Duet India Hotels to invest Rs 2,300 crore to set up 5,000 hotel rooms in India

According to a report in Business Standard by Swaraj Bassonkar, Delhi-based real estate investment company, Duet India Hotels will invest Rs 2,300 crore over four years to build 5,000 hotel rooms in India. The company, which will invest in mid-scale segment and five-star properties, has tied up with New York-based Starwood Hotels and Resorts Worldwide to develop its hotels, to be run under the brand name of Four Points by Sheraton. Likewise, Duet India Hotels aims to partner with other international hotel players to launch their brands in the country.

To set up the required number of rooms, it will pump in equity of Rs 1,200 crore, while the balance will be raised through debt. So far, it has made an equity investment of Rs 218 crore and almost an equal investment has been raised through debt of around Rs 246 crore. The company currently has five projects under development, which includes 115-room hotel in Jaipur, 223-room hotel in Pune, 124-room hotel in Ahmedabad, 200-room hotel in Indore and 220-room hotel in Hyderabad.

Source:http://www.travelbizmonitor.com/duet-india-hotels-to-invest-rs-2300-crore-to-set-up-5000-hotel-rooms-in-india-8789

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

Duet India Hotels Invests $12M In Hyderabad VentureDuet India Hotels Ltd (DIH), the private equity firm of UK-based Duet Group, has invested $12 million in a five- star upscale hotel project in Hyderabad. The project, which comprises 210 rooms, is being developed at Gachibowli suburb, close to the IT district, of the city at a total investment of $26 million. The company will soon invest another $25 million in a hotel project in Bangalore

Duet India Hotels, which is the investor and developer of the project, will infuse the remaining amount through debt. The company has already bought the land from L&T Phoenix Infoparks for the Hyderabad project.

It is yet to finalise a hotel partner for the project, Dilip Puri, CEO of Duet India Hotels, told VCCircle.

Across five projects, the company has invested $47 million so far from its $166.5-million fund. Earlier, it has invested in projects in Jaipur, Pune, Ahmedabad and Indore. The Jaipur project is already operational and is run by Sheraton Hotels & Resorts under the brand name, Four Points. The Pune project will be operational by September 2010 followed by Indore and Ahmedabad projects in January and March 2011, respectively.

The company has also completed due diligence for two more investments, one each in Lucknow and Nashik. “We have completed the due diligence for two other projects, and will bring in equity in the next one month. These are smaller projects having equity of $3 million each for developing 3-star hotels of 100 rooms in each,” added Puri. “We are about to conclude a project at Whitefield in Bangalore, and will invest equity of around $25 million,” he said.

By the end of this calendar year, the fund will complete investments of $78 million equity across eight projects. Duet India Hotels, which has raised the fund from foreign institutional investors, plans to raise more equity for the fund and go for an initial public offering in the next two years. “We plan to raise more equity for the same fund and would be looking to do an IPO in a year-and-a-half or two years,” Puri said.

Apart from DIH, Duet Group runs another fund in India called South Asian Real Estate, which has been investing in residential projects.

Source:http://www.vccircle.com/500/news/duet-india-hotels-invests-12m-in-hyderabad-venture

Pride Group of Hotels eyes Tier II cities for expansion

With an aim to have a wider presence in the Indian market, Pride Group of Hotels is now eyeing Tier II cities to expand its business hotel brand, Pride Biznotel. For the same, the company is considering cities like Surat and Rajkot in Gujarat; Mangalore, Coimbatore, Madurai and Kochi in south India. The hotel chain will operate properties under this brand on a management and marketing contract. A management contract has been signed for two Biznotels in Maharashtra.

A 65-room property is also under development in Delhi, which is expected to be launched by March 2010. There are plans to launch city centre business hotels in Jaipur, Agra and the National Capital Region (NCR). The two hotels in Maharashtra will be located in Nashik and Aurangabad. The 91-room property in Aurangabad will be launched by March 2010 while the 100-room hotel in Nashik will be launched by end of 2010.

The chain is developing its first five-star property in Mumbai, which will be operational by 2011. The 250-room hotel will be developed on a two acre area. S P Jain, Chairman, Pride Group of Hotels, said, “We had to rework our hotel designs as the property received an increased FSI of 3.5.”

The company will speculate on the market situation and demand and will explore the possibility to add 100 rooms after a year of operations. It will invest around Rs 200 crore in the Mumbai property. Besides this, the company has two other properties of 100 rooms each, under development in Alibaug and Goa, which will be ready by 2011. The Alibaug hotel will incur an investment of Rs 45 crore whereas the Goa hotel will incur an investment of Rs 55 crore. Plans are also in the pipeline to develop a 250-room five-star hotel in Delhi under the Pride brand. The company is also considering offers in Hyderabad for a hotel under the five-star segment.

Pride Group of Hotels aims to set up 30 hotels with 3,000 operating rooms by 2015 and aims to invest Rs 800 crore, during the same period. It has raised around Rs 55 crore through private equity, which was invested in its newly launched 100-room hotel in Bengaluru. There are plans to raise Rs 45 crore through the same route. It will also receive Rs 100-crore term loan from Kotak Mahindra Bank and Citibank. Remaining funds will be generated through internal accruals. Plans for an initial public offering (IPO) have been scheduled for 2010. There are plans to raise Rs 200 crore through the IPO.

Source : http://www.hospitalitybizindia.com/detailNews.aspx?aid=6149&sid=1

Alibaug

Puravankara, Mexico’s Homex talk JV

Bangalore: Realty major Puravankara Projects is in talks for an alliance with Homex, a Mexican company that specialises in affordable housing.

The idea is to give a boost to its affordable housing subsidiary Provident Housing.
Ashish Puravankara, director, Puravankara Projects, said, “We are holding discussions with Homex as they have build a large number of affordable homes. They like our business model and are very keen to tie up.” He did not divulge the nature of the alliance.

Homex is vertically integrated home development company focused on affordable-entry level and middle-income housing. It is also the largest home builder in Mexico, based on the number of homes sold, revenues and net income. It has so far delivered around 270,000 homes.

Its affordable entry-level housing ranges between 452 sq ft and 818 sq ft in size and its middle-income apartments are typically 818-1,851 sq ft.

Homex has operations in 32 cities located in 20 Mexican states as of December 2008.
Homex integrates aluminum moulds into its construction process. With this method, the shell of an entire home can be constructed from concrete poured into as many as 1,000 interconnected pieces of aluminium moulding for an affordable entry-level home.

Once the concrete hardens, the moulds are disassembled for use on another home. Each mould can be used as many as 2,000 times. The method also generates less waste, reducing materials cost. Most importantly, the mould system reduces the average time of construction.

Provident Housing has roped in SBI Capital and Housing and Urban Development Corp to raise funds for it affordable venture. The firm is currently at an advanced stage of talks with private equity investors for diluting stake on a project level and hopes to close the deal soon.

It has already launched two projects in Bangalore and Chennai and is in the process of launching its second project totalling 6 million sq ft in size in Bangalore with an investment of around Rs 900 crore.

The project is expected to have 6,000 apartments. It is currently waiting for sanction to kick start the project.

The real estate player will invest Rs 1,900 crore by 2010 on three affordable housing projects in Bangalore and Chennai. The three projects, slated to be ready by 2010-11, will house 15,000 units.

The one, two and three bedroom flats will be priced at Rs 10 lakh, Rs 15 lakh and Rs 20 lakh respectively spanning from 750 sq ft to 1,100 sq ft.

Provident Housing will also roll out the concept to other cities like Hyderabad, Coimbatore and Mysore in the Phase I. In Phase II it will set up properties in Delhi, Kolkata, Kochi, Jaipur, Pune and Nagpur.

Source : http://www.dnaindia.com/money/report_puravankara-mexico-s-homex-talk-jv_1284925

Decline in Demand of Service Apartments

The demand for service apartments has declined in the last few months due to the slowdown. This apart, real estate experts feel that lack of dedicated players and lower hotel room prices too have impacted the demand in this segment. This, however, was not the scene a year ago. “Last year, the boom had resulted in corporates offering a lot of privileges like frequent travels, which had seen a rise in demand for service apartments. However, lately, with the domestic travel reducing and even hotels offering cheaper prices, the demand has dropped a bit. Nevertheless, the industry expects demand for service apartments to rise again in the next six months,” says Jaxay Shah, director, Savvy Infrastructure Limited.

Real estate analysts agree that the option of service apartment is better than hotels as far as corporates are concerned. “Service apartments carry facilities that support stay with a duration of 15 days as well as over six months. Compared with that, staying in hotels tend to be costlier. Longer stay, however, is being ruled out by corporates as of now. Rather, they are now relying on video conferencing and other cost effective means,” says Ashutosh Limayi, associate director, strategic consulting at John Lang LaSalle Meghraj (JLLM), a real estate consulting firm.

According to SK Sayal, chief executive officer and director of Delhi based Alpha G: Corp Development Private Limited, the segment also lacks seasoned players. “Since service apartments require more facilities that can be offered over a period of time, ranging from 15 days to over six months, there are not many specialists in the industry. As compared with global markets, India still lacks dedicated service apartment providers and hence, hospitality players are complementing it with their hotels. Even our upcoming hotel project in Ahmedabad might complement service apartment need in the market,” points out Sayal.

Ahmedabad-based Neesa Leisure, which operates service apartments in Gurgaon and Jaipur, is also wary of the market. “We have a couple of properties in Ahmedabad and one in Gandhinagar. However, another service apartment is yet to be planned,” says Arvind Gupta, managing director of Neesa Leisure Limited. Industry estimates reveal that the investment in service apartment is over Rs 20 lakh per room.

Source : http://www.indianrealtynews.com/real-estate-trends/decline-in-demand-of-service-apartments.html

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

Le Meridien plans to open 5 hotels in India

The French hospitality major, Le Meridien, plans to open five hotels in India in the next three to five years, a top company official said in Mumbai yesterday.
 
 ”We are looking at setting up five new properties of hotels and resorts in India adding around 1,000 rooms capacity over the next three to five years,” Starwood Asia Pacific Hotels regional vice president, Don Elliot, told reporters.

However, he has not revealed the names of the cities in which the company is interested in setting up its properties.
 
”We are negotiating with our partners and these properties will be set up in Tier I and Tier II cities,” Elliot said.
 
Le Meridien currently has eight hotels in India in Ahmedabad, Kochi, Jaipur, New Delhi, Pune, Mumbai, Bangalore and Chennai.
 
With close to 80 of its properties located in Europe, Africa, the Middle-East and the Asia-Pacific region, Le Meridien provides a strong international complement to Starwood’s primarily North American holdings.
 
Le Meridien recently opened new hotels in Bangkok, Chian Mai, Chiang Rai and Shimei Bay in China, and will open in Dallas and Philadelphia in the coming months.
 
It has also signed new hotel deals in Taipei, Xiamen, Chongqing Nan’an and Qingdao in China.
 
Le Meridien was started as an accommodation option for Air France customers to be used when they travelled to destinations across the world. The first Le Meridien property was setup in Paris in Etoile with 1,000 rooms.

In November 2005, the company, was acquired by Starwood Hotels & Resorts Worldwide Inc, one of the leading hotel and leisure companies in the world with more than 940 properties in approximately 97 countries and 145,000 employees.

Starwood ’s internationally renowned brands include St. Regis, The Luxury Collection, Westin, Le Méridien, Sheraton, Four Points by Sheraton, and the recently launched Aloft, and Element. Starwood Hotels also owns Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts.

 
Source : http://www.google.com/url?sa=X&q=http://www.domain-b.com/industry/Hotels/20090523_hotels.html&ct=ga&cd=oHwoFOHo08Q&usg=AFQjCNHsb8y9_H9ryXaPz_alVqBeKu3WGQ

Emaar MGF launches its first hotel in Jaipur

NEW DELHI: Real estate major Emaar MGF Thursday unveiled its first hotel project in India, Fortune Select Metropolitan, to be managed by an ITC  subsidiary.

Located in the heart of Jaipur, Fortune Select has 90 rooms that include six suites. The property also has a sun deck, rooftop swimming pool, spa and health club.

“Jaipur offers tremendous potential to the business and tourism industry and the opening of the Fortune Select Metropolitan is a key strategic move in expanding our presence here,said Emaar MGF chief executive Sanjiv Rai.

Added Pawan Verma, senior executive vice-president of ITC’s hotels division: “It is our 28th hotel and the second in Jaipur.”

The new property will be managed by ITC subsidiary Fortune Park Hotels.

Source : http://economictimes.indiatimes.com/News/News-By-Industry/Services/Hotels–Restaurants/Emaar-MGF-launches-its-first-hotel-in-Jaipur–/articleshow/4561203.cms

Tata Housing eyes Rs 700 cr from low-cost projects

Tata Housing Development Company, a unit of Tata Sons, expects to earn Rs 700 crore in revenue from low-cost housing in the next four years, a top company official has said.

Tata Housing is launching over 1,000 low-cost houses under the brand “Shubh Griha” priced between Rs 3.9 lakh and Rs 6.7 lakh in Bhoisar, on the outskirts of Mumbai, and plans to launch around 4,000 such houses across other cities in the next four years, mainly targeting industrial workers and other low-wage earners.

The company is targeting Rs 15,000 crore revenue by FY13 from its projects, covering an area of 20 million square feet. It plans to build 10,000-13,000 homes by then. The company aims to earn 5 per cent of its revenue from low-cost houses.

“Low-cost projects have more velocity and can be completed in two years. We see huge opportunity in this space, especially in industrial belts,” said Brotin Banerjee, managing director and chief executive of Tata Housing.

The company is launching two-three such projects in Bangalore and the national capital region in this fiscal and plans joint development with land owners, wherein it will share a percentage of revenues with the owners of the land, and outright of purchase of land in other cases, according to Banerjee.

A host of companies such as Omaxe and Ansal API have launched low-cost apartments to target the low-wage earners and generate cash in the downturn. While New Delhi-based Omaxe has launched 5,000 apartments in Rs 5.99-8.99 lakh range at Mayakhedi in Indore, Ansal API has launched 4,000 low-cost apartments in Jaipur, Jodhpur, Agra and Meerut.

“Our revenues are doubling every year and we hope to continue by being present in different categories and launching innovative products,” said Banerjee. Currently, the company has more than 10 million square feet under development.

Banerjee says more land is now available for developers and land prices have come down to realistic levels. “Earlier, land prices used to escalate within a month. Prices have hit their bottom and I expect them to remain sluggish for the next eight-nine months,” he said.

Source : http://www.google.com/url?sa=X&q=http://www.business-standard.com/india/news/tata-housing-eyes-rs-700-crlow-cost-projects/357607/&ct=ga&cd=IKkcjF1VKlg&usg=AFQjCNFRhGsdR8mKdu4SCTncXKC8v_Ye1Q

Fortune Park Hotels plans 4 new hotels

ITC owned Fortune Park Hotels plans to open four new hotels in Mussoorie, Jaipur, Bangalore and Manipal by July, a top company executive said. The  hospitality firm also announced that it is going to invest Rs 120-150 crore to build two hotels in Bangalore and Coimbatore.

“So far Fortune Park Hotel was a hotel management company and has expanded by tying up with various real estate developers. Now we plan to invest and build two hotels under the brand,” said ITC -Hotel division senior executive vice president Pawan Verma.

The company on Friday opened Fortune Inn Grazia at Noida. The mid-market brand currently has 26 operational hotels with plans to doubling it in the next two years in collaboration with real estate developers. The hotels will open under its existing Fortune sub-brands —- Select, Park, Inn, Resort, Apartments, Faith, Spot, Stop, Lodge, Indoville and Adventure.

Fortune Hotels president Suresh Kumar added that the company plans to have five new hotels in the NCR region in addition to its existing two to cater to the upcoming Commonwealth Games next year.

“Despite the economic slowdown our occupancies on an average across all hotels are about 60% and we believe we have gained since many corporate travellers are downgrading,” he said. But Mr Kumar agreed that room rates at the company’s hotels have dropped 15-20% in the past few months.

Nearly 70% of the revenues for the company comes from business travellers.

Source : http://economictimes.indiatimes.com/News-by-Industry/Fortune-Park-Hotels-plans-4-new-hotels/articleshow/4388973.cms

Panoramic Universal to import its United 21 brand into India

Panoramic Universal Limited (PUL) plans to bring its four star brand, United 21, into the Indian market. The company, which manages two properties under this brand in the United States, will launch the first United 21 hotel in Thane, Maharashtra by end March 2009. It will also develop the brand in Hyderabad, Jaipur and Durgapur.

While the 46 room Thane property is under a management contract, hotels at the other three locations will be owned and operated by the company. PUL will invest Rs 55 Crore in the 90 room Hyderabad property, which is expected to be operational by end 2010. The 83 room Jaipur hotel will incur an investment of Rs 72 Crore. It is slated for operations by 2012. The Durgapur hotel will be developed in two phases. The first phase will see the development of 75 rooms, which are to be ready by end 2010. As part of the second phase, the company will develop 45 serviced apartments within the property.

The Thane hotel will also provide a membership club. It will house a multicuisine restaurant, a barbeque speciality restaurant, a lounge bar, a 24 hour coffee shop and a rooftop poolside Café. It will also provide banqueting facilities to accommodate up to 350 guests. Speaking about the development, Utpal Parekh, Senior Vice President – Finance & Operations, Panoramic Universal Ltd states, “Our research signified the need for good hotel and club facilities in this part of the city. The property will depict a youthful and contemporary look. We will position it as a boutique property.” The property will undergo a soft launch on March 27, 2009 and will be completely operational by July 2009.

Besides this, the company is also on the lookout for distressed assets present in the market; it aims to adopt them through a management contract or own-and-operate model. It has undertaken a 25 room villa resort in Alleppey under management contract in October 2008. “The United 21 hotel under development in Hyderabad is a semi finished project,” Parekh adds.

The company is in the process of land acquisition in Kumarakom. “We have already acquired 10 acres and plan to develop a 100 room five star resort and spa property on 14 acres of land. About 80 per cent of the land acquisition is already done,” Parekh informs. The project is expected to incur an investment to the tune of Rs 300 Crore. Plans are also underway to develop a five star hotel cum serviced apartment in Munnar. The company has also taken over the management of a five star hotel under development in Pune. The property is expected to be commissioned by early 2011. It has bought 35 acres of land in Uzgaon, Goa and plans to develop a jungle resort on the property, as well.

PUL is raising Rs 50 Crore through preferential allotment of shares and aims to raise an excess Rs 50 Crore through non convertible preference shares in 2010. The company is presently on the lookout for domestic and international operators to brand and manage its five star properties.

Source : http://www.hospitalitybizindia.com/detailNews.aspx?aid=3871&sid=1

SBI, Mahindra World City in tie-up for Jaipur hub

JAIPUR: India’s largest public sector bank State Bank of India has signed an agreement with multi-product special economic zone- Mahindra World City
to set up a 25-acre northern hub in Jaipur.

The hub, coming up in the domestic tariff area of the SEZ, would be the banks’ only data processing unit outside Maharashtra. It is likely to create 20,000 jobs in next few years.

Mahindra and Mahindra executive director Arun Nanda said the presence of SBI would give a tremendous boost to the company’s efforts of positioning Jaipur as a specialized banking, insurance and financial services processing hub.

“With the inclusion of SBI, we would now have three top banks of the world – Deutsche bank, ICICI and SBI – in our campus. It will help us to attract other banking, insurance and financial majors to establish their facilities in Jaipur.

ICICI bank has also signed up an MoU with MWC to set up its northern hub while Deutsche bank is already operating its offshore processing unit from this campus. Earlier, Rajasthan chief minister Ashok Gehlot inaugurated Mahindra World City’s light engineering and handicraft SEZ.

The 250-acre light engineering and handicrafts zone form a part of 3000-acre multiproduct SEZ that also have IT, auto ancillary and logistics zone which hosts 17 players including Q H Talbros, Veto Electropowers, Om Metals, Marsons, Dyanmic Engg, Tijara Polyprep, Polymed, A L Paperhouse, Rustic Furniture, Pink city Enterprises, Peadiprint etc..

Apart from the light engineering and handicrafts zone, the 750-acre IT zone of MWC, which is the largest IT SEZ of the country hosts IT majors like Infosys, Wipro, Tech Mahindra, Naggaro Connexions and Truworth.

“We are trying to rope in TCS as well. Our talks are in advance stages. We are a transparent company and want to make this zone a growth driver of this region,” said MWC chairman Sunil Arora.

The Mahindra World City, a 74:26 joint venture between Mahindra Lifespace developers Limited and state owned Rajasthan State Industrial Development and Investment Corporation Limited is likely to attract an investment of Rs 10000 crore over a period of 5 years.

Source : http://economictimes.indiatimes.com/Economy/SBI-Mahindra-World-City-in-tie-up-for-Jaipur-hub/articleshow/4206307.cms

Panoramic eyeing PE funding to fuel pan-India expansion

MUMBAI: With a view to have a pan-India footprint, hospitality major Panoramic Universal is planning to develop two exclusive properties in  Hyderabad and Jaipur and is in talks with private equity players for raising Rs 50 crore.

“We plan to raise Rs 50 crore and are in talks with private equity players and institutional investors. The deal should be sealed soon,” Panoramic Universal’s Senior Vice President (Finance & Operations) Utpal Parekh told PTI here.

Initial discussions with several investors have already been done, he said, adding, “We will dilute at the right valuation.”

Panoramic Universal has adopted the inorganic route for expansion and recently acquired three hotels in the country taking its total chain to 11 across India, US and New Zealand.

The company acquired a controlling stake of a semi-finished hotel in Hyderabad called Sri Vatsa Hotels for Rs 20 crore last year. It intends to convert this property into a 90-room four star hotel.

It also acquired a property in Jaipur for Rs 18 crore. Panoramic Universal intends to set up a multi-use hospitality project with a 83-room three-star hotel and a commercial complex spread over 30,000 sq ft on the property.

The company is also intending to take over the management control of an “only suite hotel” in Thane.

Source : http://economictimes.indiatimes.com/News/News-By-Industry/Services/Property–Cstruction/Panoramic-eyeing-PE-funding-to-fuel-pan-India-expansion/articleshow/4154734.cms

Tier 3 Offers Good Real Estate Opportunities

Despite the global economic downturn eating into India’s real estate markets, Jones Lang LaSalle said the country’s third tier markets would provide attractive future returns. The real estate services firm added that Ahmedabad, Chandigarh, Kochi, Jaipur and Nagpur were among the most attractive. The investment case for India’s third tier cities is still strong despite the financial turmoil being felt in the country, according to property services firm Jones Lang LaSalle. India’s economy has suffered amid the global deleveraging with general repricing across real estate markets and predictions the country’s gross domestic product will fall from an average rate 8.9 percent to 6.2 percent for 2008/2009.

However Jones Lang LaSalle said in their “India30 Real Estate Opportunities in Tier III Cities” report, that the country’s tier three cities are well placed to weather the storm. Highlighting 30 cities, the firm said these locations would “set the benchmark by which other [tier three] cities will be measured.” Assessing the investment potential of the cities by “size, market reach and connectivity”, Jones Lang LaSalle said the most attractive investments would be found in Ahmedabad. Chandigarh, Kochi, Jaipur and Nagpur. Anuj Puri, chairman and country head of Jones Lang LaSalle Meghraj said these cities “offer the strongest real estate potential combined with the lowest market risk.”

According to the report: “The [30 cities highlighted by the report] still account for a relatively small proportion of real estate activity (21 percent of modern offices and 34 percent of shopping malls), but with 41 percent of the country’s wealth, the potential of these tertiary markets is clearly evident” “Domestic players continue to expand rapidly into tier three cities, and whilst foreign players are currently adopting a cautious approach in today’s uncertain global economic climate, over the longer term we anticipate the India30 will offer new opportunities for both domestic and foreign real estate investors, developers and occupiers,” he added in a statement.

Source : http://www.indianrealtynews.com/real-estate-india/tier-3-offers-good-real-estate-opportunities.html

JLLM Releases ‘India30 – Real Estate Opportunities in Tier III Cities’

With the release of ‘India30 – Real Estate Opportunities in Tier III Cities’, Jones Lang LaSalle Meghraj decisively answers the recurring question in investor circles today – Is the Tier III city story over, or is there comeback sequel?

The answer is a resounding ‘Yes!’ This latest report from Jones Lang LaSalle’s World Winning Cities Research sets out to provide fresh insights into the long-term real estate opportunities and risks across India’s Tier III cities.

What makes these cities tick, and what will keep them ticking when others are facing the prospect of a protracted period of stagnation?

“This is not a simple question to answer, but we have attempted to do so in this report,” states Anuj Puri, Chairman & Country Head, Jones Lang LaSalle Meghraj. “In any given city, the factors that influence real estate growth are diverse and complex. To arrive at a uniform and non-ambiguous model of ‘real’ time potential, we arrived at three control points for this study – infrastructure, human capital and governance. These factors are best suited to reflect growth amongst any city.”

‘India30 – Real Estate Opportunities in Tier III Cities’ showcases 30 cities – the India30 – which Jones Lang LaSalle Meghraj identifies as the focus of new real estate activity outside of India’s major metros over the next decade. The India30 will set the benchmark by which other Tier III cities will be measured.

Included in the report is a unique Real Estate Opportunity Map, which provides a high-level summary of the research and analysis of macro-economic parameters, real estate fundamentals, future growth drivers and risk profiles across the India30.

“We have short-listed 10 Tier III cities which offer the strongest real estate potential combined with lowest market risk”, states Mr. Puri. “Five cities stand out – Ahmedabad, Chandigarh, Kochi, Jaipur and Nagpur. This group already have rapidly growing real estate markets due to their city size, market reach and connectivity.” A second group of mainly southern Indian cities – Coimbatore, Mangalore, Thiruvananthapuram, Visakhapatnam and Goa – also score well and have growing consumer markets.

With ‘India30 – Real Estate Opportunities in Tier III Cities’, Jones Lang LaSalle makes a strong case for these cities which, led by proactive visionary governments which invest in infrastructure and education, will be best positioned to succeed in the immediate and long-term future.

Source : http://propertybytes.indiaproperty.com/?p=3247

Ansal Properties eyes sale of 10000 affordable units

New Delhi: Real estate developer Ansal Properties and Infrastructure Ltd said that it expects to sell 10,000 dwelling units in the affordable housing segment this year, but has put on hold plans to build 30 hotels.

The affordable dwelling units are being sold in two categories – Rs 2.5 lakh for 200-sq ft unit and Rs 9.50 lakh for 850-sq ft unit. This means that the average cost for the buyer works out to between Rs 1,120 and Rs 1,250 for every sq ft as compared to Rs 1,700 to Rs 2,000 a sq ft for mid-income housing. The construction cost for the company for these projects is expected to be between Rs 500 and Rs 550 a sq ft.

Ansal Properties – which derives nearly 70 per cent of revenue from mid-segment housing – has already launched the affordable housing projects in UP and Rajasthan and has sold 2,000 units. It is targeting a sale of 10,000 such units this year.

Ansal Properties to invest Rs 500 cr on low cost housing

“These projects are coming up in Lucknow, Meerut, Agra, Jaipur, Jodhpur and Ajmer and also in Bhilwara as part of our townships,” said Pranav Ansal, Vice-Chairman and Managing Director of Ansal Properties and Infrastructure Ltd.

Ansal Properties signs MoU with BSI Management

“There is a strong demand for affordable housing projects, as banks have announced attractive rates for loans up to Rs 5 lakh and up to Rs 20 lakh. Beside this, we are also talking to the States and urging them to bring down the stamp duty for affordable housing projects,” Ansal said.

Now, the stamp duty in UP is pegged at 8 per cent and in Rajasthan it is 8.5 per cent.

The total cost of these projects would be close to Rs 400 crore spread over the next two years. This includes investment for land.

Cash Flow

Ansal said the company’s investment requirement for the ongoing projects would be Rs 1,500 crore in the next two years, and claimed that a significant proportion of this would be supported via internal accruals. “Our debt requirement will be only Rs 100-200 crore,” he said.

The company is planning an engineering industrial SEZ in Murthal (near Sonepath); and two IT SEZs in Greater Noida and Gurgaon.

While HDFC has come in as equity partner (33 per cent) for the Greater Noida project, IL&FS has committed a 49 per cent equity holding for the Gurgaon project, Ansal said.

The company had initially planned a follow-on public offer for 2008 but ruled it out after the markets plummeted.

Hotel plans

The lacklustre demand in the hospitality business also seems to have taken a toll on the company’s elaborate plans to come up with 30 hotels.

“The hospitality plans are on hold. We are not pursuing it aggressively. For all the 30 hotels that we had planned, we already have land. But due to the slowdown in the market, we are not looking at developing them. We may evaluate our plans in one years’ time,” he said, adding that bulk of these hotels were in the three-star and four-star categories.

Source : http://sify.com/finance/equity/fullstory.php?id=14844913

Zoom Developers mulls Rs 1,000 crore investment in hospitality projects

Real estate developer, Zoom Developers, has chalked out a Rs 1,000 crore investment plan to develop hotels in various cities in India. The realty major plans to develop 35 hotels across India by 2011.

The 35 hotel projects will be spread across Jaipur, Jalandhar, Itanagar, Ranikhet, Ooty, Kochi, Katra, Amristar, Bhowalil, Bhatinda, Indore, Danta, Alwar, Patiala and Pushkar. Construction has already begun in a few locations that include Itanagar, Ranikhet and Patiala. These properties are expected to be complete before the Commonwealth Games in 2010.

Source : http://www.travelbizmonitor.com/zoom-developers-mulls-rs-1000-crore-investment-in-hospitality-projects-4642

Lemon Tree plans to invest Rs 1,200 Crore

Lemon Tree Hotels is mulling over an investment plan of Rs1,200 Crore to set up a pan-India chain of hotels. As per the capex plan, the company intends to have 20 hotels aggregating 2,500 rooms by 2011. There will be hotels coming up in 15 major cities in India, including South Delhi, Gurgaon, East Delhi, Pune, Goa, Alleppey, Indore, Aurangabad, Mumbai, Bengaluru, Hyderabad, Chennai, Jaipur, Chandigarh, Shimla and Ahmedabad. The funding for these projects will be a mix of equity and bank debt.

Currently, Lemon Tree Hotels has nine properties across India in the mid-price segment and the other ten properties are under development. The Chennai hotel will open in February 2009 while the two hotels in Bengaluru, one in Electronic City and the other on St Johns Road, will open by end-2009 and by June 2010 respectively. The hotel at Hyderabad will open in 2010.

Source : http://www.hospitalitybizindia.com/detailNews.aspx?aid=3054&sid=1

Duet acquires three new hotel ventures

According to a report in the Economic Times, UK-based private equity fund, Duet Group acquired three new hotel ventures in India from their bankrupt British owners Starlight Investments and Insureprofit, recently. The acquisition of three companies that owned hotels in Pune, Jaipur and Ahmedabad was made by Duet’s real estate investment arm, Duet India Hotels and it was concluded on December 12. In a distress sale by the UK owners, the assets came at a discount from their current market price, which, according to analysts, is close to Rs 200 Crore.

The two hotel projects in Pune and Ahmedabad are under construction and are likely to be completed next year while the one in Jaipur is almost ready to be opened. Duet acquired majority stake (over 90 per cent) in the three companies owning the hotels from the receiver appointed by a British bankruptcy court. The minority stake was purchased from Alok Vajpayee, chief of financial advisory firm Dawnay Day AV Financial Services, which is a joint venture between Vajpayee and Dawnay Day International. Starlight Investments and Insureprofit owned hotel companies in India directly or through their 100 per cent owned Dawnay Day Group of Companies. Dawnay Day had planned to promote the hotels under the brand ‘Ten Hotels’. Now Duet will take a decision on the branding.

Source : http://propertybytes.indiaproperty.com/?p=3113

RIMC enters India in JV with Sahil Group

Germany-based hotel management and consultancy firm, RIMC International, has entered into a 50:50 joint venture agreement with Pune-based Sahil Group of Companies, to manage and operate hotel projects in India. The joint venture company, RIMC Sahil India, aims to operate about 20 properties in the country by 2012. It has earmarked an investment of about three million USD for the same period.

Speaking exclusively with Hospitality Biz, Vinay Phadnis, Chairman and Managing Director, Sahil Group of Companies, stated, “Due to immense potential within the Indian hospitality industry, RIMC wished to have a presence in this market. The alliance will also help to accelerate our company’s growth and presence in the country.” RIMC Sahil India will start operations with six properties located in Mumbai, Pune, Kolhapur, Gurgaon and Jaipur across different categories. Of these, two properties — one each, under the three and four star categories, respectively — in Pune and a three star property in Jaipur are already under construction and slated for operations by mid January 2009. A five star hotel in Mumbai,

Source : http://www.hospitalitybizindia.com/detailNews.aspx?aid=2872&sid=1

Buyers hesitant to take the plunge

A weak sentiment and constant negative commentary have aggravated the problems of affordability and high mortgage rates in real estate, according to Motilal Oswal Financial Services Ltd.

A report by the company, based on an interaction with international property consultants, states that buyers are shying away from new projects and those under construction if delivery times are more than a year away. They feel that prices could drop further in the medium term and they are not sure if the developers would have the ability to stick to schedules. So presales, an important source of funds for developers to meet construction cost, is under threat.

List prices are no longer relevant as developers with projects in the pipeline and those that have been announced offer discounts of 30-50 per cent on listed price. They do not lower prices officially because they do not believe this would attract more buyers but would only aggravate the situation by making people wait for a further cut. A few leading developers such as Orbit Corporation and Oberoi Construction have dropped list prices, according to the report.

Property consultants felt that the outlook for real estate companies has worsened in the last few months along with their financial condition and were hesitant to give estimates of the possible time for recovery. But it is possible that the residential businesses could stabilise by March 2009 with some deals happening then.

The residential real estate prices are likely to realign with the present market situation by then and stimulate demand from end-users.

The property consultants expect demand to start improving first in Mumbai, Bangalore, Hyderabad, Delhi as the pent-up demand is higher in these cities. This will be followed by strong Tier II and Tier III cities such as Ahmedabad. However, any significant improvement in demand is not expected in the next few quarters.

Financial year 2009 is likely to be one of consolidation with industry leaders differentiated from peers. Developers with staying power will utilise this consolidation phase to emerge stronger and position themselves in an advantageous manner to capitalise on the growth phase post-consolidation. Focus should be on companies with high visibility on monetisation of assets over the next 3-5 years; low leverage and robust financials; and strong execution track record.

Tier II/III cities hold potential

Pension funds can exploit the relatively stable realty markets in India to park their funds, according to Jones Lang LaSalle Meghraj.

A report by the international property consultants says that with $20 trillion in assets, pension funds worldwide are the largest category of any investments. These can look at realty investments in India where the market is less volatile and property consistently priced making it an ideal investment option for prudent investors.

India’s Tier II and III cities rank higher than those of China’s, indicating less diversity in transparency within India. This is a reassuring factor for investors seeking to enter India’s secondary and tertiary cities.

The levels of transparency in Tier II cities are only marginally below Tier I cities. In the Asia-Pacific region investors may find greater reassurance in investing in smaller cities in India than in other countries.

According to the international property consultant, of the total domestic and foreign investment of $6 billion announced in India in the first half of 2008, over 63 per cent is in Tier I cities and 33 per cent in Tier II cities and the balance in smaller location. In 2007, Tier I cities accounted for over 95 per cent of the total investments.

In Tier III cities there have been investments in IT parks and SEZs in Nagpur, Kochi and Jaipur; retail in Ahmedabad and Chandigarh; hotels in Goa and Jaipur; and mixed development in Indore and Visakhapatnam. — Our Bureau

Source : http://www.thehindubusinessline.com/iw/2008/11/30/stories/2008113050691700.htm

Bharat Hotels to spend Rs1,200 crore on expansion

New Delhi: The family of Lalit Suri, a home-grown Indian hotelier who died two years ago, plans to invest Rs1,200 crore in adding 10 hotels to its chain and refurbishing seven properties over three years after a franchisee deal with InterContinental Hotels Group Plc. ends for its Delhi and Srinagar properties in 18 months.
Bharat Hotels Ltd, the family-controlled firm, has re-branded its properties here The Lalit, a name that will be used for the company’s hotels in Mumbai and Goa after the contract with Intercontinental expires, Jyotsna Suri, chairperson and managing director of the firm, said here at a press conference on Wednesday. The Suri-run firm has hotels in Bangalore, Udaipur and Khajuraho, which too have The Lalit branding.
The chain has 10 hotels that are currently under development in Kerala, Kolkata, Jaipur, Chandigarh, Ahmedabad, Amritsar, Noida, Dehradun, Dubai and Thailand that are expected to be operational between 2009 and 2011.
The Delhi property is being renovated and will be ready by March-April next year.
“We are continuing with our development as scheduled and there has been no slowdown whatsoever on the development front,” Suri said, adding the Rs1,200 crore spending will be funded equally through internal accruals and borrowings. An initial public offer is not on the cards in the next two to three years, she added.
Hotels in larger cities, are experiencing lower occupancy as businesses cut back on travel. Suri said Bharat Hotels was open to acquiring properties and was “waiting for the rates to drop further”.
Well-capitalized hotel firms such as Bharat Hotels will move ahead decisively with their expansion plans, one expert said. Such firms “recognise the opportunity and are probably looking at a long term view and building right now so that when the economy turns around, which it will, they will be on their feet,” said Sudeep Jain, executive vice president and hotels country head at the Gurgaon office of real estate consultancy JonesLang LaSalle Inc.

Source : Livemint.com

Real Estate Developers Suffer Reality Bite

With Diwali having come and gone and no increase in sales in the real estate sector, it now seems certain that developers will be forced to reduce prices at least in the residential segment. The biggest reason for concern for all real estate players is that a number of private equity deals did not materialise.

This is coupled with isolated or barely any property changing hands this festive season. In fact, many desperate developers had offered major freebies — ranging from consumer durables to luxury cars — but it seems nothing worked. And now developers who had taken huge loans from banks would be forced to reduce the prices so that the end users come back to the market.

In fact, in various markets, despite a slowdown in demand, essentially from the end users and speculative investors, developers will be looking at reducing rates further by 10-15%. Some have already started offering the lower rates.

“All the developers have tried to use the freebies route but nothing has paid off. In many residential projects not a single apartments has been sold. We may have to offer a 10-15 % discount soon to bring the end users back to the market,” feels CMD of a leading real estate company on the condition of anonymity.

Sales in secondary markets have also taken a beating with very few transactions taking place at relatively lower price points than market expectations. Says Anuj Puri, chairman & country head of Jones Lang LaSalle Meghraj: “It was unreasonable for the promoters to hope that the Diwali season would somehow pull the real estate market out of the doldrums. The situation is a result of deeper economic issues. Currently, the equity markets in India are in a rather low phase and credit is extremely tight, resulting in the Indian real estate sector taking an unprecedented body-blow. We expect domestic demand to sink by another couple of degrees and international interest to remain at cautious levels before the situation gets better.”

Industry sources, in fact, say that across all metros and tier II cities such as Mohali, Pune, Kundli (Sonipat), Chandigarh, Jaipur, Lucknow, Indore, Surat, Ahmedabad and Cochin there has been an estimated 80-90% drop in the number of deals. The situation is so bad that there are no buyers for any kind of residential real estate in these markets.

Many feel that it will take at least couple of years before the realty market witnesses a turnaround. Says Sanjay Verma, executive MD, South Asia, Cushman & Wakefield: ”Once real estate prices sink to more realistic levels, the watch-and-wait stance currently evident on both the domestic and international investor fronts will give way to cautious forays and eventually to steadily increasing market recovery. The turnaround phase should come in another 18 months to two years.”

Source : Indianrealtynews

Royal Orchid to manage 10 Ramada hotels

In a bid to expand its Ramada brand of upper mid-scale hotels in India, Wyndham Group which is headquarted in the US has tied up with Bangalore-based Royal Orchid Hotels to open 10 Ramada hotels across the country.

Royal Orchid will have exclusive development rights for the Ramada brand to manage hotels across Rajasthan, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. Wyndham Group already has 10 properties in India including Delhi, Gurgaon, Mumbai, Jaipur, Varanasi and Goa.

Under the alliance, Wyndham will offer use of the Ramada brand and market the hotels through its international sales network while Royal Orchid will manage the hotel.

The first hotel under the agreement has come up at Bangalore where Royal Orchid’s Hotel Harsha has been brought into the Ramada fold. Royal Orchid has invested Rs 10 crore for renovating the hotel. Royal Orchid will pay a fixed percentage of profits from its Ramada hotels to Wyndham.

“Having a well known international brand name and Indian management makes an ideal proposition in the hospitality industry. With this partnership we are evolving into a management company, “ said Chender Baljee, chairman and managing director of Royal Orchid Hotels. He added the tie-up would see setting up of hotels in Pune, Chennai, Nagpur, Indore, Hyderabad, Jaipur, Coimbatore and Mumbai in the next five years.

Royal Orchid independently operates 11 hotels in Bangalore, Mysore, Pune, Jaipur, Goa and Hyderabad. The group plans to invest Rs 500 crore in the next five years to set up hotels in Delhi, Hyderabad, Jaipur, Mumbai and Ahmedabad among others.

The group is also constructing its first international resort in Dar Es Salaam in Tanzania which would be operational in 2010. Funding for the expansion would be through its internal accruals.

Royal Orchid has debt of Rs 20 crore and has so far spent Rs 150 crore on this expansion. The company added that Rs 100 crore will be from reserves and Rs 250 crore will be through debt.

Royal Orchid in addition to this expansion also has a budget offering – Peppermint.

The Wyndham group operates 850 Ramada hotels in 45 countries and is looking at expanding its presence in India. “We are right now working on the franchise model to bring our midscale and economy brands to India, “ Said Oliver DuPont, senior vice president International development, Wyndham Hotel Group International.

Business-standard

India still a land of property investment opportunity – survey

Indian real estate is still an attractive “hot potato” which remains a popular investment, a leading trade body has said.

A study by the Associated Chambers of Commerce and Industry of India (Assocham) shows three quarters of the country’s urban working class still prefer bricks and mortar to other forms of speculation.

The group surveyed more than 1,400 mid-level workers including managers, teachers, and self-employed professionals, and found most thought real estate was still safe despite a current slump in the sector.

Assocham said:

“About 65 per cent of the urban working class remain keen to park their surpluses in buying residential properties in view of better connectivity, infrastructure and basic facilities.”

Most of the workers who tend to buy investment property are looking to smaller and emerging cities like Jaipur and Pune, the figures also show.

Opportunities in bigger cities like Mumbai, Delhi and Kolkata tend to attract higher-end professionals, while some buyers go for more commercial projects in the belief they are more likely to increase in value in two to three years’ time.

Analysts have previously said a greater interest in cheaper housing will see a revival of the country’s real estate market over the next few years.

Source : Offplanpropertyexchange

FIRE Cap to invest in affordable housing

MUMBAI: As affordable housing is becoming the new mantra for real estate developers, the concept is attracting a lot of attention from the real estate funds fraternity. The $250-million First Indian Real Estate (FIRE) Capital Fund Ltd is making its first deal in the segment.

According to industry sources FIRE Capital is currently in the due diligence stage with the affordable housing investment. “The deal should get concluded within 2-3 weeks,” said the source in the know of the deal.

While, the name of the real estate developer is being guarded by the realty fund, DNA Money has learnt that it is a firm operating out of the eastern region of India. “In most likelihood, the affordable housing project is being developed in West Bengal,” added the source.
The ticket size of the project will be between Rs 8 lakh and Rs 15 lakh across various permutations and combinations of apartment sizes.

Gautam Vashisht, executive director (investments), FIRE Capital Fund, said, “The intent is certainly there in the affordable housing segment in India, particularly in Tier II and Tier III cities.” However, he denied making any comment on the possible investment in affordable housing project in east India.

Fire Capital launched its first fund in 2006 with a corpus of $250 million and has already committed over $150 million across seven investments. Focusing on residential and mixed-use developments centred on residential use, its first investment was in the Indore-based M Jhaveri Group’s 137-acre township. Other investments are also in township projects in Jaipur, Bangalore, Nagpur, Chennai, Ahmedabad and Dehradun.

The venture fund typically makes investments ranging from $5 million to $30 million.

Now with close to 80% of the corpus being deployed, the venture capital fund is planning to raise another fund next year. The amount to be raised is rumoured to be in the region of $500 million. While the primary investors will be from the US and European markets the fund will also look at raising some part of it from the Middle East.
The second fund will also target real estate projects in residential and mixed-use developments (including hotels), and the focus will be on Tier II cities in the country.

Source : DNA India

Retail investment in India

Developers and private equity players are set to put India´s retail space market on full throttle with investments worth anywhere between $5 billion and $10 billion in FY09-FY10.

In moves that would lend retail space gigantic proportions, the Runwal Group and Singapore´s GIC will use a joint venture to launch a ´Our City Centre´ retail mall over 1.1 million sq ft of area in Ghatkopar, Mumbai. In the second phase of their foray, they will develop another ´Our City Centre´ over 7 million sq ft of area in Hyderabad. Mumbai-based ICS Group is their project advisor.

Equally bullish is Sheth Developers, which is building a shopping centre called ´Viva City´ over1 million sq ft in Hyderabad and Thane, Mumbai. The company is investing Rs 400 crore in this new retail development and has not associated with any private equity firms.

The sudden gush of investments has also swept across smaller cities. Media major Dainik Bhaskar Group will develop a 7.5-lakh sq ft retail mall in Bhopal. With construction already under way, the mall is likely to be up and running in December 2009. The mall comprises a basement, ground and six floors with seven anchor shops, 180 retail shops, six-screen multiplex and food courts. JMC projects have been appointed as the civil contractors and Bentel Associates, Mumbai, are the property advisors.

On the crest of the investment wave, Coimbatore-based PS Group is developing ´Our Grand Mall´, which is to be completed over the next 8-9 months. ICS Group is the retail management adviser to this project.

The pan-Indian ripples of the ´boom´ are spreading by the day. Provogue India Ltd´s real estate arm, Prozone, and UK-based mall property developers Liberty International PLC, are building a big mall each called ´Prozone Liberty Centers´ in Aurangabad, Jaipur, Nagpur and Indore.

According to sources, each shopping centre will be spread across an area of 1.5 million sq ft. Property Zone CEO Ashwin Puri says, “Prozone has formed a special purpose vehicle (SPV) in association with the ICS Group called Triangle Real Estate Fund to manage the Prozone and Liberty International´s upcoming shopping centers in India.” Meanwhile, DB Realty is developing over five retail malls in western India.

According to Sanjeev Dasgupta, chief financial officer and head of investments, Kshitij Investment Advisory Company Ltd, “With $5 billion investments coming into retail real estate development, developers are focusing on retail projects.

Real estate developers confident of fund flow

Real estate developers are carrying on with their projects, unfazed by the global financial turmoil that is expected to hit the Indian real estate sector. They remain confident about flow of funds, despite the prevalent crunch.

“Funding (for our projects) will not be an issue. We are accepting funding from a lot foreign agencies, some of them being HSBC, HDFC and ILFS,” said Rakesh Jain, executive director, Ansal API. He however expects funds to shrink if the RBI hikes interest rates further.

Vipin Agarwal, executive director, Omaxe Ltd, however, is a tad more optimistic. “Different countries are taking measures to bail out their banks. As a result, banks are going to be refurbished with liquidity. There is no reason why this liquidity will not flow into Asian countries,” he said.

Sharing the optimism, Shobhit Agarwal, joint managing director, capital markets, Jones Lang LaSalle Meghraj said that many new funding agencies will now decide to operate in the market. He said, “Some PE funds exercised caution at a time when others went overboard with doling out mortgage loans. Once these conservative funds come into the field, market dynamics will change once again.”

Incidentally, Indian realty stocks tumbled by almost one thousand points after the buyout of Merrill Lynch and collapse of Lehman Brothers, the world’s third and fourth largest investment banks respectively. While Jain thinks that all realty operators are trying to figure out ways to cushion their stocks from impact of the global meltdown, Agarwal believes in the philosophy of what goes down also comes up.

“Realty stocks will go up,” he said. Jain added that stocks are going down mainly because of negative sentiments and that the fundamentals of the sector are strong.

Both Jain and Agarwal claim that their order book is “very healthy”.

“We have a pending order of 1.5 billion houses in the mid-income segment,” said Agarwal. He expects mortgage rates to go down, taking a cue from inflation, which is currently on a downward mode.

Both Ansal API and Omaxe Ltd are focusing on MIG housing. The ongoing projects of Ansal API include Sushant City-Jodhpur and Jaipur, Sushant Golf City-Lucknow, among others.

 

Rising land prices hit property developers

NEW DELHI: The property market is desperately seeking a silver lining — but that seems to be evasive. In fact, real estate developers are facing a double whammy of a dip in prices of residences across the country by around 15-20% in the last few months, even as land prices are going up. While home buyers have reason to be happy over falling prices, an increase of 15-30% in land prices over the last eight months is causing sleepless nights for developers.

Besides cash crunch, what’s worrying real estate players is that with land prices going up, they are not being able to add to their land bank. In fact, many developers told SundayET that in the last four months, the number of land deals had dried up, with barely any land changing hands in this sector.

Industry sources, in fact, say that across all metros and tier II cities such as Mohali, Kundli (Sonepat), Jaipur, Lucknow, Indore, Surat and Cochin, there has been an increase in land prices. The situation is such that there are no buyers for any kind of land here. In fact, many developers feel they don’t want to lock up capital at this stage by buying land, as there is a holding cost involved in building land banks. Says Shravan Gupta, executive vice-chairman & MD, Emaar MGF: “There has been a significant rise in land prices in the last couple of years. The developers are finding it tough to get cheaper land so you will see that the number of land deals by developers have come down.”

In the last couple of years, land prices have escalated by 50% to 100%, depending on the location. In some places, prices have risen by as much as 200%. For developers, land is the main raw material and typically, they have made their money buying land cheap and building and selling homes on it after prices have tripled or quadrupled.

Organised Retail : Boom or Bust?

The research group, Images F&R Research, in their latest report titled “The India Retail Report 2009”, has projected that the Indian retail industry will grow by 36% in the next two years. The Indian retail sector, as per the report, is expected touch Rs 18,10,000 crore by 2010 from the present Rs 13,30,000 crore market (“Retail industry to touch Rs 18.1 lakh cr by ‘10: Report”, The Economic Times, 18 September 2008).

The overall retail market in India has been growing at a fast pace of around 10.8%. Within that, the organised segment in particular has grown at an even faster pace. In 2007, the modern retail segment grew at an astounding rate of 42.4%. According to the report, this segment of the retail sector is expected to grow even faster over the next three years. The expected high growth of this segment would thus result in doubling the share of the segment from the current 5.9% to about 13% by the year 2010. In absolute terms, the present Rs 78,300 market for organised retail is slated to reach Rs 2,30,000 crore by 2010 (The Economic Times, 18 September 2008).

The expected entry of major global players as well as Indian corporate houses into the segment is touted as one of the major reasons for the projected growth scenario. Projections of expected increase in consumption demand, on the other hand, is based on the assumptions of the economy’s growth at around 8-9% and hike in average salaries by about 15% in 2009.

The organised segment of the Indian retail sector is projected to grow in the next two-three years at a rate higher than 42.7% witnessed in the year 2007
Confirming the assumptions, the latest report by the Hong Kong-based HR Business Solutions (HRBS), forecasts a 16% pay increase on an average in India despite the global slowdown (“Salaries in India seen rising by 16% in 2009”, The Economic Times, 14 September 2008).

There are also reports of some companies planning to expand operations in the organised retail segment in the next few years. SSIPL Retail, the Indian franchisee of brands like Nike, Levis and Dockers, is planning to add around 150 new sales points across India. SSIPL is one of the largest lifestyle retailers in the country today. It has already applied to Securities and Exchange Board of India (SEBI) for permission to raise Rs 200-250 crore through a pre-IPO placement

Current ground realities of the modern retail sector, however, do not paint as rosy a picture. Harried by increasing losses, many new retailers are slowing expansion plans as well as cutting down on both the number of outlets and headcount. In some cases, some are even considering exiting the business altogether. Reliance Retail Ltd, for instance, has been making losses on most of its stores, particularly Reliance Fresh outlets. Opening more stores is almost akin to further adding to losses. According to Reliance officials, the company that had managed to break even last year is expected to post a loss of more than Rs 1,000 crore in fiscal 2009 (“A reality check for organized retailers as dream turns sour”, The Mint, 22 September 2008).

Most retailers have also sharply pared their initial expansion plans. Reliance Retail Ltd has managed to open only about half of their earlier revised plans for new stores. According to a retail analyst, Bharti Enterprises Ltd has so far added less than 10% of their original plans to open 100-odd stores. Others, like Indiabulls Retail Services Ltd has closed nearly 50% of its outlets and even deployed employees. HyperCity Retail has shut all the pilot stores in Jaipur inaugurated less than a year ago. So much so, that the company, which had earlier planned to open about 250 grocery stores by 2012, has abandoned the project completely

Souring Dreams Of The Modern Retail Sector

REI Agro Ltd, which had opened more than 200 grocery stores, 6Ten, has closed down dozens of stores in the recent past.

Oswal Group has downed shutters on its chain of 12 lingerie stores.

Ashok Piramal Group, based in Mumbai, was forced to sell Pyramid Retail due to mounting losses.

Along with cutting down on expansion plans, companies have been resorting to other cost cutting measures, including firing senior executives. According to Bijay Sahoo, president and chief people’s officer, Reliance Retail, the company has laid off 30 of the 50 expatriate executives hired at the time of its launch, in the last three months. Similarly, given that a megastore employs around 75-100 employees, Indiabulls Retail is likely to have fired 300-400 employees of the Indiabulls Megastores (“Indiabulls’ retail push unravels amid big losses”, The Mint, 6 September 2008; and The Mint, 22 September 2008).

Hard facts, therefore, reveal that expectations about the modern retail revolution haven’t quite become a reality in India yet. It is quite likely that future growth of the organised retail in the country too would fail to live up to the over-optimistic projections.

India’s real estate market undergoes change in todays global investment situation

India is one of the BRIC countries, along with Brazil, Russia and China, the four economies that are predicted to provide the most substantial economic growth in the world in the next few years. Add to this the fact that India is home to the largest company in the world (by numbers of people employed); has carved itself a niche in the IT services sector; and has the people and resources to continue growing, and it makes an attractive investment proposition.

Part of the reason that India has not made more of an impact on the international property scene is the fact that property ownership laws are far more restrictive than in most other countries. Whereas elsewhere it is often enough to set up a bank account and tax status in order to buy a property, in India you must be either a Non-Resident Indian (NRI) or a Person of Indian Origin (PIO) in order to buy.

The FERA (Foreign Exchange Regulations Act), 1973 states that those ‘who are not citizens of India (whether resident in India or not) and companies (other than banking companies) which are not incorporated under any law in force in India are required to obtain prior permission of Reserve Bank to acquire, hold, transfer or dispose of by sale, mortgage, lease, gift, settlement or otherwise any immovable property situated in India.’ In practical terms, this means that unless a buyer is resident in India, they must have the permission of the Reserve Bank of India (RBI).

The rights to buy property in India are reserved for certain groups that qualify, but for a foreign national is it illegal to own property unless they satisfy the residency requirement of 183 days in a financial year. Tourist visas last for 180 days, so it is also impossible to buy a property on a tourist visa.

Buyers who are able to find their way through the buying regulations have the option to buy along the 7,000km of coastline that has made India so popular with travellers since the 1960s, or to make an investment in one of the fast-growing cities that service the IT sector. While it can be argued that the major growth in New Delhi has already taken place, the ’second-tier’ cities of Bangalore, Chennai, Jaipur, Hyderabad and Mumbai are seeing huge growth.

By 2015 it is predicted that a further 2.9 million Indians will be employed in the IT services sector, the majority of whom should be earning a wage well above the average for the country. All of these newly-rich workers will need places to live in the cities, and this is fuelling the building boom in regional cities across India.

Capital cities witnessing price correction

Due to low liquidity of real estate and high mobility of investor capital, the capital cities are witnessing a price correction. Jaipur in particular has seen a fall of 20% in property prices. “The realty market in Jaipur has hit rock bottom as property prices have come down by 20% in the past one year. We were hoping the festive season to bail us out,” says Atmaram Gupta, a builder. Experts are also of the view that the situation is not going to change unless a big corporate investment comes to the market’s rescue.

“The hike in salary after the sixth pay commission will not have much impact in the market due to inflation. For, small investors already reeling under debts and with the rising price of home loan interest it is more difficult for them to think of new ventures,” says Sunil Jain, a member of Township Developer Association of Rajasthan With each passing day, it’s becoming more difficult to predict the future, he added.

UK Firm Forays Into The Indian Realty Sector

Millennium Spire Limited, an ‘Alternative Strategies Fund’ under the UK-based Millennium Global Umbrella, has entered the Indian realty sector unveiling its maiden platform for developments in the Indian market, Spire World. It is a platform that would drive development of mainstream green projects of Millennium Spire in the country. This has also marked the launch of the company’s first ‘Mainstream Green’ project in India, Spire Edge, a sprawling 1.6 million sq ft of scalable eco-office complex with an energy saving capacity of up to 30 percent, costing Rs 400 crore. The project is a joint venture between Millennium Spire and A.N. Buildwell, a company with over 25 years of experience in real estate development. The project would be located in the emerging IT hotspot, IMT Manesar along the Delhi-Jaipur highway.

LIC to Buy Land Worth Rs 2,000 cr

Life Insurance Corporation of India (LIC), which is among the largest property owners in India, is planning to acquire land worth Rs 2,000 crore this year to develop commercial and residential complexes.

This will be in addition to the Rs 1,100 crore it spent last year for purchasing lands across the country. The public sector insurance giant has identified Kolkata, Jaipur, Agra, Vishakhapatnam and Bangalore as possible cities where it may acquire land and develop it.

LIC had hired consultants, which had identified the growth centers in the country and based on the report, the company intends to invest in real estate. “We will evaluate the locations, which earn higher returns when we invest,” a company executive said.

The insurer is next only to Indian Railways in terms of property ownership in the country and, at present, it holds 1,708 properties in the country which are estimated to be worth around Rs 20,000 crore. In the eastern region alone, the life insurer owns 187 properties.

While a part of the real estate has been acquired by LIC in the last five decades of its existence, it also inherited a majority of the properties owned by it at the time of nationalization in 1956. Most of the inherited real estate is in prime location, typically in central business district in most cities, including the metros.

A bulk of the commercial complex developed by LIC is being used to earn rental income, company executives said.

In Kolkata, for instance, the state-owned company is developing around 700,000 square feet of commercial area opposite the Science City, LIC zonal manager R R Dash said.

The company acquired the five acre plot from the Kolkata Municipal Corporation for over Rs 276 crore through a bidding process and is working on a 50-storied commercial building that may be the tallest building in the eastern city. It has already short listed around 10 design consultants for the project that is estimated to cost around Rs 400 crore.

LIC Chief Engineer BK Banerjee said that during the last five years, the PSU’s rental income has increased four folds and during 2007-08, in the eastern zone it stood at Rs 22 crore.

“We expect that in the current fiscal the rental income would be close to Rs 30 crore in the Kolkata region. We would like to double this in the next two years,” Banerjee said.

IHC to spend $1 bn on buying Hotels

Indian Hospitality Corporation (IHC), a joint venture of Gordon House Hotels, Mars Restaurant and SkyGourmet Catering formed last year, plans to spend as much as $1 billion to acquire hotel groups and restaurant chains.

The company has hired Ravi Deol as chairman and chief executive of Mars Restaurants, the hotel and food services division of IHC, to initate acquisitions. Deol is the former managing director of Barista and ex-chief executive of FieldFresh Foods.

“We are looking to add 2,000 hotel rooms across 17 cities, including metros and towns such as Lucknow, Amrtisar, Raipur, Chandigarh among others. We may acquire hotel groups having 5-7 properties. We are also looking at acquiring restaurants or restaurant chains and then take them to the leadership position,” Deol told Business Standard.

All these acquisitions will be done by Mars Restaurant. “We may go for a rebranding of an existing hotel chain as and when we acquire them,” Deol said.

IHC has formed a $200-million ‘hospitality opportunity fund’ and $220 million worth of warrants to be converted into equity. The balance amount will be raised by selling equity or through borrowings, IHC executives said.

Mars Restaurants has brands Such as Tendulkars’ (a 50:50 joint venture with cricketer Sachin Tendulkar), China Joe, The Pizzeria, Dosa Diner among others, while Gordon House is a venture of Mars Restaurants and currently has three properties in Mumbai and Pune. The acquisitions will add to the portfolio of Gordon House hotels.

The Indian leisure and hospitality industry is set for high growth, according to the World Travel and Tourism Council. According to industry estimates, the Indian hotel and hospitality industry generates foreign exchange earnings of Rs 35,000 crore each year in addition to Rs 10,000-12,000 crore generated from Indian customers.

The market size of branded fast-food and dine-in restaurants is estimated at over Rs 600 crore. This segment is grwoing in double digits annually attracting players like IHC, industry experts said.

According to sources, popular north Indian restaurant chain Nirulas along with Clarks hotel chain may be on the radar of IHC for acquisition and subsequent re-branding.

On the air-catering front, IHC is looking to expand SkyGourmet to 11 cities from six metros at present. SkyGourment will soon set up its air catering facilities in Kochi, Jaipur and Amritsar among other cities.

“We will also expand our air catering services globally when Kingfisher goes international. We are already catering for Jet Airways, Kingfisher Airlines, Air India Express, Indian Airlines, Malaysian Airlines and Air France. We are looking at providing catering to Emirates and Lufthansa too,” Deol said. SkyGourmet was incorporated in 2002 and is headquartered in Mumbai and employs about 1,150 people.