Monthly Archives: August 2010

Survey on Local Housing Market

Homeowners doubt these days of the future home values due to which they plan to put their home up for sale if they see the same conditions prevailing in next six months too.

According to a survey, 33% people believed that home values in their housing market are still above the bottom line while 38% believe that they have already reached a bottom.

28% homeowners expect a decrease in home values in the next six months. However, 30% of them are expecting an increase in their local market.

In totality, 27% of homeowners hope for an increase in their home values in the next 1 year, 12% expect a decrease in value, 35% say the value ill be same and 26% don’t have any opinion yet.

Raheja Universal Ltd is a Three Starrer

Hotel Rating picture 2
Raheja Universal Ltd’s is rated a three star on the scale of CRISIL. This implies that the proposed issue of Rs. 864 cr. is an average proposal as compared to other listed ones.

Mumbai will soon be gifted around 70 million sq ft of developed area by Raheja Universal out of which 26 million sq ft will be the commercial segment and 44 million sq ft will be residential segment.

The three stars received by the company from CRISIL reflect its strong position in the realty business in Mumbai. Due to its good execution track record and high quality construction, it has been able to maintain its image as a good brand. This brand name has been the major reason for the company being able to command premium prices over its competitors.

Also, other than this, the company owns an area of 1,202 acres across eight Indian cities.

Shangri-La; New Residential Project

Alliance Nisarg at Wakad Pune Photowalk - Name the well known projects of Wkakd Pune - site of Alliance Nisarg in the fore-ground
Photo by Ravi Karandeekar

On Friday, Alembic, India’s oldest pharmaceutical company announced its entry in real estate sector as it has launched a company called Alchemy Real Estate. The CEO of this company will be Mr. Udit Amin, son of chairman and managing director of Alembic Limited Chirayu Amin.

The city-based pharmaceutical major Alembic had announced its planning in June this year about entering the realty sector with residential and commercial properties. Also, one of the official told that Shangri-La, company’s first residential project is located on Alembic road overlooking Alembic cricket ground and near Bhailal Amin hospital.

During these announcements, officials informed that the company holds more than 100 acres of land in the city out of which around 50 acres is might be used for real estate purpose. The recently launched residential project will consist of 11 towers of nine floors. There will be in all 396 flats of two, three and four BHK. The project is spread over six acres of land.

Bombay Dyeing to come up with residential and commercial buildings

Delhi Properties - Real Estate India - Unitech Habitat 1
Photo by nancyarora2020
Mr. Nusli Wadia, chairman of Bombay Dyeing & Manufacturing Co., a textile major, expects to clear off its debt in the next few years through realty business. The current debt on the company is Rs. 1775 cr.

At the company’s 130th annual general meeting, Mr. Wadia told the shareholders that debt has always been a big concern and the company hopes to get free from these debts within 2-3 years. The company expects a good response for its real estate business which might help them become a debt-free company.

Last year, the income from Real estate business doubled to Rs. 562 cr. The company now plans to come up with residential and commercial buildings on the 67 acres of land it owns in Mumbai.

Indiabulls Real Estate net sales at Rs. 5.58 cr

The first quarter results have been declared by Indiabulls Real Estate. As per the report, Rs. 2.98 cr. was the company’s Q1 from standalone net profit.

Rs. 5.58 cr. was its standalone net sales.

According to the data, in March 2010, the trailing 12-month (TTM) EPS of the company was at Rs 0.56 per share. The ratio between stock’s price and earning (P/E) was 334.02.

Rs 89.84 per share are the latest booking value of the company. Thus, at this value, the ratio of price to book value was 2.08.

Affordable housing in Mumbai

Amman Housing Development
In order to provide affordable housing to the Economical Weaker Sections (EWS) of society, MHADA, The Maharashtra Housing and Area Development Authority plans to buy land at market price and develop some houses.

Gautam Chatterjee, Vice-President and Chief Executive Officer of MHADA stated in a conference that MHADA is lacking in land due to which it is not able to provide affordable houses to the urban poor.

He also said that the MHADA’s available land is passed on by the Government at subsidised rates.

He continued that value of land is a component of the price of finished products (houses). Therefore, it is difficult for the government to subsidise the land with the market price resulting in shortage of land.

As a measure to help the situation, MHADA plans to buy land at market prices from developers. The authority will also give advantage of additional 2.5 FSI scheme to the developer.

DLF plans to refinance ECB at 7%

Sign of a large margarita
Photo by abrinsky
DLF, India’s leading real estate developer is approaching domestic banks like State Bank of India (SBI) and ICICI bank to refinance a 300 million USD loan it had raised last year through external commercial borrowings (ECB). The debt of company might get refinanced at a rate of around 7%.

The refinancing will be done in terms of dollars since last year the debt was raised in dollar terms only. It means that it may not be in accordance with the current base rate. ICICI and SBI currently have base rate of 7.5%.

Due to the recent permit from RBI to take-out financing arrangement through ECB under the approved route for infrastructure sectors like bridges, airports, power sector, sea ports and integrated townships, DLF’s chances for refinancing becomes brighter.

Bharat Mills sold at Rs. 1505 cr.

Friday evening was a landmark in Indian Real Estate market history since the biggest real estate deal took place. National Textile Corporation (NTC) sold Bharat Mills spread over eight acres at Worli for an extreme price of Rs. 1505cr, i.e. Rs. 188 cr. per acre.
The top bidder was Indiabulls followed by Lodha who lost the bid by just Rs.2 cr. The next bidder was Peninsula. Other bidders were Tata, Videocon and Oberoi groups.
This land was earlier opted by state government to develop affordable housing on it. But, NTC didn’t sign the deal. State government offered Rs. 750 cr. for this land.
Also, few days back, Indiabulls won the Podar Mills deal too which was a deal of Rs. 474 cr. for 2.39 acres.

Indiabulls flourishing after winning Bharat Mills bid

Nifty hits 4k for the first time!
After winning the bid of NTC’s defunct Bharat Textile Mills in Worli, Mumbai, for Rs. 1505 cr, Indiabulls Real Estate shares have raised by over 3 %. Last Friday, the bid for Bharat Textile Mills closed and the winner was Indiabulls Infraestate which won by just Rs. 2 cr.

On the Bombay Stock Exchange, the shares settle at Rs 175.70 which is 3.51 % higher than the share price before this bid. Also, on the National Stock Exchange, the share price closed at Rs. 176.45; 4% higher.
Sensex, the broader market also closed higher by 143.51 points at 18,287.50.

Indiabulls had also one the auction before this one which was for NTC’s 2.3-acre Poddar Mill held last week. Indiabulls paid almost double the reserve price for the mill, i.e. it paid Rs.474 cr for the mill where the bid started from Rs.250 cr.

Credit Suisse Group plans to spin off its property business

Credit-Suisse, Basel-Stadt
Photo by
According to a report, Credit Suisse Group is planning to give up its property business, DLJ Real Estate Capital Partners, to management.

As per the report, the bank is not disclosing any details, neither about size of fund nor about the sales price of the deal.

Also, the report stated that the total real estate investment arm of Credit Suisse manages around 33.5 billion USD in property assets.

High response to India-focused PE has been observed

The Tata Group Company plans to raise $500 million for an India-focused private equity (PE) fund through its partnership with Mizuho Securities of Japan. Tata Capital announced last month that it will raise 1 billion Dollars from both the foreign and domestic investors by the end of next year.

On the other hand, Mizuho Sec plans to focus on developing a growth capital private equity business in India. Also, it wants to invest in Indian companies through private transactions. According to MD & CEO, Tata Capital, Praveen Kadle, Japan’s saving base offers a stable source of capital. If all goes well, then there will be high investments from Japanese and other International investors.

Also, Kadle told that the company chose Singapore only due to its transparent regulation with economic and tax advantages.

Launch of Real Estate Ratings

On Thursday, Crisil, the leading credit ratings agency, introduced real estate ratings in order to help buyers in making informed purchases so that greater transparency can be achieved. This concept of rating is launched for the first time by any Indian organization.

Roopa Kudva, the Managing Director and Chief Executive Director of Crisil, told that there will be a scale of seven stars through which rating would be given to specific projects as compared to the other alternative available projects in the city.

Also, CREST publically declared that they are currently considering 21 projects spread across 9 Tier-I and II cities.

The parameters of rating will be previous record of the developer, the infrastructure of the project, cost overruns, timely completion, finishing, after-sales service, project innovations and the legal issues associated with the project.

Also, this rating will be revised after the project completion.

Forecast about Office Rental Space

A report was released on Tuesday according to which Indian realty sector might face problem of plenty with office rental space. A further drop in rentals is also expected. As per the report presented by Jones Lang Lasalle Meghraj(JLLM) and Confederation of Indian Industry (CII), the vacancy level in India will increase from 17.2% in 2009 to 20% by the end of 2010.

The report stated that during the first quarter of 2010, most Indian cities have experienced an upward movement in the volume of lease transactions. There have been recorded around a million sq. ft. of leases in each of the cities; Delhi, Hyderabad and Mumbai.

For the future, the report predicts that within the next three quarters, most micro markets are expected to reach their rental lows. This implies that even after balance of power favors the occupiers, the opportunity for then is diminishing with every passing quarter.

The report “The Seven Stars of India India’s best performing micro markets for occupiers” gives the prediction about real estate rental market in cities like Mumbai, Delhi, Bangalore, Chennai, Kolkata, Pune and Hyderabad.

Bank lending to residential sector increased in 2009-10

In 2009-10, the lenders such as Jammu & Kashmir Bank, Union Bank of India, ICICI, Bank of India and Canara Bank reduced lending to the some sectors of real estate. As per the data provided by banks, the largest private sector bank, ICICI reduced its lending to realty by 17 % and to capital markets by almost 10 %.
However, the public sector banks such as Bank of Baroda, State Bank of India, Syndicate Bank and IDBI Bank rose lending to these sectors between 34% and 46%.
Among the private banks, rank 1 lender was YES bank, next was IndusInd Bank, and followed by Development Credit Bank and HDFC Bank.
Other than ICICI bank which reduced its lending by 9.6 %, the total growth in the lending to realty was around 16.7 % in the fiscal 2009-10.There was a mixed response from the banks. On one hand, around 10 banks rose lending by 30% each, while on the other hand, 14 banks witnessed a decline in lending.
After all these ups and downs, the exact scenario was that the lending to the residential sector increased from 47.5 to 53%, and commercial mortgages reduced from 27.7 to 23.3%.

Jaypee launches new plots in Jaypee Greens Sports City

Jaypee has launched new plots in Jaypee Greens Sports City. These plots are available at a discount of Rs. 1800 per square yards and now it would cost Rs. 16,200 per square yards.

The size of these plots is 153 square yards. Thus, the whole plot would cost approximately Rs.25 lakh.  The additional charges on the plots will be the same as the old ones applied on all other plots.

These plots are available at a further discount of 10% on BSP in case of Down Payment. In case of Partial Down Payment, there is a discount of 6.25% on BSP.

One more update is that the project earlier known as JPSK (Jai Prakash Sports Komplex) will now be known as JPSI (Jai Prakash Sports International).