Goldman forms $300m realty JV with Nitesh Estates

Wall-street leader Goldman Sachs is expected to invest $300 million (Rs 1,850 crore) in a proposed joint venture company promoted by listed property developer Nitesh Estates. The proposed JV will own and operate commercial real estate assets in India, people directly aware of the matter said.

As per reports, Goldman will hold 74% whereas Nitesh Estates will have 26% in the proposed entity which has plans to acquire rent-yielding office parks, shopping malls and luxury hotels, sources added. The impending deal is a proprietary investment from the Goldman Sachs balance sheet which has assets estimated at over $900 billion.

Meanwhile, with the proposed investment Goldman Sachs joins the list of marquee global investors like Blackstone, Brookfield Asset Management, Qatar Investment Authority and GIC of Singapore which have been buying into India's over 400-million-sqft commercial real estate market over the last few years.

Indian economy, dominated by service sector has opened a stable market for income-generating commercial real estate, giving investors a chance to list these assets through real estate investment trusts (REITs). These trusts are listed entities holding income-generating real estate assets from which earnings are distributed to shareholders.

SEBI recently came out with REIT guidelines last year to help real estate and infrastructure developers list their rent-yielding assets, and providing large and small stock market investors with an inflation-indexed product.

Goldman Sachs with the first-generation entrepreneurial company Nitesh Estates, will create a platform of assets worth almost $1 billion in the next few years. The still unnamed JV, on which a battery of top lawyers are completing due diligence, is expected to employ leverage financing of up to three times the equity commitment to go on a shopping spree.

The recent Union Budget provided some tax clarity on REITs even though certain structuring challenges still remain. Four Indian developers - Embassy Office Parks (Blackstone), K Raheja Corp, RMZ Offices (Qatar Investment Authority) and Prestige Group - are readying to list their assets, which could translate into at least a $20-billion REIT market in the next few years.

With such market potential, India would compete with or even surpass the Mexico's REIT market, often cited as a successful new world experiment, launched three years ago and with a current market value exceeding $18 billion. New York, London and Singapore have hogged the limelight in developed market.

Brookfield Asset Management, with real estate and infra assets worth over $200 billion globally, struck the single largest deal when it acquired the office parks of Unitech for $1 billion - $400 million in equity and $600 million in debt. Private equity giant Blackstone Group, too, struck office park acquisitions worth more than $1 billion in recent years in India.

Blackstone-supported Embassy Office Parks and Brookfield India, with 21 million sqft and 17 million sqft portfolios, are among the top five office landlords in the country. DLF tops the list with around 30 million sqft.

Though foreign investors have mostly invested in office buildings, that too specifically in 125-million-sqft IT SEZs until now, they are turning to the country's hotels and shopping malls which have remained undervalued or, in some cases, distressed assets for a while.

Cement sales likely to rise by 12% in March

Mumbai:

Sales of cement is likely to go up by 12% in March on demand from real estate and construction sectors , say industry executives and analysts. This would be the third consecutive growth in sales of the building material in a month.

Cement companies are scheduled to announce sales data on March 31.

 “There are no dampeners to growth,” said Shree Cement managing director Hari Mohan Bangur. “Demand is robust and the industry will see healthy growth in March. The growth momentum will continue as there are no dampening factors.”

The growing sales are reflective of a robust demand scenario and Indian companies are expanding capacities. India’s cement industry is targeted to go up to 300 million tonnes by December, from the current 240 million tonnes. Globally, India is the second-largest cement maker after China.
In January, all India cement sales were up 11%,while it grew 4.3% in February.

Large cement majors - Aditya Birla, Jaiprakash Associates, Dalmia, JK Lakshmi and Shree Cements, are expected to grow mainly due to higher consumption by the building industry. These five companies together account for almost half of Indias total capacity of 240 million tonnes.

“Our initial estimates show that March sales would be higher compared to the first two months of the current year,” said Rupesh Sankhe,a cement analyst with Angel Securities. Sales could go up by 12% in March.

On Tuesday, Prime Minister Manmohan Singh said the country needs to spend $1 trillion on roads, ports, power and other infrastructure between 2012 and 2017.

“A sharp sales increase likely in March would be due to inventory pile up of February month. There was a shortage of wagons last month when many companies unable to deliver the commodity to the retailers,” Mr Sankhe added.

Apart from a revival in real estate, sectoral analysts say sharp pick up in the consumption of the key building commodity, following the government’s thrust on infrastructure spending.

“Sales have increased and company expects a 15% jump in revenues in the current quarter due to the boom in infrastructure and real estate projects in Kolkata,” said Ashok Gutgutia,managing director of Burnpur Cement.

With the boost given by the government to various infrastructure projects,road networks and housing facilities, growth in cement consumption has been anticipated.

Ajit Motwani, cement analyst, Emkay Global says that demand will rise over the next one quarter as most firms are expanding current projects aggressively, due to increased construction activities from the Commonwealth Games, which is scheduled to be hosted in Delhi. Source: MagciBricks

HDFC to pick up 49 per cent stake in Godrej Estate Developers

ET; 22 Mar 2010, 1609 hrs IST, PTI

MUMBAI: Godrej Properties on Monday said it will transfer 49 per cent stake of its subsidiary Godrej Estate Developers to HDFC for Rs 45 crore. 

The company has entered into agreements with HDFC PMS to transfer 49 per cent of the equity share capital of its arm Godrej Estate Developers for a consideration of Rs 45 crore, Godrej Properties said in a filing to the Bombay Stock Exchange. 

Further, Godrej Properties has assigned the development rights of its project at Chandigarh to Godrej Estate. 

Shares of Godrej Properties were trading at Rs 499 on BSE, down 1.43 per cent from the previous close.

Parsvnath Developers Signing Deal to Sell off BEST Land at Kurla for Rs 307 crore

Parsvnath Developers, the New Delhi-based realtor, is close to signing a deal with a local developer for its BEST land at Kurla for Rs 307 crore, sources involved with the deal said. Parsvnath had received development rights in 2007 for the land, which included constructing of a fully-equipped bus depot, staff housing and buildings for commercial utilisation. Sources said that Mumbai based Kanakia Spaces is a close contender for the tract of land in Kurla and the final closure of the deal would happen by March-end.
Property consultants Jones Lang LaSalle are advisors to the deal. Vishal Doshi, the spokesperson of Kanakia Spaces, did not deny the development. A source involved with the deal told DNA, “Parsvnath is now assigning the new entrant the development rights, but not the entire part for the BEST bus depot. Parsvnath had received a component of free-sale floor space index for the development which will go to the new player.” Parsvnath spokesperson did not deny the development and said they would not like to comment on it. It had plans to raise Rs 242 crore by the end of the quarter through the private equity route which hasn’t happened yet.
Parsvnath had signed a deal with private equity fund Yatra Capital and Saffron India Real Estate Fund I to invest in the BEST project on April 21, 2008. Repeated attempts to reach Saffron Asset advisors remained unsuccessful. Yatra Capital’s non-executive director, David Hunter, had told DNA last year, “I have read that Parsvnath has difficulty but that’s not our problem. We are reviewing the project so that we can look at correct timing of participation. It’s under review by Saffron. A minimal amount has gone for the project.”
Parsvnath was awarded the development rights for the land under a tender process for the 30,820 square metres in Kurla. Parsvnath’s subsidiary, Jarul Promoters and Developers, was undertaking the project. Parsvnath and Jarul had entered into agreements with Yatra Capital Ltd and SIREF I whereby the funds were to each hold a 15% equity stake in Jarul, on a fully diluted basis.
For the purpose of acquiring this stake, the funds were to make an investment of Rs 186 crore, thereby valuing the BEST project at Rs 620 crore. In August 2007 Parsvnath had bagged redevelopment project from BEST for Mahim bus terminus, with a developable area of 40,000 sq ft.
The company has submitted a letter for surrender and expects to receive Rs 75 crore from it. An analyst said Parsvnath does not have money to develop these projects and the deal value for the BEST project is coming at Rs 11,000 per square feet.

Three in race for developing Bandra prime property

Supriya Verma Mishra, ET Bureau

Three Maharashtra-based developers — DB Realty, Ackruti City and Pune-based Kakade group — are ahead in the race for one of the biggest redevelopment projects in the state, which will release 10 million sq ft residential space in Bandra east, a popular Mumbai suburb. 

The area currently houses a government employees colony spread across 96 acres. After redevelopment, around 30 acres would be used to relocate the existing occupants and the balance 60 acres would be available for various other purposes, including commercial. For DB Realty, the project would add around 5-6 million sq ft of saleable land and between Rs 4,500 crore and Rs 5,000 crore to its topline. 

The state cabinet sub-committee on infrastructure projects, headed by chief minister Ashok Chavan, gave a nod to the project a few weeks ago. But with the state legislature currently in session, the government officials declined to comment on the subsequent decision on selection of the developer. 

The proximity of the project to Bandra-Kurla Complex, the most sought-after central business district, will enhance the project’s value in the residential segment. Currently, Bandra (east) commands Rs 20,000-25,000 per sq ft for luxury apartments while residential rates hover around Rs 14,000 per sq ft. The rates for office space at Bandra-Kurla Complex are around Rs 225- Rs 275 per sq ft. 

Anuj Puri, country head of the property broking firm Jones Lang LaSalle Meghraj, said: “Though there is demand in that part of the city, if such a huge supply comes up at one go, it could have some downward impact on prices. However, it is still too early to say anything, as the project would take time to come up.” 

However, a noteworthy point is the way the whole process has taken place. It was only recently that the state government had decided to opt for redevelopment of the project. How the entire bidding process was completed within a short span of time is difficult to comprehend. 

Thanks to the handling of the bidding process, there’s a perception that the state government has not been offering a level-playing field to all builders. “The practice of keeping matters ambiguous reminds one of the bidding process for Mantralaya redevelopment,” said an industry source.

Unitech Shifts Focus on Mumbai

Unitech Ltd, the second-largest real estate developer in the country, along with its joint venture partners in Mumbai, is looking to develop 4-5 million square feet (msf) of properties in the city from the next fiscal, according to a source familiar with the development. The developer, once heavily relying on luxury projects in the National Capital Region, has shifted focus on developing Mumbai’s slum rehabilitation projects to push up its operating margins.

The company is expecting about 20-25% of its total sales to come from Mumbai by the fiscal 2012. Unitech spokesperson declined to comment on the developments. The New Delhi-based developer has already invested Rs 850 crore in two joint ventures, Shivalik Ventures and Unitech-Omkar, and would further invest Rs 150-200 crore as the development progresses. Going forward, the JVs are expected to be self funded.

Unitech has obtained Letters of Intent (LoI) for 8 msf in Mumbai, up from the last year’s 5 msf. Its slum rehabilitation project in the city covers more than 60,000 families. Construction is currently on for nine projects and Unitech is looking to sell at least 6 msf next fiscal. It would pump in Rs 1,000 crore towards construction costs during the period. In a bid to get a large quantum of cash upfront for construction activities, the developer is looking to pre-launch project at hefty discounts to attract demand and save up on higher borrowing costs.

Recently, Unitech pre-launched and sold around 2 million sq ft from one of its projects in Worli at a massive 36% discount on the prevailing market rates. Unitech’s local partners in Mumbai will help it in acquiring, clearing and rehabilitating slums, while Unitech will aid the financing, project management and marketing part of the business. Unitech’s current land bank in Mumbai is over 320 acres with overall development potential of 35-40 msf. It is expecting to maintain margins in the housing segment at a healthy range of 40-45%. The company is expecting gross margins of 67% from the Worli project compared with 51% and 57% from Noida and Gurgaon, respectively.

Birla to fight wadia on Worli land makeover

B K Birla’s company had decided to spend Rs 625 crore on the first phase of Century Mill’s redevelopment plan in Mumbai.

Basant Kumar Birla, the 89-year-old patriarch of the Birla family, is ready to fight with Wadia Group chief Nusli Wadia for 10 acres of land in Mumbai’s Worli suburb.

Over a century ago, Nowrosjee Wadia, great-grandfather of Nusli Wadia, gave 10 acres of his Worli land to the Birla-owned Century Textile Mill. The mill land was given on a 999-year lease for a monthly rent of Rs 375. Now, Nusli Wadia who inherited the vast property in 1996, wants it back.

The land leased by Wadia adjoins a large chunk of freehold land owned by the Birlas. The Century Textile Mill was set up on the premises formed by the combined land. The mill operated till about 2005, when the state granted permission to close the defunct mill.

“We want to do real estate development on the land. We have 40 acres, of which Wadias are contesting 10 acres. They have moved court, so we will fight it legally,” said Basant Kumar Birla.

The Wadia Group could not be reached. Wadia, as the sole executor of his father’s will and the administrator of the property, has stated in his suit before the small causes court that the Birlas had breached the lease deed conditions and must be evicted.

The B K Birla Group, on the other hand, has filed an originating summons in the Bombay High Court, asking the court to interpret the lease deed and its conditions. It wants to know if it can redevelop the land for commercial purposes.

B K Birla’s company had decided to spend Rs 625 crore on the first phase of Century Mill’s land development in Mumbai. This would include development of a commercial complex and rehabilitation of around 850 workers. Currently, the company is in the process of demolishing the old buildings and was expected to start construction work on the mill land soon.

It plans to build a hotel and a commercial complex for information technology (IT) and IT-enabled service companies. It was to be developed in three phases, the first one comprising a commercial complex and rehabilitation of around 850 workers.

According to the succession plan of B K Birla, Century Textiles is expected to come into the fold of Kumar Mangalam Birla, chairman of the Aditya Birla Group.

The stock of Century Textiles & Industries was up by two per cent, to Rs 519 a share on the Bombay Stock Exchange of Tuesday. The Sensex, the benchmark index of the exchange was up by 1.3 per cent to 17,383. Source: Neytri

Muthoot to set up home loan subsidiary

Mumbai:

Kerala-based Muthoot Pappachan Group is all set to form a separate subsidiary in the next fiscal for housing finance, which plans to invest around Rs 100 crore over by 2012.
The group, however, has dropped its earlier plan to apply for a banking licence. The new venture Muthoot Housing Finance would be set up as a wholly-owned subsidiary of Muthoot Fin Corp. The new entity would primarily target the affordable housing segment and aim to disburse small-ticket loans up to Rs 6 lakh.

Recovery in realty

15 Mar 2010 12:16 AM PDT

Delhi:

Residential markets across major cities of India have seen significant appreciation in values towards the close of 2009. This trend is most prominent in NCR and Mumbai, the two key residential markets in India, where values in Oct-Dec 2009 appreciated, compared to the same period the year before, says Cushman and Wakefield in a report.

The report said that recovery in NCR and Mumbai is a definite precursor to the expected trends in 2010. However, it would be premature, the report adds, to predict a bounce-back for the entire sector. The other markets which are still witnessing some correction are expected to stabilize only in the next 3-6 months. These are expected to see positive signs of recovery by the middle of this year, when values across the board would stabilise but will remain within acceptable range.

The average increase in capital values in various micro-markets in these two metro areas has been in the range of 3% to 25% over the previous year, the report shows (see chart). Most micro-markets in these two cities have recorded stable to appreciating capital values over the last quarter as well.

NCR and Mumbai have shown a faster recovery than other cities due to the fact that these are high-demand markets, both from end users and investors, who were holding back their requirements as a result of economic slowdown , which created a kind of uncertainty in the job markets. The best outcome of the slowdown is the emergence of affordable housing in the country.

At the same time, the strong recovery in the economy led to sharp upward correction in the capital values for mid-ranged housing due to the quantum of demand and affordability.

Certain broad trends that were noticed across cities were that peripheral and the suburban markets witnessed the highest correction but were also one of the first markets to bounce back, C&W says. Another shift in the trend is the rise in demands for properties under construction.

The report said, there was a clear shift towards readyto-move-in properties during the beginning of the year, when there was uncertainty on the capability of a developer to complete a project. But that has receded now resulting in a rise in risk appetite for properties under construction.

In the NCR region, demand for affordable housing in the range of Rs 20 lakh to Rs 40 lakh could be understood from the fact that a number of projects completely sold out within a couple of days of their launches. Recently, in Noida, Supertech , which launched apartments for Rs 9.75 lakh, (this is the first project in NCR for sub-Rs 10 lakh) could sell around 500 apartments in a couple of days.

The new trend has led to increase in the volume of transactions. Supertech CMD, R K Arora, says that the developers have now shifted to high-volume business from high margin ones. However, he also pointed out that this became possible because of the relaxation in the density norms (number of apartments allowed to be constructed on a given area). Therefore, the construction activities are set to rise in 2010. Source: MagicBrick

275-metre ritzy tower to come up in Prabhadevi

15 Mar 2010, 1422 hrs IST, Alka Shukla, MUMBAI MIRROR
Have you ever wondered what it would feel like living at the height of Eiffel Tower’s highest observation deck, which stands at 276 metres? If 
you have Rs 50 crore in your kitty, you may be a proud owner of just one such celestial home in Mumbai.

For, Prabhadevi is all set to witness the rise of a 275-metre tower on a one-and-a-half acre plot. Touted to be one of the most expensive upcoming apartments in Mumbai, the tower will have villa-like apartments sprawling across 12,500 sq ft and 7,500 sq ft.

With an average height of three metres per floor for residential complexes, 275 metres would come to 90-odd floors. But the skyscraper in Prabhadevi will have only 24 apartments.

According to Lalit Kumar Jain of Kumar Urban Development, which is building this property, this is to give each floor a feel of exclusivity. “This is an extremely high-end project with the sea link in view. We decided to maintain a distance of 50 feet between two floors to create an air of exclusivity,” he said.

Each 12,500 sq ft apartment will be a triplex with a 4,000 sq ft terrace on the first level that will have a mini putting range leading to a living room and a guest bedroom. The other two levels will have a living room, space for a gymnasium, more master bedrooms and family rooms. Each apartment will also have an individual parking space with a capacity of around five cars on the apartment’s first level with two special lifts for cars.

The 7,500 sq ft apartments will be duplexes. “The 7,500 sq ft apartments at the lower levels would cost around Rs 20 crore. But the price obviously increases as you go higher, with the most expensive apartments falling in the price range of around Rs 50 crore,” said an industry source. The lowest apartment will be at the height of 18 meters.

Though the city probably does not have any other luxury triplexes launched yet, high-end duplexes are certainly on the rise. Orbit Corp, for instance, is selling 4,500 sq ft bungalows at Napean Sea Road for around Rs 25-30 crore.

“We had earlier planned villas of 12,000 sq ft, but later changed it to independent bungalows as we think there is more demand,” says Pujit Aggarwal, Managing Director of Orbit Corp. Other high-end duplexes on Napean Sea Road include Lotus Villas, the cost of which is under wraps.

In Lower Parel, 5,000-6,000 sq ft duplexes at Lodha Bellissimo are going for Rs 20-25 crore. On the other hand, two 60-storey Indiabulls towers – Sky and Sky Suites — that come with a combination of smaller apartments, duplexes and penthouses are commanding anywhere between Rs 7.5 to 25 crore, depending on the size.

“Sky is sold out while Sky Suites is 45 per cent booked. It’s the value being created that is important. I strongly believe the real estate market has bounced back,” said Gagan Banga, CEO, Indiabulls.

Recovery in Realty

14 Mar 2010, 1134 hrs IST, Prabhakar Sinha, Source: ET Bureau

Residential markets across major cities of India have seen significant appreciation in values towards the close of 2009. This trend is most prominent in NCR and Mumbai, the two key residential markets in India, where values in Oct-Dec 2009 appreciated, compared to the same period the year before, says Cushman and Wakefield in a report. 

The report said that recovery in NCR and Mumbai is a definite precursor to the expected trends in 2010. However, it would be premature, the report adds, to predict a bounce-back for the entire sector. The other markets which are still witnessing some correction are expected to stabilize only in the next 3-6 months. These are expected to see positive signs of recovery by the middle of this year, when values across the board would stabilise but will remain within acceptable range. 

The average increase in capital values in various micro-markets in these two metro areas has been in the range of 3% to 25% over the previous year, the report shows (see chart). Most micro-markets in these two cities have recorded stable to appreciating capital values over the last quarter as well. 

NCR and Mumbai have shown a faster recovery than other cities due to the fact that these are high-demand markets, both from end users and investors, who were holding back their requirements as a result of economic slowdown , which created a kind of uncertainty in the job markets. The best outcome of the slowdown is the emergence of affordable housing in the country. 

At the same time, the strong recovery in the economy led to sharp upward correction in the capital values for mid-ranged housing due to the quantum of demand and affordability. 

Certain broad trends that were noticed across cities were that peripheral and the suburban markets witnessed the highest correction but were also one of the first markets to bounce back, C&W says. Another shift in the trend is the rise in demands for properties under construction. 

The report said, there was a clear shift towards readyto-move-in properties during the beginning of the year, when there was uncertainty on the capability of a developer to complete a project. But that has receded now resulting in a rise in risk appetite for properties under construction. 

In the NCR region, demand for affordable housing in the range of Rs 20 lakh to Rs 40 lakh could be understood from the fact that a number of projects completely sold out within a couple of days of their launches. Recently, in Noida, Supertech , which launched apartments for Rs 9.75 lakh, (this is the first project in NCR for sub-Rs 10 lakh) could sell around 500 apartments in a couple of days. 

The new trend has led to increase in the volume of transactions. Supertech CMD, R K Arora, says that the developers have now shifted to high-volume business from high margin ones. However, he also pointed out that this became possible because of the relaxation in the density norms (number of apartments allowed to be constructed on a given area). Therefore, the construction activities are set to rise in 2010. 

Due to focus by developers in 2006 and 2007 on luxury housing, high-end properties in most cities suffered a steep correction when slowdown impacted the sector, as compared to mid-end properties. This left a large unmet demand in the mid-end market. As favourable conditions have come back, the sector has witnessed resurgence of demand. 

However, for the trend to continue, the government should not put extra burden on it. The budget announcement of 10.3% service tax on the sale of apartments before completion is expected to have the highest impact in the real estate market. This may hamper the attractiveness of the projects under construction. 

The scope of service tax is extended to the construction of complex service, wherein the developer/builder is likely to pay service tax on construction services while the project is under construction. The levy would cover all construction of complex service or commercial or industrial construction services resulting in higher cost of properties under construction. 

The service tax of 10.3% will be levied and also be charged on additional services provided in residential developments such as preferential location charges, internal or external development charges, etc. It is estimated that service tax of 10.3% will be levied on approximately 33% of the value of an apartment, which is likely to escalate the price of real estate and put further pressure on the housing affordability. 

In the short term, the report says, real estate prices across most cities are expected to continue to strengthen. However, it also warns that a significant increase could result in demand drying up and lead to stagnation or further correction. Rental values are expected to remain stagnant, especially in the luxury/high-end segment with certain mid-end properties witnessing buoyancy.

Developers are likely to remain cautious and launch new projects at attractive price points, the report says. Due to prevalent demand for mid-income housing, most developers are expected to focus on new projects in this category, over short- to medium-term, with very few niche projects in luxury category with strong differentiation factors.

DLF changes tack in Mumbai realty market

14 Mar 2010, 0334 hrs IST, Mayur Shetty, ET Bureau

MUMBAI: In a move that could add 5-million sq ft to Mumbai’s high-end residential market, the country’s largest developer, DLF, has decided to change the end use of its Lower Parel property. 

DLF had acquired the defunct mill land in Lower Parel in an auction conducted by state-owned National Textile Corporation in 2005. It had bid Rs 702 crore for a 17.5 acre plot — a record price at that point — while stepping into the Mumbai market. But while buyers of some of the other plots in the auction have already completed their construction, DLF has chosen to wait and watch. 

Industry officials feel that switching the project from a commercial complex to residential makes sense, given the oversupply in office space. While residential rates have firmed up in the city, lease rentals as well as prices are still way below the peak levels. 

Recently in a Rs 650-crore deal, Axis Bank purchased nearly 4 lakh sq ft of office space developed by Bombay Dyeing in its erstwhile Mill land in Lower Parel. The bank’s acquisition price works out to nearly Rs 16,000 per sq ft, which is significantly lower than Rs 20,000-Rs 25,000 being quoted for top-end residential properties in the same locality. 

When contacted, a DLF spokesperson refused to comment on the matter. 

“The commercial real estate market is facing oversupply. Buyers are also concerned that as the area develops there will be more traffic congestion in the Tusli Pipe road (the arterial road for mill lands in Lower Parel),” said an official with HDFC Realty, which brokered the Axis Bank deal and another Rs 200-crore transaction by SBI Life. 

Several builders were banking on the commercial property market, as municipal authorities grant higher development rights for properties earmarked for hospitality and information technology businesses. “Many developers have gone for commercial property because they can get higher FSI (floor space index). Also, they felt these real estate assets could generate a regular rental income,” said a leading broker. 

However, DLF is not the only builder to change a commercial project into residential. Last year, Mumbai-based Ackruti decided to build a residential building in a property set aside for a mall at Andheri in North-western Mumbai. Besides supply of fresh commercial real estate in Lower Parel, several million sq ft of office premises are expected to come up for occupation in the Andheri-Kurla Road. HSBC in a recent report on commercial real estate had said office rentals have fallen by 39% from their peak levels. 

MMRDA to build trans harbour link

13 Mar 2010 11:50 PM PST; Mumbai

The Mumbai Metropolitan Region Development Authority (MMRDA) has finally wrested an ambitious Mumbai Trans Harbour Link (MTHL) project from another state agency MSRDC.

Chief minister Ashok Chavan, who heads the MMRDA, gave consent to the authority to build the trans harbour link though in a revised form. MMRDA officials said global tenders for the project would now be placed within six months after the current detailed project report (DPR) is modified and financial structure is worked out.

Earlier, the project, proposed first in the early 70s, was the baby of MSRDC which has built the Mumbai Pune Expressway and Bandra-Worli Sea Link. But a serious financial crunch weakened MSRDC’s claim and allowed the cash-rich MMRDA to make a bid for one of Mumbai’s costliest infrastructure projects.

In the revised form, the MTHL will be extended right up to Khopoli and directly linked to the Mumbai-Pune Expressway. The MSRDC had proposed a 22-km-long sixlane bridge from Sewri in South Mumbai to Nhawa in Navi Mumbai at an estimated cost of Rs 7600 crore.

In its proposal, the MMRDA added another two lanes and also a Metro rail corridor parallel to the sea link, thus scaling up the project cost to around Rs 8300 crore. Even this estimate is set to see a sharp cost escalation as the MMRDA plans to add a 28-km-long road to the bridge between Nhawa and Khopoli. Source: MagicBrick

BPTP plans Rs 1,500 cr IPO in early 2010-11

Press Trust Of India / Mumbai March 11, 2010, 1:00 IST
Real estate developer BPTP today said it plans to raise around Rs 1,500 crore through an initial public offer (IPO) by early 2010-11. “We have applied to the Securities and Exchange Board of India (Sebi) for approval. We hope to launch our IPO of Rs 1,500 crore early next fiscal,” BPTP Managing Director Kabul Chawla said.

The company, which has a net worth of Rs 1,600 crore, is hoping to clock a top line of Rs 1,000 crore and profit after tax of Rs 200 crore in FY10.

The company plans to pre-pay its Rs 325 crore debt from the issue proceeds, while Rs 500 crore has been earmarked for government use (conversion of land), he said.

The realty major has a consolidated debt of Rs 900 crore.

In 2011, Rs 150 crore will come up for repayment and the year after Rs 600 crore, Chawla said, adding “though we are not stressed in terms of debt, we plan to pre-pay Rs 325 crore out of the issue proceeds”.

JP Morgan and SSKI are the book running lead managers (BRLMs) to the issue.

The company, which is primarily into mid-housing development, also has four special economic zone (SEZ) projects but, is currently going slow on them.

“Given prevailing market conditions, we have deferred activity on our SEZs so as not to over leverage our balance sheet,” Chawla said.

Going forward, BPTP might explore the option of converting these SEZs into residential use, Chawla said.

“We have the option of converting our four IT SEZs, at Noida, Greater Noida, Gurgaon and Faridabad, for residential purposes. We might exercise this option if the market conditions so demand,” he said.

On its focus on the national capital region (NCR) market Chawla said: “There is tremendous potential here and we intend to continue focussing on this region.”

Besides NCR, the company has one project in Hyderabad spread over 10 acres, which it plans to take up at an appropriate time.

BPTP has a land bank of 1,860 acres. It has 37 million sq ft of ongoing projects and has sold 31 million sq ft, worth Rs 5,500 crore, so far. Its receivables stand at Rs 2,500 crore.

JP Morgan and Citi currently hold 12 per cent stake in the company while, Merrill Lynch has 49 per cent stake in one of its Special Purpose Vehicle (SPV) — Vital.

At present, Citi Properties holds 50 per cent stake in its Faridabad SEZ SPV, 17 per cent in its Noida SEZ SPV and 43 per cent in its Greater Noida SEZ SPV.

Higher demand lures cement cos to build presence in eastern India

March 10, 2010 – 11:42 am; Mumbai

Lured by a higher demand in the country’s eastern region, leading cement players in India’s other parts such as ACC, Dalmia and Binani
Cements are expanding their presence in West Bengal, Jharkhand, Bihar, Chhattisgarh and Orissa.

India’s eastern markets have recorded a 24% growth in demand in April-December, more than double of the national average of 11%. This spurt in demand may pull up cement prices in the region, while other parts of the country are expected to face over-supply this year, said sectoral analysts.

In fact, cement prices have gone up by an unprecedented Rs 13 a bag, post the Budget on February 26, in eastern India.

“While cement prices in eastern India will remain stable, it would fall in most other places,” said RP Gupta, chairman and managing director of Orissa-based Shiva Cements.

“We are expecting a 15% jump in revenues in the current quarter due to the boom in infrastructure and real estate projects in the east, especially in Kolkata,” said Ashok Gutgutia, managing director of Burnpur Cement.

ACC, India’s largest cement maker, has added one million tonne capacity at Bargarh plant in Orissa. The expansion, which was completed three months ago, raised the production capacity to 2.1 million tonne. ACC has also acquired a 14% stake in a coal block in West Bengal, to supply fuel to this unit.

Dalmia Cement (Bharat), second-largest player in south, has increased its stake in OCL last month to 45.4% “to get an access to the high growth in eastern market”, the company’s managing director Puneet Dalmia. “With this strategic investment, the company’s profitability is likely to improve,” he added. Mumbai-based Binani Cement, which mainly supplies to Rajasthan, Gujarat and Delhi, is planning to set up a plant in eastern region.

The companies based in the eastern region are also scaling up their capacity. For example, Asansol-based Burnpur Cement is setting up a plant in Bihar, while Shiva Cements is quadrupling capacity to 2.3 million tonne.

The total installed capacity of the Indian cement industry, the world’s second-fastest growing market after China, is 240 million tonne. The cement industry is growing at 9-11% for the past few years. It is widely-believed that the growth would be around 9% over next few years. China is growing at over 14% annually.

Binani Cement ventures into commercial realty

March 10, 2010 – 1:17 pm, Mumbai

Binani Cement, the flagship company of the Binani Group, is getting into commercial real estate development in order to cash in on its idle land and to reduce dependence on the cyclical nature of the cement business.

The company has decided to develop an information technology park jointly with a partner on 56 acres it has at Thane in Mumbai.

The construction work will start in a few months and the project is likely to be completed by next year, said a person close to the matter. Source: Magic brick

IPO-bound realtors sitting on fence despite SEBI nod

Mumbai:

Less than a couple of months ago, real estate firms were in a tearing hurry to file their initial public offering (IPO) prospectus with the Securities and Exchange Board of India (SEBI).

And now, many firms are unsure if they should hit the market right away, even though they have got the ‘green signal’ from the regulator. While key indices have recouped their losses suffered in January, investors remain wary of realty firms.

The poor performance of the recent offerings in the sector is the main reason, while liquidity concerns because of the year-end factor is also keeping IPObound companies in check, say market watchers.

“We have received the required clearances from Sebi and are looking forward to coming out with our IPO in the near future,” said Abhishek Lodha, MD, Lodha Developers, without specifying a deadline.

Lodha Developers, Ambience, Emaar MGF and Nitesh Estates are the leading companies that are yet to open their books for subscription despite getting the blessings of SEBI.

Together, these four companies are looking to mop up around Rs 8,000 crore through their IPOs.

“Primarily, the market sentiment towards realty has not been very encouraging. Hence, a lot of players are waiting,” said S Subramanian, head of investment banking, Enam Securities.

In the past six months, the ET Realty index is down 22% compared to a 6% rise in the 30-share Sensex, reflecting investor apathy towards property developers.

“There is an investor fatigue for realty issues, because of an abundance of forthcoming issues, and also their performance on bourses has been lacklustre,” says S Sriniwasan, CEO, Kotak Realty Fund.

Recent listings of realty and infrastructure companies like DB Realty, Vascon and Godrej Properties have not been encouraging, with brokers attributing the downtrend to the issues being overpriced.

“Promoters are not ready to budge from the benchmark valuation of their companies and have been valuing their companies exorbitantly. Such unrealistic assumptions create a mismatch between the way an analyst values a realty company and creates a 30-40% inflationary element,” says market expert SP Tulsian.

Also, the government’s divestment drive has sucked out a lot of liquidity from the system. The latest public sector offering, NMDC, is aiming to raise between Rs 9,500-11,000 crore from the primary market. Moreover, as the financial year ends in March, most fund houses have exhausted their investment limits.

So, it appears that most realty companies may decide to open their issues in April. And as the IPO sanction is valid for one year, there are no regulatory compulsions. All that needs to be done is to update the quarterly accounts, said the promoter of a real estate firm which is awaiting Sebi approval. Source: MagicBrick