Category: General

DLF Conferred Best Global Developer Award For 2009 By Euromoney

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DLF Ltd has been conferred the Best Global Developer Award for 2009 by Euromoney magazine at Euromoney’s Fifth Annual Real Estate Awards - the most prestigious awards in global real estate. Further, DLF has also won the awards for Best Developer in Asia and Best Developer in India. The award ceremony was held in London amidst the senior management of leading global leaders. DLF won the honour for the best global developer services even with tough competition from other nominations, such as CapitaLand and ProLogis.Commenting on the receipt of the award, K P Singh, chairman, DLF Ltd, said, “There is tremendous prestige and honour attached to these awards as they acknowledge the best of the best in the real estate industry. To be named as the best developer, not just in India, but across the globe, is definitely an achievement. It fortifies our vision to be a world - class real estate developer and provide best quality developments.”

Euromoney is the world’s leading financial markets magazine. Clive Horwood, editor of Euromoney, said, “In an increasingly challenging financial environment, the winners of the 2009 Euromoney Real Estate Awards are those that exhibited the ability to react at speed, innovate, and make best use of the inherent strengths of their organisation. Through the real estate poll, the market has recognised the achievements of these institutions in the face of difficult market conditions, which is why the awards are so richly deserved.”Euromoney’s annual Real Estate Survey canvassed the opinions of real estate developers, advisors, financial institutions, investors and end-users worldwide, who were asked to name which firms they thought were best at providing various real estate products and services in their market in the last 12 months. While DLF was accorded third position in these awards last year, it moved to being named the best global developer this year.

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IL&Amp;FS Chief Takes Over As Maytas Infra Chairman

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A month after a Company Law Board ordered the handing over of the erstwhile Teja Raju promoted Maytas Infra to IL&FS, its chairman Ravi Parthasarathy finally took over the reins of Maytas Infra as chairman on Tuesday. Parthasarathy takes charge following completion of the transition process as per SEBI guidelines with effect from September 29. The government has also recalled two out of its four nominees from the Maytas Infra board with effect from Tuesday. While K Ramalingam and OP Vaish have been recalled, Ved Jain and Anil Agarwal will continue to remain on the board of the company.

With this, IL&FS has formally taken over as the new promoter of Maytas Infra, which was being run by government -appointed board comprising chairman K Ramalingam and three other directors since March 2009. In the aftermath of the Satyam scam, the operations of Maytas Infra, then promoted by Ramalinga Raju's elder son Teja Raju, had come to a grinding halt. The CLB had in its order issued last month to hand over the company to IL&FS, had ordered Maytas Infra vicechairman and CEO Teja Raju,as well as his family friend B Narasimha Rao to step down from the company's board. Since then IL&FS had made an open offer in early September to acquire an additional 20% stake in the company for a price of Rs 112.80 per share and hike its stakeholding in Maytas to 57.1%. IL&FS already holds 37.1% stake in Maytas Infra as the Rajus had pledged the stake with the infrastructure financing firm to raise funds in October 2007 soon after the company was listed. htttp://

Realtors Pin Hopes On Festivals

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PROPERTY firms are launching new housing projects and raising pitch for their ongoing projects hoping to make decent sales going into the festive season. The mood among builders may be buoyant but few believe price hike is possible as demand is still hesitant and new supplies are hitting the market. The festive season, which usually begins late September with Hindu festival of Navratri and continues up to Christmas holidays, often sees higher sales of property, cars and other durables in India. “Last year’s festive season was a total washout. But this time indications are that we are back to normal,” said Mumbai-based Lodha Developers director Abhisheck Lodha. He said property firms usually make 30% of their sales in one and a half month between Navratri and Diwali, and this time will be no different. Last festive season, though, was disastrous. Lehman had just collapsed plunging the entire global economy in a crisis and driving away homebuyers fearing for their jobs.

Mr Lodha is planning to launch two new real estate projects, comprising apartments priced over Rs 1 crore, in Mumbai’s suburbs of Andheri and Thane. So far, the slow return of housing demand was scripted by lower-priced homes. But Lodha’s offerings indicate the builder is confident of getting buyers to high-priced segment as well. Similarly in Delhi, DLF is preparing to launch over 1500 apartments in a project in which it sold 1350 apartments just six months ago. DLF says it is yet to fix a price or number of apartment to be sold for the project, but brokers on behalf of DLF are offering apartments at a 30% premium to the first phase price. “If a location has a very good demand and not enough supply, prices will go up,” says DLF executive director Rajiv Talwar. Delhi may be one such market because it has lived under state-controlled DDA’s monopoly for long and has not many private developers building homes. But price rise is not something many are really betting on. “Housing demand is not going to rise dramatically in a hurry. The market remains price-sensitive and any attempt at price hike will adversely impact demand,” says Vipin Aggarwal, principal of $200-million India Industrial Growth Fund. Agrees Pradeep Jain, chairman of Parsvnath Developers and head of the NCR chapter of industry body CREDAI, “We have requested all developers not to increase prices. If we increase prices in the next six months, it’s likely that demand will be hurt and we may get into that vicious circle of lower demand and higher debt.”


While some firms like DLF & Omaxe believe price rise is imminent, others like Parsvnath have decided to keep prices steady to encourage demand Last festive season was disastrous. Lehman collapsed plunging the economy in a crisis and driving away homebuyers The festive season, which usually begins late September with the Hindu festival of Navratra and continues up to Christmas, often sees higher sales of property, cars and other durables

Quinn Group Unveils Q-City In Hyderabad

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Quinn Group, a leading business conglomerate from Ireland, has unveiled Q-City, a Class-A commercial building in Hyderabad, which sets a new benchmark in quality commercial real estate. This is the first offering in India from Quinn Property, the division of Quinn Group, specialising in development and management of premium quality commercial real-estate for lease. Q City Hyderabad, a signature property located at Gachibowli, in the midst of marquee organizations like Microsoft, Infosys, Wipro, Computer Associates, UBS, Franklin Templeton, Polaris, ICICI amongst others. Q-city is a modern international office development consisting of two blocks with a total built-up area of 1.2 million sq.ft. Speaking to mediapersons here today on the launch of their first project, Peter Quinn, Head-Quinn property said, "India is an exciting market for us with immense potential in the commercial real-estate space. The location where Quinn developed its first project is one of the most prominent ones in the South Asian region with the presence of many marquee organizations and with many more planning to set-up operations".

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Improved Affordability In Housing Requirement

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With fall in interest rates in the last eight months, affordability factor of house buyers has improved substantially. During the period, interest rates on home loans up to Rs 30 lakh have declined by around three percentage points to 9%, from 12%. This sharp decline in rate has improved the capacity of borrowers.For instance, at 12%, the EMI on Rs 10 lakh loan to be repaid in 20 years is Rs 11,010. But, with interest rate at 9%, a person can borrow Rs 12,30,000 with the same EMI. That means, now he can buy a house that is almost of 20% higher value than what he could have done in 2008.

In the meantime, since January, prices of residential units have also fallen by up to 30%. Together, these two factors have led to an increase in construction activities in the country. This has also brought housing within the reach of a large number of buyers. As per the Housing Development Finance Corporation Limited (HDFC), the largest lender in the housing loan market in India, the maximum affordability of a household has been computed to be 5.1 times its annual income. In other words, for a household earning Rs 3 lakh a year, an affordable house should cost at most Rs 15 lakh. The report of a high level task force under the chairmanship of Deepak Parekh, chairman of HDFC, delves into the various aspects of providing affordable housing and has recommended a similar definition of affordability. In fact, it has been seen that if one buys a house within these limits, the chances of default go down substantially. A prospective buyer's purchase decision is influenced by a host of factors ranging from price points to location. Due to the growing awareness among consumers, choice of facilities and amenities are also found to be important determinants. Uninterrupted power supply, water supply and safety and security are the other three important factors influencing a buyers decision with respect to residential project in a preferred location. The potential buyers are not much concerned about developers brand and goodwill. The survey has brought out factors influencing preferences of potential buyers pertaining to locations, projects and amenities within the projects.

Many of the so-called affordable projects are offering apartments with an area of 1,200 sq ft and above. In such cases, even though a project is affordable on the basis of rate per sq ft as calculated by Knight Frank research, the larger size of the apartments make them unaffordable. Higher cost of living and lifestyle have adversely impacted affordability of households in Mumbai and Bangalore, compared to cities like Kolkata and Hyderabad. For instance, middle class households in Kolkata, Chennai and Hyderabad can afford houses valued at Rs 14-45 lakh, whereas households of a similar status in Mumbai can only afford houses valued at Rs 12-38 lakh.The primary deterrent in providing affordable housing in cities is the high land cost involved in developing such projects. While construction cost has increased marginally in the last few years, land cost in contrast has gone up several times.

Realtors Turn Malls And Office Plans Into Homes

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With developers forced to return to the drawing board to make projects financially viable, the landscape is, indeed, changing.Look what TTK Prestige, the cooker-to-condom maker, said in a notice to the Bombay Stock Exchange last week.In 2007, the company had entered into a joint development agreement with Kolkata-based Salarpuria Group to develop a 6.3 acre site in Dooravani Nagar, Bangalore.The initial plan was to construct a mall to ensure recurring rentals. But the financial crisis has forced a change: residential blocks will be added to the project."Taking into account the ground reality, Salarpuria suggested putting up a residential-cum-office space. But a decision on this is yet to be taken," said K Shankaran, director and secretary, TTK Prestige.The management feels the new plan makes sense from a liquidity point of view.

Also last week, another firm, Sunteck Realty, said it was revisiting its project --a commercial complex on a 1.5 acre site between Kandivali and Borivali. "The project hadn't even reached the drawing board when we closed the deal a few months back. However, taking into account the oversupply situation in Mumbai's commercial space, we thought it prudent to develop a high-end residential complex instead, with a small portion of retail added to it," said Sunteck Realty managing director Kamal Khetan.Orbit Corporation, the south Mumbai realtor, decided convert its 2.5 lakh sq ft commercial development, called the Hafeez Contractor House in Lower Parel, into a residential project. Pujeet Agarwal, managing director, Orbit, said the company is actually converting two commercial developments -- the Lower Parel one and another in Andheri -- into residential ones.Realty analysts said oversupply and declining demand is making such commercial space development unviable."The government's initiatives towards reducing borrowing costs is reflected in declining interest rates on home loans. This, coupled with realty prices getting more realistic are helping maintain the excitement in the residential space," said Sanjay Dutt, CEO, business, Jones Lang LaSalle Meghraj, the real estate consultancy.Revival in demand for commercial space, meanwhile, will largely depend on the global economic scenario.

"The only movement that I see is offices being relocated to more reasonably priced commercial developments thereby cutting costs," said Dutt. Investment bank Goldman Sachs in a recent report, said primary residential volume trends (year to date till May this year) indicated recovery in markets such as Mumbai and Noida."Inventory days in the two cities have fallen back to early 2008 levels or better. However, the overhang in Bangalore, Chennai, Gurgaon and Hyderabad remains significant with at least 15 months of inventory in the pipeline," Goldman analysts Vishnu Gopal and Aditya Soman wrote.

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Top Nine Listed Real Estate Firms 76% Dip In Profit And 57% Fall

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India’s struggling realty industry may have sprouted some green shoots of late, but the top nine listed real estate firms posted a 76% dip in profit and 57% fall in sales in the June quarter, prompting the segment leader to observe that the industry is not “completely out of the woods”. Analysts said the revival in demand could improve things, especially in light of a government subsidy for loans taken for affordable housing, but warned that a possible price war between players sitting on huge inventories could spoil the scene. “The recovery of the sector will depend a lot on the sustenance of demand,” said Shailesh Kanani, a real estate analyst with Angel Broking.

Rupesh Sankhe, another real estate analyst with Centrum Broking, felt low-priced homes will continue to drive up demand , even though it may not be, “anywhere close to what we saw in 2006 and 2007”. DLF, India’s largest listed real estate developer, sold 2.5 million sqft of home space in Delhi and Bangalore in June quarter and wants to launch another 16 million sqft of residential space this fiscal. DLF reported a 79% decline in profit and 57% slide in sales for the June quarter.“There has been a reasonable revival in demand for homes not just in low-cost or mid-income , but also for high-end ,” DLF vicechairman Rajiv Singh told an analyst conference call on Friday. His immediate competitor, Unitech, reported 63% decline in profit with sales down by half. “Property prices have come down and so has the interest rate. That’s why home buyers are again looking at the property market ,” said R Nagraju, head of corporate planning at Unitech. The firm is targeting to sell a total of 30 million sqft of space this fiscal. Other realty players Indiabulls Real Estate, Parsvnath, Omaxe, HDIL, Akruti, Sobha and Purvankara too have reported decline in profits up to 95% for the June quarter. Parsvnath chairman Pradeep Jain said the worst was over for the sector and demand had started picking up. But the pick-up in demand hasn’t really erased all concerns as DLF’s Rajiv Singh said the sector was still not “completely out of the woods.”

Much of the new bookings received in residential projects have been in what developers call ‘affordable’ category or homes priced between Rs 20-35 lakh. Encouraged by the response , more developers are readying to launch homes in this segment. The tax benefits announced recently by the government for smaller homes is likely to act as additional incentive for projects in the category. “Supply is likely to increase faster than the demand in the residential market, as many developers, who had been postponing their launches for a long time are now launching new projects ,” says another analyst with a Mumbai-based brokerage firm, who didn’t want to be named. He says prices may correct further as new supplies hit the market.Mr Sankhe of Centrum believes the scope for price correction in low-price segment is limited, but high-end homes can still see property prices drop at least 10%. Some real estate developers such as HDIL and privately held Lodha developers have claimed that prices have already started firming up in Mumbai. But analysts as well as some developers, including DLF and Unitech, say price hike would hit demand and not be good for the sector at this stage.

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More Malls Vacant In Cities As Retail Pace Slows

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Even as demand seems to be returning slowly to the residential space, the retail real estate market continues to look disappointing. The average vacancy across malls in major cities shot up to 19 per cent during the second quarter (April-June) of 2009 against 10 per cent in the last quarter. It is also expected that over 50 per cent of the estimated mall supply planned for 2009 will be delayed due to slowing construction and deferment of mall space, and also withdrawal of previously-announced retail projects. According to global property consultant Cushman and Wakefield, the Delhi NCR (National Capital Region) is expected to see the maximum deferment of mall supply in this regard at 3.9 million sq ft, followed by Kolkata at 2.5 million sq ft. According to the quarterly report by the consultant, this quarter too was marked by subdued retail activity, as retailers continued to remain cautious about expansion. "Mall supply was only marginally higher by 3 per cent from the previous quarter and was recorded at 1.14 million sq. ft. Expected mall supply by the end of 2009 is reduced to 8.55 million sq.ft about 50 per cent lower than what was estimated at the beginning of the year," it said.

Surge in supply

The vacancy rates rose on the back of a slowdown in uptake of mall space and churn among existing clients. This, in turn, prompted a further correction in the mall rentals. Surge in supply but a relatively slower absorption of malls space in the NCR led to vacancy of nearly 26 per cent in the second quarter of 2009. The vacancy level in Mumbai continued at nine per cent, while Chennai - in the absence of fresh mall supply and restrained churn - witnessed mall vacancy of only one per cent.

New malls

Hyderabad witnessed the largest infusion of mall supply of about 450,000 sq. ft., followed by Bangalore, which saw an addition of 300,000 sq. ft. in fresh mall supply. Kolkata (215,000 sq. ft.) and the NCR (175,000 sq. ft.) were the other markets that saw fresh additions to mall supply. "Many upcoming malls have been deferred or in certain cases withdrawn given the rather lukewarm response from retailers," the report said. The demand for mall space across most micro-markets remained slow due to conservative approaches from retailers and overall slowdown in consumer demand, it said. Slowing retail demand in many micro-markets led to rental values either remaining stable or correcting marginally, in the range of 5-10 per cent, over the previous quarter.

According to Mr Jaideep Wahi, Director, Agency, Retail Services, Cushman & Wakefield, there could be more corrections as a result of renegotiations. "Retailers are looking at changing their business understanding with upcoming malls into a revenue share or minimum guarantee model as an alternative to the fixed rental model previously employed," Mr Wahi said.

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AP Government To Call For Fresh Bids Hyderabad Metro

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BL reported that after scrapping the INR 12,132 crore project contract awarded to the Maytas Infra led consortium, the Andhra Pradesh Government recently decided to call for fresh global bids for the Hyderabad Metro Rail Project. While the project cost would remain the same, the government has decided to increase the caution money from 0.5% of the contract to 1%, which works out to INR 120 crore. Mr Anam Ramnarayan Reddy State minister for Urban Development said "The State Government is keen to put the project on fast track and expects to make up for the lost time due to cancellation of contract awarded to Maytas Infra."

Speaking to reporters after a review of the project with Dr YS Rajasekhara Reddy CM of AP, Mr Reddy said while the project cost would remain the same, the Government expects to take this up now basing on viability gap funding mode. This is in contrast to earlier approach of awarding the contract to Maytas Infra, which had based the project on commercial exploitation of real estate. In fact, it had promised to pay back about INR 30,000 crore during the contract period and drew flak from experts. for more details visit

25 Percent Upswing In India’S Housing Market

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Activity levels are gaining traction in the near moribund housing market as a flurry of interest rate cuts, price drops and the building industry's focus on affordable housing start to lure buyers back into the market. A cross section of banks, property developers and real estate consultancies confirmed that the rise in activity levels since the start of the year had picked up momentum in the last three months, with some in the sector saying that sales were up by as much as 25-30% since April, after witnessing a growth of 10-15% during the first quarter of 2009.

India's property market started showing signs of serious trouble nearly a year ago with first the American sub-prime crisis and later the Lehman bankruptcy playing havoc. The overpriced projects by builders found few takers which was worsened with the IT industry facing a major setback.Builders were stuck with high-end apartments which had no takers. There was a severe drop in sales with people wanting to conserve resources. As a result, property prices too fell 30-45% since peak of 2007, according to industry estimates. But today the scenario is different, with builders getting a mix of mid end and affordable housing into their portfolio.

Raminder Grover, CEO-Homebay Residential, Jones Lang LaSalle Meghraj, says the revival in sales has been, conservatively speaking, to the tune of around 25% across the mid-to-high income segments, according to his company's sales records. Rohtas Goel, CMD of Delhi-based Omaxe too says there has been a 30% increase in sales thanks to factors such as a reversal in general economic sentiment after the elections and more options available in affordable housing. Statistics too would appear to bear this out. India's largest real estate developer DLF says it has sold almost 1,500 flats in various cities since April, notably some 400 flats in its mainstay market Gurgaon, 700 in Bangalore, 100 plots in Indore, 200 flats in Hyderabad and 50 in Cochin. Rival Unitech has managed to sell more than 4,000 units in the last two and a half months in the National Capital Region, Chennai and Mumbai.

Omaxe has also sold almost 500 apartments in its Omaxe Eternity project in Vrindavan. Niranjan Hiranandani, MD of Hiranandani Developers says there had been a sale of 7,000 apartments across the industry, mainly in Mumbai suburbs, over the last 60 days. Despite indications of improving demand, builders don't seem to be in a hurry to raise prices. They are conscious that demand was up due to price cuts and the affordable housing strategy. Builders are loathe to do anything that could incipient recovery. "We will not be looking at a price increase," says DLF's group executive director Rajeev Talwar. The company says it has cut prices by up to 30% from peak levels of 2007. Others point out that the demand is coming from the low-end housing segment comprising house prices under Rs 25 lakh. "Buyers have come out of the waiting mode...By December, the situation is expected to become much better," said Mr. Goel of Omaxe.

Mr. Hiranandani of Hiranandani Developers also agreed that affordable housing was selling the most right now, saying that while the overall market had improved, this particular segment was doing really well as buyers realised that the market has bottomed out. Bank officials spoke to also confirmed the trend of rising demand, and noted an increasing demand for home loans. Largely the demand is coming from the sub Rs 30-40 lakh category. Resale market is also showing high growth. However, there is lesser demand for new projects as well as in yet to be completed ones," said Kamlesh Rao, senior vice president at Kotak Mahindra Bank. "While during January-March, there was a growth of 10-15%, now it is around 15-20%." He is not alone.

Officials at UCO Bank, Axis Bank and the country's top mortgage lender HDFC too agree that an improving sentiment had helped drive housing sales. "We are witnessing an increased interest from our clients. The condition has definitely improved over the last 3-4 months," says Sujan Sinha, senior VP and head of retail assets at Axis Bank. An HDFC spokesperson felt the growth is up month on month mainly due to decline in interest rate and the growth of affordable housing. "We are confident that we will achieve the 20% annual target growth," he said.

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Maytas May Lose Hyderabad Metro Deal

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Despite government-appointed directors taking over charge of Maytas Infra, its only key project Hyderabad Metro is once again in trouble with the Andhra Pradesh government weighing whether to take the project forward with or without Maytas.According to sources, the state government is more or less convinced that Maytas Infra would not be able to take the Rs 12,000 crore project forward on its own.  Though taken up on a public-private partnership model, the company had agreed for a reverse grant to pay the government a certain amount without opting for viability gap funding. However, after its key promoter and Satyam Computer founder B Ramalinga Raju confessed to financial fraud Maytas Infra too was caught up in the ensuing storm.

The company is being probed for fund diversion from Satyam. Maytas Infra failed to achieve financial closure for the Hyderabad Metro by March 17, the deadline for fixing up funds. Citing difficulties, the company had sought extension of the deadline. Though the government is yet to take a decision on that, sources said the scope for Maytas to raise funds looks limited. "For about Rs 1,700 crore loans that it has, it is seeking a debt restructuring and its potential to raise further debt looks unlikely," an official source said. Given this situation, the Andhra government is learnt to have been examining options to take the project forward without having to depend on Maytas. "The state government sees the metro as a prestigious project. It can't wait for Maytas to come out of troubles... There are options to take it forward," an official said.However, one source said, the government is working on three options.One is to ask the Centre to fund the entire project.

The other option is to ask the Hyderabad Metro consortium, including Maytas, Nav Bharat, Ital Thai and IL&FS, to change the lead partner. "Currently, Maytas is the lead partner. Since its ability to raise funds is under question.. if any of the other partners come forward to take the responsibility, the project can be reworked," a source said. The third option, which is said to be under active consideration, is to cancel the bid awarded to the Maytas consortium and go in for re-tendering. "We are yet to take a decision. But we definitely want to explore the option of looking for central support to fund the project," an official said. Analysts feel Hyderabad metro remains a lifeline for Maytas Infra and would have a significant impact on the company if it is allowed to continue with the project. The existing pipeline of Rs 13,000 crore projects would not match the single metro project considering the by-products the project would offer."It is not just the metro Maytas would be developing. There is a significant real estate value along with the project. Losing this project would be a back-breaker for the ailing company," a source said.

Investors Wary As Share Sales Mushroom

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With its investor roadshow complete, India's GMR Infrastructure Ltd has managed to attract just over half the $1 billion (around Rs4,750 crore) it was initially hoping to raise, according to banking sources-an ominous sign for issuers looking to cash in on a stock market rally. While share sales are beginning to flow after a 15 month drought as India's main index has surged 90% from its 2009 low in March, wary investors are concerned the run-up has been too fast. Rapid surge: The BSE building in Mumbai. The Sensex has gained 90% from its 2009 low in March. Ashesh Shah / Mint "Clearly quality is coming into play now," said Jayesh Shroff, who oversees $1.3 billion for SBI Mutual Fund. "There will be some inflection point. Some issues may not sail through at some prices." So far in 2009, 11 Indian firms have raised nearly $2.6 billion, mostly in the last two months. Another three dozen firms, including GVK Power Ltd and JSW Steel Ltd, have announced their intentions to raise $8.5 billion in share sales, Thomson Reuters data showed.

Property and construction firms, reeling from debt-heavy balance sheets, form a majority of this group. Most are opting for the sales of shares to institutional funds, which can be done faster than a standard follow-on offering. Bankers reckon as few as one-third of the planned offers will succeed as investors are faced with multiple choices and stocks are no longer cheap. Shares in top real estate firm DLF Ltd have jumped nearly three-quarters since its founders raised $780 million in mid-May, handing out handsome returns to its investors.But new investors in GMR, which operates two of India's biggest airports in New Delhi and Hyderabad, would be buying into a firm that has already at least doubled in value since February and trades at 93 times its forecast earnings for fiscal 2010. "We are concerned with a run-up (in prices). Investors don't like this," said Ashutosh Agarwala, GMR's chief financial officer for strategic finance. "But having said that, I don't think it will matter. We haven't decided the pricing, but all I can say is the (placement) will be investor friendly," he said. GMR still cannot launch its offer due to restrictions on pricing from the market regulator. Under pricing rules for share sales to institutions, offers must be priced at a minimum of the average price in the past two weeks or six months, whichever is higher, making newer issues dearer following the recent rally. GMR's current market price of Rs158 is well below the regulator's floor price of around Rs185.

Overseas heavyweights including HSBC Holdings Plc., Government of Singapore Investment Corp. Pte Ltd, the UK's Prudential Plc. and T. Rowe Price Group Inc. have been among the most active investors in recent offers in India, bankers said, and are expected to become more cautious after sharp run-up in share prices. Most of the share sales so far have gone towards retiring high-cost debt and would not help in generating fresh cash, eventually diluting earnings on expanded capital, analysts said. Even for firms working on new projects, returns will flow only after a few years, as in the case of GMR, which plans to use the proceeds to finance a slew of new road and power projects. "Indian industry is hungry for capital. If investors are indicating prices are high, companies will have to value it. Pricing power is still with the investors," said Girish Nadkarni, executive director at Avendus Capital, an investment bank. But firms such as Gammon Infrastructure Projects Ltd, which is debt free and plans to invest in new projects, insist offerings that will deliver strong cash flows are attractive enough for investors. "I have a queue of these guys waiting," said Parvez Umrigar, managing director at Gammon, which aims to sell shares worth $105 million.

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Home Demand On Rise But Realty Recovery Still A Distant Dream

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Homes sales in India are trickling back in some sections of the  real estate market, but industry watchers say a rebound is months away as buyers in the world's second-most populous country await further price corrections. Builders have begun new projects after a year-long hiatus, and are also swapping older premium project proposals for cheaper ones to restart sales as they try to beat a severe cash crunch. "While the market has turned up, I don't expect it to be back to 2007 or 2008-beginning levels for another 6 months or 8 months," said Rajesh Goenka, Chairman, Axiom Estates, real estate agency, servicing overseas Indians mostly in the earning bracket of $100,000-$300,000 a year. Indian real estate developers have spent months battling a severe cash crunch as high interest rates and an economic slowdown kept buyers away and funding from investors dried up.

But, a spate of interest rate cuts and a sentiment revival has encouraged builders to focus on middle-income buyers by launching new projects or re-market older ones as mid-income properties. Unitech, Parsvnath Developers as well as India's top listed real estate firm DLF redesigned projects and cut costs to appeal to a wider consumer base. Demand is swaying towards affordable housing and buyers of luxury properties are staying on the sidelines, holding out for a further drop in prices. In the quarter to March, half of the homes sold were in 114 new projects of the 2,000 available for sale, according to estimates by realty rating and research agency, Liases Foras. Realty firms are also using the momentum to tap investors for money. Real estate firms alone have raised $1.7 billion this year so far, Thomson Reuters data showed, to beat a cash crunch.

In cue, India's realty index has almost tripled, outperforming the 82 percent rise since March 6 in the benchmark 30-share BSE index when it saw its 2009 low. Despite a cautious revival in demand for homes, the sales taking place now are not spread evenly despite prices falling by 40 percent from their peak for under-construction houses mainly in southern and northern India, analysts say.

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Office Rentals To Fall 20% In 2009 Realty To Recover In 2010

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Office space rentals in India are expected to fall up to 20% in the next three quarters, with key cities like Delhi and Mumbai slated to witness a sharp decline of 50%. According to the global real estate consultant Jones Lang LaSalle (JLL), the decline in property prices in India is expected to continue through the year with office rentals expected to fall by 15-20%, as the slowdown-hit realty sector is likely to see a recovery only in the second half of 2010.

"The largest decline in rentals is expected in Delhi and Mumbai, expected to halve its peak," JLL said in a report on global market perspective. The consultant further said the office rentals in Chennai, Kolkata, Hyderabad and Pune are expected to decline between 30% and 40% from their peak during the next three quarters, while the same in Bangalore will fall 15-20% from its peak. On the current economic scenario, the report said the recent gains in the equity market propelled optimism in the economy and if it continues, a recovery is expected by early 2010.

"Although the effects of this upturn would start showing signs in the real estate sector, the gains would definitely come in second half of 2010, when fresh demand again builds up in the market and the latent demand suppressed on fears of a downslide comes back," it added

New Launches Trigger Demand In Realty Sector

General | By mahendra | 2009 Trackbacks (0) Comments (1)   

After witnessing an acute slowdown during the third and fourth quarter of 2008, the real estate sector has shown some recovery in the first quarter of 2009 ending March 31. If trends of absorption for the period January-March 2009 are any indication, a report prepared by PropEquity Research suggested there has been a surge in absorption in majority of the cities. A recent study conducted by PropEquity across Mumbai, Bangalore , Chennai, Hyderabad, and Gurgaon in NCR reveals that absorption has been high among the residential new launches in the first quarter of 2009 in Mumbai, Chennai and Gurgaon.

The study attributes the success rate in absorption to the price correction and reduction in unit sizes introduced by developers in these cities. However, Bangalore and Hyderabad, which witnessed fewer new launches during the period, experienced a low absorption.The real estate sector experienced one of the worst kinds of slowdown in demand because of rise in the interest rates in the January-March 2008, by almost 2 percentage points, to 12%. At the same time, the prevailing prices of residential apartments in most of the cities made them unaffordable for most buyers. The situation further worsened after global financial markets got affected due to the failure of banks and brokering houses in the US and Europe.

This also affected Indian real estate market very badly and demand plummeted. According to the report , While October-December 2008 saw the nadir with absorption of only 1,113 units in Mumbai, the first quarter of 2009 witnessed the launch of over 14,478 residential apartment units and a corresponding absorption of 5,746 units. As against this, during October-December 2008, 3,096 units were launched, the report said. That means, in the first quarter of 2009, 40% of the launched apartments were sold, which is consid

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