Indiabulls is expecting a strong demand at projects in tier-II cities such as Baroda, Ahmedabad and Indore as these have been appropriately priced, between 2,000-5,000 rupees per square feet. Indiabulls is assured that they can meet the increasing demands for residential real estate.

The company is now expecting to deliver 15 million square feet against a guidance of 22-24 million square feet at the beginning of this fiscal. It has completed about 7 million square feet as on date.
“We will deliver 15 million square feet of constructed space by the end of this fiscal. We have deferred some projects, which have been already reported by media. In any case, 22 million square feet also included some plots which were not constructed properties, and that was the earlier target,” DLF’s financial chief Ramesh Sanka said.

DLF was earlier planning to launch close to 35-40 million square feet of real estate projects across its different verticals such as residential, commercial and retail in the current fiscal. In the third quarter, DLF launched projects only in the mid-income housing segment. It launched mid-income housing in Bangalore, Kochi and Gurgaon.

The realtor is expected to launch 6-7 million square feet of new projects in the rest of this fiscal including projects such as Sriram Mills in New Delhi, Panchkula, Bangalore, Hyderabad and Indore.

Early this week, DLF said it will build a commercial property on its 25-acre plot, which it bought from Sriram Industries near Delhi’s commercial hub Connaught Place, instead of IT SEZ.

According to the assessment of Assocham, over 20 million people in about 25 tier-II and tier-III cities, who want to purchase dwelling units, but had to back out on account of rising borrowing costs.

This, in turn, has compelled most real estate developers to defer projects, Assocham said, adding that the rising cost of raw materials like brick, cement and steel has worsened the situation for them.

In tier-II and tier-III cities, property purchases had registered a growth of over 25% between April and September last year.

Higher interest rates have also upset payment plans of borrowers, it said.

The chamber’s assessment is based on feedback from real estate members operating in cities such as Chandigarh, Meerut, Pune, Bhopal, Indore and a slew of smaller urban centres across the country.

Developers giving the feedback include Parsvnath, Omaxe, DLF and Unitech.

Also, the company is looking to change its business model from cash contracts to long-term revenue channels like build, operate and transfer, Totem director and chief operating officer Abhijit Roy told the media.

In February the company had, raised $10 million (about Rs 40 crore) from Singapore-based private equity fund Aquarius Investment Advisors. It plans to utilize this money for growth plans, expanding to new locations and operations.

Right now, Totem has offices in Hyderabad, Delhi and Indore and new offices are being planned in Kolkata and Nagpur shortly. “We want real estate to account for at least 25 % of our portfolio,” Roy said.

Totem’s current order book stands at Rs 1,000 crore to be executed in two-and-a-half years. Most of the existing projects are cash contracts and hence the required investments are mobilized through advances and other means. To fund these, the company has also formed a consortium of banks with Union Bank of India as the lead bank. The company expects the order book to increase to Rs 2,500 crore for this financial year and in three years, it plans to go public to raise funds for various projects.

Among the various projects, it is building about roads in Maharashtra, Uttar Pradesh and Karnataka on a BOT (build, operate, transfer) basis. It established its presence in central India recently by bagging the order for the III phase of the Omkareshwar Project Canal System from Sadbhav Engineering Limited for Rs 310 crore.

Totem is also executing an NTPC power project in Nagpur and constructing minor bridges, culverts and others for an internal railway line for expansion of the Bhilai power project for RITES, a government of India enterprise.

The Rs 150-crore company is now looking to forge a public-private partnership in a state project in Rajasthan and recently submitted a request for quotation (RFQ) in this regard.

The company is looking at generating $10 billion from these five projects in the next 10 years.

Nirmal Lifestyle chairman and managing director Dharmesh Jain told that the houses in these projects would be priced between Rs 20 lakh and Rs 1 crore. He declared, “Houses in Mumbai cost much more than the price we have put to our projects. So we hope to successfully tap this market”. Nirmal Lifestyle, which has built over 50 lakh square feet of residential and commercial space, is one of the top real estate players in the Mumbai market.

It is known for developing Mulund, a central suburb of Mumbai, into a real estate hub. The company also operates the Nirmal Lifestyle shopping mall.

Each township will have a sports centre modeled on international standards, an IT SEZ, hotels and malls. Jain expects the projects to be completed in seven to nine years.

He said, “The construction of two townships will begin towards the end of this fiscal and for the others in early 2009″. He further added that private equity investment for one of the projects has been received and more is expected once construction begins. Nirmal Lifestyle is also looking at launching an IPO in the next 12-18 months.

Thanks to the steep rise in the cost of housing, the middle segment is seeing a boom, with many PE players eyeing mid-tier projects priced between Rs 35 lakh and Rs 70 lakh and premium projects with price tags of Rs 65 lakh to Rs 1 crore.

Sashi Makapatti, a senior investment officer at Rutley Capital Partners, the investment arm of global property consultant Knight Frank, said that the company was investing $300 million in mid-segment housing projects in tier II cities. He pointed out, “The demand is enormous in these regions. We are looking at Hyderabad, Indore and suburban Mumbai”.

According to Anuj Puri, country head and chairman of Jones Lang LaSalle Meghraj, investors are now realizing the potential of mid-segment projects. He added, “Projects in areas where land prices are Rs 2,000-3,000 per square feet are not feasible. This is why such projects are likely to succeed in suburbs, where land rates are low”.
Nirmal Lifestyle will invest $5billion in Phase I, which includes five townships under the brand name of Lifestyle City.

Spread over 300-1,000 acre, will be one each in Pune, Indore and Panvel, and two in Mumbai.

Houses in these townships, complete with sports centres, malls, IT SEZs and hotels, will be priced between Rs 20 lakh and Rs 1 crore.