Real Estate Intelligence Report, Friday, August 07, 2009

UPA takes land Bill off the agenda

UPA takes land Bill off the agenda
Business Standard, August 07, 2009, Page 1

Saubhadro Chatterji / New Delhi

The long-awaited Land Acquisition (Amendment) Bill 2009 is in more trouble, with the government scrambling today to withdraw a copy of the final Bill that it circulated to MPs this morning ahead of introducing it in the Lok Sabha.

The retraction was preceded by a shouting match between Finance Minister Pranab Mukherjee and Railway Minister Mamata Banerji, who had threatened to walk out of a Cabinet meeting protesting some provisions in the Bill earlier this month.

Congress President Sonia Gandhi had to act as an umpire at the informal meeting that took place in Parliament during a break.

The bone of contention was the fact that one of Banerji’s colleagues in the Trinamool Congress, the Congress’ largest ally in the United Progressive Alliance, relayed her objections to the press.

A furious Mukherjee thumped his desk and asked, “Why did Shishir Adhikary disclose your objections to the press?” (Adhikary is also a junior rural development minister). Banerjee retorted that he had done the right thing.

Given these sharp differences between two senior ministers, Gandhi intervened and suggested the UPA discuss the contentious amendments again and that the Bill would be tabled only after a consensus.

Within minutes of this meeting, the Lok Sabha secretariat issued instructions to all the relevant sections of Parliament that the copy of the Land Acquisition (Amendment) Bill 2009 should be withdrawn and that “ no further action ” was to be taken on the Bill.

“ There is some confusion over the land Bill, so we have stopped circulating it, ” a senior office in the legislative wing of the Lok Sabha confirmed to Business Standard. All Bills to be introduced in Parliament are circulated to MPs at least 48 hours in advance.

Both Congress and Trinamool sources said the land Bill and the Rehabilitation and Resettlement (R&R) Bill — both aimed to ease theland acquisition process and secure a better deal for farmers and other land-losers — are unlikely to be placed in Parliament during the current session that ends on Friday.

But a section of the Congress is still trying to find a face-saving solution with the Trinamool. Late-night meetings between the two sides are not ruled out but the Trinamool camp is confident it will not allow the Bill to be tabled in its current form.

At the heart of the problem is a clause that allows the government to acquire up to 30 per cent of the land after private players buy the remaining 70 per cent to meet contiguity requirements.

The Trinamool wants at least four changes. One, landowners should have a legal right to buy back their land if the proposed project doesn ’ t take off within the stipulated time. Two, the government should not play a role in acquiring land to set up private projects. Three, no industry should come up on agricultural land. Four, land cannot be acquired forcibly against farmers’ wishes.

Adhikary told friends that he had tried to reason with his senior colleague, Union Rural Development Minister C P Joshi (a Congressman), to take Banerjee’s views on board. But the Bill that the government sought to introduce was identical to the 2007 version, drafted before Banerjee joined the UPA.

“Mamata Banerjee’s sentiments about land and farmers are well known. Some political concession should have been made for us,” Adhikary told party colleagues.

The UPA government has been trying to pass the twin bills for almost two years. Now, as an adamant Banerjee insists on radical changes, the Congress managers fear it might only see the light of day during the winter session of the Parliament, slated for the end of this year.

Inflation still in negative zone, but food stays on hot plate

Inflation still in negative zone, but food stays on hot plate
The Economic Times, August 07, 2009, Page 9

Our Bureau NEW DELHI

GOVERNMENT data showed on Thursday that the annual rate of inflation for all commodities stayed negative for the eighth straight week, but prices of food items continued to surge, signalling political concern for the Centre and three states preparing for assembly elections in a few months. Maharashtra is facing polls in October-November, while Haryana, which is supposed to go to polls next year is likely to advance it to this yearend. Jharkhand, now under President’s rule, is also likely to go to polls later this year.

As per the latest official data, annual inflation based on the wholesale price index (WPI) stood at -1.58% for the week ended July 25, against 12.53% a year ago. The negative inflation is, however, no consolation for consumers as inflation in food articles is almost in double digits—9.7% for the week ended July 25. The sharp run-up in prices of food articles, which were up 0.8% in the week under consideration, does not adequately reflect in the WPI due to its low weight in the index.

A negative rate of annual inflation offers the government little comfort when prices, particularly of food, go up week after week, as was evident from finance minister Pranab Mukherjee’s statement in Parliament on Thursday. “The government is responsible... the government is responsive. We are sensitive to it (price rise) ...as and when appropriate policy measures are needed, they will be taken,” Mr Mukherjee said. The minister said vegetable and milk prices have increased due to erratic monsoon.

India’s chief statistician Pronab Sen told ET that rising food prices have more to do with speculation at this stage than a crop failure. “Before the harvest, a lot of speculation activity takes place, driving up prices. We cannot say as yet that crops are failing...There is no real threat to economic growth this fiscal (on account of any disappointing harvest),” said Mr Sen.

At the wholesale level, prices are up 19% for pulses, 26% for vegetables and 11.3% for cereals compared to last year levels. At the retail level the increase has been sharper.

Realtors rebuild hopes on rising home sales

Realtors rebuild hopes on rising home sales
Business Standard, August 07, 2009, Page 1

Raghavendra Kamath / Mumbai

After a long hiatus, home sales are finally back on track. Sales of major real estate developers have more than trebled in the June quarter compared to the preceding three months, amid growing expectations that the good times will continue to roll.

Consider this: DLF, the country’s largest real estate developer by market value, has sold 2,500 apartments in the first quarter of the current fiscal, compared to nearly 600 in the quarter ended March 2009. In the preceding quarter, DLF had sold just about 120 apartments.

Unitech, the country’s second largest property developer, went a step further and sold 5,000 units in the first quarter, compared to 300 to 400 apartments in the preceding quarter.

Delhi-based Parsvnath Developers did 100-odd transactions against 25 to 30 in the previous quarters, and Omaxe reported sales of 700 units, compared to 200 in the same period.

“After a few difficult quarters last fiscal, we have seen a fairly good first quarter of the current fiscal. The economy on the whole has been showing signs of recovery, and activity in real estate has picked up,’’ DLF Vice-Chairman Rajiv Singh said.

Almost all of them are convinced that the future looks bright. While DLF’s Singh said he expected the market to improve, a Unitech spokesperson said the market would pick up in the second quarter, though demand would be mainly for affordable products.

“It is a good time to bargain-pick now,” said Ravi Ramu, director of Bangalore-based Puravankara Projects.

That the first-quarter sales are no flash in the pan is reflected in the fact that developers have lined up around 60 million square feet of new launches this year, more than double last fiscal’s bookings.

DLF plans to launch 8 to 9 million sq ft of city centre projects in Chennai, Kochi, Delhi and Gurgaon and 5 to 8 million sq ft of mid-income housing projects in the National Capital Region and southern cities. Unitech has launched buildings covering 15 million sq ft since April and plans to launch an additional 15 million by March 2010.

Apart from lower interest rates and affordable housing, the reduction in the number of fence-sitters has helped in a major way. ICICI Bank Chief Financial Officer N S Kannan said buyers had been postponing their purchase decisions in the hope that prices would fall further.

“There is a general sense now that prices have stabilised,” he said, adding “our disbursements, month-on-month, have increased and we would like to play in that market based on our current strategy on pricing”.

Though Kannan was not willing to comment on a specific number, sources in the bank said it was expecting a 20 per cent growth in disbursals in the second quarter.

SBI, the country’s largest bank, has set a monthly home loan disbursal target at Rs 2,500 crore compared to Rs 1,500 crore disbursed over the last few months. The bank is targeting a home loan growth of 30 per cent in the current fiscal against 21 per cent in 2008-09.

HDFC, the country’s largest home loan lender, saw its disbursals rise 22 per cent in the first quarter and expects the trend to continue.

While several property developers have ventured aggressively into Rs 20-Rs 60 lakh apartments and launched properties that were 20 to 30 per cent lower than the prevailing rates, interest rates have also softened in the last six months, which eased the monthly loan pay-outs of home buyers.

In December, the Indian Banks’ Association (IBA) and its members in December had announced new rates, under which loans up to Rs 5 lakh was offered at 8.5 per cent and those between Rs 5 lakh and Rs 20 lakh at 9.25 per cent.

Private sector banks have also reduced their retail lending rates 50 to 100 basis points in the December 2008-June 2009 period.

Analysts are also gung-ho. Pankaj Kapoor, chief executive of Liases Foras, a real estate research firm, said the momentum would increase after Diwali. “Now we are seeing a momentum for some time, lull for the next few days and then momentum. This will change as the economic recovery gathers steam,’’ he said.

(Additional reporting by Neeraj Thakur and Sudeep Jain)

Public-private partnerships can revive investors’ sentiment, says CII report

Public-private partnerships can revive investors’ sentiment, says CII report
The Financial Express, August, 07, 2009, Page 12

fe Bureaus, Chennai

Though Shayama Chona is completing her last week as principal of DPS RK Puram after working there for 35 years, she has no plans of slowing down. Work is her passion and as some one who believes there is “no cause and effect in the final analysis” she plans to continue working in the social sector and has chosen as one of her projects, to serve on the advisory board of Yatn, part of the Coca Cola India Foundation that aims at providing free drinking water to all railway stations in India. Chona shares her views in an interview with FE’s Malvika Chandan.

How do you feel about the Right to Education Bill being passed in the Lok Sabha?

The right to education for all children is a great thing and I’m glad the Bill has been passed. A lot of the credit goes to Kapil Sibal whose dynamism has been a great push for the education sector on the whole. My only comment is that even while “equity” is important “understanding” cannot be undermined. While schools start admitting students from economically weaker sections there should be an understanding that this would change the environment in the classroom. Economically well off students usually have a more urban outlook whereas students from economically weaker sections maybe more rural in their outlook.

What has been your experience with the quality of teachers and what improvements would you suggest in teacher training?

Teacher training in India is just not up to the mark. Countries like China have a five-year training programme for teachers and in India our bachelors in education (BEd) is just nine months. The entrance exam for a BEd programme is 80% based on a written assessment and only 20% based on communication skills. I don’t think this criteria is correct for the teaching profession. Much more emphasis needs to be put on interpersonal skills and communication as much of the success depends upon how a teacher engages with a student.

I do feel strongly about stopping teachers from giving tuitions and wish firmer guidelines supporting this could be put in place. Almost 99% of students today are taking tuitions and pay teachers anything from Rs 200 to Rs 500 per hour for the same. Teachers’ economic background is not the same as students and this changes the teacher-student equation wherein students’ respect diminishes and they start treating teachers just as paid servants. Also, there are thousands of coaching centres operating with no regulation. This could have got some consideration in the Bill.

The status of teachers needs to be consciously raised. There needs to be an “education core” or an “Indian Education Service” similar to the Indian Administrative Service that would give more definition and a sense of prestige to the teaching profession.

What has been your experience with public private partnerships in the education sector?

I strongly believe in privatisation in education. Private players can bring a lot of innovation and modernisation into this sector. Companies like Educomp have been front-runners in this endeavour and before having started their own schools they helped teachers conduct “smart classes” through content as well as hardware and technical support.

CII seeks separate budget for infra sector
The Financial Express, August, 07, 2009, Page 12

fe Bureaus, Chennai

Setting up of a national infrastructure facilitating and monitoring agency on the lines of Foreign Investment Promotion Board (FIPB), independent regulators for each sub-sectors, separate budget for infrastructure sector, adoption of 20 cross-sector projects for the timely completion, forming land bank corporation are some of the 12-point key proposals, the Confederation of Indian Industry (CII) will be placing before the Centre in order to fast-track the infrastructure projects through public-private partnership (PPP) mode.

Addressing the media at the CII summit on infrastructure (Siminfra 2009) here JP Nayak, chairman, Suminfra said,

“In every area where human interaction takes place there should be monitoring agency, hence in PPP we need a facilitating and monitoring agency, most probably on the lines of FIPB.”

With a view to give more thrust to infrastructure spending, CII has proposed the government to present a separate infrastructure budget. “If government can present a separate railway budget, why can’t it have budget exclusively for infra sector,” said Nayak. Since infrastructure projects need huge investment proper earmarking and allocation of funds are of paramount importance, he said.

Asserting that land acquisition was still the single largest problem faced by the infrastructure developers, he said due to non-availability of the land on time, projects are getting delayed, which in turn causes cost over-runs. To address the issue of land acquisition, CII is seeking setting up of a land bank corporation, which can facilitate hassle-free land acquisition by identifying specific lands ahead of announcement of the projects, thus by minimising bargaining power of the landlords.

“Project delays adversely effect expected benefits from the projects and this should be avoided,” he said.

RBI rates: Pre-emptive hike in store?

RBI rates: Pre-emptive hike in store?
The Hindu Business Line, 7th August 2009, Page 6

S. Balakrishnan

No one can say we weren’t told.

Both in its Quarterly Monetary Policy Review and the RBI Governor’s J. R. D. Tata memorial lecture last week, the message is clear. Raising repo rates from the current levels is inevitable; the only question is, when. In fact, even earlier, well before the Policy Review, the central bank’s chief expressed discomfort at the high level of liquidity in the banking system and fiscal deficit.

The RBI is ‘rearing to go’ and clearly has its foot on the interest rate pedal.

Actual Inflation

The toughening posture is not difficult to understand. The Governor has taken great pains to explain that the current sub-zero inflation data are purely statistical.

The weekly report of the Wholesale Price Index (WPI) actually measures the annual inflation, point-to-point, between this week, this year, and this week-last-year. So, though prices are declining on a year-to-year basis, they are not on a current week-to-week basis.

Monsoon setback

The RBI actually has its hands full. Strengthening the case for increasing rates is healthy personal consumption and Government spending. The Quarterly Review did a great service in bringing out with clarity the economy-propping contribution of public expenditure – it is true not always for the best purposes and causes – but for which a recession was certain.

But the failure of the monsoon is a setback for India’s still very large rural economy and will hit agricultural production and rural incomes while creating food price pressures. The full effects are not yet visible.

Exports

Exports are another shocker, dropping close to 30 per cent in the last year. It is obvious, the reason for our comfortable reserves is foreign portfolio investment and remittances.

On the other hand, the fiscal stimulus, coupled with soft liquidity and interest rates, has boosted stock markets. There are reports – though still only a smattering – fall of realty prices stopping.

The logic may also be that the economic environment is not propitious for a prolonged period of monetary sustenance, if it isn’t going to improve the investment climate anyway.

Of course, merely pushing up repo rates will not achieve the tightening objective as money rates tend to be influenced mainly by system liquidity, which, at over Rs 100,000 crore, is ample. The RBI will take a bite out of this.

The unfortunate aspect of the overall economic situation is the poor rains, which has weakened domestic growth impulses.

It is this which will make the RBI think if its policy posture at this moment is not overly risky.

Cautious ECB holds interest rates at 1%

Cautious ECB holds interest rates at 1%
The Financial Express, August 07, 2009, Page 18

Reuters

The European Central Bank kept interest rates on hold at a record low on Thursday as it waits to see the impact of efforts so far to revive the economy and credit flows. All 75 economists in a Reuters poll last week had expected the ECB to keep the main policy rate at 1.0% for the third month in a row. The refi rate is likely to remain at this level for at least another year, the poll showed.

“This was not surprising at all,” Nomura economist Laurent Bilke said. “They would have had very little room to cut anyway, given that the overnight market rate is around 0.35%.”

The euro was little changed after the decision. Massive supplies of ECB liquidity have pushed short-term bank-to-bank rates well below the main policy rate, and analysts said the ECB was unlikely to announce any plans to ease back on the throttle with the euro zone economy still shaky.

The ECB has cut interest rates by 325 basis points since October, but they remain the highest among the biggest developed economies.

The Bank of England, which also met on Thursday, left British rates at 0.5%.

The ECB governing council's views on economic recovery are likely to have changed little since its July policy meeting. At that time it said it expected economic activity to remain weak for the rest of the year, although the pace of decline was likely to ease from the 2.5% plunge recorded in the first quarter.

ECB president Jean-Claude Trichet was likely to stick to a similar assessment at his news conference beginning at 1230 GMT, RBS Economist Jacques Cailloux said.

“We doubt the ECB will start shifting its assessment just yet as uncertainty remains elevated and there are -- as yet -- no tangible signs that the rebound in economic indicators is sustainable,” he said.

Trichet may also outline the results of the ECB's survey of professional forecasters, due to be released next week. The main attention centers on whether the long-term inflation expectations are still seen at 1.9%.

Trichet is expected to give details on the first month of the ECB's bond programme of buying covered bonds, aimed at boosting the euro zone economy, and the market's reaction. After a slow start, the ECB has bought close to 5 billion euros in bonds backed by mortgage and public sector assets -- putting spending on track as it plans to use 60 billion over 12 months.

Dresdner Kleinwort bond analyst Ted Packmohr said the market was keen for information about spending country-by-country, the share of purchases on the primary market as opposed to the secondary market, and the maturities bought. The ECB has said it will focus on maturities of three to 10 years. “The more information they provide, the better it would be,” he said. Trichet may also offer the ECB's view on bank lending.

The ECB has repeatedly urged banks to lend on the close to half a trillion euros in one-year funds they borrowed from the ECB in late June, as a revival in bank lending is key to supporting the real economy.

Economic signals are mixed: surveys of purchasing managers suggest the recession in the services and manufacturing sectors eased in July, and economic sentiment rose to an eight-month high. But euro zone unemployment is at record levels and retail sales fell again in June, underlying the weakness in consumer demand.

Nomura's Bilke said Trichet would keep the basic scenario intact, but could accentuate signs of economic stabilisation.

“He could signal some positive signs,” Bilke said. “It's enough for him to say that short-term indicators have confirmed recession is going to be less pronounced in coming months.” But he added it was too early to update the economic outlook, especially as new ECB staff projections are due next month.

Meanwhile, inflation is likely to remain well below the ECB's benchmark of below, but close to 2% well into next year. Prices at factory gates logged their biggest annual drop on record in June and consumer prices fell for the second month running in July, by a record 0.6% annually. In June, ECB staff forecast the economy would contract about 4.6% this year and 0.3% in 2010, although positive growth is expected to return mid-year. Staff forecast inflation of about 0.3% this year and 1.0% in 2010.

CII calls for Infrastructure Budget

CII calls for Infrastructure Budget
The Hindu Business Line, 7th August 2009, Page 15

Creation of Land Bank Corpn mooted.

Our Bureau, Chennai

The Confederation of Indian Industry on Thursday, called upon the Government to come out with an Infrastructure Budget annually, on the lines of the Railway Budget.

Speaking to journalists on the sidelines of Suminfra 2009, CII’s conference on infrastructure, the Conference Chairman, Mr J. P. Nayak, said that given the importance of infrastructure, an Infrastructure Budget would be appropriate. He said that the Prime Minister could present the budget in Parliament.

The ‘infrastructure budget’ was one of the “12 recommendations” the CII had drawn up for infrastructure development. One of the others is the creation of a Land Bank Corporation, which would buy land and sell them to infrastructure companies as and when they require.

This, he said, would help lighten the problem of land acquisition for projects, veritably the biggest stumbling block for infrastructure development.

Asked why the Land Bank Corporation would succeed where others fail, Mr Nayak said that the activity of land acquisition would be done by the body on “an ongoing basis”, not necessarily for specific projects.

Asked how the Corporation would get its funds for buying large tracts of land across the country, he said, “from the Government”.

Mr Nayak described the problem of land acquisition as fundamentally caused by the land owner wanting to participate in the appreciation of land value that happens as a consequence of the infrastructure project. However, he admitted that the Land Bank Corporation would not help solve this problem.

Another suggestion for infrastructure development was to “energise public sector undertakings engaged in infrastructure”.

Asked what exactly he meant by “energising”, Mr Nayak said it depended upon each instance, such as ensuring that no infrastructure PSU was without a head at any point in time.

He also wanted “gross capital formation properly monitored”, creation of “domestic SEZs,” private-public partnership in irrigation, standardising bidding and selection process, creation of independent regulatory bodies for each area of infrastructure, adoption of some quick-result infrastructure projects and the setting up of a National Infrastructure Facilitation and Monitoring Agency.

A time to learn!

A time to learn!
The Economic Times, ET Realty, August 07, 2009, Page 17

Recession was necessary in our overindulgent times, and has done a great deal of good to the real estate sector in India. The end user has benefited the most during this period. ET Realty argues

Namrata Kohli

Arti Khanna, a senior executive with a leading MNC, equates recession with the medicine that people initially complain 'is bitter', but in the end, come out far healthier and are better off for it. More cautious spending and greater saving by consumers, more prudence by lenders, shift in focus from premium to lower- and mid-end segment of housing by developers, is exactly what our economy needed for its long-term health and recession is having the desired impact.

Arti reminisces how they saw bad times during the dot-com bubble in 2001, and yet how the younger generation continues to be over indulgent, leading a hedonistic way of life and not paying heed to saving money. Arti says, "In many ways it brings the much needed discipline to people's way of life, while for corporates across various sectors, there are many positive ripple effects - for instance it allows people to analyse and identify their core competencies. It also helps in rebuilding focus, pruning tangential activities to achieve cost controls, which help in creating more effective systems and processes. And, it forces people to come up with innovative ways of handling problems, something mandatory for survival."

Among the three most affected - end users, investors, developers - surely, the end user has benefited the most during this period.

The end user has benefited as, finally, the supply chain started addressing the real demand in market - mid-end and affordable housing. Earlier, developers in their greed to garner higher profit margins, focused primarily on premium housing. But now, suddenly, the supply is shifting where the demand is. Even well known developers like Unitech, DLF, Raheja, Jaypee and Omaxe, primarily engaged in raising high-end homes, have begun talking of affordable options.

Recession has also been a time to introspect for everybody. "It has been a good learning experience, though not a pleasant one," says Samir Chopra, CMD of RE/MAX India, (RE/MAX is a global network of real estate agents operating in 70 countries). "There have been things to learn, relearn and unlearn for all the three - end users, investors and developers. Consumers have become more vigilant in transactions, and they are more thorough about both the market situation and their own needs. They are beginning to learn how to investigate and research before spending their lifelong savings. Investors have also become more conscious. They are more careful about spending huge sums of money in development and are looking for other avenues for investment in the real estate sector. They have become more delivery oriented, innovative and price conscious in this volatile market. They have learnt from the difficult times, reduced prices, and learnt to make more beneficial offers to consumers."

While at a superficial level investors may seem to be winners with recession giving them an opportunity to pick investments at more realistic prices, recession has also seen them investing less. According to investor Shalabh Bhasin, director of Kshitij Portfolio Services Pvt Ltd, "The recession period has seen me investing less in property market because the previous prices where unduly inflated and even now it can't be said with surety that the prices have bottomed out. Also, most of the investors were already stuck with loads of investment at higher prices, so there was not enough liquidity for further purchases."

Citing examples, he says he had invested in Parsvnath Panchkula flats at Rs 3,250/sq ft and Parsvnath Dharuhera flats at Rs 1,800/sq ft, but there is no buyer in these projects and three years on, the builder is yet to start construction. But on the upside, the investor is now carefully assessing a project and is no longer fooled by lucrative promos and advertising of the property.

As for developers, on the face of it, they may seem to be the biggest losers with the fund flow nearly stopping and sales drying up. But recession has been a blessing in disguise as it has forced them to innovate to cut costs, improve sales and raise funds. Recession has seen developers changing their product and strategies.

According to Mohammad Asif, chief operating officer of High Street Capital, "The shift in strategy is in terms of market focus, product size, pricing and promotion. In residential sector, they have started focusing more on affordable and mass housing. Today's market is customer driven and developers are offering suitable payment plans and other freebies like sharing of stamp duty and housing loan EMI burden to ensure transactions. In commercial segment, the decline in demand from IT/ITeS sector has forced them to look at other business sectors such as logistics, biotechnology, hardware, pharmaceuticals, tourism and education. In the retail segment, instead of fixed rentals, revenue sharing model is becoming a common practice. Developers have also been forced to work out an optimal tenantmix strategy and work on new project design to reduce operating costs. In hospitality sector, the focus now is more on budget hotels and services apartments."

Overall, recession has been a time to innovate. In a price sensitive market, the effort has to be to reduce cost, and to achieve this, both the construction cost and land cost have to come down.

FOCAL POINT

Recession helps in rebuilding focus, pruning tangential activities to achieve cost controls, which help in creating more effective systems and processes The end user has benefited as the supply chain started addressing the real demand in market - affordable housing. Well known developers are now catering to this demand

Peninsula Land plans Rs 500cr mopup via QIP

Peninsula Land plans Rs 500cr mopup via QIP
The Economic Times, August 07, 2009, Page 6

Shivani Muthanna ET NOW

REAL estate company Peninsula Land is planning to raise a qualified institutional placement (QIP) of Rs 500 crore for acquiring land in Mumbai.

Peninsula Land has already identified 5 plots in Parel, Lower Parel, Kanjurmarg and Thane, said Rajeev Piramal, the company’s executive vice chairman.

“The capital, if raised from the QIP, will be used towards acquisition of new properties, as we will complete our current projects of 4 million sq feet in Mumbai within the next 18 months and need to find fresh projects to replace those,” Piramal said. The company currently has a board approval to raise upto Rs 750 crore and will decide on the final amount to be raised in its annual general meeting that will be held on August 10.

Mr Piramal said demand for commercial projects will at least six months to revive. “We’re moving away from the commercial model for our projects outside Mumbai for three years now,” he said.

Peninsula Land has decided to convert its plans of developing commercial projects on 30 acres in Hyderabad and 100 acres in Pune to residential.

The company will also develop residential projects on its Nashik and Goa properties. Peninsula Land has plans to launch 7 million sq feet of residential projects over the next three years. The company’s stock closed up 1.91% on Thursday at Rs 71.95.