India Real Estate Link » Infrastructure Development

Major Realty Firm Now Bids For National Highway Project

admin — Tue, 26 Aug 2008 06:52:32 +0000

Three large realty firms have placed bids to build and operate stretches of national highways that have come up for auction this year as part of expanding their portfolio to offset a slump in their core business. Unitech Ltd, DLF Ltd and Omaxe Ltd are among several infrastructure companies bidding for the right to build and operate national highway stretches that are currently being offered by the National Highways Authority of India, or NHAI, the regulator for inter-state highways.
The projects they are bidding for are part of the national highway development programme, or NHDP, which aims to upgrade more than 33,000km of highways, according to an NHAI official, who didn’t wish to be named.
The real estate sector in India has seen a slowdown in recent times as it has become expensive for developers to borrow money, with Reserve Bank of India raising the repurchase rate overnight lending rates to banks to a seven-year high of 9% last month.
In the past three years, property prices in some markets such as Gurgaon in Haryana and Noida in Uttar Pradesh adjoining the national capital have jumped by 100-200%, deterring home-buyers from investing in properties. As a result, realty firms are finding it tough to sell residential properties that typically contribute 50-70% to their revenues. DLF, Unitech and Omaxe have a large chunk of their residential and commercial projects in these places.
The Union government estimates that India needs at least Rs20 trillion in infrastructure investments in five years, at least a third of which it expects to come from private firms.
While DLF, the country’s biggest realty firm by market capitalization, announced an infrastructure development partnership with Gayatri Projects Ltd earlier this year, Omaxe partners with Hyderabad-based GVK Industries Ltd and Nagarjuna Construction Co. Ltd on a project-to-project basis.
Unitech, which has built highways on a turnkey basis (building roads for a fee), is now bidding for projects that allow the concessionaire who wins the bid to operate and derive revenues from the highways for a specified period. Its revenue from the construction business was Rs213.01 crore for the year to March.
A concession agreement, which governs national highways, doesn’t allow developers to commercially exploit land along the highways they operate, although such land is considered prime property.
Some analysts say, for real estate companies, bidding for national highway projects could be a way of building their portfolio so they would be able to bid for state highways or the so-called ring roads around cities, many of which have land development components.
“You don’t need a land development component. If you know how to execute your project well, then you can make money upfront, rather than wait for toll revenues,” said Amrit Pandurangi, who heads the infrastructure practice for consulting firm PricewaterhouseCoopers.
Calling investing in infrastructure the latest fad, Subhash Bedi, director at Red Fort Capital Advisors Pvt. Ltd, an India-focused real estate fund, said infrastructure investments made sense for real estate companies because of a “synergy of skill sets, construction skills and project management skills.”
“What real estate companies are beginning to understand is that land is not a store of value. In the case of a lot of real estate companies, they are asset-rich and not cash flow-rich… In infrastructure projects, you get a steady cash flow,” said Ashish Kalra, managing director of Trikona Capital Plc., which manages over Rs4,300 crore in infrastructure and real estate assets in the country.
“We have project management expertise and have done highway construction contracts in the past,” said Unitech’s executive vice-president M.K. Aggarwal. “When totally unrelated industrial groups are bidding, why can’t we?”

Two Wadala Plots For 375 Crores

rajani — Wed, 20 Aug 2008 15:36:23 +0000

The real estate sector may be experiencing a slump at present, but that has not stopped the Mumbai Metropolitan Region Development Authority (MMRDA) from offering two huge plots for long lease. The two plots are sited within the Wadala truck terminus opposite the IMAX multiplex.

The agency, undertaking multiple infrastructure projects in Mumbai, hopes to draw top notch developers and companies for the bid as the plots are well-connected by rail and road.

The MMRDA on Tuesday called bids for the two plots, meant for commercial complex and a movie multiplex respectively, for a lease of eighty years.

While the plot for the commercial complex has a permissible construction area of 24,000 square meters, the one for a cinema complex has a built up area of 13,500 square metres, said officials. The MMRDA has fixed a reserve price of Rs 240 crore for the commercial plot and Rs 135 crore for the movie theater complex. The successful bidder would have a free hand to design, finance, built and operate the commercial and movie multiplex plots, said officials.

“Nobody else has such big plots in the Wadala area. The MMRDA plots would set a benchmark in real estate rates in this central area of Mumbai,” said an official from MMRDA’s town planning department. “MMRDA strongly favours offering the commercial plot to financial institutions such as banks, insurance companies, housing finance agencies, merchant banks, asset management companies or mutual fund groups. We would prefer renowned FIs to bid for the plot. Corporate developers catering to financial institutions or IT/telecom companies would also be a good option,” said officials.

Asked if the time is right to put the plots under sale, MMRDA officials said the brisk pace of infrastructure development along the Wadala Truck terminus would definitely attract big names in real estate and FIs. “The recently sanctioned monorail line between Jacob Circle and Chembur would have a station at the Wadala terminus. Moreover, MMRDA would soon invite bids from developers to construct the Inter-state Bus terminus nearby,” said the official.

The plots, argue officials, is well connected even with the existing rail and road network. “It’s just five minutes from the Guru Tegh Bahadur (GTB) station on the harbour line. There is a flyover connecting the plot to the Eastern Express highway also,” pointed officials.

He was quick to add that the area already has a strong presence of residential homes. “People staying in Sion-Koliwada, Everard nagar, Bhakti Park are a stone’s throw from this plot. Anyway, moviegoers all over Mumbai know of this area because of their visit to IMAX Adlabs,” add officials.

Five Realty Firms Submit EOI For Five Star Hotel

rajani — Thu, 10 Jul 2008 11:33:36 +0000

Five major realty companies including B L Kashyap and Sons are going to bid for developing a Rs 100-crore Five Star hotel in Bathinda, Punjab.

The other three companies which have shown interest in the project are Chalet Hotels Limited, Ashiana Homes and Spirit Global, informed an official of PIDB.

Punjab State Electricity Board (PSEB) through Punjab Infrastructure Development (PIDB) had intended to develop a five star hotel project in Bathinda under Public Private Partnership format on BOT (Build Operate Transfer) basis. IL&FS Infrastructure Development Corporation (IDC) is the project development advisor to Punjab government.

Proposed to be developed on 3.10 acres of land, the scope of the developer would include planning, designing, engineering, financing, construction, marketing, operation and management of hotel facility and recover the investment by earning revenues through various revenue streams.

The technical evaluations of the companies are expected to be complete in a week’s time. Thereafter they would be asked to submit their proposals in detail.