 low-cost houses a year; there is huge demand but inadequate supply, Mr Bakeri said.
The low-cost flats at Omshantinagar- 2 would comprise two rooms with a kitchen (58 square yards) and three rooms with kitchen (75 sq yards) in storeyedapartments.
The company has signed up with leading banks for housing loans. The project would have all the basic facilities such as roads, streetlights, local bus availability, markets, temples and hospitals within the developed area. It would also have safety features such as earthquake- resistant structures, underground water storage tanks and overhead tower, as also common plots for recreational activities for children.
Million-dollar home dreams vanish as realty dawns
Million-dollar home dreams vanish as realty dawns
The Economic Times, May 10, 2009, Page 1
Neha Dewan & John Sarkar, ET Bureau, NEW DELHI
When the rich get less rich, lavish lifestyles turn into a bad dream. Wide-ranging influences, from shock at sudden economic strains to the rise of simpler living, have shrunk blue-ribbon realty consumption. Million-dollar realty transactions, which used to be routine in big cities such as Mumbai and Delhi, have all but disappeared.
Property brokerage firms point out that the once-tony suburbs of the Capital have been hit the hardest. “Million dollar transactions or deals worth Rs 5 crore are seeing a dip of around 50% in Noida and Gurgaon due to very limited supply,” says Pankaj Jain, executive director of Realistic Realtors, a North Indian real estate consulting firm. But according to property brokers, swish locations such as Vasant Vihar, Shanti Niketan and Anand Niketan are still holding up due to the pent-up demand for independent floors. “Over the last two quarters million dollar transactions in these locations have seen a spurt of around 20%,” adds Jain.
He also points out that cash rich cities such as Chandigarh are seeing only a few such transactions in prime areas like Panchkula and Mohali. “The dynamics of the Chandigarh market are very different. The holding capacity of these areas is quite good. However, owing to the tight supply, only a few transactions are being witnessed in this value,” he mentions.
Even Mumbai, which boasts some of the most costly addresses in the country, is not faring any better. Other than a slim demand in areas such as Cuffe Parade, Lower Parel, Bandra and Worli, million-dollar real estate transactions in the City of Dreams are now far and few. “The supply is always limited, with only a few choosing to go for this segment,” says Rajeev Talwar, executive director of DLF.
Agrees Niranjan Hiranandani, MD of Hiranandani Developers, who feels that the mid and lower rung segments are in the limelight now. “There are not too many such big ticket transactions happening in Mumbai as of now,” he reiterates. “It’s a high price zone and the market for that is limited in the current scenario.”
And down South, demand for $1m houses is also rather low. Says Anshuman Magazine, CMD, CB Richard Ellis, South Asia: “Jubilee Hills and Banjara Hills in Hyderabad are seeing an overall decline in such transactions. Similar is the case with Chennai in areas such as Boat Club and Poes Garden.” According to Mr Magazine, it’s also the nervous sentiment that is persuading buyers to postpone their purchase. “Since a lot of the demand in Hyderabad comes from senior IT executives, they are holding back due to uncertainty in the job market,” he adds.
Also, in Chennai, for instance, many independent houses that would roughly cost Rs 5 cr and above are owned by people who have inherited either the land or the entire property. In Bangalore, demand for such luxury apartments is also low owing to the erosion of demand from the market. However, according to Cushman & Wakefield, Bangalore is more important than Chennai and Hyderabad in the South for investment or purchase of property tagged at million dollars due to stronger economic fundamentals.
The trend in Kolkata too is no different. Brokers say the million transactions in the City of Joy are to the tune of 1-2% in areas like Ballygunge and Alipore with a buyer profile mainly consisting of businessmen. “Kolkata is no Delhi or Mumbai. The fastest selling price bracket in the city is in the range of Rs 25-40 lakh. Areas such as Alipore and Ballygunge are saturated now. Fresh development in these areas is impossible,” says Venugopal Sampath, Eastern India head of allCheckDeals.com, a realty brokerage firm.
So what all can a million dollars do for you? While it will offer an independent residence for you in posh locations in Chennai, Hyderabad and Bangalore, metros such as Mumbai and Delhi will mean living in upper class suburban locations if you don’t prefer build-up floors. As per C&W, while locations like Lower Parel, Mahalaxmi, Prabha Devi and even further north in areas such as Juhu and Bandra have the potential to offer residential units costing roughly $1mn. In NCR many ‘gated community’ projects in the peripheral locations of Gurgaon and Noida are available in this bracket.
However in Chennai, residential units with a price tag of $1mn will help you snap up luxury residences such as free hold bungalows and high-end condominiums in sizes varying from 4,500 sq ft to 6,500 sq ft in locations such as R A Puram, East Coast Road and Poes Garden among others. In Bangalore, some new high-end residential projects would be available at this cost in areas such as Richmond Road, Lavalle Road and Sankey Road. These apartments would range from 3,700 sqft-6,000 sq ft, with 3-4 bedroom units. So now you know where to make the most out of your million dollars.
The Economic Times, May 10, 2009, Page 1
Neha Dewan & John Sarkar, ET Bureau, NEW DELHI
When the rich get less rich, lavish lifestyles turn into a bad dream. Wide-ranging influences, from shock at sudden economic strains to the rise of simpler living, have shrunk blue-ribbon realty consumption. Million-dollar realty transactions, which used to be routine in big cities such as Mumbai and Delhi, have all but disappeared.
Property brokerage firms point out that the once-tony suburbs of the Capital have been hit the hardest. “Million dollar transactions or deals worth Rs 5 crore are seeing a dip of around 50% in Noida and Gurgaon due to very limited supply,” says Pankaj Jain, executive director of Realistic Realtors, a North Indian real estate consulting firm. But according to property brokers, swish locations such as Vasant Vihar, Shanti Niketan and Anand Niketan are still holding up due to the pent-up demand for independent floors. “Over the last two quarters million dollar transactions in these locations have seen a spurt of around 20%,” adds Jain.
He also points out that cash rich cities such as Chandigarh are seeing only a few such transactions in prime areas like Panchkula and Mohali. “The dynamics of the Chandigarh market are very different. The holding capacity of these areas is quite good. However, owing to the tight supply, only a few transactions are being witnessed in this value,” he mentions.
Even Mumbai, which boasts some of the most costly addresses in the country, is not faring any better. Other than a slim demand in areas such as Cuffe Parade, Lower Parel, Bandra and Worli, million-dollar real estate transactions in the City of Dreams are now far and few. “The supply is always limited, with only a few choosing to go for this segment,” says Rajeev Talwar, executive director of DLF.
Agrees Niranjan Hiranandani, MD of Hiranandani Developers, who feels that the mid and lower rung segments are in the limelight now. “There are not too many such big ticket transactions happening in Mumbai as of now,” he reiterates. “It’s a high price zone and the market for that is limited in the current scenario.”
And down South, demand for $1m houses is also rather low. Says Anshuman Magazine, CMD, CB Richard Ellis, South Asia: “Jubilee Hills and Banjara Hills in Hyderabad are seeing an overall decline in such transactions. Similar is the case with Chennai in areas such as Boat Club and Poes Garden.” According to Mr Magazine, it’s also the nervous sentiment that is persuading buyers to postpone their purchase. “Since a lot of the demand in Hyderabad comes from senior IT executives, they are holding back due to uncertainty in the job market,” he adds.
Also, in Chennai, for instance, many independent houses that would roughly cost Rs 5 cr and above are owned by people who have inherited either the land or the entire property. In Bangalore, demand for such luxury apartments is also low owing to the erosion of demand from the market. However, according to Cushman & Wakefield, Bangalore is more important than Chennai and Hyderabad in the South for investment or purchase of property tagged at million dollars due to stronger economic fundamentals.
The trend in Kolkata too is no different. Brokers say the million transactions in the City of Joy are to the tune of 1-2% in areas like Ballygunge and Alipore with a buyer profile mainly consisting of businessmen. “Kolkata is no Delhi or Mumbai. The fastest selling price bracket in the city is in the range of Rs 25-40 lakh. Areas such as Alipore and Ballygunge are saturated now. Fresh development in these areas is impossible,” says Venugopal Sampath, Eastern India head of allCheckDeals.com, a realty brokerage firm.
So what all can a million dollars do for you? While it will offer an independent residence for you in posh locations in Chennai, Hyderabad and Bangalore, metros such as Mumbai and Delhi will mean living in upper class suburban locations if you don’t prefer build-up floors. As per C&W, while locations like Lower Parel, Mahalaxmi, Prabha Devi and even further north in areas such as Juhu and Bandra have the potential to offer residential units costing roughly $1mn. In NCR many ‘gated community’ projects in the peripheral locations of Gurgaon and Noida are available in this bracket.
However in Chennai, residential units with a price tag of $1mn will help you snap up luxury residences such as free hold bungalows and high-end condominiums in sizes varying from 4,500 sq ft to 6,500 sq ft in locations such as R A Puram, East Coast Road and Poes Garden among others. In Bangalore, some new high-end residential projects would be available at this cost in areas such as Richmond Road, Lavalle Road and Sankey Road. These apartments would range from 3,700 sqft-6,000 sq ft, with 3-4 bedroom units. So now you know where to make the most out of your million dollars.
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