Real Estate India

There is a perception that the Godrej Group has not been as successful in grabbing new growth opportunities as other old business houses.

This perception is probably because we don’t have- large listed companies like other old business houses. For a long time, most of Godrej group companies were privately-held and they began to get listed only in the last decade or so. This is why our growth in emerging sectors such as real estate, agri-commodity, processed food, retail and consumer goods has remained hidden from public view. Like others, we have benefited from the economic boom and most of our companies have been out-performers in their respective segments. However, I must add that the Godrej group has never ventured into capital-intensive and high-volume commodity businesses like steel, metals and cement, as other contemporary business houses. Our forte lies in marketing and brand building and we have been very successful in that. These businesses take time to mature and tend to be smaller (in terms of net sales) than their commodity cousins. Godrej is one of India’s leading brands in personal care, white goods and furniture and our brand penetration is second only to Hindustan Unilever and continues to grow. Going forward, what’s your vision for the group? We will maintain our focus on brand-building across all our businesses. However, there could be a re-alignment in contribution from various business segments. Right now, bulk of the group’s revenues comes from consumer durables and FMCG businesses. Going forward, I expect real estate to emerge as the group’s growth driver followed by retail and food. Godrej Properties, which is 75%-owned by Godrej Industries, is likely to emerge as the group’s biggest company in the next five years. In FY07, Godrej Properties’ net profit was Rs 42 crore while revenue touched Rs 125 crore. We expect it to double its profits and revenue for at least the next two years. Godrej Property is expected to raise Rs 400-500 crore through an initial public offer some time by FY08 to fund its expansion plans. We see real estate more as a brand and design-oriented business. We are targeting premium customers across India’s top 10 cities. The aim is to emerge as one of country’s top three real estate developers but without diluting our brand equity. All our properties are distinctive in design and offer something different than what is generally available in the market. Currently, we are developing 27 million square feet of property across India’s major cities. Our biggest project is the development of 50-storey high residential complex in central Mumbai. Once completed it will be India’s tallest residential building and will become the landmark project for the group.

Source:http://economictimes.indiatimes.com

Real Estate Mumbai

The Mumbai-based real estate developer Lodha Group has entered the Hyderabad real estate market by acquiring 12.9 acres of land for Rs 225.4 crore. The group will develop a high-end residential and commercial complex in Hyderabad in about three million sq ft, according to company officials.

The company had bagged the 12.9-acre land located at Eden Square, Kukatpally Housing Board Colony, for Rs 255.42 crore in an auction by Andhra Pradesh Housing Board. “Much like Mumbai, real estate in Hyderabad is booming and we look forward to tap the existing market opportunity,” Lodha Group director Abhishek Lodha said.

The group is also in the process of acquiring more land in Hyderabad besides Pune, he added. With over 25 projects in various stages of completion in and around Mumbai, the group is now spreading its wings to other rapidly developing metros in southern and western India.

Source: http://economictimes.indiatimes.com

Real Estate Chennai

Nitesh estates has pipped heavyweights such as Unitech, DLF and HDFC Realty with a Rs 642-crore offer to bag a church property in the heart of Chennai city.
The deal gives the Bangalore-based real estate and construction player — managed by the 31-year-old Nitesh Shetty — access to a nine-acre plot just off the city’s high-profile Boat Club area.
At Rs 642 crore excluding registration, the transaction is the costliest land deal in south India and jostles for a place among the biggest deals nationally. The Chennai archdiocese had put the land parcel on Chamiers Road on a 66-year lease and called bid for the same, with some 30 expressions of interest coming in the initial round itself.
The just-concluded transaction could well be the fifth-largest land deal in India after Adani’s Rs 2,250-crore pact with HDIL, DLF’s Rs 1,675-crore acquisition of DCM Shriram property in Delhi, Unitech’s Rs 1,586-crore purchase in Noida and DLF’s Rs 702-crore acquisition of National Textile Mills’ land in Mumbai. Earlier this year, hospitality major Leela Group purchased a three-acre plot at Chanakyapuri in Delhi for Rs 635 crore.
The Chennai deal follows Citigroup’s $250-million investment into Nitesh Estates, as reported by ET last week. When contacted, a Chennai archdiocese representative declined to comment. Hugh Britto, senior vice-president, business development, at Nitesh Estates offered no comments. The deal size could well be in excess of Rs 700 crore, including registration value.
Sources said realty bigwigs like Sobha Developers and RMZ were in the fray. Unitech had tied up with local player Arihant for the bid. Unconfirmed bids suggested interest from corporate giants like Reliance Retail and ITC. It is believed that Nitesh could look at developing over one million sq ft of mixed use development on plot. The nearly a decade-old Nitesh group is in the midst of an expansion acorss key cities. It is also planning a foray into the hospitality industry and has plans to set up at least five luxury hotels.
Last year, Nitesh inked a definite deal to bring Ritz Carlton to India with the first property in Bangalore. While Nitesh is not the exclusive partner to Ritz Carlton in India, it could well be the preferred party for future expansion, sources said. The Ritz Carlton arrangement as well as an earlier investment by the $26-billion global hedge fund Och-Ziff have catapulted Nitesh into national limelight in recent times. Citigroup’s $250 million infusion was the biggest by the global financial powerhouse in the domestic realty sector.
Source: http://economictimes.indiatimes.com

Real Estate

FRANKFURT: Fraport is looking to strike multiple partnerships in India with a minimum of 26% equity stake in every future airport project in the country. Fraport, which is a Frankfurt-based international airport operator, has 10% stake in the GMR-led consortium involved in the modernisation of the international airport in Delhi. This apart, Fraport has also signed a separate agreement of partnership for airport development projects with real estate group DLF. While the agreement with DLF involves exclusivity rights for projects in particular geographies within India, Fraport is open to tie-ups with different players in other regions. "Our India strategy is very clear. We want to have at least 26% equity stake in any project that we get involved. In Delhi, we have only 10%, but that is just a door-opener for us into India. We would form joint ventures for greenfield or airport modernisation projects with local players with whom we see a synergy depending on the region," said Fraport senior executive manager (global investments & management) Christoph Nanke. He added: "While we are considering various projects, we would prefer to have a package deal where we get the rights for development in a few airports in a particular region." While declining to give details of the projects wherein Fraport is looking to bid, Klaus Jeschke, who is part of the India management team for Fraport, indicated that Goa and Gujarat are on Fraport’s radar. "As against the traditional approach where we developed an airport hub, in our new strategy, we are looking to develop an entire airport city. Instead of viewing land as space and infrastructure, we look at it as an opportunity for real estate management and development," said Mr Jeschke. The $2.14-billion Fraport has identified India, China and the Middle East as key focus areas for international airport projects in the near future. In its agreement with DLF, the airport projects in which Fraport planned to bid together included Chennai, which has now been given to Airports Authority of India. In addition, the venture with DLF also includes plans for a general aviation airport around Delhi. A general aviation airport exclusively caters to private and business jets and chartered flights as against those that allows scheduled airlines. Source: http://economictimes.indiatimes.com

Real Estate -Real Estate investment India

With property prices overheating in the top eight 'A' grade realty markets (Delhi, Mumbai, Bangalore, Chennai, Hyderabad, Kolkata, Pune and Ahmedabad), 11 tier two cities have caught the attention of investors as future growth areas.

These cities are likely to witness a spate in construction activities and the shift from established markets to emerging locations has already begun.

Consultancy firm Ernst & Young in its recent city ranking exercise has identified 11 new markets categorised as 'B' cities, which hold maximum potential for investors.

In its latest survey Ernst & Young has named six cities including Surat, Chandigarh, Nagpur, Vishakhapatnam, Vadodara and Jaipur as the emerging cities. Close on the heels are Thiruvananthapuram, Kochi, Nashik, Indore and Ludhiana.

"As the focus of economic growth shifts to smaller emerging cities, there is a greater need to access the potential of the next set of cities which are expected to emerge as future battlegrounds," the report titled Indian Real Estate: Growth and New Destinations said.

Surat, the fastest emerging industrial and economic cluster in western India, is likely to witness massive economic growth. It would witness influx of international companies and professionals. The proposed expressway linking Mumbai and Surat and the upgraded airport is likely to give a boost to the economic activities and real estate in the city. Last year had witnessed significant rise in land transactions in "The Silk City" with price appreciations of more than 35 per cent in most localities.

Meanwhile, Chandigarh has the potential to emerge as a knowledge city. With several global and Indian technology and R&D companies planning to set up bases and rapid influx of professionals to the city expected to drive the demand for real estate across asset class, the report said adding the city, 240 kms away from Delhi, has already witnessed a boom in real estate with land appreciation of almost 200 per cent in certain areas.

Nagpur, known as the city of Oranges has emerged as the next most preferred location for IT/IteS companies in Maharashtra after Mumbai and Pune. Increasing interest of investors has led to an upsurge in real estate activity in the city. "Areas close to MIHAN project have a strong investor interest and prices have gone up by 250-300 per cent in the area over the last 18 to 24 months. The demand for residential properties has led to a rise in property prices. An over supply situation is predicted in the retail segment," the report said.

The port city of Vishakapatnam is likely to attract investment in the areas of logistics, health tourism and educational hubs. Land prices have appreciated by 200 per cent.

If Vadodara is a potential biotechnology hub, the relative low cost of land in Jaipur is set to encourage national developers to foray into the city.

Source: http://www.hindustantimes.com/

Real Estate India

India’s government wants to set up state-level regulators for real estate, a sector that has been among the country’s fastest growing in the past few months but is plagued by the lack of an adequate legal framework.

“A quasi-judicial regulator is required in big cities as both consumers and builders may need protection,” Urban Development Minister S. Jaipal Reddy told reporters on the sidelines of an industry conference here Thursday. “We will set up a regulator in Delhi which would serve as a model for other states to emulate.” The body is likely to be set up in the next six months.

“Land is a state subject so there cannot be an all-India authority. But we will encourage this plan while giving assistance to state governments,” Reddy said. The initiative comes in response to domestic and foreign investors raising concerns about malpractice. A lack of proper land titles, delays by builders in completing projects and poor construction are among the problems.

According to an Ernst & Young estimate, the real estate market is growing at a rate of about 30% annually, calculated from the amount of sales as well as the value of unsold completed properties. Some 18 real estate and construction companies have opted for exchange listings in India and overseas markets since last August, raising about $4.4 billion in capital. For the 16 companies with IPOs, average listing gains were 71.5%.

But unregulated growth has led to the central bank tightening lending rates so that banks go slow on credit to real estate projects. Credit to commercial real estate has risen 83.9% year on year. Housing credit witnessed growth of 32.3%, according to government statistics.

With the economy chugging along at rates exceeding 9%, the potential for growth in the field is huge, attracting plenty of foreign investment. In the past 18 months, foreign investors have pumped in about $4.5 billion into real estate, observed Anshuman Magazine, chairman of CB Richard Ellis South Asia.

Source: http://www.forbes.com/

Real Estate India

Real estate firm Emaar MGF Land plans to sell a 10 per cent stake through an initial public offering in India, which banking sources say may raise about $1.5 billion to make it one of India's biggest listings.

The company is 40pc owned by Dubai's Emaar Properties and Indian real estate developer MGF Development holds close to 60pc.

Emaar MGF said that it had filed a prospectus with the Indian regulator and would offer up to 117.4 million shares in the sale, including a pre-IPO placement at a price to be determined through a book-building issue.

India's market regulator takes at least a month to approve the issue, and the company was then expected to offer shares in the following three months, bankers said.

Sources close to the development said the company may raise about $1.5 billion depending on the market conditions.

"The pricing of the issue will depend on the market condition. If the market rises to 18,000 or 19,000, it is a different story altogether," a banking source said.

In July, real estate firm DLF listed after raising $2.25 billion in India's biggest IPO. Shares in DLF, India's biggest real estate developer, rose nearly nine percent on their debut, and have gained nearly 30pc since then.

Home prices in India have dropped as much as 20pc this year because of rising interest rates and a correction after prices had more than doubled in a few years.

Source: http://www.gulf-daily-news.com/