One sector on which alarm bells are ringing today is real estate. Although stocks are having a rough session, the money raising continues. Sobha Developers is planning a QIP of three crore shares reports CNBC-TV18, quoting sources.
The book is open for Sobha Developers is what we understand for the QIP (Qualified Institutional Placement). Three core shares are what they are offering in the QIP book and the floor price is going to be Rs 227 which is a two-week average. So given the floor price, the total fund raising plan is Rs 680 crore. Only yesterday in the EGM (Extraordinary General Meeting) the company got an approval to raise up to Rs 1,500 crore via various means including QIP. So in the first tranch as I understand now they have opened the book to investors and they are looking at raising Rs 680 to 700 crore via this QIP issue.
In terms of dilution, it means that the promoters’ holding will come from 83% to close to 62–63%, so there is going to be a good amount of dilution from the promoters through this QIP issue. But I do know from investment banking sources that the QIP book has opened today with three crore shares and the floor price is Rs 227.
Friday, June 19, 2009
Thursday, June 11, 2009
States, PEs queue up for Nano homes
Tata Housing Development Company, a subsidiary of Tata Sons, which recently announced low-cost housing project Shubh Griha, is learnt to be in talks with various state governments for developing similar projects. The houses are priced at around Rs 4 lakh.
Managing director & CEO of Tata Housing Brotin Banerjee confirmed the news. “There have been some proposals from state governments offering us partnerships for affordable housing projects, but we have no announcement to make now,” he said. It is believed that the company may adopt the public-private partnership (PPP) route with the state governments by year-end. It was not possible to ascertain which state governments have approached Tata Housing for these projects. The company is also believed to be in talks with private equity players for its forthcoming projects, which could cost anywhere between Rs 1,500-2,000 crores.
Meanwhile, it’s also learnt that the company would soon announce three more projects with an investment of around Rs 300 crore around Mumbai and Pune. A senior official in the company told ET, “We have the option of 16 land parcels in Mumbai where we can start the projects. Some land deals will be an outright purchase while we will go in for a JV with the land owner in the case of the others,” the official added.
Tata Housing’s Shubha Griha project will come up at Boisar, which is about two-and-half hours by train from Mumbai. This project will be ready in two years. “For the new projects, we would give preference to those who did not get their home in Boisar,” the official said. This project is often referred to as the Nano housing project. The company had earlier said that around 16,000 forms were sold for this project with 5,500 people having applied. Eventually, 1000 houses would be allotted through a random selection of forms or a lottery system.
Earlier, Tata Housing had announced that they would build a total of 16,000 houses within the next two years across the country. Referring to the option of bringing in private equity money, the official said, “In the affordable housing project the return is anywhere between 20% to 25% which is lesser than what normally prevails. We are in talks with PE players who would not mind lesser but secure returns,” the official added.
Tata Housing recently tied up with Micro Housing Finance Corporation (MHFC), a microfinance institute, and intends adopting the same model going forward. “Our customers belong to low-income groups who can buy a house but may not have documents required to obtain a housing loan. The MFIs and other financial institutions we have tied up with understand this and provide loans without these documents,” added Mr Banerjee.
Managing director & CEO of Tata Housing Brotin Banerjee confirmed the news. “There have been some proposals from state governments offering us partnerships for affordable housing projects, but we have no announcement to make now,” he said. It is believed that the company may adopt the public-private partnership (PPP) route with the state governments by year-end. It was not possible to ascertain which state governments have approached Tata Housing for these projects. The company is also believed to be in talks with private equity players for its forthcoming projects, which could cost anywhere between Rs 1,500-2,000 crores.
Meanwhile, it’s also learnt that the company would soon announce three more projects with an investment of around Rs 300 crore around Mumbai and Pune. A senior official in the company told ET, “We have the option of 16 land parcels in Mumbai where we can start the projects. Some land deals will be an outright purchase while we will go in for a JV with the land owner in the case of the others,” the official added.
Tata Housing’s Shubha Griha project will come up at Boisar, which is about two-and-half hours by train from Mumbai. This project will be ready in two years. “For the new projects, we would give preference to those who did not get their home in Boisar,” the official said. This project is often referred to as the Nano housing project. The company had earlier said that around 16,000 forms were sold for this project with 5,500 people having applied. Eventually, 1000 houses would be allotted through a random selection of forms or a lottery system.
Earlier, Tata Housing had announced that they would build a total of 16,000 houses within the next two years across the country. Referring to the option of bringing in private equity money, the official said, “In the affordable housing project the return is anywhere between 20% to 25% which is lesser than what normally prevails. We are in talks with PE players who would not mind lesser but secure returns,” the official added.
Tata Housing recently tied up with Micro Housing Finance Corporation (MHFC), a microfinance institute, and intends adopting the same model going forward. “Our customers belong to low-income groups who can buy a house but may not have documents required to obtain a housing loan. The MFIs and other financial institutions we have tied up with understand this and provide loans without these documents,” added Mr Banerjee.
Saturday, June 6, 2009
Real estate developers homing in on residential projects
While the sudden rise in demand for affordable residential housing in the last couple of months has given the much-needed relief to real estate developers, commercial and retail segments continue to face the heat of oversupply, combined with declining rental rates and lower demand from investors.
As a result, developers have deferred a majority of the ongoing commercial and retail projects, which were scheduled for completion in 2009-10, and are instead focusing on the residential market. In fact, according to real estate consultants Cushman & Wakefield, developers will be forced to defer 41 per cent of the projected office space supply in 2009.
“Out of 76 million sq ft of commercial (office) space projected across eight cities by many developers, only 45 million sq ft is expected to be completed in 2009. In the retail segment, out of the 14.5 million sq ft of projected space, only 3.6 million sq ft is expected to enter the market,” Cushman & Wakefield’s Executive Director Kaustav Roy said.
The supply overhang in commercial and retail segments is expected to continue for another 12-18 months, feel experts. At the same time, a sharp decline in the price of residential units — in terms of per sq ft rate as well as size — has resulted in a sharp increase in demand. As per conservative estimates, 60 million sq ft of residential space has been lined up for launch in 2009.
One of the key reasons for this poor demand in commercial and retail segments is the non–availability of Real Estate Investment Trusts (REITs), which could not take off because of complex legal hurdles and the sudden crash in the stock market in 2008.
While many of the real estate companies — such as DLF Asset Ltd, Unitech, Indiabulls Real Estate and Purvankara, among others — were planning to raise resources through REITs’ listing, only Indiabulls successfully raised $286 million by listing its REITs on the Singapore Stock Exchange. The failure of REITs to take off has affected the financial position of developers and, in turn, further delayed the completion of ongoing retail and commercial projects.
“In the past one year, everything has been against the commercial real estate. Private equity vanished from the markets, while the government increased risk rating on the real estate sector. The failure of REITs to pick up added to the financial crunch of the developers,” commercial real estate services company CB Richard Ellis’ Chairman and Managing Director Anshuman Magazine said.
“Developers are not in a position to complete their commercial projects due to a lack of funds, a demand-supply mismatch and falling rentals,” he added.
The country’s largest developer, DLF, has already received an approval to denotify four of its SEZs. In addition, it has also temporarily stopped construction work on nearly 16 million sq ft of office and retail mall space out of the 62 million sq ft of planned construction.
As a result, developers have deferred a majority of the ongoing commercial and retail projects, which were scheduled for completion in 2009-10, and are instead focusing on the residential market. In fact, according to real estate consultants Cushman & Wakefield, developers will be forced to defer 41 per cent of the projected office space supply in 2009.
“Out of 76 million sq ft of commercial (office) space projected across eight cities by many developers, only 45 million sq ft is expected to be completed in 2009. In the retail segment, out of the 14.5 million sq ft of projected space, only 3.6 million sq ft is expected to enter the market,” Cushman & Wakefield’s Executive Director Kaustav Roy said.
The supply overhang in commercial and retail segments is expected to continue for another 12-18 months, feel experts. At the same time, a sharp decline in the price of residential units — in terms of per sq ft rate as well as size — has resulted in a sharp increase in demand. As per conservative estimates, 60 million sq ft of residential space has been lined up for launch in 2009.
One of the key reasons for this poor demand in commercial and retail segments is the non–availability of Real Estate Investment Trusts (REITs), which could not take off because of complex legal hurdles and the sudden crash in the stock market in 2008.
While many of the real estate companies — such as DLF Asset Ltd, Unitech, Indiabulls Real Estate and Purvankara, among others — were planning to raise resources through REITs’ listing, only Indiabulls successfully raised $286 million by listing its REITs on the Singapore Stock Exchange. The failure of REITs to take off has affected the financial position of developers and, in turn, further delayed the completion of ongoing retail and commercial projects.
“In the past one year, everything has been against the commercial real estate. Private equity vanished from the markets, while the government increased risk rating on the real estate sector. The failure of REITs to pick up added to the financial crunch of the developers,” commercial real estate services company CB Richard Ellis’ Chairman and Managing Director Anshuman Magazine said.
“Developers are not in a position to complete their commercial projects due to a lack of funds, a demand-supply mismatch and falling rentals,” he added.
The country’s largest developer, DLF, has already received an approval to denotify four of its SEZs. In addition, it has also temporarily stopped construction work on nearly 16 million sq ft of office and retail mall space out of the 62 million sq ft of planned construction.
Friday, June 5, 2009
Mumbai SEZ in danger of being scrapped
The country’s largest special economic zone (SEZ), promoted jointly by Reliance Industries Chairman Mukesh Ambani and his confidant Anand Jain, is in danger of being scrapped. The zone was being set up by a company called Mumbai SEZ Ltd in the Raigad district of Maharashtra.
The threat to the SEZ follows the Supreme Court’s refusal to stay the land acquisition process that otherwise has to conclude by Monday, June 8. A Bench headed by Justice B Sudarshan Reddy dismissed Mumbai SEZ’s plea challenging a Bombay High Court interim order that refused to stay the land acquisition process. A stay by the Supreme Court would have made the deadline redundant.
The company has spent Rs 600 crore on land acquisition but the process had stalled following protests in 22 villages. The state government then held a referendum on the project among villagers last year but has not yet released the results.
Mumbai SEZ had filed a writ petition last month before the high court, seeking a direction to the Raigad district administration to speed up the land acquisition initiated under the provisions of the Land Acquisition Act, 1984.
Land acquisition for SEZs has to be completed within two years from the date of approval.
The Mumbai SEZ project, which was to come up over 10,000 hectares at an investment of Rs 40,000 crore, was approved in June 2005 and the deadline has been extended twice.
A Mumbai SEZ spokesperson declined to comment when asked about the company’s course of action.
Senior Maharashtra government officials, however, said the project’s future appeared bleak, given that the state was headed for Assembly elections in October. Land acquisition for industrial projects is a highly emotive issue and no government wanted to do anything that was perceived as being harmful to the villagers' interests.
Sources familiar with the developments, however, said there was hope for Mumbai SEZ. One, the Supreme Court simultaneously issued a notice to the Maharashtra government on another plea by the Mumbai SEZ, seeking to transfer its petition pending before the Bombay High Court.
Last year, the apex court had transferred a number of SEZ cases to itself from various high courts. All the writ petitions, some by land owners and some in public interest, challenge the validity and procedure of land acquisition in various states for building SEZs. The Supreme Court is yet to hear those cases.
J P Dange, the state’s additional chief secretary (revenue & forests), said the government would take a decision on granting an extension to the land acquisition process only after receiving a specific request from the company to that effect.
Convener of the People Against Globalisation, Ulka Mahajan, who headed the anti-SEZ agitation, welcomed the apex court’s decision and said, “The decision has strengthened our belief that even mighty corporations can be forced to eat humble pie using peaceful and democratic means of agitation.”
The state government will need to carry out detailed consultations and study the legal provisions before deciding what to do with the land the company has already acquired from farmers, Dange said. If the project is scrapped, one option available to the state government is to return the land after taking it over from the company. However, the state government can also use it for other public purposes. A Supreme Court judgement in the case involving the Kerala government allowed such a change of purpose, an official said.
Thursday, June 4, 2009
Global property consultant RE/MAX to expand network
RE/MAX, a US-based international property consultant, is expanding its network of franchisees in India to offer a range of real estate transaction services.
Mr Samir Chopra, who is part of a consortium that operates the master franchisee for India, said RE/MAX brings into the real estate agents business a high degree of organisation and professionalism. RE/MAX brings into India a working style that has helped it spread its presence in 74 countries and over 7,000 offices.
Mr Chopra who was in Chennai to sign up the RE/MAX owner for Chennai region, said the company has earlier tied up with a owner for the Mumbai region. It would spread this franchisee network in stages across the country. In each region – in major cities such as Mumbai there would be over 100 offices.
RE/MAX’s system provides for a 2-3 per cent commission on transactions and the maximum share of the commission goes to the field-level staff. The personnel who actually effect the transactions and the broker office share over 90 per cent of the commission equally, 7 per cent goes to the region owner, 2.1 per cent to the India master franchisee and 0.9 per cent to the RE/MAX international.
The operators in the RE/MAX network get the benefit of the international network through a referral system, support systems such as training and region-centric advertisement campaigns.
RE/MAX will handle property transactions across the entire gamut of real estate business covering residential, commercial and industrial, including plantations.
Mr Samir Chopra, who is part of a consortium that operates the master franchisee for India, said RE/MAX brings into the real estate agents business a high degree of organisation and professionalism. RE/MAX brings into India a working style that has helped it spread its presence in 74 countries and over 7,000 offices.
Mr Chopra who was in Chennai to sign up the RE/MAX owner for Chennai region, said the company has earlier tied up with a owner for the Mumbai region. It would spread this franchisee network in stages across the country. In each region – in major cities such as Mumbai there would be over 100 offices.
RE/MAX’s system provides for a 2-3 per cent commission on transactions and the maximum share of the commission goes to the field-level staff. The personnel who actually effect the transactions and the broker office share over 90 per cent of the commission equally, 7 per cent goes to the region owner, 2.1 per cent to the India master franchisee and 0.9 per cent to the RE/MAX international.
The operators in the RE/MAX network get the benefit of the international network through a referral system, support systems such as training and region-centric advertisement campaigns.
RE/MAX will handle property transactions across the entire gamut of real estate business covering residential, commercial and industrial, including plantations.
Tuesday, June 2, 2009
Parsvnath gets approval for La-Tropicana project
New Delhi, June 2 Parsvnath Landmark Developers, a subsidiary of Parsvnath Developers Ltd, on Monday said it has received approvals to commence construction of premium luxury project La-Tropicana in Delhi.
The approvals include sanction of the building plans by the Municipal Corporation of Delhi.
The company is eyeing a realisation of about Rs 1,300 crore in three years from the project.
The land and construction cost would add up to Rs 700 crore, the Parsvnath Chairman, Mr Pradeep Jain, said, adding that 1.2 million sq ft (of the total 2 million sq ft) of residential space, had already been booked.
Work started
“The excavation work at the site has already been completed and now we shall be deploying equipment and manpower to take up construction in full swing and complete the project within the time frame,” he said.
The approvals include sanction of the building plans by the Municipal Corporation of Delhi.
The company is eyeing a realisation of about Rs 1,300 crore in three years from the project.
The land and construction cost would add up to Rs 700 crore, the Parsvnath Chairman, Mr Pradeep Jain, said, adding that 1.2 million sq ft (of the total 2 million sq ft) of residential space, had already been booked.
Work started
“The excavation work at the site has already been completed and now we shall be deploying equipment and manpower to take up construction in full swing and complete the project within the time frame,” he said.
Bangalore realty market showing positive signs
After months of lull, the real estate market in Bangalore is showing signs of revival. The real estate market is now growing by 15-20 per cent compared to last year.
Though the rental and capital values in most of the micro markets witnessed a downward trend in the last 6-8 months, for the end-users or investors the secondary market has been a lucrative option in comparison to the primary market.
But now demand for residential spaces is looking up again, and a few frontline developers have been successful in improving their sales. Though demand for commercial and retail spaces has not caught on, those in the sector feel it could just be a matter of time before things improve.
While sales has been impacted due to current economic scenario coupled with prevalent job insecurity, revival of the economy in the coming months, stable government at the Centre and positive rulings by regulatory authorities will give the much needed impetus to the realty sector, says Mr Sandeep Trivedi, Director – Development Consulting, Cushman & Wakefield India, a real estate services firm.
“Coming to terms with reality, there are positive signs in the market. New projects are being announced and residential construction is picking up; slow, but sure, signs of a change for the better,” says Mr Sridhar Kulkarni, Head – Marketing (Karnataka and Andhra Pradesh), Shriram Properties. In pockets such as Bangalore North and South, there is a sign of increase in demand now, he adds.
Sales Push
Mr Trivedi says in the last few months, developers have also been offering cash discount or providing additional room for the same cost to push sales in the primary segment.
“The State Government’s recent amendment in the registration cost is another positive factor for the residential sector.”
The residential demand is up 30-40 per cent in the mid-to-low income segments since March for residential apartments priced below Rs 30 lakh, says Mr Kulkarni.
In the commercial segment, leasing has picked up 5 per cent in volume terms in the first quarter of 2009-10.
Mr Koshy Varghese, Managing Director, Value Designbuild, feels that pricing is still soft.
“The natural path will be increase in demand due to lower prices leading to firmer prices. If the credit flow improves and builders can complete construction, a firming of prices will happen.” He adds that there is a firming of prices on ready units “where the seller is not desperate”
Though the rental and capital values in most of the micro markets witnessed a downward trend in the last 6-8 months, for the end-users or investors the secondary market has been a lucrative option in comparison to the primary market.
But now demand for residential spaces is looking up again, and a few frontline developers have been successful in improving their sales. Though demand for commercial and retail spaces has not caught on, those in the sector feel it could just be a matter of time before things improve.
While sales has been impacted due to current economic scenario coupled with prevalent job insecurity, revival of the economy in the coming months, stable government at the Centre and positive rulings by regulatory authorities will give the much needed impetus to the realty sector, says Mr Sandeep Trivedi, Director – Development Consulting, Cushman & Wakefield India, a real estate services firm.
“Coming to terms with reality, there are positive signs in the market. New projects are being announced and residential construction is picking up; slow, but sure, signs of a change for the better,” says Mr Sridhar Kulkarni, Head – Marketing (Karnataka and Andhra Pradesh), Shriram Properties. In pockets such as Bangalore North and South, there is a sign of increase in demand now, he adds.
Sales Push
Mr Trivedi says in the last few months, developers have also been offering cash discount or providing additional room for the same cost to push sales in the primary segment.
“The State Government’s recent amendment in the registration cost is another positive factor for the residential sector.”
The residential demand is up 30-40 per cent in the mid-to-low income segments since March for residential apartments priced below Rs 30 lakh, says Mr Kulkarni.
In the commercial segment, leasing has picked up 5 per cent in volume terms in the first quarter of 2009-10.
Mr Koshy Varghese, Managing Director, Value Designbuild, feels that pricing is still soft.
“The natural path will be increase in demand due to lower prices leading to firmer prices. If the credit flow improves and builders can complete construction, a firming of prices will happen.” He adds that there is a firming of prices on ready units “where the seller is not desperate”
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