Unitech Looks to Invest Rs 600 cr into Affordable Housing

Unitech Ltd, India’s second largest real estate developer, is looking at investing Rs 600 crore to develop and launch affordable houses under its Uni Homes brands across seven cities in the country. The developer would launch these homes in the price range of Rs 10-30 lakh in Noida, Greater Noida, Chennai, Kolkata, Rewari, Bhopal and Mohali. The total area in the phase one of the launch would be about 4.5 million square feet with about 5,000 flats. The company would fund the development with a combination of debt and internal accruals.
The developer had earlier said it would launch 30 million sq ft of development of commercial and residential properties in the current fiscal, which included 20 million sq ft of residential projects. By August it has been able to launch 17 million sq ft of projects, mostly in the affordable housing segment and has already sold 6,000 flats. However, analysts covering the company believe that Unitech’s margins would go further go down with its concentration in the lower-margin affordable housing segment. “We expect the profit margin to reduce going forward as affordable and mid housing are low-margin segments compared to commercial, retail and luxury housing segments,” K R Choksey analysts said in a note to clients.
The company plans to launch 40 projects, and would develop 35 million sq ft properties in the next two years. The company may require Rs 6,000 crore over the next two years for funding the expansion, and would use the cash generated from two qualified institutional placements (QIP) of shares, asset sale and internal accruals. The developer has already raised about Rs 4,410 crore through QIPs. It is also looking to raise Rs 500 crore by selling about 20-25 hotel land parcels as its hospitality expansion plans have been deferred due to low demand. The realtor currently has debt of around Rs 7,000 crore, which is expected to go down to Rs 4,000 crore by the fiscal end.
Ref:http://www.indianrealtynews.com/real-estate-india/unitech-looks-to-invest-rs-600-cr-into-affordable-housing.html

DLF and Unitech Bid for 350-acre Gurgaon Plot Worth Rs 1,700 cr

DLF and Unitech, the country’s top two real estate firms, are understood to have bid for a 350-acre plot in Gurgaon with a reserve price of about Rs 1,700 crore. According to sources, DLF and Unitech today bid for the land meant for setting up recreation and leisure project, comprising commercial, residential and sports complexes.The bids were invited by Haryana State Industrial and Infrastructure Development Corporation (HSIIDC). This is the second time the bids were invited. The technical bids for the land were opened today and DLF and Unitech have been shortlisted for the financial biddings, which will be opened tomorrow, sources said.
When contacted, a HSIIDC spokesperson declined to comment on the bidding process and its participants. Neither DLF nor Unitech officials commented on the issue. Earlier in April, HSIIDC had closed the bids for the same project, in which DLF was the sole bidder. However, according to the HSIIDC advertisement for the bidding process this time, DLF had pointed out certain difficulties likely to be faced during project implementation. After this, HSIIDC made certain relaxations on terms and conditions regarding the payments for the land.
Ref:http://www.indianrealtynews.com/real-estate-india/dlf-and-unitech-bid-for-350-acre-gurgaon-plot-worth-1700-cr.html

Promoter holdings Go Down by 4% to 31% in Top Six Real Estate Companies

Promoters’ equity holding in top six real estate companies fell between 4% and 31% over a one year period ended June 30, 2009, on account of stake sale, sale of pledged shares by lenders and issue of fresh shares to institutional investors. Promoters’ stake in the country’s second-largest developer Unitech and third-largest firm Indiabulls Real Estate fell significantly to 43% and 16.73%, respectively. But analysts say these companies may not become takeover targets due to the nature of the business. “Consolidation in Indian real estate sector is likely to happen at project level rather than at company level. A target company can offer brand, relationship and land, but it’s impossible for the acquirer to leverage the relationship as it is individual-driven. So it makes sense for them to go for acquisition of only physical assets,” according to Aashiesh Agarwaal, a real estate analyst with Edelweiss Securities.
Adds another real estate analyst with a Mumbai-based domestic brokerage, who asked not to be named: “In India, most real estate companies have close nexus with politicians, who have their black money invested in these firms. Despite such a deep downturn, no realty firm went bust. The politician-investor will never let a realty company be taken over.” Unitech promoters saw their holding decline the most — around 31% from 74% a year ago. The promoters lost almost 10% in the company as lenders sold shares pledged with them following sharp drop in valuation of the firm in a falling stock market Promoter Ramesh Chandra’s stake declined further 21% with the issue of fresh shares in two tranches in April-June quarter to raise $900 million. The share issue was necessitated to repay huge debt that the company had piled on its balance sheet. Unitech’s debt levels had peaked at Rs 10,000 crore, which has now come down to around Rs 7,000 crore. DLF promoter KP Singh and family also had to sell 9.9% in the company to raise funds to pay hedge fund DE Shaw that was looking to exit from DLF Assets (DAL), another company promoted by Mr Singh. Mr Singh raised Rs 3,800 crore through the stake sale. DE Shaw is yet to exit DAL.
Indiabulls Real Estate promoters — Sameer Gehlaut, Saurabh Mittal and Rajiv Rattan — too saw their stake fall by almost 10% to 16.73% following a QIP to raise $565 million in the June quarter. Promoters owned minority stake even before the QIP, but analysts say the company is safe because of higher FII holding, who may not welcome hostile acquirers. FIIs hold 62% stake in the company. Similarly, the country’s fourth-largest developer HDIL’s promoter Wadhawan family’s holding fell around 10% to 51% following $325 million QIP. Promoters’ stake in Bangalore-based Sobha Developers fell from 87% to 65% after the company raised $130 million through share sale to qualified institutional buyers. Delhi-based Omaxe, which is looking to raise Rs 600-700 crore through QIP, has seen its promoter Rohtas Goel’s stake slide by over 4%, possibly on account of sale of pledged shares by the lenders.
Ref:http://www.indianrealtynews.com/real-estate-india/promoter-holdings-go-down-by-4-to-31-in-top-six-real-estate-companies.html

EWDPL Plans to Float Rs 500-cr IPO by Year-End

Entertainment World Developers (EWDPL), a partner firm of Phoenix Mills, is planning to float a Rs 500-crore initial public offer (IPO) by the year-end, a top company official said. EDWPL is in the process of filing a draft red herring prospectus (DRHP) with capital markets regulator Securities and Exchange Board of India (Sebi) and finalising merchant bankers for the issue, the official said. After the issue, venture capital firm ICICI Venture is expected to convert convertible debentures it holds in the company and own a stake of around 15 per cent. The stake held by Phoenix Mills, promoted by Ruias, is expected to come down to 30 per cent from the 42 per cent it holds in the company. When contacted, Manish Kalani, managing director of EWDPL, said: “Yes, we are planning an IPO by the year-end and issue of fresh shares for our shareholders.”
The IPO plans of EWDPL, which builds malls in Tier II cities, closely follows that of other property developers like Godrej Properties and Lodha Developers, which are also planning to tap capital markets in the next three-four months to raise funds for their ventures. Godrej Properties, a part of the Godrej group, may float an IPO of around Rs 500 crore in the next three months and has already received Sebi’s nod for the same. Mumbai-based Lodha Developers is also looking at an IPO of Rs 2,000 crore by the year-end and plans to a file a DRHP soon. EWDPL is looking to deploy its IPO proceeds for its expansion into such cities as Madurai and Kolhapur, among others. “We will have five operational malls when we hit the markets,” Kalani said. Currently, the company has two malls in Indore in Madhya Pradesh and is expected to complete its projects in Raipur in Chhattisgarh, Ujjain in Madhya Pradesh and Nanded in Maharashtra. By 2011, EWDPL plans to have 13 operational malls in the country.
According to consultants, the success of qualified institutional placements (QIPs) of property developers in the recent past and the requirement for equity capital are prompting developers to go for IPOs. “The QIPs of real estate companies have been accepted very well by the market. Most of the real estate companies are in need of equity capital, as they are highly leveraged. They need to get equity capital to lower their leverage positions,” said Ambar Maheshwari, director, investments, DTZ — an international property consultant. Last year. EWDPL had raised nearly Rs 307 crore from a clutch of funds, including ICICI Venture and the US-based Pyramid group’s Nettleton Global. Various investors, such as Eredene Capital, Capitaland and MPC Synergy, have invested in the special purpose vehicles of EWDPL.
Ref:http://www.indianrealtynews.com/real-estate-india/ewdpl-plans-to-float-rs-500-cr-ipo-by-year-end.html

Donald Trump Junior Shares His Views on Real Estate Scenario

Leading real estate expert Donald Trump Junior is to deliver the keynote presentation at Cityscape Dubai 2009 which takes place on October 5-8 will address a wide range of real estate issues including his forecast for recovery and the existing market opportunities. Trump, the son of famed real estate developer Donald Trump and Executive Vice president of the Trump Organization says it will be 2010 before real estate prices bottom out but the world will only fully recover from recession when the United States is out of the red.
Asked when he believed real estate prices will bottom out, Trump said: “Due to the persistent buy-sell gap, the unwillingness of banks to foreclose and the complexity of workouts - I would say that it will be sometime in 2010 before we get the sense that we have bottomed out.” Giving a preview of his Cityscape Dubai address, Trump said that on worldwide recession that although some markets such as China may recover sooner, “a consensus will be reached on the state of the world economy and its recovery once the US is out of the red.”
He added: “I do see emerging countries recovering more quickly because fundamental demand in so many of these countries is still very strong…Mumbai has seen the average rental and capital values for luxury apartments decline in the range of only 4 – 12% year over year. This is a show of resilience, and the entry level to middle income housing market in India is even stronger. Total retail sales in Beijing are expected to grow by 13% year over year by the end of 2009 – a remarkable performance for a sector that has been comparatively decimated in the US.” Asked how long he thinks it will take for property values to return to their peaks of late 2007/early 2008, Trump said not until 2017 for commercial office real estate in the US and hospitality values by 2015. He warned that for the west: “There is more pain to come and real estate will not recover without liquidity and job growth. But both will recover in time and with them real estate prices.”
He nevertheless continues to see real estate investment continuing to appeal. “Real estate is a solid, long-term hold in a portfolio; it is a secure investment provided the right people are involved,” he added. “In addition, should increased government spending trigger an inflationary environment, investors will be looking for shelter in hard assets.” In that respect Trump identified the assets that interest the Trump organization as hotel, residential, mixed use and golf asset classes in both international and domestic locations. “In this environment we have explored acquiring or taking a position in key assets from distressed parties, partnering with banks to complete or reposition foreclosed assets, acquiring divested assets from bank reorganisations and partnering with ‘local’ developers,” concluded Trump.
Cityscape Dubai takes place against the backdrop of the foundations of the real estate world buffeted by economic turmoil. Indeed the Trump Organization has also experienced the regional fall out from the global downturn at first hand, with the suspension of Trump International Hotel & Tower on the trunk of the Palm Jumeirah. “As such, we anticipate reduced participation figures in 2009 compared with previous years, but the event remains the largest business-to-business real estate platform in the world with the greatest regional influence – speculator free and back to our roots,” said Chris Speller, Cityscape Group Director.
Alongside the main Cityscape Dubai event is the World Architectural Congress from 5 – 7 October at which some of the world’s most respected architects and visionaries will share with their experiences and outlook on architecture in a global recession. The Cityscape Dubai Facilities and Asset Management Conference is on 4 – 8 October attracting delegates in the design, build and post-occupancy of buildings. There will also be a Cityscape Dubai “Green Day” on 7 October which will include green communities, green construction methods, energy saving issues, financing green buildings, regulations, facilities management, whole life costs and new materials and products.
Ref:http://www.indianrealtynews.com/real-estate-developers/donald-trump-junior-shares-his-views-on-real-estate-scenario.html

High Vacancy Levels Pose Problems for Asian Office Space Market

Floors of office space in key business districts of Delhi and Mumbai are awaiting occupants, although rentals have gone down and business confidence is said to have returned, according to a study that tracks Asian market. “The Bandra Kurla Complex and Kalina districts of Mumbai, for example, saw overall vacancy levels rise to 29.4 per cent, while vacancy levels in Noida in the National Capital Region hovered at around 40 per cent,” real estate consultancy CB Richard Ellis (CBRE) said in its Asia Market View Q2-2009. The report said the election of a new government and falling interest rates improved local business sentiment during the second quarter in India.
However, despite small signs of improvement, cities like Mumbai, Delhi and Bangalore witnessed a slide in office rentals due to an exodus of occupants from the CBDs as corporates moved to alternative locations as a cost cutting measure. “While the second quarter of 2009 observed some improvement in the office-space market with levels of enquiries going up, vacancy levels continued to remain high.” CBRE Chairman and MD (South Asia) Anshuman Magazine said. “The fall in capital values has encouraged more companies to explore and evaluate opportunities for buying rather than leasing the required office space,” he added. He said there is an improved level of activity in the sector but the markets are expected to remain soft in the short to medium term.
“Although the rise in demand for less costly premises bolstered office sub-markets outside the CBD, landlords of buildings in secondary office destinations struggled with the consequences of speculative overbuilding and were forced to increase incentives to recruit tenants,” the report said, adding, that this led to the rise in level of vacancy. CBRE said the overall Asian market has started showing signs of stability in the second quarter of 2009 but companies remain focused on reducing costs and tightening their real estate expenditures. “Most Asian cities either recorded a smaller negative net absorption or a mild increase in office requirements. Overall vacancy for Asian cities rose 60 basic points quarter-on-quarter to 12.5 per cent in the second quarter, but the rate of increase slowed from 120 basic points in the previous quarter,” it said.
Overall, the Asian leasing markets were sluggish during Q2 and office rents remained caught in the down cycle. “Overall office rents in Asia fell 6.7 per cent in the second quarter, decelerating slightly from the 8.1 per cent decline witnessed in the previous quarter as most cities underwent a milder rate of rental reduction,” it said.
Ref:http://www.indianrealtynews.com/real-estate-india/high-vacancy-levels-pose-problems-for-asian-office-space-market.html

Developers Reconsider Luxury Housing

As demand trickles back into the property sector, particularly in the affordable housing space, bringing back buyers and pushing up sales, developers such as QVC Realty, Lodha Group, Unitech Ltd and Ajmera Group are trying various ways to revive their so-called luxury projects in Bangalore, Mumbai and Delhi. So while some are adding cheaper homes alongside villas to boost sales, others are relaunching their high-end offerings in the hope that there will be demand for them. Prakash Gurbaxani, chairman and managing director of QVC Realty doesn’t think so, which explains his company’s decision to launch the smaller houses: “Given the current market dynamics, we recognized the need for a lower ticket size product. Buyers are eager to see prices for homes come down and this time it is end-users, and not speculators, driving the demand.”
The Rs150 crore project is the first development of Bangalore-headquartered QVC Realty Pvt. Ltd, the country’s first venture capital-funded realty firm, backed by IL&FS Investment Managers Ltd. Still, other developers remain hopeful about the prospects of their relaunched offerings. Lodha Aria in Mumbai’s East Parel area, a high-end residential project, was launched by the Lodha Group in March 2008. It was a limited soft launch, primarily for investors and the firm closed a couple of deals. In July, the project was launched again, this time for buyers. The project has 30 three-bedroom apartments, two on each floor, at 2,100 sq. ft each, with prices starting at Rs3 crore. “It’s a good time to launch now after a dry spell last year because buyers’ interest is rising,” said R. Karthik, vice-president marketing, Lodha Group.
The launch, he added, was triggered by rising demand at the company’s other Mumbai project, where an 1,800 sq. ft apartment costs Rs3 crore. “What worked for us wasthe various sizes of apartments that buyers could pick from.” Analysts second Gurbaxani’s assessment of the market and say demand is yet to return to the “luxury” segment of the real estate market and that there are several reasons why developers are relaunching such projects. “First, luxury projects aren’t selling as much as affordable ones, so many projects have been reclassified from luxury to ‘upper middle class’. Developers are repositioning projects by cutting the size of apartments,” said Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj, a real estate advisory.
And demand has returned to this segment in Mumbai, Puri added. “Developers rationalized prices by reducing size of apartments by 25-45% and by offering price protection to buyers by telling them that if prices came down, they would be given the benefit of the price drop,” Puri said. A Bangalore developer has chosen to go the other way. In a recent auction of nine premium homes for Rs5.5 crore each in the Century Avalon project located at Jakkur in north Bangalore, not a single residence was sold. The builder, Century Real Estate Holdings Pvt. Ltd, has now decided to sell only two to three homes in the project and sell the rest once they are ready. Houses that are ready to move in typically fetch a higher price. The developer is changing part of the masterplan to make the houses bigger and is offering customized interiors.
Unitech recently redesigned its luxury project Unitech Grande on Noida Expressway. From penthouses and duplexes, the firm now plans to relaunch the project as an integrated township with high-rise apartments, villas and developed plots. Unitech Grande was planned on 347 acres acquired by Unitech for Rs1,582 crore in May 2006 in what was then the largest land deal. Initially, 12 towers were planned, with 36-45 floors each, including duplexes and penthouses. Waning demand for luxury apartments propelled Unitech to redesign the project. This May, the firm launched residential plots, called The Willows, at the site. Around 200 plots have been sold, a company spokesman said. “There is demand in the market but the pricing and the positioning of the product are important,” said Alexander Moore, managing director, L.J. Hooker India, a real estate agent that conducted the auction.
At the Ajmera Infiniti project in Bangalore’s Electronic City, the developer is now selling cheaper homes in the Rs20-27-lakh category three years after the project’s launch. After initially trying to sell houses for Rs40-72 lakh, the developer is revising the plan for the remaining part of the project and will now build 250 two-bedroom and 180 three-bedroom flats. “We have seen huge demand in other projects in the same price category. We have got lot of enquiries since we made the change,” said Bandish Ajmera, the Ajmera Group’s managing director
Ref:http://www.indianrealtynews.com/real-estate-india/developers-reconsider-luxury-housing.html

Govt Gives Manufacturers Located in SEZs Additional 6 Months for Foreign Sales

The government has decided to give manufacturers located in special economic zones a whole year to sell their goods, including gems & jewellery, in foreign shops and designated show-rooms instead of the six months stipulated earlier, before these products can be brought back to the country. As per recently amended SEZ rules, the items not sold abroad in such shops may be re-imported within a year from the date of their export without attracting penalties. The government has allowed the manufacturers longer time to sell their wares to provide relief as they are facing difficulties finding buyers at the back of the global downturn.
The amendment gives companies more time to find suitable buyers for their wares. Meanwhile, the government allowed Maytas Ventures to give up its biotech SEZ in Hyderabad. No decision, however, was taken on Reliance India’s request of getting a two year extension for completing the process of acquiring land for its multi-product zone at Gurgaon. The board of approval (BoA) for SEZs also gave its approval to three new proposals, including those by Brooke Bond Real Estate, Karnataka State Electronics Development Corporation and Lanco Solar.
Ref:http://www.indianrealtynews.com/sezs-india/govt-gives-manufacturers-located-in-sezs-additional-6-months-for-foreign-sales.html

SBI Launches “My Home Campaign” Reduces Home Loan Rates Further

The State Bank of India reduced its home loan rates further by announcing a three-month-long “SBI My Home Campaign”, starting from Saturday. In SBI’s home loan scheme, interest rate for the first year is 8%, and for the next two years is 8.5% to 9% depending on size of the loan. It is linked with benchmark lending rates. However, the chairman of the country’s biggest home loan lender HDFC, Deepak Parekh criticized the lending institutions like SBI, which gives home loan at differential rates — low rates for the earlier period and raising it later. Parekh warned that such artificial lower rates could lead to a subprime-like crisis, which happened in US housing market. ‘‘We are seeing some variations of teaser type housing loans being offered. The lure of low interest rate at the start of taking a housing loan is enticing. But are customers being made aware of future implications of this?” he asked.
SBI has effected the steepest reduction in interest rate on home loan between Rs 30 lakh and Rs 50 lakh. However, the interest rate will remain same for the first year at 8%, it will be brought down to 8.5% from 9.5% during the second and third year. For the period beyond third year, the floating rate on the loan has been cut by 1.25 percentage points. Earlier, the rate was pegged at 1.5 percentage points below PLR, which has now been increased to 2.75 percentage point below the bench mark rate. So the effective home loan rate will become lower. If the present condition remains the same and the bank does not change PLR, the new rate will be 9% as against 10.25% earlier. Parekh noted that main reason of the US housing loan crisis was such kind of loans — that offered artificially low interest rates in the initial years but once the rate normalised later, many found themselves unable to service the loan. “These are the lessons one should learn from,” he said, pointing out that the same disturbing trend being seen in India where some variation of teaser type housing loans are being offered in the market.
However, in its latest offerings, the interest rates on home loan offered by SBI will be lower that that of HDFC for the entire period of repayment, Even for the later half, the rate will be lower than HDFC. In fact, this aggressive stance of SBI will force the other banks to follow suit soon. State Bank of India said the market response to its special initiatives on home loans has been encouraging, which is evident from the fact that the bank’s net lending to individual home loan borrowers has increased by Rs 10,076 crore during the year ending May 2009. Besides this, it is also not taking any processing fees. In case of home loan up to Rs 30 lakh, the benefit for the first year will remain the same with interest rate at 8%. But for the next two years, the interest rate has been cut by 0.5 percentage points to 8.5% from 9%. The fall in the interest rates after that will be 75 basis points.
Ref:http://www.indianrealtynews.com/real-estate-india/sbi-launches-my-home-campaign-reduces-home-loan-rates-further.html

DDA Gets Clean Chit in Multi-Million Housing Scam

The Delhi Police, which is probing the multi-million-rupee housing scam, has given the Delhi Development Authority (DDA) a clean chit. “We have received a report from the forensic lab in Hyderabad that the software used by the DDA during the allotment of over 5000 flats was not rigged. The DDA conduct of allotment was fair and no discrepancy was found in it,” a senior Crime Branch official told IANS. “We have not found any wrongdoing by the DDA,” the official said. Over 500,000 people applied for 5,238 flats under the DDA’s housing scheme 2008. But the housing scheme got mired in controversies amid allegations of fake applications.
The scam came to light earlier this year after a man who was allotted a flat in the draw of lots told the police that he had not even applied for it. The Economic Offences Wing (EOW) of Delhi Police started investigations, which revealed a group of people conspired to buy several flats in the names of those from reserved categories like the Scheduled Castes and the Scheduled Tribes who were eligible for the flats but could not afford them. The conspirators meant to sell off these flats later for huge profits.
So far, the EOW has arrested Deepak Kumar, who allegedly blew the lid off the scam after he fell out with some fellow real estate agents, retired DDA employee M.L. Gautam, and real estate agents Raju Ram, Laxmi Narayan Meena and Vijay Pal. Satbir Singh and Dinesh Dral were arrested for forging the documents to open bank accounts in fictitious names. Suresh Kumar Meena, a Delhi-based real estate agent, was arrested March 19 and the last one to be arrested was Jeet Ram - one of the key financiers
Ref:http://www.indianrealtynews.com/real-estate-india/delhi/dda-gets-clean-chit-in-multi-million-housing-scam.html