Investment in a second home

According to a study conducted by Kapston.com, a Bangalore based e-business consulting firm, the sales of ’second homes’ in India increased by 50

per cent from 2002 to 2007, before the slump in the market brought the figures down to negligible. “Although the concept of second homes was accepted by the Indian audience, as the figures show, everything crashed during the downturn . In the last one year, there have hardly been any takers for this segment .

The market is stagnant as of now,” says Raminder Grover, CEO, Homebay Residential, Jones Lang LaSalle Meghraj.

There are two types of buyers, in the second home market, explains Grover. The first category consists of the affluent buyers who purely look at luxury and the second category is the middle and upper class, which looks at second homes as an investment option. “The first category has started showing interest, in the last coupe of months, but the second category of buyers is still playing the waiting game,” he adds.

As the demand for second homes dropped, even developers put their projects on hold and only now, are builders completing their pending projects. This trend, says Grover, is not surprising, as projects within the city are the ones that give developers immediate returns and so, most developers concentrated on completing these first. “With DLF launching their luxury home segment in Goa, other players, I believe, will soon join the fray,” he expects.

“The industry is still at a nascent stage and those who are planning for second homes, should look at it purely as an instrument of ‘value appreciation’ . Investors should look at it, in terms of growth, over the next two to five years,” says Hemant Shah, chairman , Ackruti City. Investment in the right property will always appreciate in value and with the younger generation earning well and investing intelligently , the second home market has good scope in India, says Abhishek Lodha, director, Lodha Develoers.

Second homes are sought, primarily as a means for a getaway from the city. However, for the larger Indian market, it is also an investment for post-retirement days. Real estate is always an asset and today’s generation wants the option of having a home by a hill or a riverside and this is why places like Devnahalli in Bangalore, Coimbatore, Ooty and Kasauli, are springing with second homes. “There is a lot of demand for properties between Pune and Panvel. Even the four main metros and its peripheral areas are in demand, for second homes,” reveals Tushar Khatri, GM (sales and marketing), Arihant Universal .

Apart from these, the other hotspots for second homes are hubs in Noida, Hyderabad, Jaipur, Kerala, and Gurgaon. Mumbai is also one of the preferred locations, with Royal Palms being the only second home provider within city limits. The 240-acre Royal Palms Estate is situated in the midst of Mumbai’s only green belt and surrounded by a further 20,000 acres of the Borivali Sanjay Gandhi National Park.

Source : http://economictimes.indiatimes.com/markets/real-estate/realty-trends/Investment-in-a-second-home/articleshow/5198311.cms

Mall vacancy in southern cities drops in July-Sept

The average mall vacancy in the southern cities of Chennai, Hyderabad and Bangalore dropped to 5.7 per cent in the third quarter (July – September) of 2009 from seven per cent in the second quarter.

However, supply in these three cities increased by one million sft, up 33 per cent from the second quarter, according to Cushman & Wakefield, a commercial real estate services and research firm.

Alongside this development, rents stabilised in these markets in the third quarter as against the corrections they had witnessed in the last six to seven months.

Rents in major cities and markets are expected to remain stable in the coming few months. Over 60 per cent of the anticipated supply during the quarter was delivered, a marked improvement from previous few months, it said.

There was no fresh mall space in Bangalore. Though leasing activities remained low, vacancy rates dropped as there was no additional supply in the city. The average rentals stabilised indicating a revival of interest in the city’s organised retail space.

However, the Garden City anticipates supply of one million sft in six months, 80 per cent of which is expected to come up by this year end. Bangalore’s suburban zone will see more than 60 per cent of the total new supply and the rest will come up in peripheral micro markets.

Hyderabad, till September, witnessed an additional mall supply of 650,000 sft at Madhapur and vacancy dropped to 14 per cent from 17 per cent till June. Rentals are likely to remain stable till March next year.

The mall space in Chennai increased 28 per cent with Ampa Skywalk mall becoming operational.

Food and Beverage outlets continued to be the main driver for retail space and are expected to remain so in the future. Retailers preferred to expand within city limits and refrained from venturing into the peripheries, it said.

Source : http://www.business-standard.com/india/news/mall-vacancy-in-southern-cities-drops-in-july-sept/375173/

Prajay to invest Rs 600 crore in hospitality biz

Prajay Engineers Syndicate Limited (PESL), a city-based construction and hospitality company, will be investing Rs 500-600 crore in various hospitality ventures in and around Hyderabad.

Currently operating a 30-room Celebrity Boutique Hotel in Begumpet and 70 rooms at the company’s Celebrity Club near Shamirpet on the city outskirts, PESL is planning to build a 260-room business hotel at LB Nagar.

The company has signed up Best Western International – an Arizona-based hotel brand with more than 4,000 hotels in 80 countries – for this project christened Pristine Towers, which will be ready by December 2010. Besides, a 130-room three-star hotel with an investment of Rs 55-60 crore is currently under way.

“We have already received funding to the tune of Rs 150 crore for the Rs 200-crore Pristine Towers from a consortium led by the State Bank of India, while the rest is the equity from the company,” PESL chief financial and operating officer, N Ravinder Reddy, told Business Standard, adding that the company aims to create a 1,000-room capacity in the five-star, four-star, three-star business class categories by 2011.

“Since the current market is not greatly conducive for debt raising, we have decided to infuse fresh capital through promoters’ resources and had already received approvals from the regulators for the same. Currently, the promoters’ holding is 26 per cent (10 million shares of the total equity of 3.96 million), which will be increased to 49 per cent post the infusion. It will take 14 months from now for the entire process to be completed,” Reddy said.

PESL’s current consumed debt, Reddy said, was Rs 130 crore, while the total sanctioned debt is Rs 270 crore. Last year was a watershed year for PESL, when the real estate market was in a stalemate condition. The company reported revenues of Rs 80 crore in FY09, as against Rs 340 crore during the previous year, he said.

“We expect to see a 50 per cent growth in revenues this financial year, with our net margins being in the range of 10 to 12 per cent, as against a net loss of Rs 1 crore in FY09,” he added.

Prajay Engineers Syndicate’s stock was at Rs 30.25 at the end of the trade on the BSE on Friday, down 2.89 per cent as against the previous close of Rs 31.15.

Source:http://www.business-standard.com/india/news/prajay-to-invest-rs-600-crore-in-hospitality-biz/372929/

Office rentals stabilise: CBRE Report

Office rentals, which dropped 40% from their peak in the middle of 2008, stabilised across the country in the September quarter as fresh bookings for office spaces partly reduced inventories, says a report by international property consultant CB Richard Ellis.

There was no change in office rentals in some of the major office locations in the national capital region, Mumbai, Bangalore, Hyderabad and Kolkata, while rentals at some others in Chennai and Pune fell by 5-6 % in the quarter ended June 30. In contrast, rentals in Connaught Place in Delhi and Gurgaon in Haryana registered an increase of 5-8 % in the last quarter.

The increase in demand is largely due to improving economic conditions, positive market sentiment and growing corporate confidence. However, it would take some time for the supplydemand gap to get bridged. Thus, both rentals and capital values are expected to remain stagnant or under downward pressure in the medium term, said Anshuman Magazine, chairman and managing director for south Asia at CB Richard Ellis. The rentals in Connaught Place increased marginally by Rs 10 per sq ft to Rs 230 per sq ft after having slipped 30% from its high in June 2008. Similarly, offices in Gurgaon attracted 8% higher rental at Rs 65 per sq ft after registering a decline of 33%.

While most locations in the national capital region saw no change in rentals compared to the preceding quarter, some locations faced significant vacant spaces which was highest for Jasola at 50% and Saket at 25%. In Mumbai, vacant spaces were high at 25% in Bandra Kurla Complex and 22% in Lower Parel even after corporates took up new office spaces. Mumbai is expected to witness an additional supply of 3.5 million sq ft by 2010 that may add to the vacancy level and keep rentals under pressure, says CB Richard Ellis.

Source:http://mail.google.com/mail/?shva=1#inbox/1243c34b4e87b665

Despite Slowdown India to Add 40 mn sq ft Office Space This Year

With the economy regaining its momentum slowly, India will add up to 40 million sq ft of office space this year, which will be higher than many other advanced countries, but lesser than China. “Despite the slowdown, India will add highest ever office spaces this year. We will see 30-40 million sq ft of office space coming up in 2009,” global real estate consultant firm CB Richard Ellis Chairman and Managing Director (South Asia) Anshuman Magazine said.

The addition of office space will be more compared to many other advanced countries, except China, he added. Magazine, however, said demand has not picked up yet and the huge supply would lead to correction in rentals. “Prices can further fall in certain pockets depending on how much supply these places can absorb. In other places, prices have almost stagnated,” Magazine said, adding that some locations in Bangalore are likely to see decrease in rentals.

“After 2-3 years when supply will decrease and demand will increase, probably then we will reach at a stage of equilibrium,” replied Magazine when asked about the time by which office-space rentals could stabilise. Although office-space demand has increased in the first two quarters in 2009, Magazine said it would take time for “actual demand to pick up”.

“IT companies are responsible for 80 per cent of the total demand for office locations and these were the most impacted firms during the recession… But next year supply will dip by atleast 20 per cent,” he added. Of the total anticipated supply this year, Mumbai, Bangalore and the National Capital Region will house most of the spaces. “Chennai, Hyderabad, Kolkata and Ahmedabad will also see considerable addition of office spaces,” Magazine said.

Source : http://www.indianrealtynews.com/property-prices/despite-slowdown-india-to-add-40-mn-sq-ft-office-space-this-year.html

Duet India Hotels eyes expansion

UK-based investment group Duet’s Indian hospitality arm Duet India Hotels is looking for more land to expand its portfolio and add more than 1,300 rooms by the end of this fiscal.

The group plans to develop 20- 30 mid- scale and upper middle segment hotels with around 5,000 rooms in the next two to three years. The company has recently signed a franchise agreement with Starwood Hotels & Resorts Worldwide to open the Four Points hotels by Sheraton.

The company, which opened its first property on October 1 in Jaipur, a 115- room four- star hotel, is developing four such properties in Ahmedabad, Hyderabad, Indore and Pune.

Dilip Puri, chief executive officer ( CEO), Duet India Hotels, said, ” The five properties including Jaipur is worth around Rs 500 crore. In these, we would have around 882 rooms. We plan to reach to 1,500 rooms by the end of this fiscal.” ” For this kind of expansion, we are looking for more land. As soon as we acquire land, we can start building. We have already acquired land in Hyderabad for developing a property similar to our Jaipur property. We are also looking at other Tier- II cities such as Lucknow, Nasik, Bangalore and Nagpur.

Bangalore would be more of a brownfield development. Among the metros, Chennai is also our target.”

Source : http://indiatoday.intoday.in/site/Story/64668/Business/Duet+India+Hotels+eyes+expansion.html#

Residential property prices rise 15%

AHMEDABAD: The upswing has begun. Not only have the sales picked up, but the prices of residential property too have increased 5-15 % in the last Greatest ceilings
Make maximum use of office space  couple of months. With a long festive season ahead, realty experts believe property markets could see heightened activity, provided developers desist from increasing prices of residential space any further.

“The festive season (September-December ) has historically been a buying period, with a large chunk of overall sales being converted during this auspicious time. Some developers see as much as 30-40 % of the yearly sales taking place during the festive season,” says Aditi Vijayakar, the executive director (Residential Services, India) of Cushman & Wakefield (C&W ), a global realestate consultant. “Residential prices have increased by 5-15 % from the bottom it made in the first half of the year. If the developers continue to raise the prices then the renewed demand and interest that is being witnessed will start to abate,” she cautioned while talking about the upcoming season which is also a source of attraction for the cash-rich NRIs.

“The previous year has been a taxing one for the real estate industry and the initial signs of recovery are evident in the market, and as most of the sales happen during the festive periods, developers have to be cautious not to hike prices in projects and new launches as this will drive out the end users and prolong the revival in the residential space,” Ms Vijayakar remarked.

According to the expert, almost all cities are registering a rise in sale as transactions had frozen up during the start of the year. But now as the economy has stabilised and is back on the growth trajectory, there is a revived interest in buying homes by end users and this increase in confidence, better economy, favourable borrowing conditions, rationalised capital values amongst others which is promoting rising sales across India..

However, developers and builders are eyeing the renewed demand in the residential space as a huge opportunity. “After almost a year-and-a-half, we see a renewed demand in the residential sector. During the last three months, sales have picked up by almost 100%, and with a long buying season ahead, the property prices will definitely move up the graph,” says Sameer Sinha of Savvy Infrastructures Ltd.

“In Ahmedabad, going by conservative estimates, the prices of residential property is expected to rise by another 25-30 % in the next one year”, Mr Sinha said adding that the prices in the city have already risen by about 15% since the markets bottomed out earlier this year. The fresh demand in the housing sector has boosted the confidence of developers as well. Earlier this month, the city-based body of developers, GIHED (Gujarat Institute of Housing and Estate Developers) displayed about 500 projects worth Rs 3,000 crore at property show in Ahmedabad.

“As the economy recovers and grows on a pan-India basis, residential demand is expected to grow along side. C&W Research estimated demand to be over 7.5 million units by 2013 across all categories such as Economically Weaker Section, affordable mid segment and luxury segment. The residential demand for NCR, Mumbai, Bangalore, Pune, Chennai, Hyderabad and Kolkata is estimated to be 4.5 million units by 2013”, Ms Aditi Vijayakar added.

http://economictimes.indiatimes.com/articleshow/5064201.cms

Quinn of Ireland plans hotel in Hyd

Hyderabad: No sooner had Irish major Quinn group announced its India debut with a premium commercial realty project Q-City at Gachibowli on Wednesday, than it is already cementing plans to set up a hotel project in the same area of the city. The $2.2 billion Quinn group, which has already invested nearly $100 million in India, has acquired over 4 acres of land in Gachibowli for a hotel project, which it intends to kick off shortly. While refusing to divulge any details about the project, Quinn Property head Peter Quinn said the company would rope in one of its global hospitality partners like Hilton, Sheraton, Ibis or Crowne Plaza for the project. As we are still assessing the hospitality market in Hyderabad and working out the modalities. It is too early to discuss any specifics, Quinn said. He, however, said the company was looking at investing around $100 million each year in Indian over the next five years or so. Quinn said the company explored all the top cities in the country and zeroed in on Hyderabad as they felt it was the market with the most potential . We are now looking at other markets like Pune and Chennai as we feel they have good potential for commercial and hospitality projects, Gary Conway, acquisitions manager , Quinn Property, said. It was in 2006 that Quinn group quietly made its first foray into India by picking up land at Gachibowli for the 1.2 million sqft Q-City project, which was constructed by Indu Projects. Source:http://lite.epaper.timesofindia.com/getpage.aspx?edlabel=TOIH&pubLabel=TOI&pageid=13&mydateHid=17-09-2009

No takers for ready-to-occupy houses

HYDERABAD: Here’s the real lull story on real estate. Going by the slow pace of sales and more houses than takers, realtors fear that the current stock of properties in the city will not get exhausted before 2012. Even this, they say is an optimistic speculation considering that close to 10,000 houses in the Gachibowli area alone are currently lying vacant. No surprises then that most city builders have shelved their new projects, unless there is further demand.

Pointing to the extent of over-supply, realtors say, that despite customers opting only for ready-to-occupy houses now, the stock of such properties in the city would last at least until June 2010, if not till later. Projects that are close to 60-70 per cent complete would be the next to go, followed by constructions that have kickstarted recently. “Only after that, the demand for new houses will arise,” said Khaja Asif Ahmed, consultant with Steller Project Management.

According to industry observers, the surplus is largely in the peripheral areas of the city where builders are unable to find many takers. This despite an impressive cut of 15 to 20 per cent in the prices of the houses there. Among the worst-hit are areas like Nizampet, Miyapur, Manikonda and Nallagandla, where hundreds of homes are lying vacant, post construction. Builders say this is because these pockets saw maximum activity when the real estate sector was booming. They estimate that close to 50-60 per cent of the city’s construction work was undertaken in these areas. “Builders targetted the IT sector here. But with recession hitting IT severely, they are left with no buyers now,” said a city-based builder.

In comparison, properties within the city limit are doing better with builders sealing a few deals, though at a discounted rate. The movement is, however, drastically slow and realtors see no scope of improvement until late next year.

Experts say that this huge gap in demand and supply, which has stagnated the growth of the sector, is primarily due to a spurt in expensive housing schemes over the last few years. They note that city builders failed to tap the biggest client base __ the middle class __ by initiating such unaffordable projects and is, hence, facing a customer-crunch now. “With only a few takers from the higher strata of society, most of these expansive projects are lying vacant,” said a realtor adding, “Even with a discount on them currently, they remain unaffordable for genuine buyers.”

However, some industry observers continue to remain hopeful and say that the demand for new projects has not died out, but only slowed down for the time being. “The Vijaywada road and the Visakhapatnam road on the city outskirts for instance are low on supply and people would grab any new project that comes up there,” said C Shekhar Reddy, president, Builders’ Forum even denying an excess in ready-to-occupy homes.

While some like Reddy are optimistic about sales picking up latest by early 2010, they do not deny that projects that have only obtained approvals so far, have to face a long wait before finding takers. “Unlike in the past when units sold out even before completion, customers will now hold on and put in their money only once the project is complete,” said a builder.

Source:  http://timesofindia.indiatimes.com/news/city/hyderabad/No-takers-for-ready-to-occupy-houses/articleshow/4992624.cms

Bolywood Actress Malaika Arora to Launch India’s First Rent-Free Malls

Mumbai, Sep 9: Entertainment World Developers Private Limited (EWDPL), a front-runner in developing shopping Malls, residential townships and hospitality projects, has just announced ‘Treasure Showcase’ – a concept that offers Indian manufacturers and emerging brands to virtually showcase their products / brands in a modern, world-class mall environment.

The most notable feature of Treasure Showcase is that it is a unique ‘no-rent, no cam, no deposit and no maintenance’, which will be featured in 20 malls in 11 states across India by 2011, offering one million square feet of international quality retail space on a revenue share basis. The cities include Agra, Amaravati, Bangalore, Bareilly, Bhilai, Chennai, Hyderabad, Indore, Jabalpur, Kolkata, Lucknow, Mumbai, Mohali, Nanded, Pune, Raipur, Thiruvanathapuram, Udaipur, Ujjain and Vadodara, featuring categories ranging from apparel, footwear, electronics, food, accessories, cosmetics, jewellery and home furnishings. ‘Treasure Showcase’, in fact, is the new face of Indian retail. It is an opportunity for every manufacturer / brand with a vision, to gain from modern retail and take their brand across the nation.

“With ‘Treasure Showcase’, the idea is to enable more Indian products and brands to benefit from modern retail practices, leveraging retail intelligence and a new business / revenue model. Here, emerging brands will rub shoulders with established brands under the same roof. Besides, it will also lead to an increase in footfalls, drawing in consumers, who are currently non-mall customers, offering them greater choice,” said Manish Kalani, managing director of EWDPL.

According to him, EWDPL has always believed that besides creating world-class retail infrastructure, its role is really to promote consumption, by providing emerging Indian consumers access to a wider bouquet of brands / merchandise / choice / price points. This will help modern retail create fresh demand and generate new revenue streams.

Keeping this in mind, EWDPL is creating Retailocracy and a level playing field between what is considered traditional retail and modern retail. The idea is to expand the market for modern retail by promoting consumption and innovating retail, thereby enabling emerging and aspiring manufacturers and brands to enter malls.

Kalani strongly believes that everyone should gain from the emergence of modern retail – manufacturers, brands, retail realty developers and most of all consumers. According to Kalani, while India’s aggregate consumption is set to quadruple by 2025, the emerging middle class in metros, cities and towns will significantly drive consumption across categories, thus creating the need for a whole new generation of brands that are young, trendy and affordable.

‘Treasure Showcase’ brings its partners, mall management experience, operational and retail expertise, trend spotting and an opportunity to be alongside the world’s best brands and reach customers directly. Further, management information systems and databases will be shared to ensure a profitable and efficient business, added Kalani.

Gaurav Marya, president of Franchise India, strategic partners for ‘Treasure Showcase’, said, “internationally, revenue sharing model is getting popular and we feel this will unleash a new era of retailing in India.”

The group expects to generate revenues of over Rs 500 crore by 2011 from Treasure Showcase. Nearly Rs 300 crore will be invested in creating and promoting Treasure Showcase, which would include the cost of real estate. The whole concept will be based on a transparent / pre-determined margin sharing revenue model, added Kalani.

“This concept would have a great impact on the real estate industry, as more realty players will formally join the fray, which will lead to market expansion for modern retail,” said Marya.

Kalani, Marya and others were present at the press meet that was held at Taj Land Ends, here on Tuesday September 8.

Source : http://www.daijiworld.com/news/news_disp.asp?n_id=65437&n_tit=Bolywood+Actress+Malaika+Arora+to+Launch+India%92s+First+Rent-Free+Malls++

Realty firms look at PE bailout for hotel projects

Realty majors, left with few avenues to fund their ambitious hotel projects, are now hoping for a private equity (PE) bailout. Developers like Parsvnath, Nitesh Estate and Brigade Group have kicked off negotiations with PE players to bail them out.

New Delhi-based Parsvnath Developers, for instance, recently prepared an information memorandum for the purpose. “We plan to raise money for hospitality projects but currently it is in an early stage of discussion,” said an official on condition of anonymity. The company has expressed its intention to focus on six projects in Hyderabad, Ahmedabad, Lucknow, Goa, Mohali and Shirdi.

“Banks are still a little averse to lending to the hospitality sector even though signs of economic revival are looking imminent,” said K Ramakrishnan, executive director & head, investment banking, Spark Capital.

Technopak Advisors’ principal consultant (hospitality) Tarandeep Singh said, “PE funds are currently more liquid than bank finance and many funds have past experience of investing in hospitality.” He added that there are around 15-20 PE players who are scouting for good bargains in the budget hotel segment.

PE players like S Sriniwasan, CEO, Kotak Realty Fund, say that the hospitality business in India is promising from a long-term perspective despite the current challenges. “Despite the capital-intensive nature and high cost of land, I think the hospitality business is very promising. The need for hotels is only going to pick up as the Indian economy grows,” Sriniwasan said.

According to data provided by Venture Intelligence, a research service focused on PE and M&A deals, in 2007 there were nine PE deals in hotel projects worth $343 million, and in 2008 there were 11 deals worth $246 million. So far this year, there have been five deals worth $74 million.

Arun Natarajan, founder and CEO of Venture Intelligence, said that its real estate and hospitality focused PE funds are looking at investing mainly in hotel projects. “These funds will try and replicate the global hotel management model in India. Under this strategy, it would either build a new hotel or buy an existing property and then strike a deal with hotel firms for branding,” he added.

Realty companies are looking at joint ventures as well as the special purpose vehicle (SPV) model to partner with PE firms. Some PE firms are also looking to buy out assets of distressed hotel projects. Duet India Hotels, a $166.5 million fund that is a part of Duet Private Equity (DPEL), which acquired Dawnay Day Hotels for $33 million last year, is in the hunt for distressed properties.

http://www.dnaindia.com/money/report_realty-firms-look-at-pe-bailout-for-hotel-projects_1288631

Office space rentals decline at slower rate

While there has been a drop in the rate of decline in office space rental rates in the country in the second quarter of the current fiscal, the absorption rate has shown an uptrend for the first time in four quarters. This is according to a recent research report — State of the Office Sector – by financial and professional services firm Jones Lang LaSalle Meghraj (JLLM). The report shows that the rate of decline, as a national average, has slowed to 8.3 per sent in the second quarter, compared with a dramatic drop of 18.8 per cent in the previous quarter. Nation-wide, rates had dropped sharply in the first quarter of this fiscal as compared with an 8.6 per cent drop in the last quarter of the previous fiscal.The report’s author, JLLM research head Abhishek Kiran Gupta has attributed slowdown in rate of decline of office space rental rates to four factors that have helped shape the Indian economy over the past six months. The factors pointed to are: Firstly, increased liquidity in the market due to fiscal measures taken by the government. Secondly, a sharp rise of 4,536 points in the Sensex in the first six months of this fiscal. The index has risen over 50 per cent after hitting a low of 8,451 points on November 20 of last year post the Lehman Brothers-led global financial crash. Thirdly, strengthened political stability with the UPA governments being sworn back into to power and sweeping the elections by a large margin. The government has also shown its resolve in boosting the economy with a string of fiscal measures as well as its decision to disinvest large public sector undertakings. And lastly, green shoots that are now being seen in the affordable segment of the residential sector. There has been a rise in the number of developers embarking on affordable housing projects across the nation. The study covers seven cities — Hyderabad, Mumbai, Delhi, Kolkata, Bangalore, Chennai and Pune. It, however, does not include Chandigarh. While only Hyderabad has shown a steady decline in office space rentals quarter-on-quarter — from (-)5.8 per cent in Q4 of the previous fiscal to (-)7.6 per cent in Q1 and a further drop to (-)10.4 per cent in Q2 of this fiscal — all other cities, except Pune, have shown a drop in the rate of decline. In Pune, the decline in office space rental rates has been witness to a gradual slowing down — from (-)17.3 per cent in Q4 of the previous fiscal, to (-) 12.9 per cent in Q1 of the current fiscal, to a weak (-)4.2 per cent in Q2. The country’s financial and political capitals — Mumbai and Delhi — have seen a drastic drop in rate of decline. Both cities have seen a near-13 percentage point drop in rate of decline of office space rentals. Gupta contends that the factors that led to the slowdown in decline, coupled with the gradual revival of opportunistic demand, have led to strengthening of absorption rates.

After decreasing since Q2 of the previous fiscal, absorption rate at the pan-India level has picked up for the first time in a year in Q2 of the present fiscal — inching from a low of 7 per cent in Q1 of this fiscal to 13 per cent in Q2. The JLLM study notes: “Net Absorption of office space in Q2 stood at around 4 million square feet, doubling from (the) previous quarter. About 1.8 million square feet of absorption in Q2 is contributed by pre-leased projects of SBD (small business development) Bangalore, which became operational in the quarter. Gupta, in the report, goes on to state that “considerable rationalisation of rents in the information technology (IT) as well as non-IT spaces (has resulted in) opportunistic demand led by domestic occupiers who have expanded their real estate portfolios in various Indian cities. Apart from IT/ITES and BFSI (banking, financial services and insurance) sector, other sunshine sectors -– like telecommunications, pharmaceutical and automotive — are leasing out office spaces in various Indian cities”.

The seven cities covered in the nationwide survey witnessed completions of 7.5 million square feet of office space in Q2 of the current fiscal, taking the total operational office stock to 200 million sq ft. “While vacancy in office space decreased at the country-level from 12.6 per cent in Q1 of the previous fiscal to 11.1 per cent in Q2 of the current fiscal — on account of completion of a few projects and better absorption — it has witnessed a year-on-year rise of 490 basis points,” says Gupta.

There are also chances of high vacancy levels in micro-markets through 2010. As total operational office stock continues to grow, the vacant space available in operational projects continues to augment itself to massive proportions.

Source : http://www.expressestates.in/full_story.php?content_id=93889

Changing Real Estate Scenario in Tier 2 and Tier 3 Cities

The demand fundamentals of the India story are now focused around all cities that have sufficient economic activity, be it industrial, service sector-driven or incentive-driven programs by the State Government. In Gujarat, which has seen considerable industrial progress, the key cities of Ahmedabad, Surat and Vadodara come readily to mind. Baddi in Himachal Pradesh and Pantnagar and Rudrapur in Uttaranchal attracted a lot of residential developers that met with success, thanks to proactive Government policies. In the South, Coimbatore, Vizag and Kochi emerged, either thanks to a large investor segment or as the outcome of sufficient economic activity. Towards the West, Pune, Nasik and Nagpur are noteworthy in this context. In all cases, developers positioned their development close to industrial hubs, targeting a totally different price segment and making the most of it.

This said, every developer was inspired to create a national footprint three to four years back. While this was a worthy ambition, it was poorly conceived as a plan since many of them did not factor in State Government-level regulatory challenges such as local municipal laws. They also did not consider that they may not have had the requisite financial resources, organizational depth and knowledge of the local markets to manage and execute projects in Tier II and Tier III cities. Nor had they accurately gauged the demand fundamentals of these locations. Such developers proceeded to enter into land acquisition on their own equity and were caught short-footed, not realising that the property cycles were then at their peak, and that there was bound to be a correction – if not a fall.

Major players are now going to re-align their positions vis-à-vis unexplored territories. There is now a very clear realisation that it is extremely difficult to become a genuine Pan India player in every geography and real estate segment. Moreover, developers today have woken up to the fact that there is only limited capital available to real estate players today – capital that is earmarked for residential projects, construction funding against achieved leases and signed contracts, or for cities displaying sufficient demand even in subdued market conditions. In the current context, it makes sense for developers to re-strategize and focus on their core geographies. For example, if a certain developer is extremely accomplished as a residential player in the South, having high credibility and sufficient brand recall in this region, such a company would ask itself how wise it is to experiment in the North or the West, and whether it would not make more sense to expand in the South.

Likewise, developers accomplished in IT projects would now concentrate on geographies that feature a healthy IT component, and avoid branching out into cities that lack a sufficient volume of such activity. Such developers would see the virtue of focusing on IT-centric cities such as Bangalore, Hyderabad, Chennai, Mumbai, Gurgaon and Pune, and re-think on plans to invest in cities that lack Information Technology activity. Tier II and Tier III cities still represent a great story, especially in terms of affordable housing for industrial workforces. However, this story may no longer be suitable for some of the larger developers. These are locations where the strength of regional players will come into play. There is at least one strong developer in every region. For instance, Panchshil Realty, Magarpatta, Paranjape Builders and Kumar Builders are very powerful local brands in Pune, with a company like Pharande Spaces practically spearheading the residential drive in Pune’s PCMC area. These brands have demonstrated that they understand their geographies better than any players who arrive from the outside to experiment on the Tier II / Tier III story.

The success of these local developers will inspire larger developers from beyond a region’s borders after the fundamentals of that area’s demand are captured sufficiently and the markets are sanitised in terms of municipal and financial market stabilisation. In the next one to two years, developers will have realigned their business strategies sufficiently to leverage the potential of Tier II / III cities that have sufficient market drivers or are witnessing considerable investor activity (such as Kochi, Surat, Mohali and Chandigarh).

Source : http://www.indianrealtynews.com/real-estate-india/changing-real-estate-scenario-in-tier-2-and-tier-3-cities.html

Realtors turn malls and office plans into homes

Mumbai: Residentials hot, commercial space not.

With developers forced to return to the drawing board to make projects financially viable, the landscape is, indeed, changing.

Look what TTK Prestige, the cooker-to-condom maker, said in a notice to the Bombay Stock Exchange last week.

In 2007, the company had entered into a joint development agreement with Kolkata-based Salarpuria Group to develop a 6.3 acre site in Dooravani Nagar, Bangalore.

The initial plan was to construct a mall to ensure recurring rentals. But the financial crisis has forced a change: residential blocks will be added to the project.

“Taking into account the ground reality, Salarpuria suggested putting up a residential-cum-office space. But a decision on this is yet to be taken,” said K Shankaran, director and secretary, TTK Prestige.

The management feels the new plan makes sense from a liquidity point of view.

Also last week, another firm, Sunteck Realty, said it was revisiting its project –a commercial complex on a 1.5 acre site between Kandivali and Borivali. “The project hadn’t even reached the drawing board when we closed the deal a few months back. However, taking into account the oversupply situation in Mumbai’s commercial space, we thought it prudent to develop a high-end residential complex instead, with a small portion of retail added to it,” said Sunteck Realty managing director Kamal Khetan.

Orbit Corporation, the south Mumbai realtor, decided convert its 2.5 lakh sq ft commercial development, called the Hafeez Contractor House in Lower Parel, into a residential project.

Pujeet Agarwal, managing director, Orbit, said the company is actually converting two commercial developments — the Lower Parel one and another in Andheri — into residential ones.

Realty analysts said oversupply and declining demand is making such commercial space development unviable.

“The government’s initiatives towards reducing borrowing costs is reflected in declining interest rates on home loans. This, coupled with realty prices getting more realistic are helping maintain the excitement in the residential space,” said Sanjay Dutt, CEO, business, Jones Lang LaSalle Meghraj, the real estate consultancy.

Revival in demand for commercial space, meanwhile, will largely depend on the global economic scenario.

“The only movement that I see is offices being relocated to more reasonably priced commercial developments thereby cutting costs,” said Dutt.

Investment bank Goldman Sachs in a recent report, said primary residential volume trends (year to date till May this year) indicated recovery in markets such as Mumbai and Noida.

“Inventory days in the two cities have fallen back to early 2008 levels or better. However, the overhang in Bangalore, Chennai, Gurgaon and Hyderabad remains significant with at least 15 months of inventory in the pipeline,” Goldman analysts Vishnu Gopal and Aditya Soman wrote.

With inputs from Pooja Sarkar in Kolkata

Source : http://www.dnaindia.com/money/report_realtors-turn-malls-and-office-plans-into-homes_1282909

Want to buy a home? Shift to a less costly city

A  study of households with an annual income of Rs 3 lakh (Rs 300,000) to Rs 10 lakh (Rs 1 million) in seven cities shows substantial variations in the type of houses they can afford to buy.

The study on affordable housing, done by property consultants Knight Frank, says the Rs 8-10 lakh (Rs 800,000-1 million) income category in Chennai can afford houses up to Rs 45 lakh (Rs 4.5 million), while the same group can afford houses up to only Rs 38 lakh (Rs 3.8 million) in Mumbai [ Images ] and Rs 37 lakh (Rs 3.7 million) in Bangalore. The same category in Hyderabad, Kolkata [ Images ] and Pune could afford between Rs 40 lakh (Rs 4 million) and 43 lakh (Rs 4.3 million).

In terms of apartment sizes, the Chennai households can afford up to 1,200 square feet, while those of Pune and Mumbai can only afford 800 sq ft and 950 sq ft, respectively.

In terms of affordable rates per sq ft, Pune can afford up to Rs 5,900 a sq ft and Bangalore only Rs 3,600 a sq ft, the study said.

“Mumbai’s high cost of living, coupled with the generally higher maintenance lifestyle, has adversely affected the affordability of households in the city. For instance, middle class households in Kolkata, Chennai and Hyderabad can afford houses valued at Rs 14-45 lakh (Rs 1.4-4.5 million), whereas households of similar stature in Mumbai can afford houses valued at Rs 12-38 lakh (Rs 1.2-3.8 million),” the study said.

“Affordable rates are higher if sizes are smaller. If buyers can compromise on size, they can afford higher priced apartments,” said Samantak Das, national head, research, Knight Frank.

The study assumes significance, as top real estate developers such as DLF, Unitech and Parsvnath have shifted their focus towards the Rs 20-60 lakh (Rs 2-6 million) income category in many cities, with the premium housing segment seeing sharp decline in sales after the economic slowdown and stock market decline impacted home buyers.

The report states that not all of the so-called affordable housing projects in the country are really affordable; they are way beyond the means and preferences of buyers.

“Although preferred unit sizes are less than 1,200 sq ft, many projects are offering greater sizes that are unaffordable. Based on consumer preferences, house property beyond Rs 5,900 a sq ft would be unaffordable across all cities covered,” it said.

The consultancy thinks it is premature for developer to raise prices now.

“It is too short a period for developers to increase prices. It is just euphoria after elections and a stable government and not supported by fundamentals,” said Gulam M Zia, national director, research and advisory services, Knight Frank.

Source : http://business.rediff.com/report/2009/aug/13/shift-to-a-less-costly-city-to-buy-a-home.htm

Signs of recovery in Hyderabad

Low interest rates — at a near 10-year low, thanks to the Government’s recent announcement lowering rates for houses below Rs 20 lakh — and the pent up demand for affordable housing have seen the real estate market in Hyderabad recover in the last two months.

With value for money being the buzzword, the action is now centered around apartments and independent houses in the Rs 20-30 lakh segment. There is still pressure on sales volumes when it comes to apartments which are over Rs 30 lakh, according to industry experts.
Buyers’ market, still

“It continues to be a buyers’ market. This has forced many developers to re-look their existing projects and for the rest it is clear that affordable housing is the way to go forward,” according to Mr K. Ravinder Reddy, Chairman and Managing Director, Janapriya Engineers Syndicate, and Chairman of Andhra Pradesh Builders Association.

Mr Reddy said that after the elections the real estate market has shown clear signs of revival.

Though it is nowhere near the dizzy heights it had reached couple of years ago, the pent up demand is beginning to be served.

The Centre’s efforts to shore up the economy, coupled with State Government support by way of lower stamp duty and waiver of stamp duty for properties below Rs 20 lakh, have spurred the market. Buyers have realised that the market has more or less bottomed out and it is time to buy , Mr Reddy explained.

What is significant is that this time round speculative buying in anticipation of big returns on investment is conspicuous by its absence, according to Mr C. Sekhar Reddy, Chairman and Managing Director CSR Estates and Member of CREDAI (Confederation of Real Estate Developers Association of India).

Citing recent interactions with major real estate developers and members of the banking community at a meeting in Mumbai, Mr Sekhar Reddy said that the realty market in Hyderabad mirrors the other markets in the country. The enquiry levels and the conversion rates are going up, he added.

“Of the 12 municipalities in the Greater Hyderabad Metropolitan Corporation area, in nine municipalities we have projects that cater to all buyers. Significantly, in these areas there is adequate supply of affordable housing where flats are available for below Rs 20 lakh,” Mr Sekhar Reddy, said.

More developers, which include even the major players such as DLF, Mantri and Asoka Developers, are launching projects that are offering apartments in the Rs 20-30 lakh range.

The lower interest rate regime and concessions offered by the State Government for houses below Rs 20 lakh make this market, which is still hungry for good projects, attractive for developers, Mr Sekhar Reddy said.

The prices have already corrected by about 25 per cent, he added.

Land availability

However, in the core city area , the cost of real estate continues to rule high mainly due to demand-supply mismatch. The availability of land is an issue and this keeps prices high.

In a study of 10 cities by PropEquity , Hyderabad comes lowest in terms of launch of new units at 2,585 units because of high inventory.
http://www.thehindubusinessline.com/iw/2009/08/02/stories/2009080250711500.htm

Ambuja Realty to execute Rs 4,000 cr housing projects

Ambuja Realty Development has planned to execute projects worth Rs 4,000 crore in the next five years. According to Harshvardan Neotia, company’s chairman, all options would be kept open for raising funds for the projects. The company has kept options open for divestment in the closely held company.

He informed, “IPO or any other means to raise funds would depend on several conditions like market response, project schedules, booking, bank credit and capital market conditions. If the situation demands, we are open to raise funds from the market, but there is no plan as of now.”

Gurgaon, Faridabad to be developed as green cities
The Haryana government has planned to develop Gurgaon and Faridabad as green cities.

Haryana chief minister Bhupinder Singh Hooda said that the project meet the energy challenges, reduce dependence on fossil fuel, expensive oil and gas for energy and also to promote increased use of renewable energy. “The state government would be assisted in preparation of a master plan for increasing energy efficiency and renewable energy supply in these cities, besides having in place institutional arrangements for implementation of the master plan,” Hooda said.

These will be the first cities in Haryana to be brought under the development of solar cities programme, launched by the new and renewable energy ministry.

Oakwood plans apartment with five-star facilities
Oakwood Worldwide, a leading player in the service-apartment segment, has announced plans to open 11 five-star temporary housing facilities across the country by 2012. The locations for its facilities would include Thiruvananthapuram, Chennai, New Delhi, Hyderabad and Ahmedabad. Vikas Kapai, country general manager, Oakwood Worldwide, said “These properties are under construction. Meanwhile, we have also signed 11 deals with real estate developers for the new constructions. It would come up with two more properties in Mumbai, and two in Chennai in the next one year.”

Realtor to develop vaastu-compliant township
Kolkata-based Shristi Infrastructure Development has planned to develop a mega integrated township with the name of Shristinagar at Asansol, West Bengal.

The vaastu-compliant project, with built up area of 6 million sq ft, will offer 2,400 apartments, in addition to plots, group housing structures, bungalows, row housing and premium residential apartments. Keeping options open for people who would prefer community living and yet want to develop a dream home. We will develop vaastu-compliant houses for 5,000 families at Shristinagar, spread over 90 acres,” said Hemant Kanoria, director, Shristi Infrastructure.

RICS to launch professional courses in realty sector
Royal Institution of Chartered Surveyors (RICS), the UK-headquartered organisation which trains professionals working in the land, property and construction sectors, has decided to start its professional courses in India.

Sachin Sandhir, MD, RICS India, said “We plans to start Centre of Excellence for Real Estate & Construction, for the development of specialised skills for professionals employed in the realty sector.” He said that the specialised courses in realty and construction management with durations of six months to two years.

Source : http://www.expressestates.in/full_story.php?content_id=93873

5% to15% Mall Vacancies in Major Retail Destinations

Mall vacancies in major retail destinations such as Delhi, Mumbai, Pune and Hyderabad climbed between 5% and 15% in June 2009, even as developers rewire their strategies to sustain cash flows. During the past six months, developers juggling with various revenue models have discovered to their relief that certain “flexible” formats like ‘minimum guarantee’ and ‘revenue sharing’ have picked up steam.

“Riding on a 30-40% annual rental growth in 2006 & 2007, and strengthening consumerism, developers in India planned and began constructing malls in dozens. A rental correction of 30-35% from the peak in 2008 was not able to entice retailers, leading to several malls becoming operational in the first six months of 2009 at high vacancies,” says Abhishek Kiran Gupta, head — research of global real estate consultancy firm Jones Lang LaSalle Meghraj (JLLM). According to Mr Gupta, the mall vacancies have continued to increase between 5% and 15% in retail hotspots like Delhi, Mumbai, Pune, Bangalore and Hyderabad.

“Select malls like Inorbit and Forum Value Mall in Bangalore, along with Select City Walk in Delhi, have shifted to a combination of minimum guarantee and revenue sharing models, accompanied by a performance clause in the agreement. Depending on the format of the store and the tenant, the revenue-sharing terms are decided,” Mr Gupta says, adding, “Such flexible revenue models are highly acceptable to the retailers as the risk is shared between the real estate owner and the retailer. Also, it makes the developer more accountable for generating footfalls and conversion rates in the mall. For the developer, it reduces the risk of high vacancy in the mall while counting on the probability of better revenues in future.”

Similarly, developers like the Entertainment World Developers Pvt (EWDPL) are in the process of constructing 20 such malls based on the revenue-share model across India. Gaurav Marya, the president of franchise solution company, Franchise India Holdings, says, “The revenue sharing model, where developers don’t charge rent and accommodate more local retailers into the malls, including local brands, can encourage a seamless model benefiting all the stakeholders.”

Retail consultant, Mr Wahid Ravji chips in: “The revenue-sharing model existed on the international retail scene, but has come very late to India. Most of the big deals finalised between retailers and mall developers are now on the revenue-sharing model. This model works well for both. Retailers now do not wish to shell out more than 4-5% of sales as rent, compared to the 10-11% they used to pay till a year ago.” According to Mr Ravji, the model will ensure that the mall developer continues to remain “interested” in the property and there are enough retailers in the mall to attract significant footfalls.

Source : http://www.indianrealtynews.com/retail-market/5-to15-mall-vacancies-in-major-retail-destinations.html

Mall owners focus on space fillers

AHMEDABAD: Mall vacancies in major retail destinations such as Delhi, Mumbai, Pune and Hyderabad climbed between 5% and 15% in June 2009, even as  developers rewire their strategies to sustain cash flows. During the past six months, developers juggling with various revenue models have discovered to their relief that certain “flexible” formats like ‘minimum guarantee’ and ‘revenue sharing’ have picked up steam.

“Riding on a 30-40% annual rental growth in 2006 & 2007, and strengthening consumerism, developers in India planned and began constructing malls in dozens. A rental correction of 30-35% from the peak in 2008 was not able to entice retailers, leading to several malls becoming operational in the first six months of 2009 at high vacancies,” says Abhishek Kiran Gupta, head — research of global real estate consultancy firm Jones Lang LaSalle Meghraj (JLLM). According to Mr Gupta, the mall vacancies have continued to increase between 5% and 5% in retail hotspots like Delhi, Mumbai, Pune, Bangalore and Hyderabad.

“Select malls like Inorbit and Forum Value Mall in Bangalore, along with Select City Walk in Delhi, have shifted to a combination of minimum guarantee and revenue sharing models, accompanied by a performance clause in the agreement. Depending on the format of the store and the tenant, the revenue-sharing terms are decided,” Mr Gupta says, adding, “Such flexible revenue models are highly acceptable to the retailers as the risk is shared between the real estate owner and the retailer. Also, it makes the developer more accountable for generating footfalls and conversion rates in the mall. For the developer, it reduces the risk of high vacancy in the mall while counting on the probability of better revenues in future.”

Similarly, developers like the Entertainment World Developers Pvt (EWDPL) are in the process of constructing 20 such malls based on the revenue-share model across India. Gaurav Marya, the president of franchise solution company, Franchise India Holdings, says, “The revenue sharing model, where developers don’t charge rent and accommodate more local retailers into the malls, including local brands, can encourage a seamless model benefiting all the stakeholders.”

Retail consultant, Mr Wahid Ravji chips in: “The revenue-sharing model existed on the international retail scene, but has come very late to India. Most of the big deals finalised between retailers and mall developers are now on the revenue-sharing model. This model works well for both. Retailers now do not wish to shell out more than 4-5% of sales as rent, compared to the 10-11% they used to pay till a year ago.”

According to Mr Ravji, the model will ensure that the mall developer continues to remain “interested” in the property and there are enough retailers in the mall to attract significant footfalls.

Source : http://economictimes.indiatimes.com/News/News-By-Industry/Services/Retailing/Mall-owners-focus-on-space-fillers/articleshow/4823854.cms

Oakwood Worldwide plans 15 operational properties in India by 2012

Planning a major foray into service apartments segment, international player Oakwood Worldwide would launch 11 five-star category temporary housing facilities across India over next three years.While the brand is already operational in Pune, Mumbai and Bangalore with four properties, it will have operations in prominent Indian cities such as Chennai, New Delhi, Hyderabad, Thiruananthapuram and Ahmedabad by 2012.

Oakwood Worldwide, which runs resorts and service apartments in United Kingdom, USA, Singapore and a number of Asian countries, plans to run properties in three different categories in India. The Oakwood Premier category provides for a long-term stay in five-star deluxe category rooms while the Oakwood Residence has five-star standard residential flats. The Oakwood Apartments category is meant for tier-two and tie-three cities and has compact service apartments.

The brand has so far launched four properties in the country while 11 new locations are under construction. Speaking to Business Standard , Oakwood’s country general manager Vikas Kapai said, “We have signed 11 new deals with different real estate developers. We expect to have two properties operational in each of New Delhi, Chennai and Hyderabad by 2011.”

Oakwood recently launched its largest property in India, the Oakwood Premier in Pune with 202 five-star deluxe studios and suits. It also runs an 84-unit Oakwood Residence property in Pune. The brand already has a property each operational in Mumbai and Bangalore. It plans to have have two new properties in Mumbai while a property each in Ahmedabad and Thiruananthapuram.

“We have seen more than 73 per cent occupancy during the financial year 2008-09 at our three properties. This year as well, we have seen more than 65 per cent occupancy, which is excellent considering the present economic situation,” Kapai added. the firm plans to concentrate on Pune, New Delhi, Mumbai and Bangalore, the cities that attract the maximum number of foreign working professionals in India. Kapai however did not disclose the financial details of the company in India.

Source : http://www.business-standard.com/india/news/oakwood-worldwide-plans-15-operational-properties-in-india-by-2012/67360/on

Govt may relax FDI norms for realty

The government department responsible for the promotion of industry is proposing easier rules to allow overseas investors to be part of smaller real  estate projects and lower capitalisation norms for those which involve facilities related to hospitality or tourism.

The department of industrial policy & promotion (DIPP), which handles the FDI policy, in a note drafted for the Cabinet Committee on Economic Affairs (CCEA), has said that FDI should be allowed to flow into realty projects even if the area covered is only 10 acres.

As of now, FDI is allowed in realty projects only if the minimum area covered is 25 acres (or 10 hectares).
The move will help realty projects in metros like Mumbai, Delhi, Bangalore, Chennai and Hyderabad to attract FDI.
Realty players feel that it is not possible to find 25 acres of land in these cities to make their projects comply with Press Note 2 of 2005, which defines guidelines for permitting FDI in this sector.

The industry is keen on business in the metros, as it attracts high-profile customers, but wants FDI to be allowed since the cost of land in these cities is high, making them expensive.

The DIPP has also proposed that the minimum capitalisation norms specified in Press Note 2 can be waived in the case of projects, which involve hospitality and tourism facilities, such as hotels, restaurants or entertainment facilities meant for tourists.

Press Note 5 specifies that minimum capitalisation should be $5 million for permitting FDI in realty projects, which involve an Indian partner. In case the project is implemented by a fully-owned subsidiary of an overseas firm, the minimum capitalisation specified is $10 million.

The waiver would be available in case 50% of the built-up area in a project is devoted to hotel and tourism businesses, such as food courts, resorts, restaurants.

If 20% of the total built-up area is used for hotel rooms, the waiver will be available. Veterans in the real estate business, who do not want to be identified, said the liberalisation moves were welcome changes that they have been waiting for.

These steps, when implemented, will provide relief to high-value projects in metros and projects being developed for the tourism sector.

The move comes as a relief at a time when realty players are struggling to managed debt and lull in business, they added.

However, the realty industry is upset that its demand for waiving off the three-year lock-in for FDI in real estate has not been accepted. Many fund houses keep off realty projects due to the three-year lock-in period, industry veterans feel.

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/Govt-may-relax-FDI-norms-for-realty/articleshow/4764581.cms

Leela Palaces to invest Rs 2,200 cr by next year

NEW DELHI: Hospitality player The Leela Palaces, Hotels and Resorts is planning to invest Rs 2,200 crore by the next year as part of the group’s  plan to add seven new properties across the country by 2012-13.

The company will spend the amount for its upcoming hotels in Delhi and Chennai which will be ready for inauguration in 2009.

“We plan seven new properties across India by 2012-13, and as the first phase of it our group would be investing Rs 2,200 crore to complete two new hotels in Delhi and Chennai by the end of 2009,” Hotel Leela Venture Ltd Vice Chairman and MD Vivek Nair told reporters here.

He said that besides the properties in Delhi and Chennai, the chain is also going ahead with plans to set up hotels one hotel each in Udaipur, Pune and Hyderabad and resorts in Kovalam and Kolkata by 2012-13.

“We have managed to secure funds for the Delhi and Chennai properties with a mix of buy-back of 25 per cent of our Foreign Currency Convertible Bonds worth USD 100 million and Euro 60 million,” Nair said, adding that the buy-back was decided during the company’s board meeting on June 27.

Leela group’s board had also passed the enabling resolution for setting up properties in Agra, Hyderabad and Pune during the same meeting, though actual number of equity has yet to be decided upon, he added.

Source : http://economictimes.indiatimes.com/News/News-By-Industry/Services/Hotels-Restaurants/Leela-Palaces-to-invest-Rs-2200-cr-by-next-year/articleshow/4766743.cms

Real estate survey shows silver lining for market

CHANDIGARH: Presently facing a downward trend, the real estate market is likely to recover by 2010 with increase in demand for residential segment driven by improving affordability, steady economic growth and greater liquidity. These are the findings of a survey carried out in 10 cities, including Chandigarh, by the Crisil Real Estate Research Group.

The report says, “Demand in the residential market is expected to turn positive in 2010 due to these factors, however, a decline in the currently over-priced capital values of all the three real estate segments – residential, commercial and retail would persist through 2009.” “The commercial and retail markets would continue to witness erosion in lease rentals through the next two years,” it states.

The report provided information and analysis of more than 400 acres of land across 88 micre markets in 10 cities – Ahmedabad, Bengaluru, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Mumbai and Pune.

The report indicated that capital values for residential sector and lease rentals for commercial and retail properties have substantially corrected till March this year, due to slowdown in both the domestic and global economies. Cities such as Kochi, Chandigarh and Pune, which have greater investor presence as against end-users, witnessed a greater fall in capital values compared to other cities, the report revealed.

However, Crisil believes that demand for houses would improve in 2010, backed by lower home loan interest rates as well as better job security owing to higher growth in the economy.

Expressing confidence in the report, a leading real estate agent of the city, Sunil Kumar, said, “Apart from the low interest rates on housing, another important factor for the rising demand in 2010 would be the upcoming international airport in Chandigarh. The direct Dubai flight from Chandigarh would also add to arrival of many big business houses here.”

Kumar insisted that these factors would compell more and more tricity tenants to go for owning a property of their budget and choice. “The demand for residential properties would be more in the neighbouring areas like Mohali, Panchkula, Zirakpur, villages across the city and even far-off areas like Derabassi, Kharar and Kurali,” said Kumar.

Source : http://timesofindia.indiatimes.com/NEWS-City-Chandigarh-Real-estate-survey-shows-silver-lining-for-market/articleshow/4770363.cms

Budget hotels, serviced apts sprouting fast

Bangalore: Mid-market hotel brands and serviced apartment chains are fighting tooth and nail for the keys to growth, and perhaps, the same customers.

Both segments are on an expansion spree to cash in on the slowdown that has thrown up good demand for cheaper hotel rooms.

The high average room rates (ARR), despite the current slump, have reduced hotel occupancies by 57% in cities like Bangalore, Hyderabad and Pune for star hotels.

But budget hotel chains and serviced apartments have benefited from this. Not surprisingly many of them have charted out aggressive plans including expanding in the hinterland.

For instance, Roots Corporation Ltd, a wholly owned subsidiary of the Indian Hotels Company, plans to launch 30 more properties by 2010 under the Ginger brand. The firm will add hotels in Guwahati, Durg, Surat, Chennai, Jamshedpur and Pune among others.

“We have identified the locations after detailed studies across various parameters such as market potential, clusters of clientele and peak periods,” Prabhat Pani, chief executive officer & director, Roots Corporation Ltd, said.

Likewise, Fortune Hotels Pvt Ltd, a wholly owned subsidiary of ITC Ltd, is planning 26 hotels across India by mid-2011. “There had been minor hiccups but there is still a huge opportunity to add new property in the mid segment. All the properties are in different stages of development and Fortune is the fastest growing brand for ITC Hotels,” ITC Ltd – Hotels Division senior executive vice president, Pawan Verma, said.

The firm has signed management contracts for 55 hotels with a total room inventory of 4,400 rooms. It is also in talks with Bangalore based JP Group to operate and manage its luxury hotel in Mysore. Fortune has 29 hotels in operation comprising an inventory of 2,400 rooms.

Mumbai based Sarovar Hotels Pvt Ltd, one of the largest budget and mid-market chains, is looking at garnering higher business by adding 800 more rooms in eight hotels to its existing 4,500 in 35 hotels by the end of this year.

Sarovar will invest about Rs 250 crore, excluding land cost, to develop hotels in Bangalore, Jaipur, Gurgaon, and Chandigarh among others, said Ajay Bakaya, executive director, Sarovar Hotels.

With competition increasing in the affordable stay segment, average room rates will stabilise by 2010, said Tarandeep Singh, principal consultant (hospitality), Technopak Advisors.

“There will be excess inventory and hotels will be cautious while revising rates,” he said, adding the industry will pick up by September 2010.

Serviced apartment players are letting go of their cautiousness and are re-looking at the market to close deals on affordable rates. Many of the operators are in talks with developers to enter into management contracts and are bargaining hard to add rooms.

Priyadarshi Samal, director, operation, Chalet Hospitality, a leading serviced apartment player in Bangalore said he believed this is the right time to get value for money property. “The value of good property has come down and we plan to add another 100 rooms in next three to six months.”

Keshav Baljee, co-promoter Royal Orchid Hotel, said, “We are not much affected by the downturn and are currently operating on healthy occupancy.” The firm is adding extended holiday concept in Hyderabad, and is in talks with several developers to build and operate properties in Mumbai, Chennai and National Capital Region. It is also eyeing distressed property which can be converted into serviced apartments.

Source : http://www.dnaindia.com/money/report_budget-hotels-serviced-apts-sprouting-fast_1272389

The Park Hotels to launch luxury cruise, property in Hyderabad

The Park Hotels will launch a new property in August and a luxury cruise in September 2009. The Park Hotel Hyderabad will open in August and will be a certified green building offering 285 guest rooms. It will offer three restaurants, two lounges and two entertainment venues, as well as retail halls and art galleries.

Apsara, a luxury cruise will be launched in Kerala in September 2009. Aspara is a 28-metre lake cruiser with capacity for 24 delegates. The vessel will offer ten luxury rooms, a tented spa, restaurant, bar and pool.

Source : http://www.hospitalitybizindia.com/detailNews.aspx?aid=5458&sid=1

Housing sector sees a silver lining, sales up 25%

A cross section of banks, property developers and real estate consultancies that SundayET spoke to confirmed that the rise in activity levels since the start of the year had picked up momentum in the last three months, with some in the sector saying that sales were up by as much as 25-30% since April, after witnessing a growth of 10-15%  during the first quarter of 2009.

India’s property market started showing signs of serious trouble nearly a year ago with first the American sub-prime crisis and later the Lehman bankruptcy playing havoc. The overpriced projects by builders found few takers which was worsened with the IT industry facing a major setback. Builders were stuck with high-end apartments which had no takers. There was a severe drop in sales with people wanting to conserve resources. As a result, property prices too fell 30-45% since peak of 2007, according to industry estimates. But today the scenario is different, with builders getting a mix of mid end and affordable housing into their portfolio. Raminder Grover, CEO – Homebay Residential, Jones Lang LaSalle Meghraj, says the revival in sales has been, conservatively speaking, to the tune of around 25% across the mid-to-high income segments, according to his company’s sales records.

Rohtas Goel, CMD of Delhi-based Omaxe too says there has been a 30% increase in sales thanks to factors such as a reversal in general economic sentiment after the elections and more options available in affordable housing. Statistics too would appear to bear this out. India’s largest real estate developer DLF says it has sold almost 1,500 flats in various cities since April, notably some 400 flats in its mainstay market Gurgaon, 700 in Bangalore, 100 plots in Indore, 200 flats in Hyderabad and 50 in Cochin. Rival Unitech has managed to sell more than 4,000 units in the last two and a half months in the National Capital Region, Chennai and Mumbai. Omaxe has also sold almost 500 apartments in its Omaxe Eternity project in Vrindavan. Niranjan Hiranandani, MD of Hiranandani Developers says there had been a sale of 7,000 apartments across the industry, mainly in Mumbai suburbs, over the last 60 days..http://www.maaproperties.com/Pages/ModuleContent.aspx?Module=Articles

At Maa Properties, we have in-depth knowledge of property markets, extensive experience, specialized skills and resources necessary to provide an entire range of reliable and responsive property management services. No matter how far away you are currently located, our online services enable you to take charge of things and efficiently handle all property-related transactions back home.

We would like to take the opportunity to welcome all the community members living world wide to our real estate portal.(NRI)For More Information about Real Estate Hyderabad, India visit: www.maaproperties.com/

http://www.pr-inside.com/housing-sector-sees-a-silver-lining-r1360901.htm

19 Indian realty firms showcasing projects in London

London, June 28: Nineteen Indian realty developers are showcasing their housing projects to NRIs here at a two-day ‘India Homes Fair’, which began on Sunday.

The realty firms participating in the event include Ansal Properties and DLF Home Developers. The 19 developers showcasing their projects are from the Indian cities like Bangalore, Chandigarh, Chennai, Hyderabad, Jaipur, Mumbai and New Delhi.

“Almost all major developers from India are participating in the fair attracting good response from the NRI investors,” Renu Sud Karnad, joint Managing Director of India’s leading housing finance firm HDFC, the organiser of the event, said.

The price range of properties being showcased at the fair vary from Rs 21 lakh to a couple of crores, Karnad said.

“Through this event, we are bringing NRI home-seekers and leading developers from major cities across India together under one roof.

“We hope to provide a platform where both of them can interact freely so that the developers are exposed to the NRIs, their needs and preference,” she said.

M Subhashini, Minister, Press and Information in the High Commission of India to the UK, inaugurated the fair.

Source : http://www.zeenews.com/news542821.html

DLF seeks nod for apartments, commercial complexes in SEZs

New Delhi (PTI): Realty major DLF has sought government approval for building service apartments and commercial complexes in four special economic zones, of which two are located in Gurgaon.

The Board of Approval (BoA) in the Commerce Ministry will consider requests from the developers for building apartments and commercial space in the non-processing areas of the four IT/ITeS SEZs at Gurgaon, Chennai and Hyderabad, an official said. The non-processing area includes non-core activities.

The BoA is meeting here on June 17 to take up the request, along with other agenda.

DLF has informed the ministry that it wants to build service apartments on 15,000 square metre and commercial space on 12,000 sq m at one of its Gurgaon SEZ. The total notified area for SEZ is 10.73 hectares (1,07,300 sq m).

At the height of the SEZ controversy, it was alleged that the land was being acquired for real estate gains by the developers. However, the Commerce Ministry has denied these claims stating the commercial activities would be restricted to non-core areas.

The SEZ developers have been demanding that they should be granted an infrastructure status for availing the bank finance. However, the Reserve Bank has not acceded to the demand taking a view that it is a real estate activity.

Source : http://www.hindu.com/thehindu/holnus/006200906141012.htm

WHERE SHOULD YOU INVEST

The economic slowdown has brought greater rationality to real estate prices. With prices correcting in overheated pockets of metros and tier II cities, residential real estate has become more affordable and the scales have tilted in buyers’ favour.
 
While an investment in residential property may yield lower returns than an investment in commercial property, it is safer, especially if the property is chosen wisely. For city-based small investors, studio apartments or 1-BHK properties near known demand drivers such as IT hubs, large manufacturing units, and educational institutions offer good return potential. Smaller-format housing continues to have steady demand, especially in metros where company staffers and students seek cost-effective housing on rent. Rental accrual on such properties becomes a steady source of income, while the capital value invariably appreciates over time. The returns from commercial real estate are higher, but so is the risk. Such properties are also more expensive.

Let us now turn to a city-wise survey of residential areas that offer good investment potential even in today’s bleak market scenario. While other areas in these cities are headed for correction, these locations will hold their own and might even offer positive returns.

MUMBAI
Mumbai witnessed some of the highest prices in the residential market till the beginning of this year. Clearly, those prices were not sustainable since the number of buyers for super-luxury houses is shrinking. Central Mumbai (specifically Lower Parel and Worli) witnessed the highest price escalation. The slowdown has affected these areas.

The current slowdown has curtailed demand from investors. Most of the demand today comes from end-users. In Mumbai, there is no dearth of those desperate to buy affordable housing. Three areas of Mumbai offer such housing. These areas are likely to sustain their prices, while others are likely to witness a correction.

Vasai-Virar sub-region. The extended western suburbs are well-known for budget housing. The key economic drivers in this region are MP SEZ by DHL, Biotech SEZ and IT SEZ by Mahindra. Connectivity to this area is likely to improve due to the introduction of additional suburban trains from next year. Prices range from Rs 2,500-3500 per sq ft.

Area adjoining Panvel. This region is benefiting significantly from infrastructure enhancements such as the upcoming airport, the Trans-Harbour Link, a railway terminus, and the mono rail. Mega SEZs by Reliance and others are also expected to have a positive impact, as is the expansion of JNPT. Many developers have already initiated large township projects in this region. Prices range from Rs 3,000-3,800 per sq ft.

Bandra-Khar area. Those hunting for prime properties focus on this area. Its connectivity is expected to improve due to the Bandra-Worli sea-link, the proposed Metro Line 2, and the upcoming Santacruz-Chembur Link road.

This region has an elite profile due to the availability of quality infrastructure: shopping, healthcare, education and recreation facilities. Developers are working on a number of redevelopment schemes in this area. Prices range from Rs 18,000-25,000 per sq ft.

DELHI
Currently, Delhi’s suburban residential market is witnessing a definite slowdown. Construction on several new projects has come to a halt, and rates of flats that are ready-for-possession have stabilised. Even within Delhi rates are currently stable. Some areas, however, hold better prospects for appreciation over the medium- to long-term.

Gurgaon-Dwarka road. Areas around the 150-metre road that will eventually connect Gurgaon to Dwarka — specifically, Sectors 103 to 111 — have significant growth potential. As the area develops, it could offer a 5-7 per cent annual appreciation even in the current scenario while over the next three years you could expect an appreciation of 30-35 per cent. Much will depend on the ability of developers to raise cash for completing their projects. Currently rates range between Rs 2,200-2,300 per sq ft.

PUNE
With Talegaon not picking up in the anticipated manner, Pune’s new growth corridor now encompasses Kharadi and Nagar Road. This can be safely regarded as the most lucrative real estate investment zone for 2009-2010.

The key demand driver is the Eon IT Park, which offers 4 million sq ft of prime IT space. It is currently in the final stage of completion. Other IT SEZs and commercial developments are also on the anvil. Proximity to revamped airport is another point in its favour. Due to the opening of VIP Road that connects Viman Nagar to the airport, connectivity has improved. The opening of five-star hotels such as JW Marriott, Grand Hyatt and Leela in the near future will add further gloss to the area. Moreover, at Rs 2,700-3,500 per sq ft, the area appears reasonably priced.

MOHALI
With residential rates in Chandigarh having gone through the roof in the last few years, there appears to be little scope for appreciation currently. Because Chandigarh is a planned city with a cap on density of population, the potential for development is limited here. For this reason the city could not partake of the IT boom of recent years.

Nearby Mohali, however, presents a sharp contrast. The area named Greater Mohali, which encompasses the fast-developing Landra-Mohali Road area, is promising. Pan India developers such as Unitech, Emaar-MGF, Ansals and DLF have snapped up land here for developing mega, multi-sector residential hubs.

The key drivers of growth here will be the international airport, Indian Business School, and the 120-acre township with IT SEZ.

The investment opportunity here lies in land, which is currently available for Rs 12,000 to 14,000 per sq yd. In three-four years, land rates in these areas could even surpass rates in central Mohali, which are currently in the range of Rs 30,000-35,000 per sq yd.

CHENNAI
Chennai’s residential real estate scenario is depressed currently. Developers with projects along the once-booming IT corridor are set to reduce their rates by as much as 20 per cent. However, the Mogappair-Porur composite region continues to hold mid- to long-term potential. This location is close to the prime residential catchment of Anand Nagar and also to the railway station and the bus terminus. The fact that it is not near the IT corridor also increases its potential. Rates here range from Rs 2,800 to 3,000 per sq ft.

BANGALORE
Bangalore is feeling the brunt of the IT slowdown. However, established suburban areas like Koramangala, Outer Ring Road and Bellari Road continue to be good investment destinations. As in the case of Mumbai, appreciation is not the criterion in the current scenario: these are the areas that will sustain their prices while others are likely to correct. Mysore Road, which encompasses the upcoming NICE corridor, has potential owing to good connectivity with Mysore. Koramangala. It’s close to Electronic City. Residential demand is high here while the scope for new developments is nil. Rates range between Rs 7,000-8,000 per sq ft.

Outer Ring Road and Bellari Road. These are close to IT hubs. Outer Ring Road is close to Whitefield. New developments are coming up on Bellari Road, which is also close to the Devenhalli airport. The rates here range from Rs 3,500-5,500 per sq ft.

HYDERABAD
Hyderabad continues to hold its own even in the current scenario, though significant growth is now restricted to specific areas. Residential real estate investment growth in Hyderabad is expected to centre primarily around Gachibowli and Tellapur owing to their proximity to the financial district, which is where the highest growth of IT and other commercial projects is happening. These areas could emerge as the next central business district (CBD) over the next ten years. Proximity to Outer Ring Road (Phase 1 in advanced stage and phase 2 scheduled after six months) will reduce commuting time of residents to key workplaces. Rates range from Rs 3,000-3,500 per sq ft.

While demand exists, affordability is the key issue. Location, as always, will remain an important criterion: investment destinations that are closer to the CBD and other demand drivers will do well while far-flung destinations will have less potential for appreciation. Investors with a medium- to long-term investment horizon should take advantage of the current depressed climate now and in the latter part of 2009 to hunt for bargains.

Source : http://www.google.com/url?sa=X&q=http://www.expressestates.in/full_story.php%3Fcontent_id%3D93830&ct=ga&cd=ePLxtnuuHg4&usg=AFQjCNFUfJY2P8fBFjlYdLcohcuuWUpQbg

Jones Lang sees commercial rentals correcting further – report

MUMBAI, May 15 (Reuters) – Commercial rentals will fall faster in the second quarter of 2009 than the first, and some recovery should be seen by the end-2010, Jones Lang Lasalle Meghraj said in a report.

Oversupply across commercial space in cities are expected to increase in 2009 and vacancies are seen rising over 20 percent, in the year, the real estate consultant said in its May report.

The report covered Delhi, Mumbai, Bangalore, Chennai, Pune, Hyderabad and Kolkata, taking into account the first-quarter results of 2009.

Around 70 percent of India’s commercial projects announced in these cities for completion during the year are expected to be operational, it said.

“The rest will be delayed…We’ve only seen some isolated cases being shelved or converted. But it’s just a very small number and not in the major cities,” said Abhishek Kiran Gupta, Head-Research of Jones Lang LaSalle Meghraj.

About 146.6 million sq. ft. of space will come up in the next 11 quarters, according to the company’s estimates, as opposed to the total 172.9 million sq. ft. of commercial space announced for completion in the next 3-4 years.

The largest decline in commercial rents have been in Mumbai and Delhi, down 24 percent from the last quarter, followed by Kolkata, Hyderabad, Chennai and Pune, which were down 10-15 percent from the last quarter.

RETAIL

Total retail stock across the cities at the end of the quarter to March stood at 34.8 million sq ft while another 62.6 million sq ft of mall space is either proposed or under various stages of construction in the next 2-3 years.

Currently, Mumbai and Delhi account for about 72 percent of the retail space, but this is seen dropping to just under half the stock by the end of 2011.

Vacancies of retail space have increased to 14.5 percent as more malls in Delhi became operational.

Retailers are renegotiating on their rentals, looking for zero rental schemes, minimum guarantee and revenue sharing models, it said. (Reporting by Jasudha Kirpalani; Editing by Sunil Nair)

Source : http://in.reuters.com/article/domesticNews/idINBOM46805420090515?pageNumber=2&virtualBrandChannel=0

GMR Plans 250-acre aerospace park in Hyderabad

GMR Hyderabad International Airport Ltd (GHIAL) is planning to set up an aerospace park in Hyderabad, which would be spread over 250 acres, even though the aviation sector is going through turbulent times. The park, to be completed in 5-6 years, is coming up in the vicinity of the GHIAL’s new airport in Shamsabad, Hyderabad, where the company already has more than 5,400 acres and is expected to employ 8,000-10,000 people. “The park would be set up in the next 5-6 years. It will be spread over 250 acres,” a senior official of the company told PTI. He, however, declined to share the investment plans of the project. The land for the project has been designated as Special Economic Zone and will enjoy tax and other financial incentives.

The park will offer services like aircraft maintenance and repair, manufacturing of components and sub-systems, and research and development for civil as well as military aircraft. It will also provide training for aviation industry personnel. Besides, it will offer warehousing services and support ancillary industries like tyre manufacturers. The park is expected to generate employment for 8,000-10,000 people. In February, as a first step, GHIAL had announced the setting up of a Rs 400 crore maintenance, repair overhaul (MRO) facility in association with Malaysia Airlines at the aerospace park. GHIAL is a joint venture firm in which GMR Infrastructure holds 63 per cent, the Airports Authority of India and Government of Andhra Pradesh hold 13 per cent each and Malaysia Airports Holding Berhard has the remaining 11 per cent.

Source : http://www.indianrealtynews.com/real-estate-india/hyderabad/gmr-plans-250-acre-aerospace-park-in-hyderabad.html

New launches trigger demand in realty sector

After witnessing an acute slowdown during the third and fourth quarter of 2008, the real estate sector has shown some recovery in the first quarter of 2009 ending March 31. If trends of absorption for the period January-March 2009 are any indication, a report prepared by PropEquity Research suggested there has been a surge in absorption in majority of the cities. A recent study conducted by PropEquity across Mumbai, Bangalore , Chennai, Hyderabad, and Gurgaon in NCR reveals that absorption has been high among the residential new launches in the first quarter of 2009 in Mumbai, Chennai and Gurgaon.

The study attributes the success rate in absorption to the price correction and reduction in unit sizes introduced by developers in these cities. However, Bangalore and Hyderabad, which witnessed fewer new launches during the period, experienced a low absorption.The real estate sector experienced one of the worst kinds of slowdown in demand because of rise in the interest rates in the January-March 2008, by almost 2 percentage points, to 12%. At the same time, the prevailing prices of residential apartments in most of the cities made them unaffordable for most buyers. The situation further worsened after global financial markets got affected due to the failure of banks and brokering houses in the US and Europe.

This also affected Indian real estate market very badly and demand plummeted. According to the report , While October-December 2008 saw the nadir with absorption of only 1,113 units in Mumbai, the first quarter of 2009 witnessed the launch of over 14,478 residential apartment units and a corresponding absorption of 5,746 units. As against this, during October-December 2008, 3,096 units were launched, the report said. That means, in the first quarter of 2009, 40% of the launched apartments were sold, which is considered to be a good turnover. Similarly, in Gurgaon, during January-March 2009, 815 units were sold while 4,490 units were launched.

At Maa Properties, we have in-depth knowledge of property markets, extensive experience, specialized skills and resources necessary to provide an entire range of reliable and responsive property management services. No matter how far away you are currently located, our online services enable you to take charge of things and efficiently handle all property-related transactions back home.

We would like to take the opportunity to welcome all the community members living world wide to our real estate portal.(NRI)For More Information about Real Estate Hyderabad, India

Source : http://www.newdesignworld.com/press/story/13726

Mumbai, Ahmedabad see steepest fall in mall rentals

AHMEDABAD: Once buzzing with a lot of business activity, shopping malls too are feeling the pinch of the slowdown. While mall rentals in retail  hotspots like Mumbai and Ahmedabad have seen a correction of 36-42%, other shopping destinations like Hyderabad, Pune, Kolkata and the NCR saw a drastic dip since January 2009.

The mall and main street rentals fell as much as 42% in Mumbai and 25% in the NCR in the January-March quarter, compared to preced-ing quarter, according to a report by real estate consultancy Cushman & Wakefield. Ahmedabad saw corrections in the range of 20-36% over the last quarter.

In the past one year, mall rentals in Ahmedabad alone have corrected by a whopping 33-55%. The correction in rental points to a waning retail sector in Ahmedabad. Be it stores of Indiabulls Retail, Spencer’s Retail or Subhiksha, the retail biggies have either shut shop (completely or partially) or have shrunk in size.

In Mumbai, main-street locations also saw rental correction with Colaba Causeway recording the highest correction of 38%.

Hyderabad recorded one of the highest mall rental corrections of 25-29% due to restrained demand from retailers. Main-street rentals also saw corrections in the range of 5-20%, largely due to renegotiations and restrictive demand.

In Kolkata, the Theatre Road and Elgin Road, two prominent street markets of the city, registered 10% correction on the account of exit of some prominent retailers. In Pune, the Bund Garden Road witnessed the steepest correction of 25%. MG Road remained stable on account of lack of supply.

Source : http://economictimes.indiatimes.com/News/News-By-Industry/Mumbai-Ahmedabad-see-steepest-fall-in-mall-rentals/articleshow/4488973.cms

Not the Perfect Time to Invest in Residential Property- Experts

That the property market has undergone a significant correction is well known. Real estate experts are now talking about prices bottoming out is well known too. But contrary to conventional wisdom, experts are of the view that this may not be the right time to invest in residential property. And, their advice is for both first and second-time home buyers. Consider this: a report from PropEquity, a firm that maintains data on real estate, said that in the first quarter of the current financial year, the Mumbai market saw an average correction of 42.84 per cent compared to the corresponding quarter last year. According to another report by Centrum Broking on Maharashtra Chamber of Housing Industry’s exhibition, prominent developers such as Kalpataru, Lodha, Rustomjee and Acme Group were quoting prices 20 per cent lower than their card rate six months ago. Godrej Properties had dropped the quoted price of its Mahalaxmi project (Planet Godrej) by 34 per cent.

Prices in other major metros too have seen a significant correction in the past six months, according to the PropEquity report. These include Gurgaon (24 per cent correction), Chennai (13 per cent) and Hyderabad (10 per cent) for the same time period. “To begin with, the yields of residential properties are low. They are between 3-5 per cent only,” says Hitungshu Debnath, executive director, distribution and wealth management, Angel Broking. If you take a loan from a bank and expect the rent income to help you pay the equated monthly instalment (EMI), you will need to rethink the math, he adds. “The rent income along with property appreciation will not be able to cover even the interest that the investor will pay for the home loan in the first few years. This is called as opportunity cost in real estate. To get good returns, the buyer will need to hold on to the property for a long time, probably till the loan is repaid,” says a property expert.

Experts also suggest that property prices are going to remain stable for at least two years, that is, if the correction stops. “This is based on the supply that will hit the market in the next three years. An estimated 200 million sq ft a year will be available, considering the properties announced,” says Pranay Vakil, chairman, Knight Frank (India). Not all the supply will be lapped up by the buyers immediately. This supply also means that the appreciation in the property value will be slow, he adds. Then comes the taxation part. If the house is let out, then the rent income is taxable. It is combined with the person’s salary and charged as per the tax bracket. The income tax (IT) department also charges wealth tax of 1 per cent on a residential house unless it is let out for 300 days in a year. This is applicable on the value of the house exceeding Rs 15 lakh. If the property value is, say, Rs 25 lakh, the wealth tax will be levied on Rs 10 lakh.

Also, if the person does not let out the property, the IT department takes a notional value of the rent that the property can fetch and tax the owner accordingly. If you buy it in the name of your family member, you will lose out on the tax deduction. “For a second house, a person can claim the entire interest as a deduction. In case of co-applicant, the deductions are in the same proportion as the funds deployed by each person,” says Kanu Doshi, a tax expert. “A house for investment purpose will also skew the portfolio,” says Gaurav Mashruwala, a certified financial planner. A major chunk of the portfolio will be real estate. This asset class is illiquid. If there is an emergency in the future, the entire house will need to be sold. A person can sell other investments in parts. The same is true when the person reaches closer to his goals for which he has been saving. One can look at property only if they have excess cash and the property value is only a minor part of the investment portfolio, say investment experts. But if you still not convinced and want to go ahead with the purchase, wait for another six months. “There will be some clarity on the economy as well as the real estate industry in this period,” adds Vakil.

Source : http://www.indianrealtynews.com/real-estate-india/mumbai/not-the-perfect-time-to-invest-in-residential-property-experts.html

New launches trigger demand in realty sector

NEW DELHI: After witnessing an acute slowdown during the third and fourth quarter of 2008, the real estate sector has shown some recovery in the Make home loan repayment easy

first quarter of 2009 ending March 31. If trends of absorption for the period January-March 2009 are any indication , a report prepared by PropEquity Research suggested there has been a surge in absorption in majority of the cities.

A recent study conducted by PropEquity across Mumbai, Bangalore , Chennai, Hyderabad, and Gurgaon in NCR reveals that absorption has been high among the residential new launches in the first quarter of 2009 in Mumbai, Chennai and Gurgaon.

The study attributes the success rate in absorption to the price correction and reduction in unit sizes introduced by developers in these cities. However, Bangalore and Hyderabad, which witnessed fewer new launches during the period, experienced a low absorption.

The real estate sector experienced one of the worst kinds of slowdown in demand because of rise in the interest rates in the January-March 2008, by almost 2 percentage points, to 12%. At the same time, the prevailing prices of residential apartments in most of the cities made them unaffordable for most buyers. The situation further worsened after global financial markets got affected due to the failure of banks and brokering houses in the US and Europe.

This also affected Indian real estate market very badly and demand plummeted. According to the report , While October-December 2008 saw the nadir with absorption of only 1,113 units in Mumbai, the first quarter of 2009 witnessed the launch of over 14,478 residential apartment units and a corresponding absorption of 5,746 units. As against this, during October-December 2008, 3,096 units were launched, the report said. That means, in the first quarter of 2009, 40% of the launched apartments were sold, which is considered to be a good turnover.

Similarly, in Gurgaon, during January-March 2009, 815 units were sold while 4,490 units were launched. As against this, in October-December 2008 quarter, only 587 units were sold from 3,708 units launched. Therefore, both the absorption and launch figure showed sign of recovery.

The first quarter of 2009 showed a significant turnaround in realty activity in Chennai as well. While the number of apartments launched during Make home loan repayment easy

the fourth quarter more than doubled to 3,764 units from 1,567 units in the quarter ending December 2008, the absorption increased by more than three times to 1,450 in the quarter ending March 2009, from 468 in the previous one. In Bangalore, however, the number of apartments launched in the first quarter of 2009 declined to 2,571 units from 4,149 units in the previous quarter. But, the absorption level improved slightly, to 764 units, as against 739 units in the previous quarter.

In Hyderabad, both the number of units launched and absorbed declined to 1,286 and 347 in the first quarter of 2009, from 2,512 and 440 respectively in the last quarter of 2008.

The report says the main reason for increase in absorption of the new launched products is drop in the per sq ft rate and the reduction in the size of the units, which brought their prices within the affordable range of buyers. The report says most of these units were launched at a price almost 40% lower than the average pricing of apartments that were available in the first quarter of 2008. The average unit size of these apartments was also lower by almost 35%. As a result, 74% of the residential apartment absorption that took place in Mumbai in the first quarter of 2009 constituted the new launch products.

According to Samir Jasuja, founder & CEO of PropEquity, “The increase in this high absorption trend can be attributed to price correction and reduction in unit sizes adopted by developers. This encouraging trend is indicative that the markets are poised for a recovery if proactive measures are adopted by the real estate community to offer the right product at the right price to the consumers.”

This trend continued in Gurgaon and Chennai where the new launches have witnessed high absorption after the unit sizes were reduced and average prices corrected by almost 15% to 25%. As anticipated, 61% of the total absorption in Gurgaon and 58% of the total absorption in Chennai in the first quarter of 2009 was constituted by the newly launched residential apartment units.

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/News-/New-launches-trigger-demand-in-realty-sector/articleshow/4474878.cms?curpg=2

Decline in Office Rentals continues

Office markets across the country continued to show a downward trend as most markets recorded negative growth in rental values after supply across eight major cities in India outstripped absorption by 45 per cent.

Mumbai, the financial capital of India, witnessed the sharpest decline in rental values in the first quarter of 2009 while the National Capital Region witnessed significant decline in rental values in central business district in the first quarter of 2009, according to Cushman & Wakefield’s latest office market report.

Micro markets of Mumbai including those of Lower Parel and Worli recorded drops of 37 per cent and 29 per cent respectively from a three per cent and 13 per cent drop respectively in the preceding three months. Rentals in central business district of Nariman Point fell by 13 per cent in the first quarter of this year compared to 20 per cent in the previous quarter.

Rentals in NCR’s CBD, mainly Connaught Place dropped by 17 per cent, the highest in the last 3 years, the property consultant said in the report. The drop comes after a 14 per cent decline in the previous quarter. Bangalore rentals fell in the manageable range of three to seven per cent in key markets.

“The first quarter of the year can be termed as the weakest so far in terms of commercial office take up across major cities in India as compared to a similar period for the last 2/3 years,’’ said Kaustuv Roy, Executive Director, Cushman & Wakefield.

Bangalore witnessed the highest new office space supply of approximately 2.81 million square feet and also the highest demand of 1.29 million square feet. NCR and Mumbai witnessed fresh office space supply of 2.6 million square feet and 2.47 million square feet respectively and absorption of 0.8 square feet and 0.9 square feet respectively. Chennai, which had been reeling under over supply pressures saw moderate supply 0.98 square feet and absorption of 0.9 square feet. Hyderabad and Ahmedabad saw no addition to the current stock.

Vacancy levels had remained largely consistent to last quarter with most IT/ITeS destinations witnessing high vacancy levels. Chennai’s peripheral location (Rajiv Gandhi Salai) recorded the highest vacancy of approximately 42% while the city average was at approximately 18%. The lowest vacancy was recorded in Ahmedabad at five to six percent due to limited leasing activities and no new supply in the market.

Mumbai recorded a vacancy of approximately 11-12 per cent while vacancy levels in NCR stayed at a manageable 8 -10 per cent. Bangalore, Pune and Kolkata remained at an average of 16 -18 per cent. Hyderabad saw some slackness in activities and therefore recorded a reasonably high vacancy of 23% of which prime suburban region comprising of Banjara Hills and Jubilee Hills recorded a higher 35% vacancy.

‘’Re- negotiations and migration to more cost effective locations has been the norm for the cautiously advancing corporate sector. However going forward we are likely to see supply contraction,’’ said Roy.

‘’Acutely affected areas like IT/ITES and certain corporate office destinations will see deferment of projects to bridge the gap between supply and demand. While rental values are expected to be under pressure in short to medium term, going forward lower rentals are likely to have a more positive impact on the absorption numbers,’’ he added.

Source : http://www.indianrealtynews.com/real-estate-india/decline-in-office-rentals-continues.html

Leela Open First Hotel in Northern India

One of India’s finest luxury hotel groups, The Leela Hotels, Palaces & Resorts recently marked the soft opening of its first property in northern India. Part of an upscale, mixed-use development in New Delhi’s newest satellite business and shopping district, The Leela Kempinski Gurgaon, Delhi (N.C.R.) has 322 luxuriously-appointed guest rooms and suites and will soon open 90 one-, two- and three-bedroom Residences.

A showcase of Indian contemporary art matched with all the latest advanced technology, the property has four restaurants – one boasting six open kitchens – serving Indian, Italian and international cuisine, a 20,000-square-foot spa offering Ayurvedic treatments, a state-of-the art fitness center with yoga and aerobic studios, a large heated outdoor pool, 26,900 square feet of banquet and meeting space, a Cigar Lounge and a 24-hour business center. Curator Rajeev Sethi has filled The Leela Kempinski Gurgaon with striking sculptures, modern photography and paintings by contemporary Indian and international artists under the theme “evolution.”
A 15-minute drive from the Indira Gandhi International Airport and just over the Delhi-Gurgaon border on the edge of the Rajokri green belt, the hotel adjoins a luxury shopping and entertainment center, the largest in India. Nearby are business parks with tenants such as General Electric, IBM, Oracle, Microsoft, Siemans and American Express. Leela’s first managed property is the only one in the region offering comprehensive solutions for today’s luxury living.
The Leela Kempinski Gurgaon was designed by the internationally-acclaimed Hirsch Bedner & Associates in a modern minimalist style. The expansive rooms (484 to 559 square feet) and huge suites (818 to 3,616 square feet for the Presidential Suite) have LCD televisions with Blue Ray players, Bose iPod docks, high-speed Internet with 6mbps, Wi-Fi, IP phones and advanced security systems. King and twin beds come equipped with ergonomic mattresses, the marble baths are outfitted with large soaking tubs and rain showers and some rooms have terraces. The Royal Club offers its guests a private lounge and personalized butler service on two floors.
Commenting on the management collaboration, Capt. C.P. Krishnan Nair, chairman, The Leela Palaces, Hotels and Resorts said, “It is a momentous occasion for us to have the first Leela hotel in north India. Our management alliance with Ambience Group, headed by the well-known Raj Singh Gehlot has been an important milestone in the group’s expansion plan. At The Leela Kempinski Gurgaon, Delhi (N.C.R.) our patrons and guests will experience the same distinguished hospitality as experienced in other Leela hotels.”
The Leela Palaces, Hotels & Resorts has an ambitious expansion under way. With five properties operational, three more hotels opening this year and next, and plans for three more, The Leela aims to be a major force in the Indian hospitality industry with a presence in the country’s major resort and business destinations.
At the opening, Raj Singh Gehlot, chairman, Ambience Group said, “we are delighted to join hands with The Leela and to bring the experience of the foremost Indian hotel group to the city of Gurgaon. The hotel is among several other key luxury projects at Ambience Island. The addition of The Leela Kempinski is an integral part of this mixed-use complex, qualifying the Ambience Island as a luxury destination for residents, visitors and guests.”

About The Leela Palaces, Hotels and Resorts
Hotel Leelaventure Ltd. operates The Leela Palaces, Hotels & Resorts in Mumbai, Bangalore, Goa, Kovalam (Kerala), Gurgaon and soon Udaipur. Located in key business and leisure destinations, and charting a pan India presence in the near future, The Leela Palaces, Hotels & Resorts are a blend of aesthetic sensibility, modern amenities and truly reflect the essence of India. New hotels will soon open in Chennai (2010) and New Delhi (2010); with future plans to develop hotels in Agra, Hyderabad and Pune. The group has marketing alliances with Germany based Kempinski (Hoteliers since 1897); US based Preferred Hotel Group and are members of Global Hotel Alliance based in Geneva, Switzerland.

Source : http://www.travelvideo.tv/news/uncategorized/04-15-2009/leela-opens-first-hotel-in-northern-india

Private sector puts Rs 33161cr in southern metros

The private sector has invested Rs 33,161 crore in three southern metros in the last four years, compared with Rs 14,240 crore in other Tier I cities, according to the Associated Chambers of Commerce and Industry (Assocham).

In its report, ‘Indian Metros: Pulling Infrastructure Investment”, Assocham said the three metros – Chennai, Hyderabad and Bangalore – received 70 per cent of the total private infrastructure investment.

Around 12 real estate projects were announced by the private sector in these cities during the last six months amounting to Rs 12,990 crore. Bangalore had the maximum with six realty projects while Hyderabad and Chennai had five and one respectively.

The three cities also attracted investments worth Rs 12,150 crore in five special economic zones.

Among others, three hotel projects are being planned in these cities with an estimated cost of Rs 5,375 crore. ITC is the major investor with a Rs 4,000 crore project in Chennai.

In the power sector, Elango Industries and Toshiba have proposed Rs 1,000 crore and Rs 415 crore projects respectively in Chennai.

According to the study, better state policies and high literacy rate attracted most of the investors. “Even though these cities are less urbanised with a combined urban population of about 16 million, they attract private infrastructure projects primarily due to better state policies, better human talent, high literacy rates, and faster rising in per capita income.”

Source : http://www.business-standard.com/india/storypage.php?autono=354550

South India more attractive for investors: Assocham

New Delhi: Metros in South India are more attractive for infrastructure projects than their counterparts in the other parts of the country, an industry lobby report said Sunday.

According to the report, ‘Indian Metros: Pulling Infrastructure Investment’, released by the Associated Chambers of Commerce and Industry (Assocham), Hyderabad, Bangalore and Chennai received 70 per cent of the total private infrastructure investment came to the six major metros in the country.

Kolkata, Mumbai and Delhi account for the remaining 30 per cent.

“In the past four years, private sector has invested Rs.33,161 crore in three metros of South India compared to Rs.14,240 crore of infrastructure investments in other tier I cities,” the chamber said.

Assocham president Sajjan Jindal said better state policies and high literacy rate in the southern cities attract most of the investors.

“Even though these cities are less urbanised with combined urban population of about 16 million, they attract private infrastructure projects primarily due to better state policies, better human talent, high literacy rates, and faster rising in per capita income,” he said.

Despite the economic slowdown, real estate developers are ready to launch new projects in these cities, the study said, adding that 12 major real estate projects were announced in the last six months in the southern metros.

Out of the 12 projects, six went to Bangalore, when Hyderabad and Chennai got five and one respectively.

Besides, the three cities have attracted investments worth Rs.12,150 crore in five special economic zone (SEZ) projects.

The Assocham has added that three major hotel projects at an investment of Rs.5,375 crore are coming up in these cities.

The south is also moving fast in the power sector. Elango Industries and Toshiba will invest Rs.1,415 crore to set up two power projects in Chennai, the industry lobby said.

Source : http://sify.com/finance/fullstory.php?id=14878882

Leela Hotels To Invest Rs.2,500 Cr. In Five Hotels

Leela Hotels, Palaces and Resorts is planning to invest about Rs.2,500 crore in launching five properties across India by 2012, reported the PTI quoting the Group’s Head-Corporate Communications, Mithu Basu. He said that the group already owns five hotels and resorts in India during the inauguration of its Udaipur property.

Basu said that the Group would build hotels in Delhi and Chennai by 2010 and in Hyderabad, Pune and Agra by 2012. Currently, the Group has 1,600 rooms including its Udaipur property and would be raising 1000 more rooms in the proposed five hotels by 2012.

The Group is also planning to focus in leisure segment and introduce schemes to draw the visitors. The hotels in Goa, Kovalam and Udaipur fall under leisure segment.

Source : http://www.rttnews.com/ArticleView.aspx?Id=902162&SMap=1

Biba plans 20 more stores in a downturn

Capitalising on falling raw material prices and real estate rentals, domestic apparel brand Biba is hopeful to open at least 20 stores, mostly on high streets, in the next  one year.  Biba is planning to open at least 100 new stores in the next three years.

With a present turnover close to Rs 130 crore, the company is eying a sales of Rs 500 crore by 2011.

“In the last four months, several factors have worked in our favour. We have been able to reduce the cost of raw materials, logistics and rentals. At present, we do not have stores in high streets, as rentals were  very high till about six months’ back. Now, with rentals falling, we plan to open stores not only in malls, but also in locations like Banjara Hills in Hyderabad and Greater Kailash in Delhi,” said Siddharath Bindra, managing director, Biba.

Retail rentals have reduced by almost half in most plush locations of metros like Delhi and Mumbai, according to Bindra.

While the company is hopeful of a turnover of Rs 130 crore this fiscal, and Rs 200 crore next fiscal, it expects slight decline is its EBITDA margin, which was 15 per cent last fiscal.

“We are a very product oriented company, and have been able to maintain an efficient supply chain. We mostly source raw materials from textiles centres like Surat, Ahmadabad and Jaipur,” said Bindra.

Source : http://www.business-standard.com/india/news/biba-plans-20-more-stores-indownturn/57449/on

DLF says west Delhi apartment project on despite lower demand

The realty firm’s Shivaji Marg project will have around 500 flats priced between Rs78 lakh and Rs99 lakh

New Delhi: Undeterred by a slowdown in demand for homes in urban India, DLF Ltd, India’s largest developer by market value, is likely to launch a residential project by the end of March on one of the country’s most expensive patches of land in west Delhi.

The pricing of the apartments on Shivaji Marg is likely to be set between Rs6,500 and Rs7,000 a sq. ft translating into purchase prices of flats to just under Rs1 crore.

Upbeat: The DLF corporate headquarters in New Delhi. DLF plans to erect an integrated township. Ramesh Pathania / MintDLF Shivaji Marg project will be a ground plus 18-floor structure consisting of at least 500 flats of two- and three-bedroom apartments. The size of the apartments will vary between 1,200 sq. ft and 1,525 sq. ft, which means the flats will be priced between Rs78 lakh and Rs99 lakh. For the locality the project is in, the prices are considered competitive.
In August 2007, DLF had acquired 38 acres of land from DCM Shriram Consolidated Ltd, or DSCL, and the Lohia family of Indorama Group of firms for Rs1,675 crore, in what was then seen as the most expensive land deal in India surpassing second-ranked realty rival Unitech Ltd’s acquisition of 300 acres of land in Noida for Rs1,582 crore.

BPTP Ltd’s acquisition of 95 acres of commercial land in Noida, a satellite town east of capital New Delhi, for Rs5,000 crore followed in March 2008, ranking the most valuable land deal in India.
The purchase of the Shivaji Marg property was also the first major land deal at DLF after its initial public offering in June 2007. DSCL and the Lohias had a 50:50 right on the property, better known as Swatantra Bharat Mills and DCM Silk Mills.

DLF plans to erect an integrated township on the land including 3 million sq. ft. of office space, 2 million sq. ft. of retail space, and around 5 million sq. ft. of residential units. Earlier, DLF had planned to develop high-end residential units in the township but with demand for luxury homes contracting, DLF now plans to develop mid-income homes.

In February, DLF reduced prices of some of its residential projects in Bangalore, Hyderabad and Chennai due to slowing demand for apartments. The price cut was between 10% and 25% in these cities.
DLF has initiated market research to determine the price of the apartments. “We have let our brokers research the market,” Rajiv Talwar, group executive director of DLF, said. “The idea is to leave plenty on the table for buyers…brokers are in the market to find out at what price point people will invest in the heart of the city.”
The company is trying to position the Shivaji Park development as a mid-income housing project. “We want to build typical middle-class housing for people who use the Metro for conveyance,” Talwar said.
The final price will eventually depend on the response from the market, Talwar clarified. “Although, the project is equidistant from the Commonwealth Games Village, we are willing to launch it at half the price of flats in the Games Village,” he said.

Apartments in the Games Village, being developed by realty firm Emaar MGF Land Ltd, are priced at at least Rs12,000 per sq. ft.
An analyst said the new DLF apartments were competitively priced but sales may be slow in taking off. “The only drawback is that people will still have to be comfortable with the fact that it is not a ready apartment…so while the project will get people interested in it, the interest may not translate into actual sales,” said an analyst with a brokerage firm, who asked he and his employer not be identified.
The business community is more likely to be interested in such a project rather than the salaried class, he added.

Source : http://www.livemint.com/2009/03/25230715/DLF-says-west-Delhi-apartment.html

Furnished offices flourish amid gloom

Corporate revenues have shrunk, expenses curtailed and manpower numbers trimmed.

But amid this depressing scenario, the furnished offices business appears to be looking up, accommodating new clients who otherwise would have gone in for traditional space.

One-stop solution

Furnished offices provide a one-stop solution to companies and entrepreneurs, offering services such as executive offices, Internet connectivity, videoconferencing, wireless access, telephone and fax lines, receptionists and client service representatives, apart from on-site executive assistants, and meeting/board rooms on pay-as-you-use basis.

Such offices also offer a prestigious address for executives to print on their business cards.

Charges are competitive and substantially lower than traditional office space.

Ms Meenal Sinha, General Manager, Imperial Servcorp, says business is up 30 per cent in the last few months as multinational corporations and domestic players are looking at furnished office accommodation for convenience and cost-savings as team strength and expense sheets have been cropped. Occupancy rate, she said, was as high as 85 per cent.

Imperial Servcorp has a total of 50,000 sq.ft of office space in Mumbai and Hyderabad with the client list that includes MNCs as well as start-up firms. Imperial Servcorp is a joint venture between real estate major K. Raheja Corp and Australian serviced office provider Servcorp.

On expansion mode

Regus, which has over 2.25 lakh furnished space across the country, is looking to expand operations. “We are looking at strategic locations where we do not have a presence, said Mr Madhusudan Thakur, Regional Vice-President.

Globally, the Regus Group operates over 950 centres across 400 cities in 70 countries. The company said clients such as Google, GlaxoSmithKline and Nokia outsource their office and workplace needs to the group.

Mr Thakur said 40 per cent of the new large clients were those who owned offices before and the balance were new, who would have either gone in for traditional space or those who preferred to tread cautiously in current economic scenario.

Typically, clients need to sign a one-page agreement to move in almost immediately. On an average it costs Rs 20,000 to accommodate one person for a month in Mumbai.

Mr Thakur says his client mix include IT (25 per cent), project driven clients such as consultants (15 per cent), manufacturing companies (23 per cent), research and development (15-20 per cent) and financial institutions (20 per cent).

Occupancy rate is 85-95 per cent. About 75 per cent of the clients stay put for eight to nine months in general.

The slowdown has, however, not left the service providers unscathed. “Charges are a function of the rentals and today it is lower by 25-30 per cent than the year ago period,” he said.

Source : http://www.thehindubusinessline.com/iw/2009/03/22/stories/2009032251031500.htm

Realty check: 53% homes built in metros since ‘07 unsold

Mumbai: More than half the houses built in six major cities over the last two years are lying unsold, estimates a leading real estate research agency.

Just about 3.86 lakh homes out of the 8.21 lakh built in the last two years in the Mumbai Metropolitan Region (Mumbai, Thane and Navi Mumbai), National Capital Region (Delhi, Faridabad, Gurgaon, Noida, Greater Noida and Ghaziabad ), Bangalore, Chennai, Hyderabad and Pune found buyers, says a report by the Mumbai-based Liases Foras. The agency surveyed 5,810 new residential projects in these cities in December and January.

The 53 per cent unsold inventory (4.35 lakh homes) translates into no takers for 50 crore sq ft of a total 94 crore sq ft of living space. Pankaj Kapoor, CEO of Liases Foras, said the inventory of unsold houses across cities has doubled over the past year. In Mumbai, it has increased nearly five times between 2006 and 2009 — from 1.68 lakh sq ft to 8.08 lakh sq ft.

Kapoor attributed the absence of buyers to the mismatch between prices and affordibility. According to the report, prices started to go up in 2006, when supply was limited. Over the next two years, they shot through the roof as money poured into real estate firms from IPOs, FDI and cash-laden investors. Stocks piled up as developers shifted focus from selling homes to getting financial valuations done to attract more investment.

This, Kapoor said, is evident from the fact that Chennai, which has a conservative realty market with little involvement of equity players, has only 42 per cent unsold flats ¿ less than Mumbai and Delhi and the IT hubs of Bangalore, Pune and Hyderabad, where over 50 per cent of the stock remains unsold.

The supply glut, and the fact that investors and private equity firms are largely out of the realty market, signals good times for buyers, the report says. Firms like DLF have announced price cuts ranging from 18 per cent (Chennai) to 30 per cent (Bangalore).

“Battling mounting debts, developers are left with little option but to find end-users to sell their flats. The gap between affordability and pricing is narrowing,” Kapoor said.

Source : http://www.indianexpress.com/news/53-homes-built-in-six-metros-since-07-unsold-realty-check/436827/

ROHL to open its second fully owned and managed property by end 2010

Royal Orchid Hotels Limited (ROHL) plans to come up with its second owned and managed property in India, Royal Orchid Hyderabad, by end 2010. The group has five more projects under its five star brand in the pipeline — Royal Orchid Jaipur, Royal Orchid Central Navi Mumbai, Royal Orchid Central Mumbai, Royal Orchid Central Ahmedabad and Royal Orchid Dar Es Salaam in Tanzania. Royal Orchid Central Ahmedabad will be group’s first owned and managed property in its four star category.

Speaking exclusively to Hospitality Biz, Keshav Baljee, Co-Promoter, ROHL said, “For the Royal Orchid brand, we are looking to own and manage the hotels, making them asset-based properties in near future. However, apart from ownership, for our four star brand, ‘Royal Orchid Central’, we will look for management and leased properties.”

Spread across an area of two and half acres with 230 rooms, Royal Orchid Hyderabad in Gachibowli is a 100 per cent owned and managed by ROHL. Royal Orchid Jaipur, with an inventory of 170 rooms, will be 51 per cent owned, but fully managed by ROHL. The property is scheduled to be operational by end 2010.

Source : http://www.hospitalitybizindia.com/detailNews.aspx?aid=3999&sid=1

Hiranandani’s to invest Rs 640cr in hotel development

City-based real estate developer, Hiranandani Group is looking to collectively invest over Rs 640 crore towards development of five new hotels which will add more than 550 rooms over a period of next 2-3 years.

The company is in talks with about eight international hotel brands for management contracts that will come up in metros like Mumbai, Bangalore, Chennai and Hyderabad.

Some of the hotels with which Hiranandani is in talks with include Accor Hospitality, InterContinental Hotels Group, Global Hyatt Corporation and Hilton Hotels among others.

One out the five properties, which will come up in Chennai will be a boutique hotel with 60-70 rooms and built at a cost of Rs 30 crore. The other hotel in the same city will be a 5-star rated hotel and will have 350 rooms, built with an outlay of Rs 375 crore.

Its Mumbai hotel, will come up in Powai next to its existing hotel called Rodas, at a cost of Rs 140 crore. Work on this new hotel with 148 keys has already started and is scheduled to be completed by September-October this year.

The hotel property coming up in Bangalore will see an investment of Rs 96 crore although the company is yet to finalise on the number of rooms for this property. The company’s another green field hotel coming up in Hyderabad is on the concept stage at the moment and final plan on number of rooms and investment is yet to be drafted.

Surendra Hiranandani, managing director, Hiranandani Construction said, “We are in talks with a number of international hotel companies to develop our properties. We intend to begin construction of the Chennai hotel by October after we finalise the partner.”

The company plans to fund the expansion programme through debt and reserves in an equal manner. “We are confident of raising the debt required for the projects,” stated Hiranandani on being questioned about the availability of debt fund in such a market.

Instead of opening the entire hotel at once, the company, will go in for a phased inauguration for the Chennai property with an aim to maximise its cash flow standing.

“We are looking to start with 100 rooms in the first phase and when revenue starts to flow in, then gradually we will open the remaining half of the hotel”, said Hiranandani.

Its new property in Powai, Mumbai, which will come up inside the Hiranandani Gardens will cater to corporate clients in the immediate vicinity of the property.

Rodas, the 38-room ecotel hotel, meanwhile, will be shut for a short duration for renovation after the opening of the new yet-to-be-named hotel.

Kamat Hotel management wing Concept Hospitality will remain as the management partner of this new 5-star hotel. Concept is currently in charge of the Rodas.

Despite a downturn in the hotel industry seen currently with international inflow of travellers drying up, domestic hoteliers are optimistic of a revival in 2-3 years time.

As senior official from Hotel Leelaventure said, “The hotel industry is going through a turbulent phase because of the economic meltdown and also due to the recent terror attacks in Mumbai. But the business should bounce back in at least the next 2-3 years but growth may not be sharp.”

Source : http://www.business-standard.com/india/news/hiranandani%5Cs-to-invest-rs-640cr-in-hotel-development/351672/

Developer Puts Project on Hold

Property investment company Ishaan Real Estate Plc (ISH.L) delayed certain projects and said it would not start two of its projects as economic slowdown shrinks the demand for property and rental values in India. Ishaan Real Estate, which invests in information technology parks and special economic zones (SEZ) projects in southern and western India, said the value of the projects may fall due to the rise in capitalisation rates, the pressure on rental values and the delay in projects.

The company expects rental values for further lettings in the retail sector to remain under pressure in the near to medium term. While the company delayed projects in the Indian cities of Mumbai and Hyderabad, it said development of the IT space in the cities of Bangalore and Pune will be not be started until “there is evidence of occupier demand and confidence that a satisfactory level of pre-letting can be achieved.” Shares of the company were trading at 23 pence on the London Stock Exchange.

Source : http://www.indianrealtynews.com/sezs-india/developer-puts-project-on-hold.html

DLF Plans Commercial and Residential Projects in Chennai and Hyderabad

DLF plans to invest around INR 3,500 crore in various residential and commercial projects in and around Chennai and in Hyderabad. The projects will be developed through a SPV, which will have equity capital from DLF, JV partners. The balance fund requirement would be met through internal accruals. DLF Commercial Developers have proposed to set up a housing project under the premium category on 100 acre behind Siruseri, Chennai at an investment of INR 1,200 crore. The project is expected to be completed in the next 31 months. However, it plans to develop plots and bungalows on 250 acre land at Sriperumbudur, near Chennai. The project is likely to entail an investment of INR 450 crore to INR 500 crore. The bungalows are likely to be developed in a phased manner over the next 3 to 4 years.

As per report, DLF plans to infuse another INR 400 crore in the IT SEZ at Manapakkam in Chennai. The real estate major has already invested INR 1,100 crore and has developed 2 million square feet in Phase I. A sum of INR 250 crore is being invested for developing a luxury mall in Chennai spread over 5 acre and another INR 150 crore will be spent on setting up a 300 room premium business class hotel at Siruseri. In Hyderabad, it is developing three malls at an outlay of INR 600 crore, a group housing project at Rs.400 crore and intends to spend INR 150 crore on plot development.

http://www.indianrealtynews.com/real-estate-developers/dlf-plans-commercial-and-residential-projects-in-chennai-and-hyderabad.html

Provident Housing launches “CosmoCity” at Chennai

A Premium Affordable Housing Project In Pudupakkam, Chennai.

Provident Housing Ltd., a wholly owned subsidiary of Puravankara Projects Limited was launched during August last year. At that time Provident had indicated a broad business plan which among other things committed to launching their first project within 12 months. Provident has now fulfilled that commitment with the launch of “CosmoCity” at Chennai. CosmoCity offers premium affordable housing at Puddupakkam near Siruseri IT Park in South Chennai. Two sizes of 3 bedroom and hall apartment are priced at Rs. 16.90 lakhs and 18.90 lakhs respectively in CosmoCity.

The 2,174 apartments built on a ground + 3 plan in the prestigious CosmoCity will have premium facilities for an enhanced living experience like Lifts, children’s play area, swimming pools for adults and toddlers, separate gyms for ladies and gents, pool table, basket ball, multi-purpose hall and so forth.

In close proximity are the Chettinad Health City, reputed educational institutions, commercial & industrial establishments. CosmoCity will also have as its neighbours the campuses of Infosys, Cognizant, Wipro, TCS, Accenture and the Siruseri IT Park which are a few kilometers from the property.

Provident Housing’s objective is to provide affordable premium living spaces targeting the middle class, first time home buyers, young working couples and anyone else in need of premium affordable housing.

The announcement by the Government of India that housing loans upto Rs 20 lakhs will be available at a far cheaper interest rate of 8% makes the purchase of homes at Cosmocity a very attractive and much more affordable proposition than before.

Provident Housing will initially cover the cities of Bangalore, Chennai, Hyderabad, and Coimbatore. In the 2nd phase the objective is to have a pan India presence.

The Ministry of Urban Development has stated that the housing shortage in India at the end of the 10th five year plan is 24.71 million. Provident Housing is well placed to cater to the huge shortage of homes in this segment through the provision of good quality, premium affordable homes.

Speaking on the occasion Mr. Ravi Puravankara, Chairman and Managing Director of Puravankara Projects Limited, said “The affordable housing segment has largely not been catered to by private sector real estate developers. The large existing shortage of homes together with the ever increasing demand in this segment is where the opportunity for Provident Housing lies. With the launch of the first Provident Housing project in Chennai we have embarked on a journey to provide homes to a large cross-section of the Indian public, many of whom are first-time home buyers. Our promise is that we will provide high quality modern homes at an attractive and affordable price.”

About Provident Housing Ltd
Provident Housing Ltd., a wholly owned subsidiary of Puravankara Projects Limited, has been established as an independent stand-alone entity with its own budget, offices and staff. Effective use of technology makes for scalability resulting in affordable pricing. Provident Housing Limited will function under the supervision of the Puravankara Group which is known for its premium, world class quality construction standards. In simple words, with Provident, we intend to reset the benchmark set for affordable housing in India.

About The Puravankara Group
The Puravankara Group with over 33 years of excellence in the upper end of the housing sector across various regions of the Country has projects in Bangalore, Chennai, Kochi, Coimbatore, Hyderabad, Mysore and Colombo. The Group also has a presence in Dubai in the UAE and business representatives in the United Kingdom and the United States.  With a land bank of over 125 million sq ft, the Group has above 20 million sq ft of residential and commercial space currently under construction. Included in this are on-going residential projects amounting to 13.50 million sq ft which comprise of 7,800 homes.

Source : http://www.business-standard.com/india/news/provident-housing-launches-%22cosmocity%22-at-chennai/351089/

IVRCL’s four new projects seen bringing Rs 300 crore

Hyderabad: IVRCL Infrastructures and Projects expects 4 of its projects to start contributing to revenues from next fiscal.

While the exact timelines of the cash flows are yet to be set, the build-operate-transfer (BOT) projects are almost complete and revenues are certain to flow in from 2009-10, E Sudhir Reddy, chairman and managing director of the Hyderabad-based company, told DNA Money. Together, the four projects are expected to provide cash flows of about Rs 80 lakh to Rs 1 crore per day, adding over Rs 300 crore to the annual topline, he said.

The biggest of these is the Chennai Water Desalination project, designed to pump desalinated water to the metro. The project, which can pump as much as 100 million litres of water per day, is complete and going through a trials phase.

“We are expecting Rs 48 lakh from this project per day. The margins in this would be about 18-20%,” Reddy said, adding, the project would be operational commercially in the first quarter of the next financial year.

Similarly, the company is working on three BOT roads, including two stretches on Salem-Coimbatore road and one on Amritsar-Jalandhar road. The company would collect tolls on the three roads.

“We are able to give out the exact revenue-flow numbers for the water project since we know the output and the price at which it would be pumped out. For the road projects, we are purely going by the traffic numbers that are available and unless we actually see that traffic using the roads, we can’t specify the revenues,” said Reddy.

The company has so far invested Rs 1,600 crore on these four projects, including Rs 550 crore on the desalination project. The company is focused on water projects, which account for about 65% of its Rs 14,300 crore order book today.

“We will not focus much on roads anymore,” Reddy said.

Meanwhile, IVR Prime, a group entity, has taken a hit from the slowdown in the realty market. The company has a land bank of 3,200 acres in various locations including Hyderabad, Bangalore, Nagpur, Pune and Noida, which was to be used for developing low-cost housing. However, with the market not in favour of real estate play right now, it has decided to sit tight.
“We will keep the land with us. We are not in a hurry to do something though it is not viable,” Reddy said.

Source : http://www.dnaindia.com/report.asp?newsid=1236678