Exorbitant hotel room rates in Bangalore have forced leisure as well as business travelers to break their bank. No branded hotel in Bangalore is charging less than $350-500 for a night stay. With the prevailing scenario, the city becomes one of the most expensive places in the world for those looking for a hotel room.
Supply constraint is believed to be the major factor responsible for such a situation. Indeed, many rooms in Bangalore are booked till February 2008, say the hoteliers. With Bangalore fast emerging as a business hub, demand for hotel rooms is believed to be outstripping the supply. To save on money, travelers are looking forward to rooms in unbranded category such as serviced apartments and standalone boutique.
The branded hotel category is slowing loosing out to unbranded ones which are emerging as the best savior for travelers. Occupancy of branded hotels has dropped by nearly 3% in the past 1 year.
Bangalore sees the highest number of business travelers visiting India every year. Big IT companies such as Infosys and Wipro have set up their own guest rooms in the city to prevent non-availability of rooms.
Average Room Rates (ARR) in branded hotel category in India has increased by 280% in the past three years, says HVS International. There are around 1, 09,000 hotel rooms in the branded segment in India compared to 90,000 in London and 75,000 in New York. With India hospitality sector to see an investment of $2 billion in the next three years, the ARRs are likely to soften.
[01 Aug 07]
Govt. Allows Foreign VCFs, PE Funds to Invest in Indian Realty
Foreign investors have once again lined up to bring big money into booming Indian property market, with the government relaxing the norms. Major players including the Citigroup, Deutsche Bank, -The Carlyle Group and Blackstone, among others have finalized half a dozen deals worth $1 billion.
All the niggling doubts related to investments by foreign institutional investors (FIIs), foreign venture capital funds (VCFs) and private equity players have been cleared through a clarification issued by the department of industrial policy & promotion (DIPP), under the ministry of commerce and industry.
The clarification settled the issues between the finance and commerce ministries and finance sector regulators. Foreign investors now require to wait for three years before exiting the company completely. And, they will have to lock-in a minimum of $5 million, in case of a joint venture with an Indian real estate player. It would be $10 million if it is a wholly owned subsidiary of a foreign investor.
The prevailing norms for foreign investors regarding the lock in period are also applicable to property market. Therefore, FIIs and private equity investors will have a minimum lock in period of 1 year, if the investment occurs during the preceding 12 months before the IPO date.
This allows a multitude of foreign investors to operate at the entity level. It is completely opposite of the earlier scenario when equity investments were project specific.
A number of property developers such as Hiranandanis, Lodha Developers, Runwal Group, Paranjpe Schemes, and Kolte Patil Developers are planning to raise money through IPO and are currently holding discussions with foreign investors.
Prior, all were perplexed regarding FIIs’ pre IPO investments in real estate companies. With the clarification issued by the government, foreign VCFs, and PE funds can invest in realty firms with a lock in period of minimum 1 year. The new norms will certainly push the investments in Indian real estate sector, says Akhil Hirani, managing partner of Majmudar & Co.
[01 Aug 07]
Wadia Gets Into Property Development
The Wadias have finally decided to go for mega ventures in real estate development. The Group owns large chunks of land in different parts of Mumbai, and is now considering building a 36 storey skyscraper which boasts of featuring exclusive luxury apartments.
The proposed project will be developed in a joint collaboration with a global architect. Interestingly, 60 per cent of the apartments have been already booked and the rest would be sold off by end of the year. The project is slated for completion in 1-2 years.
The Group is also taking up the construction of shopping malls and commercial offices at Dadar and Worli. These projects are part of initial development plans at both the sites on its Spring Mill land.
The Wadias are garnering huge investments to execute their big real estate projects. Group flagships Bombay Dyeing is planning to raise Rs 1,000 crore as part of its capital expenditure programme. Of this, a major part will be used for property development.
Mumbai property market continues to avail the benefits of Foreign Direct Investments (FDI). A 10 per cent growth is likely to continue in the coming year. However, an increase of 30 per cent in unit prices and rents in Mumbai led to the overheating of the city’s real estate sector, says the data showcased in Bombay Dyeing annual report.
[31 Jul 07]
Parsvnath to Invest $4 bn to Develop Over 100 Projects
Parsvnath Developers, a prominent name in Indian real estate, plans to invest over $4 billion over the next 5 years. The company will translate its large land bank across India into more than 100 real estate projects.
Parsvnath’s current land bank constitutes a saleable area of over 153 million sq ft. and the company holds projects in all verticals including commercial, residential, retail, hospitality, IT Parks, and SEZs.
The project cost of the company’s current land bank is over $5 billion. Of this, $1 billion has already been spent on buying land. The investments will come through debt and internal accruals, informs Pradeep Jain, Chairman, Parsvnath Developers.
Construction work on 66 million sq ft. of area is already in progress. The average cost of construction is evaluated to be Rs 1,115 per sq ft.
In addition to hotel projects, Parsvnath Developers will also develop 114 multiplex screens under its commercial projects.
About 26 million sq ft. land will be used for the construction of four IT/ITes SEZs. The company has already got a nod for the same. A new subsidiary has been formed for handling the development of SEZs.
Parsvnath Developers is also looking forward to add an aggregate salable area of around 170 million sq ft by December for seven other SEZs.
[31 Jul 07]
More Affordable Housing in Haryana
Haryana Housing Board has prepared a plan to develop economical flats in the NCR cities of Haryana. The move will made residential properties in Gurgaon and its adjoining areas more affordable.
The Board will buy its own land. These flats will be built across the state, says SP Gupta, Chief Administrator, Housing Board.
According to the drafted plan, 2,000 flats each will be built over 60 acres of land in Gurgaon and Manesar. 200 more such flats will come up over an area of 10 acres in Farukh Nagar and Pataudi.
The government will be constructing 50,000 houses for the economically weaker section of society. HUDA has been asked to hand over the land to people for the same purpose.
Around 422 EWS houses will be developed in Gurgaon soon, adds Gupta. The housing board will also come up with more multi storeyed deluxe houses in the lines of 256 flats under construction in Sector 43, Gurgaon.
[02 Aug 07]
Annual Mixed Land Use Charges May Push Property Prices
THE Government's decision to raise land use conversion charges may push property prices further. It is done to generate additional resources from land to fund construction of houses for poor.
The current conversion rates are not enough to represent the fair market value. States would follow the Delhi’s model of levying development charge on mixed land use. This will enable the authorities to carry out their mission of providing housing facilities to poor.
Although, using land for the commercial purpose is not wrong but the conversion rates should be based on existing market rates, says a senior official.
Delhi has recently released an annual development charge for running shops from residential complexes. According to the Urban Development Ministry, such a tax will serve two basic purposes.
Apart from helping businessmen to operate from the convenience of their homes, it would also serve as an addition source of income for the government. Mixed Land use is allowed all over the world, provided the government gets its tax.
[31 Jul 07]
Buyers Surrender to Concept of Second Homes
Owing a second home in a place far away from the maddening crowd is no more restricted to wealthy people. With the changing scenario, the middle and upper middle level management can also buy such homes as feasible getaway investments.
The new entrepreneurial class is primarily responsible for this major change in mindset. Nowadays, second homes have become another investment option for a number of individuals. Also, owing a farmhouse, a beach cottage is still a status symbol for many.
The trend of owing second homes is booming in places like Goa, Pune, Khandala, Lonavla, Alibagh. Allured by the beauty of hill stations, people love to buy second homes in locations such as Shimla, Dehradun, Ooty, and Mussoorie.
Taking a cue for the opportunity, builders are fast coming up with a multitude of real estate projects to cater to the increasing demand for second homes. OSB Group owns Kot Farms in Kotputti which promises comfort as well as style.
The demand for second homes is shooting up as never before. For that reason, we have designed a number of exclusive offers to attract buyers. They can use their property to rent out like a resort and earn good return for their investment.
Pune, Talegaon, Lonavla, and Jodhpur are also seeing several buyers. Real estate companies dealing in second homes are cashing in on the prospects and have good options in store.
[31 Jul 07]
Ludhiana Makes Strides in Realty
Hit by the mall culture, Ludhiana is soon to pave ways for lifestyle clubs and exclusive five star hotels. Retail and the hospitality sector in Ludhiana will boom on the back of IT companies and the opening up of the Wagah border for trade.
The fast flourishing real estate in Ludhiana is witnessing almost 100% growth rate and quick to realize the business potential. This seems to have encouraged the builders to come up with a number of real estate projects such as integrated Township proposals, pushing the property prices in Ludhiana further.
Among the builders with upcoming projects are Silver Oak, MBD Group, Ansals, K Mall, Aeron, Omaxe, and JMD Promoters. Earlier, the city was criticized to lack in style but it is soon to possess it as well with the development of clubs like Nirvana by Enchanted Woods. The club features a 9 holes golf course, retail outlets, and a five star hotel.
The MBD Group has recently signed a joint venture with Radisson Hotels to develop the MBD Neopolis, a premium mixed land use project including five star hotel, premium retail and an array of entertainment facilities.
In pipeline are shopping malls, multiplexes, group housings, and commercial complexes. The JMD Group is considering setting a mall cum multiplex with an investment of Rs 100 crore. The company has already signed up M2K for the multiplex.
Ludhiana property market has an immense potential which requires to be leveraged in an apt way. Developers are in process of identifying sites in other cities of Punjab.
[02 Aug 07]
Hectic Land Acquisition Procedures in Gujarat
Now onwards, industrialists and real estate developers in Gujarat will not require bribing or running after the district collectors to get 11 different no-objection certificates (NOCs) to acquire the non-agricultural (NA) permission, documents necessary to buy land for non agriculture purpose.
It would now be a responsibility of district collectors to confine their activities to see if the title of land is clear after verifying the land records. They will also have to ensure that the land is not involved in any material pending legal proceedings. It should neither belong to the new tenure, under which landless and marginal farmers were given the land during the time of land reforms.
The move has been decided at a high level meeting in Gandhinagar. Also, a government resolution concerning the new procedure will be out soon, informs a senior official.
The required 11 NOCs will include the permission from the Gujarat Urja Vikas Nigam Ltd, Gujarat Pollution Control Board, roads and buildings department, Indian Railways, Airport Authority of India and the Oil and Natural Gas Commission. And, the process will be carried out by the state department.
The collector will have a time-period of 90 days to facilitate each and every aspect required to grant land title clearance. Such a decision has been taken because the collectors would often reject the application for getting an NA if he could not get the necessary NOCs within the stipulated 90 days
[31 Jul 07]
Trikona Cap Takes 33% Stake in Uppal’s 67.5-acre Haryana SEZ
Real estate fund Trikona Capital has acquired 33% stake in real estate company Uppal’s Group’s Haryana SEZ for around $50 million.
SEZ is owned by a special purpose vehicle (SPV), in which the remaining stake has been acquired by Uppal’s Group.
The proposed SEZ has got the approval from Board of Approvals (BoA) and will come up over 67.5 acre in the Shikohpur region of Haryana.
Uppal’s Group informs to have received investment from Trikona Capital and the SEZ has recently been notified by the government. However, the company has not revealed the exact amount but it is nearly Rs 200 crore.
It would be Trikona’s second investment in Uppal’s Projects. The fund has invested $58.3 million for the development of Uppal’s IT Park, which has been developed by Panthera Developers.
Trikona Capital is the asset management company of Trinity and makes investment in real estate through two funds launched in the US and UK.
Uppal’s Group is Delhi’s leading real estate developer in the residential sector. The company also holds interests in development of commercial and office space. The company has most of its real estate projects in tier II and tier III cities in Haryana, Punjab, and UP.
Shedding considerable light on the fund’s investment portfolio, it is attractive enough with the investments made in big Companies such as highway developer IL&FS Transportation Networks, Kapstone Constructions, etc.
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