3i picks up stake in Hyderabad firm for $101m

3i India Infrastructure Fund, part of the London-based private equity and venture capital company 3i Group Plc, has invested $101 million (Rs 398 crore) in Hyderabad-based infrastructure company Soma Enterprise.

Though the companies have not disclosed the exact stake the fund picked up, Avinash Bhosale, joint managing director, Soma Enterprise said, “3i has got minority stake; the stake figure is in mid-teens (between 13% and 17%).”

This figure values the company at over Rs 3,400 crore.

Soma will use the money for expansion. “We will invest the money to further build capacities to undertake bigger projects. This includes buying infrastructure machineries,” Bhosale.

Hyderabad-based Rajendra Prasad Maganti and his family owns majority stake in the infrastructure firm. Pune-based flamboyant real estate developer and hotelier Avinash Bhosale is the other promoter.

Soma, with revenues of Rs 1,100 crore, has an order book of Rs 6,400 crore. The company is also planning a public issue next year. “Though we have not yet started the process, we hope to come with an initial public offering by next year,” Bhosale said.

The company has divided its business in six verticals. Theses include real estate, urban infrastructure, irrigation, transportation, tunnel and hydro power. Along with IL&FS, Soma is bidding for phase II of the Mumbai metro rail project.

3i India Infrastructure fund targets to invest about $1bn in the country. Soma Enterprise is its second investment in the country. In October this year, it had invested $227 million for a minority stake in Adani Power, a subsidiary of Adani Group.

Wizard Home Loans comes to Hyderabad

Hyderabad: By middle of 2008, Wizard Home Loan, a joint venture of GE Money and the Australia based home loan company is planning to add six new cities to its existing business network. Wizard home loan provides Loan against property, home loan refinance and debt consolidation services in addition to its most popular product - the home loan. Launching the company's operation in Hyderabad, Egisto Franceschi, CEO Wizard Home Loans said, “We want to become the most-preferred home loan provider in India with highly competitive pricing.”

According to a study commissioned by the company to understand the dynamics of home loan market in India, consumers in India want competitive pricing, personalized service and expert service. Wizard Home Loans is capable of providing these services to customers in India. The research further pointed towards Hyderabad as a potential real estate market. “In view of this, we have chosen Hyderabad as the second city to launch operations,” he added.

Wizard takes the hassles out of the process of buying a new home. Wizard's dedicated lending manager explains the intricacies of home loans to a customer. A home loan from Wizard can be had in just four days making it one of the fastest turnaround times for home loan approval. Wizard home loans had taken the home loan market in India by storm when it announced a home loan at 9.99 percent in September 2007. Besides lending for the property, Wizard also provides loans for the fixtures and furnishings used in home decor. Customers can have a home loan of up to 90 percent of the property value and can extend the repayment terms up to 25 years in some cases.

Presently Wizard Home Loans is having its offices in Delhi, Noida, Gurgaon, Faridabad, and Hyderabad. The addresses of these offices are listed below for the convenience of our readers:

Wizard - Delhi

62, Dayanand Marg, Darya Ganj, New Delhi– 110 002
A-17, Northex Mall, Rohini Sec-9 Delhi
F - 14, Plot No 13, Manish Mega Plaza, Sector - 5, Dwarka, New Delhi -110075
4/5 B, Asaf Ali Road, New Delhi -110002.
G - 9, Shivam House, Commercial Complex, Karampura, Opp Milan Cinema, New Delhi -15.
Shop No. 13, LSC, B- 8 & 9, Vasant Kunj, (Opp. G.D.Goenka Public School), New Delhi - 110070.
Wizard - Gurgaon

Shop No. SG - 4 , Galleria Market , DLF Phase - 4 , Gurgaon - 122002
140, First Floor, DT Mega Mall, DLF CITY - 1, Gurgaon
SCF 92, First Flr, Main Market, Sector -14, Gurgaon.
Wizard - Noida

UG-20, Parasvnath Plaza, Sector – 27, Noida, U.P
Wizard - Faridabad

SCF No.6, Ground Floor Sector 17 Faridabad, Near Ekant Restaurant
Wizard - Hyderabad

S-30, Shop No. 3&4, Shree Rama Towers, Kukuatally, Main Road, Hyderabad - 500072
3-12-64, Balaji Nagar, Near Kamineni Hospitals, L.B. Nagar, Hyderabad-500068
Shop No. 1&2, 1 - 98/90/24/2 & 3, Near Indian Oil Petrol Station, Ayyappa Society Road, Madhapur, Hyderabad - 500033

Kotak to invest Rs250 cr for IVR Prime’s realty projects

Real estate player IVR Prime has informed that Kotak India Realty Fund Ltd will invest Rs250 crore for developing the former’s realty projects.

Kotak India will invest Rs250 crore in IVR Prime’s multi -use integrated development projects, the realty player informed the Bombay Stock Exchange.

The company added that a few more realty funds are also inclined to join hands with IVR Prime for developing some of its projects.
IVR Prime Urban Developers is the real estate arm of Hyderabad-based construction and infrastructure company IVRCL Infrastructures and Projects.

It has a total land reserve of 2,850 acres around cities like Chennai, Hyderabad, Pune, Bangalore and Visakhapatnam.
Kotak Realty Fund, established in May 2005, is one of India’s first private equity funds with a focus on real estate and real estate intensive businesses.

Realty companies see big money in city side of small airports

Several real-estate developers like Omaxe, L&T, Unitech and GMR are keenly bidding for city-side development of the four airports at Udaipur, Amritsar, Vizag and Ahmedabad. This is the first lot of airports which has been taken up by the civil aviation ministry for city-side development.

“While pre-qualification bids have been invited for Udaipur and Amritsar, the other two (airports) will be taken up early next year,” said a civil aviation ministry official.

Omaxe, L&T and Unitech have already applied for the Rs 200-crore development projects at Udaipur and Amritsar. The work includes commercial operations and maintenance of the airport terminal building, besides development of 46,268 sq metres and 110,308 sq metres of land for city-side development and cargo handling facilities at Udaipur and Amritsar, respectively.

Car-parking facilities of 13,000-14,000 square metres are also planned near each airport. The pre-qualification process for these airports started in October. The short-list, already delayed, is expected to be out later this month or early next month. The bids will be invited on the basis of the list.

“Once the first process is over, the qualified bidders will submit tenders, which will be processed early next year. The construction work should begin by February,” said an Omaxe executive.

Omaxe has tied up with several airport operators for its foray. Unitech also confirmed the development. Omaxe is also doing construction for Chennai and Kolkata airports, both of which are being developed by the Airports Authority of India (AAI).

L&T, which has done construction work for all privatised metro airports, including Delhi, Mumbai, Bangalore and Hyderabad, has bid for Udaipur and is eyeing Amritsar, Vizag and Ahmedabad as well.

“We have already bid for Udaipur and Amritsar and are also looking at Ahmedabad and Amritsar. Apart from that, we will obviously be open to any other potential project that comes our way,” said a source in L&T.

According to the AAI projections, the number of flights from Amritsar is slated to almost double in the next two years and the cargo traffic is likely to grow 55 per cent. The projected traffic growth at Udaipur, however, is a mere 10 per cent with no clear trends for cargo.

India Inc decides to hold on to land bank

India Inc is realising it’s wiser to hold on to the goose that lays golden eggs, rather than to sell it off, particularly if the price of gold is expected to keep rising. The real estate boom, in the first stage, had a number of industrial companies capitalising on their land assets by selling them out to developers. But now companies are realising there’s more money to be made out of retaining the real estate.

Many companies, including those in sectors such as apparel, jewellery and tobacco, are turning their physical assets into a long-term revenue generator by forming joint ventures with construction companies for development of the property, rather than bringing one-time funds infusion into the balance sheet.

Take jewellery maker Rajesh Exports, for instance. The company, which has 32 properties spread across Bangalore and Kerala, took a board nod early this year for development of these properties. In a statement Rajesh Exports chairman Rajesh Mehta said, “We feel that even though the development may require time, it would be worth it as it would fetch very attractive valuations compared to selling of the land bank.”

He is not alone in taking a contrarian view on the real estate assets. Another such company is cigarette maker GTC. The company which has assets in some prime locations in Mumbai, Hyderabad, Baroda etc, has already initiated moves to develop part of its assets.

Its 2.75 acre land at Hyderabad, for instance, is being developed into a mall which would include a four-screen multiplex. In this property, GTC would own 50% of the built up area of the mall while the entire investment for the development of the property would come from its partner.

Says GTC, chairman, Sanjay Dalmia, “I don’t believe in selling land. We would rather add value by developing it through strategic joint ventures and thereby enhancing shareholder value.” Its the same scene in various other parts of the country.

For instance, in Gurgaon, textile company House of Pearl Fashions recently entered into a 47.5: 52.5 joint venture for a commercial project on a 9-acre plot on the Delhi Jaipur highway with Delhi-based real estate firm Ansal API.

GMR Hyderabad International Airport awards bookstore concessions

Hyderabad, India - GMR Hyderabad International Airport Ltd (GHIAL), which is developing the Rajiv Gandhi International Airport in Shamshabad, has selected Odyssey India Ltd for setting up a bookstore in the new airport. The concessional agreement with this book retailer, belonging to the Deccan Chronicle Group, is for three-years starting from the airport launch in March 2008.

Odyssey has been selected the preferred bidder based on both technical and financial evaluations, such as its background, network of operations in India, proposed categories of merchandise for the bookstore outlets and concept planned for this outlet.

As per the contract, Odyssey will set up and operate the bookstore of its Company in the Passenger Terminal Building - International Departure area - in the airport, spread over an area of 42 sq. meters. Odyssey is expected to complete the interior fit out works before the end of December 2007, and start its operations by February 01, 2008.

Odyssey will offer an extensive range of newspapers, magazines, books, music and movies providing an undisturbed and pleasurable shopping experience in a friendly ambience with colourful and vibrant spaces.

Speaking on the occasion, Mr. T Srinagesh, COO — GMR Hyderabad International Airport Ltd said "We are sure Odyssey being a renowned book retailer will offer the top-class shopping experience to the air-travelers in the new international airport in line with our vision of providing the world-class airport experience."

Earlier in the month, GHIAL awarded the retail bookstore concession for the Passenger Terminal Building - Domestic Departure and Arrivals, to Landmark. As per the contract, Landmark will set up and operate the bookstore, covering approximately an area of 80 sqm, by February 01, 2007. Landmark will offer an extensive range of newspapers, magazines, books, music and movies. The agreement is for a three-year period starting from the Airport opening date.

Alliance Group enters Hyderabad realty market

Alliance Group, a Bangalore-based real estate developer, Wednesday announced its entry into the Hyderabad market with a Rs.4.86-billion villa project.

The project is called Inner Circle. To come up on 60 acres at Shamirpet on city outskirts, it will have 350 luxury villas designed by Asia's well-known architectural firm, Surbana of Singapore.

The villas will come on plots ranging between 2,400 sq ft and 6,000 sq ft. they will be priced between Rs.8 million and Rs.20 million.

The Rs.44-billion group has roped in Westport Capital, a venture capital firm from the US, for this project.

"Westport will be our FDI (foreign direct investment) partner in the project," said Manoj Namburu, chairman and managing director of Alliance.

He, however, declined to reveal the details of the investment.

"Hyderabad is a futuristic city with majority of economic growth happening in IT and IT related sectors. There is growing demand here for high quality and classy lifestyle living," he said while elaborating on the group's decision to enter the Hyderabad market.

Inner Circle will have a 110-room, five-star hotel on the campus offering international-standard clubhouse facilities like specialty restaurants, a gym, steam baths, swimming pool, tennis and squash courts, snooker, table tennis and banquet halls and children's play area.

Alliance Group has just completed its prestigious project "10 Downing" in Whitefield, Bangalore. It has 12 other projects on hand in Bangalore, Mysore, Chennai and Coimbatore.

Early this year, it launched a Spanish style villa project in Chennai.

Namburu said Alliance was the first real estate group in India to offer an upfront warranty to all its customers.

The group is poised to launch Real Estate TV, India's first 24X7 television channel dedicated to real estate and infrastructure.

Unitech strikes mega deal for Vizag land

The company is believed to have acquired 1,750 acres of land from the Andhra Pradesh Infrastructure & Industrial Corporation (APIC) for Rs33.28bn

Unitech has reportedly bagged the largest ever single-land deal in the country. The company is believed to have acquired 1,750 acres of land in Visakhapatnam from the Andhra Pradesh Infrastructure & Industrial Corporation (APIC) for Rs33.28bn.

North India-based real estate major outbid Dubai-based Al Hamrah Real Estate Development LLC for the Vizag land deal, a leading financial daily says.

The company plans to develop a total built-up area of 100mn sq ft, comprising villas, high-rise apartments, a golf course, club house, IT park, eco resort, hotel, shopping centre, amusement park, hospitals and educational centres, the business newspaper says.

The project will be developed at an estimated investment of Rs300bn over the next 10 years and Unitech is reportedly targeting a revenue of Rs750bn from the project on completion, the newspaper says.

It may be recalled that in August DLF, India's largest real estate firm and Unitech's rival, paid Rs16.75bn for buying 38 acres from DCM Shriram Consolidated (DSCL) in West Delhi.

DLF also won a Rs500bn bid for developing New Bangalore, a 9,000-acre township at Bidadi. But, the project did not involve a single land deal.

Retail, real estate boom will boost HVAC&R sector’

Hyderabad: The boom in the retail, cold chain, entertainment, manufacturing and real estate industry will spur the growth of the Indian heating, ventilation, air-conditioning, cooling and refrigeration (HVAC&R) sectors.

For the past three years, the HVAC&R is growing at an average 25 per cent and by end- of-fiscal 2008-09, it is expected to touch Rs 16,000 crore, according to industry experts.

Air-conditioners have become a necessity and a wide range of upcoming industries need it on a priority. With a bit of support from the Union and State Governments, the sector will grow well, said M.S. Anand, Chairman, CRP Group, Hyderabad.

Needs trained manpower

While the growth prospects are exciting, the worrying aspect is the huge shortfall of trained manpower. The industry also needs to put in place labelling and standards, said Satish Iyengar, former President of the Indian Society of Heating, Refrigerating & Air-Conditioning Engineers (ISHRAE). It is estimated that nearly 5,000 engineers are required every year to meet the needs of the industry.

To address the issue, the ISHRAE is planning to start Institutes of Excellence and sub-chapters for vocational training for fresh graduates, he told newspersons here on Thursday.

International expo

The ISHRAE is organising an International Exposition - ACREX India 2008 in Bangalore, during February 15-17, 2008 at the KPTO trade centre. The Convenor of the Expo, Pankaj J. Shah, said a delegation of 36 companies and over 200 participants from China and over 25 companies and 50 participants from South Korea would participate in the event. In addition, over 350 companies from the US, Japan, Germany, Pakistan, Sri Lanka, etc. would also take part.

They are also working with the Bureau of Industrial Standards (BIS) to put in place relevant standards and certifications for the HVAC&R industry. The voluntary star rating feature introduced by the Bureau of Energy Efficiency (BEE), under the Department of Science and Technology would become mandatory in 2010.

Retail, real estate boom will boost HVAC&R sector’

Hyderabad: The boom in the retail, cold chain, entertainment, manufacturing and real estate industry will spur the growth of the Indian heating, ventilation, air-conditioning, cooling and refrigeration (HVAC&R) sectors.

For the past three years, the HVAC&R is growing at an average 25 per cent and by end- of-fiscal 2008-09, it is expected to touch Rs 16,000 crore, according to industry experts.

Air-conditioners have become a necessity and a wide range of upcoming industries need it on a priority. With a bit of support from the Union and State Governments, the sector will grow well, said M.S. Anand, Chairman, CRP Group, Hyderabad.

Needs trained manpower

While the growth prospects are exciting, the worrying aspect is the huge shortfall of trained manpower. The industry also needs to put in place labelling and standards, said Satish Iyengar, former President of the Indian Society of Heating, Refrigerating & Air-Conditioning Engineers (ISHRAE). It is estimated that nearly 5,000 engineers are required every year to meet the needs of the industry.

To address the issue, the ISHRAE is planning to start Institutes of Excellence and sub-chapters for vocational training for fresh graduates, he told newspersons here on Thursday.

International expo

The ISHRAE is organising an International Exposition - ACREX India 2008 in Bangalore, during February 15-17, 2008 at the KPTO trade centre. The Convenor of the Expo, Pankaj J. Shah, said a delegation of 36 companies and over 200 participants from China and over 25 companies and 50 participants from South Korea would participate in the event. In addition, over 350 companies from the US, Japan, Germany, Pakistan, Sri Lanka, etc. would also take part.

They are also working with the Bureau of Industrial Standards (BIS) to put in place relevant standards and certifications for the HVAC&R industry. The voluntary star rating feature introduced by the Bureau of Energy Efficiency (BEE), under the Department of Science and Technology would become mandatory in 2010.

India Real Estate

India real estate is one of the fastest growing sectors in the country. This rapidly growing real estate market is getting matured day by day as large and international people are taking part. India real estate market has augmenting investors and carries a real industry-responsive approach. Even the real estate prices are augmenting fast, especially Chennai real estate, Hyderabad real estate and Bangalore real estate are on the very high phase. The market boom is spread across the country and hence more and more Indians are not interested in investing for India real estate. The economy rate as well has managed to grow faster than 8% each year because of increasing real estate market trend.

India is recognized as a land for all season. Everybody is amazed by the beauty and culture of India. Humanity, religious and races are nowhere better on this earth than India. Each characteristic of nation represents itself on a huge, inflated scale, praiseworthy when compared with other countries on the globe. People feel immense pleasure owning a property or a piece of land here. India real estate is one of the fastest growing sectors in the country. This rapidly growing real estate market is getting matured day by day as large and international people are taking part. India real estate market has augmenting investors and carries a real industry-responsive approach. Even the real estate prices are augmenting fast, especially Chennai real estate, Hyderabad real estate and Bangalore real estate are on the very high phase. The market boom is spread across the country and hence more and more Indians are not interested in investing for India real estate. The economy rate as well has managed to grow faster than 8% each year because of increasing real estate market trend.

India real estate is just not trendy among Indians, but has also gained popularity among foreigners. Morgan Stanly - one of the world's best banks has of late invested about $152 million Mumbai real estate. The presented report also stated that this is the only biggest investment in India's booming real estate sector. This proves that India real estate is improving in reality. Further more states that foreign investors have immense interest investing in real estate India. Due to the demand of residential and commercial real estate among NRI's has pushed the price of real estate beyond actual limit. This in turn offer common platform for Indians and Foreigner to invest in India real estate for highest return on investment. In case you are searching for real estate property in India then you can come across comprehensive list of residential and commercial property that will be suitable for you and for your budget.

According to a government official report of March 2007, India has attracted $3 billion worth of real estate. This roaring India real estate market is now further expected to contribute for about $30 billion in the upcoming years. When compared to last year, real estate 2007 has gone doubled. Investing in India real estate could lead you as well with the long-lasing wealth and monetary freedom. Real estate can become a cash producing machine for you with this highly profitable business. You must be aware of the basic strategies of investing in India real estate and should be capable to cope with market conditions. People that cannot make the payment at a stretch can go for city home loan options. Read out some online magazines and articles to get educated in your investment first by knowing the large-scale tendency of real estate market. You must as well need to educate yourself about the target neighborhoods joining the backup of successful real estate experts. If you favor getting a real estate property at an affordable price that can be useful for constant holidays and could be the most excellent return on investment, then India real estate is the most suitable destination for you.

Puravankara wins H’bad land deal for Rs 700 cr

The Bangalore-based realty developer Puravankara Projects (PPL) has pipped real estate giant DLF to bag a 30-acre land parcel in Hyderabad for Rs 700 crore. The land near the Hi-Tech City, put on auction by the Andhra Pradesh Industrial Infrastructure Corporation(APIIC), will be used to develop 5-million sq ft of mixed use including high-end ultra luxury retail, residential, commercial and hospitality complexes.

The land parcel is in a high rise zone, and Hyderabad has unlimited floor space index (FSI). Estimates suggest that we could be looking at around 5 million sq ft mixed use development,” PPL director Ashish Puravankara told ET.

PPL is already discussions with several architectural design firms in US and UK for developing the project. The project envisages a development of approximately 6.5 million sq ft area.

APIIC had floated the tender for the project with a reserve price of Rs 20 crore per acre and received three bids including DLF and BPTP Real estate. Hi-Tech City in Hyderabad is the new IT destination for many in the world and the area has developed rapidly with world class infrastructure facilities.

Apart from Bangalore, the Puravankara group has real estate operations in Chennai, Coimbatore, Hyderabad, Cochin, Middle East and Sri Lanka. Puravankara has already around 15 million square feet of land under development.

Currently, many hotels groups are in negotiations with PPL to develop hotel properties in the south. Industry officials say that in the last two years, the property prices in Hyderabad and its outskirts have spiralled. The prices which were hovering around Rs 500 per sq ft in 1991-92, soared to Rs 1,200 per sq ft in 1995 and have touched over Rs 4,000 per sq ft in the main centres. Most of the demand came from the IT companies, they said.

Land auctions fetch Rs. 1,184 cr.

The Government had realised Rs. 934.41 crore and Rs.250 crore from the auction of lands by the Hyderabad and Visakhapatnam Urban Development Authorities respectively during the last four years.

Informing this in a written answer to T. Devender Goud (TDP) and others, Municipal Administration Minister Koneru Ranga Rao said that HUDA had sold 169.62 acres, VUDA 227.49 acres and the Kakatiya Urban Development Authority (KUDA), Warangal, 20 acres.
Rural roads

Rural Development Minister G. Chinna Reddy informed Devineni Rajasekhar (Congress) that rural connectivity, to provide all-weather access, was permissible under the schedule-1 of NREGA and 1,722 cement concrete roads were proposed to be taken up in 5,166 villages in 16 districts.

Real estate fund: A promising investment destination

Real estate is an investment option that gives high returns. The high returns are due to capital appreciation. Regular returns in the form of rentals are a low 5-6 per cent. But high returns comes at a cost as investing in real estate is very cumbersome. Selecting the right property that would give good returns is a time-consuming process.

The cost of buying and selling properties is very high. It requires you to commit large amounts of funds at one go. Funds are locked up for a long time and the investment is pretty illiquid. Hence, a large number of investors stay away from this form of investment.

This drawback was mitigated to a certain extent when some of the prominent companies and banks promoted real estate funds. These are venture funds with a focus on real estate, regulated by the Securities and Exchange Board of India (SEBI), under the category of venture capital funds. They are close-ended schemes.

The offer document of these funds is privately circulated. The amount of investment is very high with the minimum amount being Rs 25 lakhs. The funds are very popular with the high net worth individuals (HNI). The schemes did away with the problems of selecting and managing properties. However, the problem of liquidity remained as they had a lock-in period ranging from one year to six years. The number of investors who could participate in these funds was very low.

All this is set to change with the recent policy guidelines introduced by SEBI. It can change the way we approach real estate investing. SEBI has paved the way for the launch of real estate mutual funds (REMF). REMF like other mutual funds are based on the concept of pooled diversification. Relatively small investments of individual investors are poled in and managed by professional managers. REMF will have an investment objective to invest directly or indirectly in realty and will be governed by SEBI (Mutual Funds) Regulations.

The funds will be initially close-ended and their units will be compulsorily listed on the stock exchanges ensuring liquidity and transparency. The real estate mutual funds will have to declare their net asset value on a daily basis. According to SEBI guidelines, all these funds will have to appoint custodians who will safe-keep the title of real estate properties held by the funds. These schemes can invest directly in real estate within India.

A minimum of 35 per cent of funds are to be invested in real estate properties. The balance can go into mortgage-backed securities, shares, bonds or debentures of companies listed or unlisted dealing in properties and property development, and in other securities like debt and money market instruments.

REMF will be a good investment option for small investors who want to be part of the real estate action. The investment will be very liquid and can be redeemed easily. It provides for diversification of risk. REMF will operate exactly like the conventional equity funds. However, the underlying property markets are not as well-developed as the equity markets. This could lead to a few glitches, which will be solved over time.

Virtual Realty: Correction time

You are happy that the value of your real estate property has gone up several time in the last three-four years. But your happiness is short-lived when you decide to unlock the value. There is a marked difference between the perceived value and realised value. The buyer is not willing to pay the price you initially thought.

The concern that the property markets in various parts of the country is overheated, particularly in certain pockets of NCR and Mumbai, has been doing the rounds for almost the last 5-6 months. There are several reasons for that. Experts say that demand and supply mismatch is one of the reasons affordability is the other. Speculators have bought properties and now they demand an unrealistic premium.

“Affordability has been a prime concern. Speculative investors can hold on to a particular price for sometime, but beyond that, they would start to get jittery and sell off at whatever price is available to him,” says DTZ India managing director Ankur Srivastava.

Experienced developers do not foresee any sudden change in the market, however, they are cautious. According to DLF vice-chairman Rajiv Singh, there is no need to panic as the fundamentals of the industry are strongly in place. “In certain pockets, the market has grown at unrealistic rates. There could be a slowdown in the rate of growth and the sector will continue to grow at a more realistic pace.”

He says that developers as well as investors must keep end-users in mind before positioning a property. “Of course, no one can rule out affordability as being a key criteria,” Mr Singh said. Big and experienced developers have played safe. They have created products according their target customers and priced it accordingly.

Unitech managing director Sanjay Chandra says that there is no reason to worry. “There are minor corrections in some B-grade properties. Once any correction takes place, small developers and fly-by-night operators would face difficulty in disposing off B-grade properties both in commercial as well as residential segments. Buyers’ interest lie in good quality real estate,” he said.

Affordability factor has been raised by many brokers, who actually deal with end-users. They say that in the current market scenario, a Rs 35-50 lakh pricing can be considered realistic, for middle and upper-middle class consumers. “If a family’s income is in the range of Rs 1-1.5 lakh per month, one may shell out a maximum Rs 50,000 towards EMI. Any property, priced above Rs 50 lakh, is unaffordable for this class,” Mr Ved Pal of Ved Properties said. He is a leading property broker in Gurgaon.

Sources say that in view of the sky-high property prices, there has been a major decline in end-user transactions in areas such as Gurgaon, Noida, Navi Mumbai and Mysore. “To a great extent, this has led to pricing being only notional. This is further proven by the fact that property prices in the secondary markets, is a significant 15-20% lesser than that in the primary market,” Mr Pal said.

But there are some who do not buy the theory of over-supply. CBRE managing director Anshuman Magazine is of the view that “oversupply of properties is just on paper and not in real terms. “Many projects are in the pipeline and been announced recently. We really don’t know, what lies ahead in future as these projects come up,” he added.

Unitech buys Vizag tract for Rs 3,328 cr

Real estate major Unitech is learnt to have closed the country’s largest single land deal by buying a 1,750-acre plot in Vishakhapatnam from the Andhra Pradesh Infrastructure & Industrial Corporation (APIIC) for Rs 3,328 crore.

Unitech’s deal is enormous in that DLF, India’s largest real estate firm, paid Rs 1,675 crore this August for buying 38 acres from DCM Shriram Consolidated (DSCL) in West Delhi.

Though DLF did win a Rs 50,000-crore bid for developing New Bangalore, a 9,000-acre township at Bidadi, the project did not involve a single land deal. It is, however, the largest in terms of size and investment.

The company will get some portion of the 9,000 acres from the state government but will have to buy a big chunk directly from farmers at Rs 57 lakh per acre. The exact split is yet to be disclosed.

As for the Unitech deal, industry sources said the company outbid Dubai-based Al Hamrah Real Estate Development LLC. The company plans to develop a total built-up area of 100 million sq ft, comprising villas, high-rise apartments, a golf course & club house, IT park, eco resort, hotel, shopping centre, amusement park, hospitals and educational centres.

The project will be developed at an estimated investment of Rs 30,000 crore, phase-wise, over the next 10 years. Unitech is targeting a revenue of Rs 75,000 crore from the project on completion, a source said.

Incidentally, the last 15-18 months have seen India’s two leading real estate developers pitted against each other for the biggest land deals. Last year, Unitech bagged a 340-acre deal in Noida for Rs 1,560 crore. This August, DLF bought the prime Swatantra Bharat Mills property from DSCL for Rs 1,675 crore.

Though Unitech’s Vizag deal is higher in terms of total value, the DLF-DSCL deal, at about Rs 44 crore, is significantly higher on a per acre basis. It also continues to be the largest private sector land deal.

Homes that count every inch

Heard of houses that have no doors and no corridors? Or of houses costing Rs 8 lakh that have bathrooms fitted with sensors and bum-washers?

At a time when real estate costs have hit prohibitive levels, Japanese-style condominiums that use every little space to the optimum and conserve energy to the maximum are in the works in India, an effort to deliver homes at a cost that's affordable to ordinary folk. "The thought of building such homes came about four years ago during a client briefing with my junior staff members. One of my staff wanted to know whether we would only be working for clients, or also build homes for ourselves, homes that common people could afford," says Amit Bagaria, chairman of Asipac.

Bangalore-based Asipac, a provider of concepts, planning and marketing solutions to the real estate market, along with over 20 builders (domestic and international) are planning India's biggest private sector housing venture—the Rs 62,000-crore Satyagriha Project, which proposes to build 342,000 homes in the next six years across India.

These homes will come up across 125 projects, to be built by developers like Bangalore-based Mantri, Salarpuria Group and Golden Gate Properties, Hyderabad-based Koncept Ambience, Jaipur-based Unique Builders Mannat, Chennai-based Marg Constructions and Israeli-consortium PBEL. M A Alagappan of Murugappa Group will invest in his personal capacity. The first project, at Jaipur, is planned to be launched in November, and the second, at Visakhapatnam, in January 2008.

Conceptualised along the Japanese idea of ‘space saving', the project proposes to deliver 1BHK (504 sq ft), 2BHK (900 sq ft) and 3BHK (1,206 sq ft) homes in the price bracket of Rs 7.75 lakh to Rs 23 lakh, substantially lower than most current offerings.

"While the real estate sector in India talks about square feet, in Japan they talk of square centimetre. So much so that Japanese houses don't even sport corridors," says Bagaria. Doors are wardrobes on wheels, making use of spaces that are otherwise of little use.

The houses are fitted with sensors to conserve electricity and water. Bathrooms have shower cubicles split into a wet and dry area. These have weight sensors—when a person steps into the wet area the water starts, and turns off the moment he steps into the dry area. The toilet bowls are fitted with bum-washers, which too conserves water. The Satyagriha consortium plans to customise these technologies to Indian requirements.

The other big cost advantage comes from standardising everything for the project, and having common design, specifications and centralised procurement. Individual projects would not require separate sets of architects, engineers and other back end staff. The procurement is expected to be of the order of Rs 28,000 crore, and doing this centrally could deliver enormous savings.

Sushil Mantri, MD of Mantri Developers, who plans to build 11 such projects, says, "Today's middle class consumers, who are the target audience for this project, are looking for functional homes and also want some amount of luxury."

Agri land continues to suffer in Andhra Pradesh

HYDERABAD: Agriculture in Andhra Pradesh is once again on the receiving end as more and more agricultural land makes way for other projects in the name of devolopment.

Tthis time, the international airport project at Shamsabad in Rengareddy district has taken big chunk of fertile land used to cultivate the castor crop in Andhra.

The real estate boom in the Hitech Hyderbad has also taken its toll on farm lands as more of these so-called devolopmental activities take palce there on a regular basis.

Ccaspor crop in particular has suffered most in the state as it lost 16250 hectares of land so far in Mehboob Nagar district. Nalgonda and Rangareddy districts which surround the capital has lost 30 to 40 percent of castor land in the last two years.

Tthough the state has gained some new castor areas in districts like Kurnool, the loss in traditional areas has not helped in increasing its national share of 25 percent.

Aandhra is only behind Gujarat which accounts for 65 percent of India's total castor production.

Red Fort Cap to pump in $425 mn on Indian real estate

Private equity firm Red Fort Capital will invest $ 425 million (about Rs 1,677 crore) this fiscal in the booming Indian real estate market and has tied up with the Prestige Group for a township project in Bangalore.

Red Fort India Real Estate Fund Managing Director Parry Singh said of the $ 425 million earmarked, it has already invested $ 225 million in five projects - one in Chennai and two each in Bangalore and Hyderabad.

Besides these projects, the firm has also tied up with the Prestige Group for a $ 250 million township project in Bangalore.

"The initial investment in the 800 acres mega township will be around $ 180 million, where we will put in $ 80 million and the remaining will be borne by the developer (Prestige)," Singh said.

He said Red Fort Capital (RFC) has not yet decided about the final investment.

The proposed township would feature 1,000 units of low-cost mass housing for Rs 1,100 per sq ft on 25 acre of land, he said.

This would be a mixed-use project, housing both residential and commercial properties, Singh said, adding "the township will constitute about 2,000 residential units in total."

On its Hyderabad project, Singh said RFC has invested Rs 200 crore to purchase land for building middle class housing units.

The company is currently developing the second phase of the Commercial Tech Park in Bangalore. "We are investing 35 million dollar for the second phase in 2.2 million sq ft of land," Singh said.

HSBC plans $600 mn Indian realty fund

London-headquartered financial services major HSBC is set to be the first foreign financial institution to raise an India-focused real estate fund. The banking major is planning to raise $500-600 million for the realty fund, with fund-raising likely to begin in the next few weeks, sources close to the development said.

“The bank is keen on getting a slice of the real estate market in India. However, the mandate of the realty fund would be such that a small portion of the corpus would also be invested in other sectors,” said an industry source.

An e-mail sent to HSBC Global Investment Banking director and co-head Ravi Menon did not elicit a response.

The proposed fund would be the first India-focused fund for HSBC. It has been making private equity investments in India through HSBC Private Equity (Asia) Ltd.

With real estate becoming a buzzword for investors, several companies have set up realty funds to cash in on the boom in the market. HDFC, Kotak Realty and IL&FS have set up real estate funds where international investors have put money to invest in opportunities in the India realty market. While HDFC raised a $750-million international fund in September last year, IL&FS Investment Managers raised a $502.57-million fund in May 2006. Kotak Realty recently concluded its second fund with a corpus of $400 million.

Some of the other global financial institutions looking to invest in Indian realty include — Goldman Sachs, Morgan Stanley, Lehman Brothers and Merrill Lynch. However, these financial institutions are looking to make investments through their global funds.

In India, HSBC has various subsidiaries, including an asset management arm, an insurance brokerage, a private equity management subsidiary and an investment banking arm. With assets of about $2,150 billion as of June 30, 2007, HSBC is one of the world’s largest banking and financial services organisations.

Realty Web site Makaan.com launched

The People Group’s consumer Internet Division, People Interactive, now offers a real estate service online at Makaan.com.

The Web site will help users make decisions related to buying, selling, renting and leasing of properties, in India and key global geographies.

The portal is currently focussed on the top 13 cities of India including Delhi, Mumbai, Kolkata, Bangalore, Chennai, Hyderabad, Ahmedabad, Pune, Chandigarh, Jaipur, Indore, Kochi and Ludhiana.

Anupam Mittal, CMD, People Group, said: “The Indian Internet community is fast growing and there is a surge in consumerism among the audiences. Fuelled by this growth, sectors like online real estate are looking extremely promising.

“Considering the potential of the industry, and the kind of investments that are going into it, we anticipate the online real estate market size to touch Rs 1,500 crore by 2015.”

Aditya Verma, Business Head, Makaan.com, said: “At present we get close to three lakh property seekers per month. 46 per cent of our registered users are real estate agents.”

Real Estate in India: A Survival Guide

India has experienced near-double-digit growth in the last several years and stories of the Indian economic juggernaut fill newspapers and bookstores. The commercial real estate market is no exception. The IT boom has created a huge demand for quality office space that was nonexistent a few short years ago. Several prominent Indian developers have emerged, and more and more international investors and developers are plunging into the country.

As with any local or regional market, there are many idiosyncrasies that color the business environment, and India is no exception. Below is an introduction into the current conditions within the Indian real estate market and what the future may hold as India quickly becomes a global superpower.

What City am I looking at?

India is a large country with an even larger population, and multi-national companies are taking a strategic approach to capitalize on this growing market and rich pool of talent. In terms of establishing office locations, most companies consider three types of cities:

Tier I cities are the hubs of business. The financial capital of Mumbai, the political capital of Delhi, and the technology capital of Bangalore are the first destination for most corporations and real estate demand and rental pricing reflect this. Consider this: office space in a prime location such as Nariman Point in Mumbai costs upwards of 350 Rupees per square foot per month (or approximately $105 per square foot per year), making it one of the most expensive real estate markets in the world. While bursting demand and constrictions on new supply have propelled rental rates, these cities face significant infrastructure issues, particularly road congestion, and the capital markets environment is somewhat stymied due to the prominence of strata title and opaque ownership history, specifically on older, more established assets in downtown locations.

Tier II cities such as Chennai, Hyderabad and Pune are the burgeoning centers of IT commerce. With large populations, developing infrastructure, airport connectivity and top-notch educational institutions, many companies look to establish large operational hubs here. While demand for space in these cities remains strong, stronger interest by developers has caused inflated land prices and many markets are predicting an oversupply of new office supply in the next ten to eighteen months. As a result, rental rates are leveling in many cities after several years of growth.

Too many to list, Tier III cities are those that have yet to see the formation of a formal real estate market, but to varying degrees have the right ingredients to attract multi-national tenants. Corporate occupiers are increasingly looking to gain first-movers advantage into cities such as Kolkata, Chandigarh, Kochi, Coimbatore and Vishakapatnam due to the potential of untapped labor markets and heavily discounted real estate costs that accompany less established locations. In light of rising costs, particularly in real estate and human capital, and a weaker dollar, these cities in coming years are sure to provide plenty of competition to Tier II cities.

What to Expect

Despite early signs of the market reaching a peak, most of India’s cities continue to be overwhelmingly a landlord’s market. All cities are still seeing multiple leases and active requirements from 100,000 to over 1 million square feet, and tenants are sometimes forced to wait months for the completion of core shell construction to start the hiring process for their new operations. Tenants are faced with the resulting conditions: no tenant improvement allowance, free rent periods that are only given during fit-out construction, and maintenance charges up to twenty percent above cost.

Things to Look Out For

A relatively young democracy – celebrating its 60th year of independence this year – India is still maturing economically and politically, and a thorough due diligence is required when considering India from an occupier or investor perspective. Local developers are still responsible for the majority of new supply in most markets and their reliability on timelines and construction quality varies. State governments play a key role in the viability of any particular market and a shift in power can cause major changes in the growth patterns of a city. Furthermore, the economic vehicles created for IT companies are a source of much debate. STPI, or Software Technology Parks of India, is a longstanding government agency, which provides tax benefits until 2009, and the extension of these benefits is unclear. The result of this is that the majority of new requirements are looking at Special Economic Zones, or SEZs, which allow for up to 15 years of tax holidays for both occupiers and developers. However, frequent changes in SEZ policy require companies to create a customized strategic plan with their tax consultant before commitment and occupancy. Likewise, there is no clearly defined exit strategy for SEZs and developers are currently required to adopt a long-term hold strategy on these assets.

The Future

Despite volatility in the US and elsewhere due to sub prime lending, Indian equity markets have remained strong, and this means companies from the subcontinent are quickly reaching market capitalizations and credit levels that allow for major acquisitions abroad. According to Grant Thornton, in the first eight months of 2007, there have been 164 acquisitions by Indian companies worth nearly $31 billion, compared to 73 in-bound deals worth $15 billion. Global brands such as Tetley Tea are already Indian-owned and Tata Steel made headlines early this year with its $12 billion acquisition of Corus Steel to become one of the world’s largest steelmakers. Indian realty major DLF made its Initial Public Offering in June and reached a market capitalization of over $20 billion, rivaling the sale price of Equity Office to Blackstone last year. Interest in institutional assets abroad is only inevitable and don’t be surprised to see Indian real estate majors such as DLF and Unitech or conglomerates such as Reliance and Tatas owning premium real estate assets in major US markets in the coming years.

India offers an unparalleled opportunity to participate in one of the fastest-growing economies in recent history. India’s integration into the global marketplace can be measured on a daily basis, and the most successful real estate occupiers and investors will be willing to adopt a flexible strategy that works with the country through this growth phase. If you do business here, look beyond the confronting challenges of overcrowded streets, poor infrastructure and still-pervasive poverty, and you’ll find a country of wonderful people, beautiful scenery, colorful history and plenty of opportunity. The Indian tiger is ready to pounce.

Real estate boom devours castor area in AP

Hyderabad: The agriculture sector is bearing the brunt of development in the periphery of Hydebard with a few thousand hectares of land falling prey to the real estate boom, triggered by the airport project at Shamshabad.

Hit badly

Castor crop is among to be badly hit. Mahboobnagar, which ranks number one in castor area in Andhra Pradesh, has lost 16,250 hectares so far this year. Against the normal area of 1.42 lakh hectares, castor has been in 1.24 lakh ha during the kharif season, that ended earlier this month.

The total castor area in Andhra Pradesh for the year is put at 2.35 lakh ha this year against 2.02 lakh ha last year. The average for last three years is 2.70 lakh ha.

Though Andhra Pradesh has gained some new castor area in districts such as Kurnool, the loss in the traditional areas has not helped in increasing its national share of 25 per cent. Andhra Pradesh ranks second after Gujarat in castor. Gujarat accounts for 65 per cent of India’s castor production.

The figures for Rangareddy district (in which the airport area falls) and Nalgonda areas are no better. Castor area has shrunk by 30-40 per cent in the last two years in these two districts that surround the State capital.

“If an acre of land is going at about Rs 1-2 crore, who will grow castor?” Mr Rajender Prashad Agarwal, President of AP Oil Millers’ Association told Business Line.

Real estate prices

Spurt in sponge iron units along the Shamshabad-Jadcherla belt and the trigger caused by the Outer Ring Road also resulted in steep hike in real estate prices in the traditional castor growing areas. The situation on the Srisailam road too witnessed sharp raise in real estate prices, he said.

Several grape gardens too gave in to the real estate boom, which seems to have slackened of late, in the last three-four years around the State capital.

“Had the State retained the traditional area, we could have increased our share to at least 30 per cent nationally,” Mr Agarwal said.

The real estate boom has resulted in yet another problem for the castor farmers in other surrounding areas. “They are not able to find labour in these areas as most of them would have gone to the city for work,” he said. “

Lodha to pay Rs 255cr for 12.9 acre land in Hyd

The Lodha Group, a Mumbai-based real estate developer, has won the bid for a 12.9-acre land auctioned by the Andhra Pradesh Housing Board.

The company quoted Rs 255.42 crore for the land located at Eden Square in Hyderabad - about 3 km from Hitec City.

It intends to build about three million sq.ft of retail, office and residential space on the site.

Why property prices are high when demand has fallen?

Banks are slashing interest rates for first-time home buyers. Reports suggest real estate prices have fallen by 10-20 % in many places. People are getting out of their rented apartments, scouring for housing deals in the festival season, which is when the real estate market takes a two-week nap.

However, the early birds are not finding any prize worms. Instead, they seem to run up against the familiar high rates, and belligerent attitudes. "I went back to the areas where I hunted for a house a year ago, and the builder is still quoting the same price. He was quite dismissive when I asked about a rate cut," says software professional Neha Swarup.

What's going on in the real estate market? Is the drop in demand just a myth? If not, why hasn't it brought prices down? "Of course, there's huge drop in the demand for property, and some deals have been struck at lower rates. But an overall drop in rates is yet to happen," says a real estate expert.

He points out that, traditionally, no deals take place during the Navratri season. "We are keeping a close watch on the situation. We believe that if there is no dramatic rise in demand by Diwali, real estate prices will come down." So perhaps if Neha were to wait it out some more, she may have some happy news. As for her anxiety about missing the bus to low interest rates, she can breathe e a s y. B a n k i n g officials say interest rates are unlikely to go up further. They believe the Reserve Bank of India is unlikely to keep up its monetary tightening measures.

While the news of lower rates gave Neha hope, it has left Ajit Ram puzzled. He was at a loss to understand why banks would offer lower interest on home loans to new customers, while existing customers would continue to pay higher rates. “In a floating rate loan, the interest rate should go up as well as down, along with other interest rates in the economy. When the rates were coming down a few years ago, there were hardly any downward revisions.

In the past year, my bank raised rates at least three times." Customers like Ajit feel banks have fooled them with floating rate loans. "It is oneway street. It is loaded against the customer.

Banks win when rates go up, and they still win when rates are coming down," says Nisha Krishna, who took a housing loan six years ago. "They change the rate as and when it suits them." Harsh Roongta, CEO, Apnaloan, uses an analogy to explain why banks treat existing customers differently. He says with a laugh, "An existing customer is taken for granted, like a spouse, whereas a new customers may be treated like a girlfriend, who can enjoy a few extra privileges."

Affin Investment’s Buy on SunCity

AFFIN Investment Bank Research has maintained its Buy call on Sunway City Bhd (SunCity) with a target price of RM6.88 based on its projects and the company’s proposed Real Estate Investment Trust (REIT) to generate further interest in the counter.

“We are raising our fully diluted revised net asset value (RNAV) target from RM5.80 to RM6.88 by increasing our valuation of the investment properties which will be placed under an upcoming REIT by 16% to RM3.7 billion, lowering our cap rate from 7% to 6%,” the research house said.

“We maintain our Buy call with an upgraded fully diluted RNAV-based target price of RM6.88, which implies a CY08 price over earnings (P/E) of 18 times,” it said.

Plans were in the pipeline for SunCity to secure another property project with a gross development value (GDV) of about RM700 million in Hyderabad, India. The project is at a “very advanced” negotiation stage with a joint venture (JV) partner. Details would be announced within the next eight months.

Affin Investment said SunCity could record significant earnings should there be a 50: 50 JV arrangement and a 30% pre-tax margin over a three-year development.

“This project could add RM26 million annually or 13% of our FY09 net profit forecast. Until this project is bagged and details provided, we maintain our forecast,” it said.

SunCity currently has two projects with a combined GDV of RM1.8 billion, and is looking to expand its landbank with a GDV potential of RM2 billion annually. It was also exploring markets in India, Vietnam and China.

SatNav's a-mantra enters real estate inds with Vatika Group

SatNav Technologies, a Hyderabad-based IT products company today announced that it will implement a-mantra for Vatika Group, a multi-tier organization with real estate, hospitality development and facilities management company based out of Gurgaon. This association marks a-mantra's entry into the Real Estate and Infrastructure segment after several successful implementations in IT Services, ITES/BPO, Banking & Financial and Educational Institutions.

SatNav's a-mantra would support the Vatika Group to manage and track their real estate property lease details and payment details along with automatic on time alerts in case of dues and delays for appropriate action. a-mantra will also help the company to track the leased and vacant floor information, rent received v/s investors payment details etc. for better utilization of the resources.

The asset management module will help the Vatika Group in handling centrally the procurement request and approval work flow, asset inventory, getting alert while reaching minimum stock level, helps to track the asset utilization, movement and tracking right until disposal of assets. The multiple location asset information and utilization pattern can be easily monitored and controlled by a-mantra.

a-mantra's Maintenance Management module will help the company in tracking the activities like AMC expiry and renewals, Preventive maintenance scheduling, updation and Maintenance Help Desk for any request or complaints.

Vatika Group's customers can log the maintenance request or complaints through the web application and track the request or complaint status whether it is getting closed within the accepted Turn-around Time or not. This will help the group to effectively manage their multi city real estate information and provide better customer service.

Speaking about the development, Mr. Amit Prasad, Founder CEO and MD, SatNav Technologies said, "We are pleased to work with Vatika Group and are glad that the management has recognized the value of an application like a-mantra which will not only bring in more efficiency across the organization, but also support in smooth operations and management across every functional area. a-mantra is our flagship product and implementing it in Vatika Group will give us more visibility and confidence with Real Estate and Infrastructure customers."

Mr. Gaurav Bhalla, Director (Marketing and Operations) - Vatika Group said "We are happy dealing with a-mantra and are hopeful that this application shall bring in more efficiencies in the system"

a-mantra implementation will include a module as per the authentication given by the system administrator which will integrate with the network so that no other credentials are required while logging in to the network. The application based on .NET platform will be database driven with an archival mechanism to archive and retrieve past events on request.

Going forward, SatNav would like to be associated with almost all the Real estate and Infrastructure companies in the country through a-mantra. In addition to product implementation, the company also offers a long term support program under which the maintaining of the system and the tracking of assets are done by the company's resources based out of either the client's office or its own premises

Realty check at the airport zone

Shamshabad is among those areas around the State capital that are poised for a boom in real estate prices, thanks to the upcoming international airport. Proposals for an Outer Ring Road, an MMTS station and categorised development are also players in the price game. But here exactly lies the mousetrap. Those falling for unapproved, illegal plots sold by fly-by-night property merchants are a growing population.

Call and find out


The legitimacy of land that you propose to buy could easily be verified by calling up (Phone: 27905371, extension 758) the Hyderabad Airport Development Authority (HADA).

HADA, to make things simpler and safer for prospective landowners and builders in Shamshabad, has a Master Plan for the Hyderabad Airport Development Area, which clearly demarcates residential sectors, commercial areas and bio-conservation zones where residential structures are not allowed.

The plan strategy also includes a Transferable Development Right (TDR) mechanism that compensates for space in plots that are affected by Master Plan roads. Accordingly, the owner can go for the desired development either in the built-up area, where otherwise there is restriction on activity, or anywhere else in the HADA area that spreads over 458.86 square km, covering 73 revenue villages and 19 hamlets.

The categories


The Master Plan demarcates the land into 10 categories: High Rise Promotion Zone (HRPZ), Medium Rise Promotion Zone (MRPZ), Low Rise Promotion Zone (LRPZ), Institutional and Special Reservation Zone, Work Centres, Transportation Zone, Recreational Zone, Bio-conservation Zone, Himayatsagar Afforestation and lastly, the Special Reservation Zone (see map).

HRPZ and MRPZ are where all types of residential developments (row houses, cluster houses, corporate townships, apartment complexes etc) are allowed. Commercial activities, institutional activities, auditoriums, public utilities and facilities like gas godowns, hospitals, petrol pumps, banks, restaurants, cinema halls and small scare industries are also allowed here. While the height limit for HRPZ is 15 metres, or ground plus four (G+4), the same in MRPZ is 12 metres or G+3.

LRPZ is where detached houses along with corporate townships and all the other above-mentioned activities are allowed.

While for residential buildings, the permitted height is seven metres (G+1), it goes up to 10 metres (G+2) for other activities. In all these three zones, however, only 20 percent of the built-up area can be used, the rest has to be left open.

The Bio-conservation Zone, where only agriculture, tourism and recreational activities are allowed, permits usage of five percent of the site area and also admits temporary structures for the above said activities.

Educational and institutional activities are also allowed, but only with a minimum area of 10 acres and with a height of 6 metres or G+1.

The Afforestation Zone, which along with the Bio-Conservation Zone denotes areas falling under the catchment area of the Himayatsagar, can have only temporary picnic huts and no development activity is allowed, except for agriculture, and that too those without using fertilisers. Temporary structures are supposed to use only five percent of the built-up area of the site here. "Shamshabad, particularly its locales outside the Bio-Conservation Zone, is growing into a most-sought-after investment opportunity. The super fast-track Bangalore Highway (NH-7) is busier than ever these days," says Mr. Sastry, a dealer who has posted a couple of plots for sale on the Internet.

Price factor


The prices on the Net touch Rs.10,000 per square yard, a fact that is however not corroborated by prominent real estate developers in the city.

"We are selling our plots, which have been approved by the Directorate of Town and Country Planning, and are outside the HADA bio-conservation zone, for Rs.2,500 per square yard. Yes, there are many people who are trying to sell off land in protected zones for lesser (Rs.1,000-1,500) and higher prices. Buyers should be careful with legal documents of all land deals here," advises M.V. Ramakrishna, the overseas development manager of Sreemitra Developers.

Take a lookExtreme caution needed when buying land in Shamshabad

Easy options available at HADA to verify legality of plots

Master Plan demarcates areas into 10 categories

Residences allowed only in High, Medium and Low Rise Promotion Zones.

The Zones

Work Centres: Residential structures except for corporate townships (with a minimum area of 100 acres) are not allowed. Reserved for industrial setups, offices and public facility/utility establishments, at a height of 15 metres or G+4.

Institutional and Special Reservation zone: For airport related activities and establishments and with a permitted stature of G+4 in areas that do not come across the air funnel, i.e., the flying path of aircraft. Offices, colleges, corporate townships, shopping complexes and hospitals along with other special projects are also allowed.

Recreational Zone: Earmarked for theme parks, resorts, hotels, tourism-based activities and public utility/facility setups, all to stop at a maximum height of 10 metres. Permitted coverage is 10 percent of site area with the rest to left open.

Central Squares: Sixty percent of site area can be utilised for educational/medical facilities and residences too, with a height of 15 metres or G+4.

Transportational Zone: For bus depots, truck terminals and similar activities.

ICICI Venture to float $2 bn real estate fund

ICICI Venture Funds Management Ltd is floating a $2 billion real estate fund — the largest in the country.

The fund, which will be launched next month, will have a tenure of ten years and the money will be invested in projects within three years.

The fund from the country’s largest private equity fund (it manages assets of over $2.5 billion in a diversified portfolio) comes just 18 months after it launched a real estate fund of $500 million. Of this, it has already invested 70 per cent in various projects.

ICICI Venture joins other majors such as Morgan Stanely, Citigroup, HDFC, J P Morgan, and Kishore Biyani that hope to cash in on the realty boom by floating real estate funds.

The private equity fund is planning to operate in the entire value chain of the real estate business and will now use part of the cash from the fund to build a land bank. It has also decided to buy and manage completed properties — commercial and residential — and sell them later.

Confirming the development, Renuka Ramnath, managing director and CEO of ICICI Venture Funds, said: “We will be able to raise large sums of money leveraging the ICICI brand name, coupled with over five years of experience in realty investment and, of course, a great international real estate developer as partner.”

ICICI Venture has a 50-50 joint venture with Tishman Speyer, TSI Ventures, to develop new projects with other partners. The fund has also tied up with developers to finance and build new properties in India.

For instance, TSI Ventures, in association with Nagarjuna Constructions Company Private Ltd, has won a bid to develop an integrated township at Tellapur, Hyderabad on a 400-acre plot.

Red Fort Cap to pump in $425 mn on Indian real estate

Private equity firm Red Fort Capital will invest $ 425 million (about Rs 1,677 crore) this fiscal in the booming Indian real estate market and has tied up with the Prestige Group for a township project in Bangalore.

Red Fort India Real Estate Fund Managing Director Parry Singh said of the $ 425 million earmarked, it has already invested $ 225 million in five projects - one in Chennai and two each in Bangalore and Hyderabad.

Besides these projects, the firm has also tied up with the Prestige Group for a $ 250 million township project in Bangalore.

"The initial investment in the 800 acres mega township will be around $ 180 million, where we will put in $ 80 million and the remaining will be borne by the developer (Prestige)," Singh said.

He said Red Fort Capital (RFC) has not yet decided about the final investment.

The proposed township would feature 1,000 units of low-cost mass housing for Rs 1,100 per sq ft on 25 acre of land, he said.

This would be a mixed-use project, housing both residential and commercial properties, Singh said, adding "the township will constitute about 2,000 residential units in total."

On its Hyderabad project, Singh said RFC has invested Rs 200 crore to purchase land for building middle class housing units.

The company is currently developing the second phase of the Commercial Tech Park in Bangalore. "We are investing 35 million dollar for the second phase in 2.2 million sq ft of land," Singh said.

DLF to pump in Rs 160 bn to build 20 malls

Real estate industry leader DLF plans to infuse Rs 160 billion over a period of four years to develop about 20 large shopping malls across the country, reports Mint.

The company intends to make this investment for development of the 22 million sq ft of shopping mall space. It is also coming out with a 4.45 million sq ft mall in Gurgaon, which is touted as the largest such facility in the country.

DLF plans to set up malls at places like Chennai, Kochi, Hyderabad, Kolkata, Bangalore, Panipat, Jalandhar, Baroda, Goa, Mumbai and Ludhiana.

The company which raised over Rs 90 billion from the capital market in June, last week announced to borrow about Rs 60 billion from overseas market to execute its business plan. Its business plan includes investment in projects in India and abroad and buying shares in DLF Offices Trust`s IPO in Singapore.

DLF, which currently has a market capitalisation of about Rs 1,480 billion, sealed the country`s biggest land deal by buying 38 acres in the national capital for Rs 16.75 billion.

Shares of the company closed down Rs 52.90, or 5.76%, at Rs 865.65. The total volume of shares traded at the BSE was 1,614,122.

Up goes the market value

In some places the land value has been hiked by even 100 per cent. Despite that, there is a difference of 50 per cent between the Government rate and the seller's rate in certain areas, writes M. SAI GOPAL

PICK OF THE LOT: Market value of land in parts of Banjara Hills has gone up by 10 to 15 per cent after the recent revision.

Fresh round of hike in the market values of lands for registrations came into effect on February 1 in the twin cities and eight other important regions under municipal corporations in the State.

The Stamps and Registration Department had formally recommended to the State Government for an increase in the market value of land in Hyderabad from zero to 100 per cent depending on the potential of each region in the city.

Despite the revision, there is a yawning gap between the new Government market value and the existing market values.

In some cases, the difference is as high as 50 per cent between the Government rates and rates quoted by sellers.

"In a way, this could to some extent curtail the flow of black money, which generally goes to builder, developer or the seller. It will also help professionals seek more loans from banks who always provide loans based only on the Government market values," said an official.

Sobha strengthens on new project

Real-estate developer Sobha Developers went up by 10.10 per cent to Rs 983.55, on reports that it has bagged a real-estate project worth Rs 6,400 crore at Hyderabad.

The project will be jointly developed with Reliance Energy and Andhra Pradesh Industrial Infrastructure Corporation. Sobha will hold 23 per cent in the project. The stock has gained by 11.81 per cent in a week and 31.30 per cent in a month. The volumes on BSE were 1.39 lakh shares.

Permission for taller buildings may lead to problems on roads

HYDERABAD: Will the latest sops announced by the State government for building owners of plots abutting Banjara Hills Road 1, 2 and 3 and Road No. 36 of Jubilee Hills, who have parted with some land for road widening, turn the traffic flow from worst to impossible?

The latest decision to allow construction of buildings to a height of 30 metres in lieu of the area lost to road widening may see more commercial complexes coming up on these roads and the proportional increase in the density of traffic. The building regulations under GO 86 already permit unlimited FSI, allowing any number of floors and increasing the density on the roads. For instance, in Banjara Hills and Jubilee Hills, the existing building regulations allowed a height of 15 metres, i.e. stilt plus six floors. Now with the new relaxation given on the widened roads, 12 floors will be allowed.

Parking problems

For instance on Road No. 2 from Punjagutta to Jubilee Hills check post, already shops have come up creating parking problems and choking the road in some stretches. If Road No.1 already has many commercial buildings and many more under final stages of construction, Road Nos. 2 and 3 are relatively better at present. But the scenario will change when more multi-storeyed complexes come up.

Moreover, after widening of Road No. 3, all the commercial establishments are opening directly on to the road with no service road provision.

On such roads, doubling the density is suicidal and in one year, everyone would see the negative impact on the traffic.

“Traffic is going to kill Hyderabad,” says a Planning Department official.

But GHMC officials do not anticipate such a serious scenario. The left side of the Banjara Hills Rd. No.1 from Nagarjuna Circle to Masab Tank already has multi-storeyed structures and some more like GVK Mall are under construction and the new relaxation will mostly apply to buildings on the right side.

The Rd. No.1 is being widened to 100 ft with only four to five properties yet to be acquired. Of 109 properties affected on either side of the road, 50 to 60 properties are on the left side which can exploit the new relaxation to go up to a height of 30 metres.

However, the height of 30 metres will be allowed only when buildings satisfy norms such as plot size of 2,000 sq.m., setback, 44 per cent of total built up area for parking, etc., they say.

REL consortium bags Hyderabad tower project

A consortium led by Anil Dhirubhai Ambani owned Reliance Energy Limited (REL) has bagged the Rs. 6,000 crore trade tower project in Hyderabad entailing construction of the tallest building in the country.

The project, awarded by the Andhra Pradesh Government, will involve development of a 100-storey building that will also have a business centre. According to company officials here, the consortium received a Letter of Award (LoA) from the Andhra Pradesh Industrial Infrastructure Corporation for the project, which involves development of over 77 acres.

The scope of the work involves design, development, funding, construction, marketing, operation and maintenance of the project, for which a special purpose vehicle (SPV) will be formed by the consortium and APIIC. The project would be completed in three phases. The trade tower on over four million sq. ft. would be set up in the first phase. The second module would comprise developing the business district on 30 acres in seven years. The development of phase II of the business district on the remaining 16.28 acres would form part of the third module, the sources said.

Biotech could be next big driver of realty prices

Biotechnology could be the next big driver of commercial real estate prices. It's expected to need 80 to 100 million square feet by 2010. Investment in such factories has been growing fast. In 2003, Rs 14 crore were invested and in 2006, the figure more than doubled to Rs 36 crore. The biotech sector has grown 33% since last year.

Its revenues total USD 2 billion, but by 2010, revenues will reach USD 5 billion. That's what a report from property consultant, Jones Lang Lasalle Meghraj says.

It says international firms like Glaxo Smithkline and Pfizer, are investing in the industry, which will boost real-estate demand.

Vincent Lottefier, CEO, JLLM said, “India is no longer relying purely on the IT sector to grow the real estate industry. The access to the talent pool, the infrastructure and the costs of labour and equally the costs of components, it has a big impact on their decision to come into India".

Although Mumbai has traditionally been the preferred choice of location, companies are focusing on cities where land prices are more reasonable. In Hyderabad, for instance, land values in some areas jumped 30-40% after ICICI Knowledge Park and Shapoorji Pallonji Biotech Park came up there. Other popular destinations include Bangalore, Pune and the National Capital Region.

The report says various incentives such as 100% foreign equity investment, customs duty exemption, and 100% tax rebate on R&D expenditure, offered by the government, have made this sector attractive. So, investors are flocking to the sector. There are six biotech parks in India and 19 more are in the pipeline.

Real Estate in India: A Survival Guide

India has experienced near-double-digit growth in the last several years and stories of the Indian economic juggernaut fill newspapers and bookstores. The commercial real estate market is no exception. The IT boom has created a huge demand for quality office space that was nonexistent a few short years ago. Several prominent Indian developers have emerged, and more and more international investors and developers are plunging into the country.

As with any local or regional market, there are many idiosyncrasies that color the business environment, and India is no exception. Below is an introduction into the current conditions within the Indian real estate market and what the future may hold as India quickly becomes a global superpower.

What City am I looking at?

India is a large country with an even larger population, and multi-national companies are taking a strategic approach to capitalize on this growing market and rich pool of talent. In terms of establishing office locations, most companies consider three types of cities:

Tier I cities are the hubs of business. The financial capital of Mumbai, the political capital of Delhi, and the technology capital of Bangalore are the first destination for most corporations and real estate demand and rental pricing reflect this. Consider this: office space in a prime location such as Nariman Point in Mumbai costs upwards of 350 Rupees per square foot per month (or approximately $105 per square foot per year), making it one of the most expensive real estate markets in the world. While bursting demand and constrictions on new supply have propelled rental rates, these cities face significant infrastructure issues, particularly road congestion, and the capital markets environment is somewhat stymied due to the prominence of strata title and opaque ownership history, specifically on older, more established assets in downtown locations.

Tier II cities such as Chennai, Hyderabad and Pune are the burgeoning centers of IT commerce. With large populations, developing infrastructure, airport connectivity and top-notch educational institutions, many companies look to establish large operational hubs here. While demand for space in these cities remains strong, stronger interest by developers has caused inflated land prices and many markets are predicting an oversupply of new office supply in the next ten to eighteen months. As a result, rental rates are leveling in many cities after several years of growth.

Too many to list, Tier III cities are those that have yet to see the formation of a formal real estate market, but to varying degrees have the right ingredients to attract multi-national tenants. Corporate occupiers are increasingly looking to gain first-movers advantage into cities such as Kolkata, Chandigarh, Kochi, Coimbatore and Vishakapatnam due to the potential of untapped labor markets and heavily discounted real estate costs that accompany less established locations. In light of rising costs, particularly in real estate and human capital, and a weaker dollar, these cities in coming years are sure to provide plenty of competition to Tier II cities.

What to Expect

Despite early signs of the market reaching a peak, most of India’s cities continue to be overwhelmingly a landlord’s market. All cities are still seeing multiple leases and active requirements from 100,000 to over 1 million square feet, and tenants are sometimes forced to wait months for the completion of core shell construction to start the hiring process for their new operations. Tenants are faced with the resulting conditions: no tenant improvement allowance, free rent periods that are only given during fit-out construction, and maintenance charges up to twenty percent above cost.

Things to Look Out For

A relatively young democracy – celebrating its 60th year of independence this year – India is still maturing economically and politically, and a thorough due diligence is required when considering India from an occupier or investor perspective. Local developers are still responsible for the majority of new supply in most markets and their reliability on timelines and construction quality varies. State governments play a key role in the viability of any particular market and a shift in power can cause major changes in the growth patterns of a city. Furthermore, the economic vehicles created for IT companies are a source of much debate. STPI, or Software Technology Parks of India, is a longstanding government agency, which provides tax benefits until 2009, and the extension of these benefits is unclear. The result of this is that the majority of new requirements are looking at Special Economic Zones, or SEZs, which allow for up to 15 years of tax holidays for both occupiers and developers. However, frequent changes in SEZ policy require companies to create a customized strategic plan with their tax consultant before commitment and occupancy. Likewise, there is no clearly defined exit strategy for SEZs and developers are currently required to adopt a long-term hold strategy on these assets.

The Future

Despite volatility in the US and elsewhere due to sub prime lending, Indian equity markets have remained strong, and this means companies from the subcontinent are quickly reaching market capitalizations and credit levels that allow for major acquisitions abroad. According to Grant Thornton, in the first eight months of 2007, there have been 164 acquisitions by Indian companies worth nearly $31 billion, compared to 73 in-bound deals worth $15 billion. Global brands such as Tetley Tea are already Indian-owned and Tata Steel made headlines early this year with its $12 billion acquisition of Corus Steel to become one of the world’s largest steelmakers. Indian realty major DLF made its Initial Public Offering in June and reached a market capitalization of over $20 billion, rivaling the sale price of Equity Office to Blackstone last year. Interest in institutional assets abroad is only inevitable and don’t be surprised to see Indian real estate majors such as DLF and Unitech or conglomerates such as Reliance and Tatas owning premium real estate assets in major US markets in the coming years.

India offers an unparalleled opportunity to participate in one of the fastest-growing economies in recent history. India’s integration into the global marketplace can be measured on a daily basis, and the most successful real estate occupiers and investors will be willing to adopt a flexible strategy that works with the country through this growth phase. If you do business here, look beyond the confronting challenges of overcrowded streets, poor infrastructure and still-pervasive poverty, and you’ll find a country of wonderful people, beautiful scenery, colorful history and plenty of opportunity. The Indian tiger is ready to pounce.

Prajay Engineers Syndicate: Buy

Investors with a 2-3 year perspective can consider buying the stock of Prajay Engineers Syndicate. Land holdings acquired at low cost and projects in hand that could translate into higher revenues, superior return on equity and attractive valuations make this stock a preferred investment among the middle-rung real estate companies. At the current market price, the stock trades at eight times its expected earnings for FY 2008, assuming full conversion of its foreign currency convertible bonds into equity.

Prajay has made steady progress in its business, starting out as a low-cost housing developer and transforming into a builder of premium houses. It has traditionally enjoyed high operating profit margins (OPMs) on the back of high demand and a low cost land bank mostly in Hyderabad.

After foraying into premium segments, the company now benefits from healthy volumes as well as high returns from its projects. This is reflected in the company’s OPMs jumping from about 31 per cent in 2004-05 to 47 per cent in 2006-07.

The residential segment, especially in Hyderabad, has traditionally accounted for most of the company’s revenues. Prajay has, however, diversified to foray into the commercial, retail and hospitality segments, which now account for about 28 per cent of its current developable area. Most of these projects are in Hyderabad, indicating that the company prefers to contain risk by treading on familiar ground.

For its venture into the hospitality segment, Prajay has chosen its locations well. For instance, its five-star hotel near the Shamshabad International airport can be expected to have robust occupancy, given the air traffic growth in Hyderabad and that the old airport would no longer function after the new one becomes operational by mid-2008.

Prajay has a comfortable land bank of 850 acres, mostly in Andhra Pradesh and hopes to develop 32 million square feet of saleable area over the next five years. This does appear challenging, as it is nearly four times the size of projects executed so far. However, the company’s familiarity with the region, its joint venture with the Malaysia-based realty player Sunway Group and comfortable financials after raising funds through FCCBs in 2006, allay concerns about execution risks.

The stock may not be able to enjoy the premium valuations enjoyed by the more geographically diversified real estate players. The good growth prospects and consistency in financial performance, aided by an improving home loan interest rate scenario, suggest that the stock could have good potential.

Huge turnout at Indian real estate fair

The two-day Indian Property Exhibition, which was inaugurated on Thursday at the Al Falaj hotel auditorium, created quite a stir with the crowds thronging in to check what leading builders from India had to offer.

Both the days of the exhibition saw crowds of buyers and investors turn out in huge numbers. On display were projects varying from plots to fully furnished apartments and villas.

A similar exhibition held in Dubai last month generated Rs3 billion of business and sales close to Rs1 billion, organisers informed.

In Muscat, the organisers were hopeful that this show too would generate similar business with builders participating in the event offering special incentives for spot booking.

For instance, Dhammangi’s Group from Bangalore was offering a free Suzuki Alto car for every flat booked during the exhibition.

The properties available at the exhibition ranged from Rs1.5 million to Rs20 million. Easy finance options were also available for buyers with HDFC Ltd offering home loans for the NRI buyers.

“There were multiple projects on display and we could compare the prices and features before deciding on our dream home,” said a buyer who had zeroed in on a project at the exhibition.

“From the customer’s point of view, there is a comfort level, which stems from the fact that most of the participants have proven credentials and the deals are transparent,” he added.

The third Indian Property Exhibition was organised by Indus Fairs to address the rising need for quality homes with its guidelines, guidance and plenty of choices. In Oman, the event was marketed by Sixth Element Advertising and sponsored by Vatika, with Premier Properties, Vakil, Our Town as co-sponsors.

The exhibition offered key solutions for Indian expatriates to find their choice of homes across India — be it apartments, independent villas, bungalows or farmhouses.

More than 150 projects in New Delhi, Mumbai, Kolkata, Burdwan (West Bengal), Hyderabad, Chennai, Bangalore, Mysore, Hosur, Vizag, Coimbatore, Trichy, Madurai, Ooty, Thirunelveli, Courtallam, Pattukottai, Ludhiana, Ajman, Panipat, Ghaziabad, Mohali, Sonipet, Meerut, Bhatinda, Karnal, Jaipur, Lucknow, Gurgaon, Jodhpur, Kundli, Chandigarh, Dindugal, Nagarcoil, Kanyakumari, Tirupur, Salem, Sathur and many other locations were on show at the exhibition.

“An exhibition like this offers a one-stop answer to those tired of running from one developer to another in search of a dream home,” said a buyer.

“There cannot be a better time to buy property in India, as many cities are now preferred destinations for IT majors.

“Software development has kick-started the real estate activity. Jaipur is one such city which has benefited from the IT boom,” said Ravi Kapur, director of Vatika Infotech City Jaipur who participated in the exhibition.

The property exhibition, which showcased nearly 150 projects under one roof, provided the customer a wide range of options to choose from and help him take an informed decision.

Realty in AP after the dollar slump

HYDERABAD: Real estate prices have slumped drastically in the last few months and industry analysts point to the changing rupee-dollar parity and stablilisation of salaries in the private sector as the culprits.

“Property market in Hyderabad is no more for locals. We see several international players investing in the city’s real estate. All this is for the future. For, now, there is a slump," builders forum president C Shekhar Reddy told ‘TOI’.

Reddy attributes the slump to the dollar’s continuous fall against the rupee (with it slipping to below Rs 40 for the first time in a decade) and the plateauing of high-end salaries in the private sector. As a result, realtors are wooing buyers with ads like"Open plots for Rs 3,999 a sq yard. Available on monthly instalments," and"Book a plot today and win a two-night, three-day stay in Singapore".

Areas in the outskirts like Maheshwaram, Tukkuguda and Shamshabad, which have been witnessing an unprecedented boom in the last year with the price for an acre touching as much as Rs 1.5 crore, are now in the grip of desperate transactions."Now, there are no takers for as much as Rs 20 lakh an acre in these areas. It is those real estate traders that are getting into a desperate act now. Landlords are not worried since there can never be a depreciation in the price. Even if there is a slump, it’ll catch up again. Holding onto land is like investing in a blue chip company in the stock market," Shekhar Reddy said.

According to experts, the real estate market has now gone beyond the reach of the middle classes. The villas and plots for independent houses on the outskirts have gone beyond the affordability of the salaried class and what is for sale now are for the high-end buyers in the form of gated communities and luxury apartments."As the marketing gurus speak, the market has gone beyond the masses — the middle class — making it fit only for the high-income groups. As this is not a volume game, the prices have seen a natural correction," head of a housing finance company said.

However, according to bankers, the slump in the last six months is more a cyclical factor than a trend in the market."The first half of a calendar year is normally a dull period for the property market. Going by the previous years’ trend, the second half will be more active with people preferring to buy property during the festival season. Though the future course will be known only after the two festivals in October and November, for now, the prices have reached a plateau," regional head of a housing finance company said.

In the housing sector, builders do not see any scope for an upside in the mid-market segment. Houses sold Rs 2,000-2,500 a sft are categorised as mid-market properties."The mid market products may not see any upside in the medium term. But, the luxury properties being sold at over Rs 4,000 sft and luxury independent houses being sold for over Rs 2 crore a house are witnessing some continuous increase," Mahender, Indu Projects’ head of marketing and sales, said.

Real estate market to touch $90 bn by 2015

Base of Indian real estate market, growing at 30%, is estimated to touch $90 billion by 2015 from current levels of $14 billion. This will help the economy to continue growing between 9-10% according to a survey carried out by industry chamber, Assocham.

Additional requirement of 370 million sqft space in urban areas by 2010 by IT, ITeS, financial services and organized retail alone has made real estate most lucrative, providing returns ranging from 20 to 30%.
Organized retail in India has the potential to add business worth $48 billion by 2010, thereby pushing up demand for at least 220 million sqft of retail space by 2010. While $10 billion is expected to flow into the sector by end 2008, by 2010, it is projected to touch $15 billion.

Factors contributing to the boom

* Repealing Urban Land (Ceiling & Regulation) Act 1976, rescind of Rent Control Act and increasing floor-area-ratio

* Greater transparency has brought in new players like High Net Worth Individuals (HNIs), FIIs and more than 100 private equity companies

* IT and ITES, banking and financial services have created huge demand for office space

* IT and ITES alone will need 150 million sqft across urban India by 2010. Services will clock double-digit growth, keeping demand of office space robust. Analysts have pegged total demand for commercial office real estate in Bangalore, Chennai, Delhi-NCR, Mumbai, Pune, Hyderabad and Kolkata to cross 25 million sqft in 2006

* 2006-07 witnessed organized retail growth at 25-30%, experiencing capital appreciation of 25-35%. Nearly 96% of India’s retail sector is still unorganized, which is propelling interest of domestic majors such as Reliance, A V Birla Group, Bharti and global biggies including Wal Mart and Texas

* Government is spending heavily on infrastructure development (express highways, airports, hi-tech construction in power plants etc); Indian Infrastructure is estimated to cross $400 billion and programmes like Jawaharlal Nehru Urban Renewal Mission, Bharat Nirman and the National Highways Development Programme will create high momentum in real estate sector.

Future projections

* Hospitality industry has seen high growth. Global players like private equity funds and JVs between Hilton-DLF, Emaar-MGF-Accor and Nirmal Lifestyle-Accor will mature with 175 plus hotels being constructed within next five years

* Upcoming SEZs will be new avenues of land development. Total land requirement of about 33,808 hectares for the 234 formally approved SEZs indicates amount of land that would be available for development. Total number of SEZs notified under SEZ Act and Rules was 132 as of July 23, 2007. Though concept is mired in too many controversies, it is a matter of time that consensus would be arrived among all stakeholders.

Air Deccan to connect Bangalore-Vijaywada directly from Oct 29

Hyderabad: Air Deccan has announced the launch of its direct flights connecting Bangalore to Vijayawada from October 29.

An ATR aircraft will be deployed to serve this route and commercial operations and booking for flights are open.

One of the largest cities of Andhra Pradesh, Vijayawada is a prominent hub of automobile, garments, iron and hardware industries. The city is fast emerging as a prominent economic centre in south India, an official release said in Hyderabad on Wednesday.

"Air connectivity is a key infrastructure for the development of industry and commerce in cities such as Vijayawada," Capt GR Gopinath, Executive Chairman, Deccan Aviation said in the release.

It further stated that "presently the only travel options between the two cities is either by road or trains taking up more than 16 hours. With time being at a premium, our new sector will provide a viable travel option for SMEs and visitors alike".

"Air Deccan was the airlines to bring air connectivity to Vijayawada, and going forward we will continue to scale up our connectivity from the city," Gopinath said.

The flight would leave Bangalore at 1020 hrs and arrive at Vijayawada at 1200 hrs. It will depart from Vijayawada at 1220 hrs and would land at Bangalore at 1400 hrs (except Sundays), the release said.

The airline offers dynamic pricing on its entire seat inventory with fares beginning at Rs 500 (plus taxes and surcharge), it added.

Maytas Infra looking to enter airport development biz

Hyderabad: Hyderabad-based construction and infrastructure development firm Maytas Infra Ltd plans to enter the airport development and operation business through alliances with strategic partners.

“We are looking to enter the airport development business,” said B. Teja Raju, vice-chairman. Raju is the eldest son of B. Ramalinga Raju, co-founder of India’s fourth largest computer services firm by revenues, Satyam Computer Services Ltd.
A view of the Delhi airport, being developed by a consortium led by the GMR Group. Maytas plans to develop and operate airports as government policy now encourages private participation

A view of the Delhi airport, being developed by a consortium led by the GMR Group. Maytas plans to develop and operate airports as government policy now encourages private participation

Maytas will team up with an experienced airport operator in order to qualify to bid for upcoming projects, said Raju, declining to elaborate. Maytas is looking to bid for low-cost airports in Karnataka, a company official said.

India needs an investment of nearly Rs40,000 crore in building and modernizing its airports by 2010, according to the Union ministry of civil aviation. Besides modernizing airports in large cities, the central government is upgrading 35 non-metro airports. The government also plans to build seven new airports apart from encouraging the setting up of so-called merchant and low- cost airports.
The Tata group, for instance, has tied up with Singapore’s Changi Airport Authority to also bid for low-cost airports in Karnataka.

Deccan Aviation Ltd, which runs India’s largest low fare carrier Air Deccan, is also planning to develop small airports in partnership with construction companies.

The proposed entry into airports comes ahead of plans by Maytas to sell 8.85 million shares in an initial public offer with plans to raise up to Rs327 crore. The share sale, scheduled to run between 27 September and 4 October, will constitute 15% of the post-issue capital of the firm. Maytas posted a net profit of Rs55 crore on revenues of Rs641 crore in the year ended March. It held orders worth Rs3,600 crore as on June 30.

Maytas has also filed an expression of interest to bid for the proposed Rs900 crore coal and iron ore berths at the central government-run Paradip port, teaming up with another Hyderabad construction firm Nagarjuna Construction Co. Ltd and Kakinada Seaports Ltd.

S. Mohan Gurunath, head, strategic deals group of Maytas, said that a consortium comprising Maytas, Nagarjuna, SREI Infrastructure Finance Ltd and Sarat Chatterjee & Co. has won a Rs1,255-crore project to build and operate a deepwater port at Machilipatnam in Andhra Pradesh.

“We are currently finalizing the terms of the contract with the Andhra Pradesh government,” said Gurunath. The new port is slated to start operations in January 2010, with three berths having a capacity to handle 17 million tonnes a year of cargo.

Maytas is also one of the entities shortlisted by the Andhra Pradesh government to build a Rs6,366 crore, 60 km-long metro rail project in Hyderabad. Maytas has teamed up with Malaxmi NBFA Ventures Pvt. Ltd (an infrastructure development company formed by Nava Bharat Ferro Alloys Ltd and Malaxmi Group Pvt. Ltd), Infrastructure Leasing & Financial Services Ltd and Thailand-based construction firm Italian-Thai Development Public Co. Ltd to bid for the Hyderabad metro rail project.