The lure of Sonepat land

Some time last month, Kamal Taneja, one of the youngest promoters of Taneja Developers & Infrastructure (TDI), launched his dream project Kingsbury luxury condominiums in Kundli, Sonepat. Today, or so he says, over 50 per cent of the township has already been booked.

A luxury apartment complex in a place like Kundli outside west Delhi selling like hot cakes? Realtors don’t think Taneja is overstating figures to boost his bookings. On the contrary, Sonepat, just beyond the western border of the capital, is on its way to fast track development in terms of real estate.

“Sonepat is the emerging Gurgaon of the west,” goes the refrain among realtors. As city limits are extending beyond west Delhi colonies like Pitampura, Rohini and Shalimar Bagh, to name some, there’s a growing demand for housing solutions among the middle classes in that area.

And with real estate prices touching the roof at Rs 10,000 per sq ft within the city, Sonepat, which falls on one of the busiest national highways just 2.5 km from Delhi, is certainly the best option.

Ground reality: Equity fall to temper real estate prices

The correction in the market is likely to affect realty prices across the country, especially in residential and land markets of Mumbai and Bangalore, according to industry analysts.

Land prices in these markets are also likely to see a downward correction. This, combined with rising interest rates, could actually push the market to a situation where transactions over the next three to six months will dwindle, say analysts.

According to Arun Goel, CEO of the DHFL real estate venture capital fund, these markets have been due for a correction for quite some time now, and this could very well be the trigger.

“There was a lot of speculation in real estate, given the excessive liquidity in the market over the last two years and this had pushed prices to unreasonable levels in suburban Mumbai and Bangalore. Gurgaon and Noida had also seen such surges but they have already seen a downward corrections. The stock market correction could very well result in real estate prices coming down by 15-20 per cent in these markets over the next three to six months. Land deals could see a correction of 20 per cent,” he said.

In the past one year, residential prices in suburban Mumbai and Bangalore had risen sharply, in some cases by as much as 30 -40 per cent. In Mumbai, areas such as Bandra, a western suburb, has seen prices touch the Rs 1 crore mark for a residential flat which was fetching Rs 65-70 lakh in just a year ago.

Said another market analyst, “Although the investors in real estate are a different class from those who invest in equity markets, we could see a situation where the number of transactions in the market go down over three to six months as liquidity in general will be hit hard.

Courtesy: http://www.business-standard.com

Unitech clinches Rs 1583-crore Noida realty deal

Unitech today clinched one of the biggest real estate deals at Rs 1,583 crore for a 340-acre plot auctioned by the Noida Development Authority.

“We were told that our financial bid was the highest,” said managing director Sanjay Chandra.

DLF and ICT Bangalore were the other rival bidders after the first qualifying round. Unitech outbid DLF, which, sources said, had bid Rs 1,401 crore.

The company plans to finance the deal through internal accruals and debt. “The land will be used to build residential accommodation,” said Chandra.

Unitech had bid at Rs 11,529 per square metre. This is one of the highest prices paid for a township deal. Reliance had bagged a tender in January in the Bandra Kurla Complex for Rs 1104.11 crore.

Going by the land size and the amount, there have been no offering on this scale so far in the capital, real estate consultants said.

Despite the crash in stock and commodities markets, realty prices have remained firm in most parts of India. Analysts said it is unlikely to fall in the near future as demand still exceeds supply in major metros. The real estate industry has seen some of the biggest deals in the recent past.

DLF Universal was part of a joint venture that recently won the auction for 35.8 acres of Delhi Development Authority’s residential land in a Rs 450-crore deal.

Courtesy: http://www.telegraphindia.com/1060524/asp/business/story_6262850.asp

New laws and high demand spur India real estate

India's real estate market is getting very, very warm.

It still may be a fragmented industry with high transaction costs and an absence of transparency, but it is whetting the appetites of domestic and overseas investors. In India, changing government policies and a focus on infrastructure are driving up the demand for housing developments, malls and offices.

"For investors seeking the high returns that are no longer possible in the mature European and North American real estate markets, India and China are hot," said Prakash Gurbaxani, the chief executive of TSI Ventures in Bangalore, a joint venture of Tishman Speyer Properties of New York and ICICI Bank, based in Mumbai.

"Every foreign investor group, including pension funds, high-net-worth individuals and private equity funds, are all looking at this sector," said Gurbaxani, whose company has planned to invest more than $1 billion in the industry in the next few years.

In the past, investors were wary of the opaque business practices in Indian real estate. The land laws were archaic, mortgage financing was expensive and the quality of the developments was poor.

But these days, India's $12 billion real estate market is expanding at a 30 percent annual rate. Analysts at Merrill Lynch predict that the real estate market will grow to $90 billion in 10 years.

Source: http://www.iht.com/articles/2006/05/14/business/indoprop.php

Small Opt to Lease

Time was when businesses run out of garages were in fashion. Of course, those who could afford, rented out an office in the central business district (CBD) for easier networking and access. Nowadays the job has become a tad difficult for those even with deep pockets, and a nightmare for the rest. And with good reason — the country’s realty magnet, Bangalore, has been ranked # 3 among global cities for the office space absorbed in 2005 in a survey done by London-listed international real estate consultancy firm DTZ.

A record 9.28 million sq ft of Grade A leasehold office space was absorbed in Bangalore last year, marginally behind London, where the net absorption was 9.96 million sq ft. Tokyo tops the list with annual net absorption of 12.33 million sq ft. A recent Prestige Group-Graphite India deal saw prices in the hot and happening investment destination in Bangalore—Whitefield—rocketing to an eye-popping Rs 7 crore an acre. Office rentals (warm-shell ) in Whitefield currently range between Rs 30-45 per sq ft. Owning commercial space can cost anywhere between Rs 3,500-4 ,500/sq ft depending on the quality of construction.

While this reflects positively on Brand Bangalore, it spells the difficult times ahead for the small and mid-sized companies in the IT hub with land prices skyrocketing to record levels. Despite infrastructure concerns, India’s Silicon Valley witnessed a 22% jump in the space absorbed in 2005, against the 7.6 million sq ft absorbed in 2004. The numbers exclude large owned campus-style developments and built-to-suit facilities. “The continued demand for space from the Information Technology (IT), Information Technology Enabled Services (ITeS) and Business Product Outsourcing (BPO) sectors is the main driver behind this dramatic increase in absorption in Bangalore. The financial services sector and high-end engineering companies are also expanding and taking up a substantial portion of office space,” say industry experts.

source:http://infotech.indiatimes.com/articleshow/1536734.cms

Market frenzy grips real estate firms

Given the boom in the real estate market, the DLF IPO is almost certain to be a hot property. One recent indicator is the thumping success of the DS Kulkarni follow-on public issue, which was oversubscribed 32.73 times. Of course, the DLF offer is much bigger, and reports say that it will raise as much as $3.2 billion from the sale.

What’s significant is, this liquidity will be pumped into the real estate market. There are also other indicators of the flood of liquidity that is poised to flow into real estate. Reports suggest that Reliance’s Urban Infrastructure Opportunities Fund is planning to raise Rs 5000 crore, more than a billion dollars, for investments in real estate and retailing. Investors like Calpers and Morgan Stanley have started investing in Indian real estate. It’s the right time, therefore, to bring out a report on the Indian real estate sector. Deutsche Bank has done precisely that — the report is called Building Up India.

It points out how the changing Indian economy will enhance the growth of the real estate sector. But while there is no doubt about the potential of the sector, it’s also true that the money flowing into real estate, including investment in malls and multiplexes, will drive values higher. Markets always overshoot and the real estate market is no exception.

According to Deutsche Bank, around $850 million additional capital was invested into Indian real estate in 2005, much of it as lending by commercial banks to the sector. Private property companies and individuals’ holdings of real estate also grew by 40 per cent year-on-year. With huge amounts being raised this year, it’s very likely that 2006 too will see a high growth. Growth in the housing market too should continue despite higher interest rates, because mortgage debt as a percentage of the GDP is only 5 per cent, very low by international standards.

Source: http://www.telegraphindia.com/1060515/asp/business/story_6224431.asp

Deutsche Bank plans $300-m realty fund

Rreef/DB Real Estate, a unit of Deutsche Bank AG plans to start a global fund that will invest as much as $300 million in India to tap an expected surge in demand for property.

The country will probably need 6.9 million to 9.7 million homes annually for the next 20 to 25 years. Deutsche Bank is very excited about the housing sector, in the opportunities that lie ahead, with income levels growing and more people investing in their own homes. In the next 15 to 20 years, India's potential is enormous in sustained growth. There's more capital looking for opportunities and they will come in a gradual manner.

Indian real-estate companies are expanding to tap the demand for homes, offices and retail space as overseas companies are allowed in more industries and faster economic growth boosts middle-class incomes in the country.

Deutsche Bank may plan a second fund for India if it continues to see success in the investments in the country.

Source: http://sify.com/finance/fullstory.php?id=14202767

Credit policy and the real estate sector

The Reserve Bank of India’s latest annual Credit Policy for the year 2006-07 may turn out to be the proverbial wet blanket to the booming real estate in India, says K Sukumaran.

The last few years have witnessed tremendous growth in the real estate sector in the country.

A tour of the outer ring road in Bangalore alone will convince one about this phenomenon. While the earlier development was rather sporadic and limited to the eastern and southern areas of Bangalore where the IT industry spread its wings, the growth can now be seen everywhere.

The fillip to this growth came not only from the increasing demand for housing and office premises from the IT industry, but also due to the liberal credit support the sector received from the lending institutions, especially Commercial Banks.

Bangalore’s realty lure continues to keep its lustre

Despite growing tension between political parties and IT industries over infrastructure woes, India’s IT capital Bangalore remains the most preferred destination for the real estate developers.

Rapid industrial growth, high-profile job opportunities, salubrious weather round-the-year, Cauvery drinking water, and life style on par with international standards hold the city top in the India real estate map. Anticipating the boom to continue on the back of expanding ’wealthy’ population, many foreign investments pumped in large investments in the Bangalore real estate market while many more are in the pipeline.

Industry sources said that foreign funds to the tune of $800 million to $900 million would be injected in the south Indian realty market within the next two years and Bangalore is expected to grab 60% of this investment.

Purchase of land has become a distant dream for individuals with land prices ruling between Rs 3,000 per sq ft to Rs 5,000 per sq ft in residential areas. This leaves flats and apartments as the only choice for lower to higher class segment, giving room for more investments from builders. Recently, Morgan Stanley invested $68 million to pick a minority stake in the Bangalore-based Mantri Developers. This deal comes close on the heels of New York-based Siachen Capital picking up an undisclosed stake in another Bangalore headquartered real estate company Nitesh Estates for $100 million in January this year.

Source: http://www.financialexpress.com/fe_full_story.php?content_id=125493