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In interesting to note the discussions on a real estate bubble in India now and where real estate values are headed. I tend to examine the real world behavior of those closest to the situation. For example, DLF is focusing on Hotel and SEZ development in India. Rajiv Singh expects his revenue growth to strengthen in the short term from a thrust in middle-income housing. While prices paid are high compared to the past few years and will not likely go up in the double digits as in years past, we will still see price appreciation in Tier 1 cities and much higher price appreciation in Tier 2 and Tier 3 cities.
As I have said in past editorials, India needs to be completely rebuilt. It’s not practical to rebuild the older cities, so what is going to happen is that new city centers will appear alongside the old and you will see a large demographic shift happen as a result. You can bank on this prediction as it’s the only way to create modern cities without ripping up entire sections of India’s older cities.
Below, I have listed real estate deals for June 2007. The information was provided courtesy of Ernst & Young.
Completed Deals
| Name of Entity | Nature of Deal | Value | Additional Details | |
| Procter and Gamble | Sold its general offices at Gurgaon | Rs 727.5 million | Sold five to nine floors at Global Business Park, Mehrauli Gurgaon Road, Gurgaon | |
| Plaza Centers, a European property developer | Acquired about 10.8 acres of land At Trivandrum, Kerala | Rs 1.1 billion | Acquisition was made through a 50:50 JV with an Indian property developer; the plot will be used to develop a mixed-use project totaling 2.1 msf, comprising shopping and entertainment centers, offices and a hotel | |
| Alpha Tiger Property Trust | Entered into an agreement with Xansa, an outsourcing and technology firm, to purchase 40 acres of development land and for the sale and leaseback of Xansa’s real estate interests in India | Rs 1.9 billion | The agreement appoints Alpha Tiger as Xansa's preferred provider in India; the agreement is conditional on local and Central government approvals, including SEZ notification and is expected to be completed in phases | |
| Reliance Industries | Acquired 16,100 sq. m plot from Sterlite Industries at Vidyavihar, a Mumbai suburb | Rs 1.1 billion | – | |
| Hotel Leelaventure | Acquired a three-acre plot at Vinay Marg in Delhi from National Buildings Construction Corporation | Rs 6.1 billion | Intends to develop a 250-room premium luxury hotel, to be operational before the Commonwealth Games in 2010 | |
| Karnataka State Government | Auctioned 73 acres of land in Bangalore | Rs 295.3 million | – | |
| Orbit Corporation | Acquired a two-acre plot at Kalina in the suburb of Santacruz, Mumbai, from Ambuja Cements | Rs 3.3 billion | Orbit plans to redevelop the plot | |
| Name of Entity | Nature of Transaction | Additional Details |
| Alony Hetz Properties and | Tied up with Wearology Limited of Poddar | To develop 500 acres at Karjat, near Mumbai; |
| Investments Limited, Israel | Group and LJCB Investment Group of Australia | the initiative comprises a luxury holiday home project spread over 200 acres at an investment of US$ 160–200 million |
| Garnet Construction | Entered into a 50:50 JV with the Dubai-based Sternon Group | To develop properties in Europe, with a prime focus on Sweden and Mauritius, off the African coast |
| Trent, the retail arm of Tata Group | Tied up with global private equity investor Xander | To develop real estate properties for its various retail ventures |
| RMZ Corp, a real estate development company | Entered into a 50:50 JV with AIG Global Real Estate | To build commercial properties and to evaluate hospitality development projects across India |
| DLF | Entered into an agreement with Kolkata Metropolitan Development Authority | To develop an integrated township in Hooghly District, West Bengal, with an investment of Rs 330 billion |
| Deals In the Making? | ||
| Name of Entity | Nature of Transaction | Additional Details |
| Quantum Fund (promoted by George Soros) | Plans to acquire a 4% stake in Ansal API for Rs 2 billion | With this, George Soros’ stake in Ansal API will increase to 5%; in 2006, George Soros had acquired a 1% stake in the company for about Rs 250 million |
| JP Morgan | Plans to invest US$ 100 million in Prestige Group through equity placement or debt financing | Prestige Group would utilize these funds to develop projects across South India, as it plans to expand its footprint outside Bangalore |
| Godrej Properties | Is negotiating with private equity investors to raise Rs 2 billion for its real estate projects in Kolkata and Hyderabad | – |
| Infinite India, a real estate fund floated by JM Financial and Old Lane (the New York-based India-focused hedge fund) | Are in advanced negotiations with textile firm Wearology to pick up majority stake in two real estate projects | Wearology is in the process of developing over 500 acres of land in various parts of Mumbai |
| Carlson Group, a US-based | Plans to acquire a 26% stake in a new JV | The JV will introduce the Regent hospitality |
| hospitality company | (called Elbrus Builders) with the Unitech Group for Rs 26 million | brand in India and invest Rs 4.5 billion to develop a luxury hotel property in Greater Noida |
| Al Fajer Properties, Dubai | Plans to invest upto US$ 1 billion in India | To develop commercial and township projects through JVs |
| A consortium by Government of Singapore Investment Corporation, Dean Witter of Morgan Stanley and Quantum Fund of George Soros | Plan to acquire a stake in Anant Raj Industries for Rs 6.8 billion | – |
| IL&FS Investment Managers (IIML) | Intends to provide US$ 100 million to QVC Realty | QVC plans to take up township projects in Gurgaon and Bangalore; IIML has raised over US$ 500 million to invest in real estate |
| New Money | |||
| Arrived | |||
| Name of Entity | Fund | Size | Additional Details |
| Morgan Stanley Real Estate | Raised a property fund, MSREF VI, that would primarily invest in the Asian markets including Japan, China and India | US$ 8 billion | – |
| Ascendas | Launched Ascendas India Development Trust (AIDT), a real estate development fund with a term of eight years | S$ 500 million | The company plans to increase its asset size to S$ 1 billion and will invest in integrated development projects in India |
| Tanglin Development | Raised funds from Hypo Real Estate Bank International | Rs 3.8 billion | The fund will be used for financing and development of 2 msf of additional IT office space at Global Tech Park in Bangalore |
| Red Ribbon UK Fund, a UK-based property investor | Plans to invest £ 250 million in the real estate sector in India in the next 5 years | £ 250 million | Of this, the fund will invest £ 50 million in budget hotel chains, £ 50 million to develop resorts in Kerala, £ 50 million in student accommodation, and £ 100 million in commercial properties |
| Expected Capital | |||
| Name of Entity | Fund | Size | Additional Details |
| CapitaLand | Plans to launch a fund to invest in real estate projects in India | S$ 500 million | – |
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