The Latest India Real Estate News Round Up

Dhruva Jyoti Chowdhury, Kolkata, India

Sensing the tempting Real estate market in India, the giants of almost every other India sector are preparing to cash on the Realty sector in India. The giants that have emerged as top global companies for specializing in some or the other respective fields are now turning their head towards the booming real estate in the country.

Bullish on government’s commitment in infrastructure development, global giant General Electric (GE) has recently elaborated its plans to set up a $300-500 million infrastructure fund for the Real Estate sector.

GE’s statement came after Citigroup, Blackstone, IDFC and IIFCL announced their respective plans to set up $5 billion fund for infrastructure development.

Reports also suggests that the company is looking at financing real estate and is planning a $2 billion fund to be invested across all types of real estate - residential, retail, townships and special economic zones (SEZ) I India in particular.

The Hinduja Group India, plans to develop 4,000 acres of land held by its listed units for residential and commercial use, under a company called Asia Property Development Ltd, joining a slew of business houses looking to cash in on a real-estate boom in the country. It’s also in close door talks with the private equity players interested in partnering the group in this venture.

The Hindujas’ land bank would count among the some of the bigger ones held by Indian firms. For instance, Delhi-based real-estate firms DLF Ltd and Unitech Ltd have land banks of 10,255 acres and 10,900 acres, respectively. Others such as Sobha Developers have reserves of 2,747 acres of land.

With real-estate prices rising 200% in India’s tier 1, cities in the past two years, Indian business groups such as chemicals firm DCM Shriram Consolidated Ltd and the Wadia Group, which owns the Bombay Dyeing clothing company, have forayed into real-estate development, although on a smaller scale. Both intend to develop around 100 acres each.

Gurgaon based real estate company Emaar MGF is learnt to be finalising its plans to hit the capital markets by the end of this year. The company is planning to raise $1.1 billion by offering 15-20% of its equity to public, valuing the company at about $6.5 billion.

This will be the second big IPO in the real estate sector to hit the capital markets this year. Another Gurgaon-based real estate company, DLF is planning to hit the capital markets with a $2 billion issue.

Mumbai-based Larsen & Toubro Ltd is also planning to invest Rs 8,000 crore in real estate and urban infrastructure over a period of three to five years through its subsidiary L&T Infrastructure Development Project Ltd (L&T-IDPL). HDFC has a 25% stake in L&T-IDPL, and would also be contributing to the investment.

L&T has already invested over Rs 700 crore in real estate and urban infrastructure projects. The management has recently agreed to invest an additional over Rs 500 crore in the business this year. The urban projects are executed through yet another subsidiary of IDPL, L&T Urban Infrastructure. The various projects together are expected to yield around Rs 2,500 crore annually for L&T. The projects will be implemented in a phased manner, with each under different special purpose vehicles (SPV’s).

L&T is developing residential projects in Chennai, Vishakapatnam and Colombo, apart from developing an integrated township in Chandigarh in association with a local builders. They have recently acquired land in Nagpur in order to develop a residential project. L&T IDPL is also working with Bombay Dyeing on redeveloping a dilapidated building in Mumbai.

Godrej Properties, the real estate arm of the Rs 7,500-crore Godrej group, is in deliberations with private equity investors to raise Rs 200 crore for its two realty projects in Hyderabad and Kolkata. The company is looking to dilute 49% stake in both the projects to PE investors.

The two projects may be set up as a special purpose vehicle in which the majority stake will be retained by Godrej Properties. Advance stages of discussions are continuing with two funds including the London-based real estate fund Trikona Capital.

Outsourcing and technology giants ‘Xansa’ has also entered into an agreement with Alpha Tiger Property Trust Ltd for sale and leaseback of the company’s real estate interests in India for Rs190.87 crore.

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Godrej Properties to raise up to Rs600 cr through IPO

Will offload 10% equity held by family and Godrej Industries; eyes Chennai, NCR, Kochi and Goa markets

Source LiveMint

Godrej Properties, which is currently developing 20 million sq ft of real estate space across the country, will go for an IPO to offload 10% of its equity, expected to fetch Rs400-600 crore for fuelling its expansion plans.

“We will be offloading 10% in the second-half of this fiscal. Currently, Godrej Industries owns 82% stake while the family owns 18% in the company,” Godrej Group chairman, Adi Godrej, told PTI in an interview here on 10 June.

With the offloading, Godrej Industries’ holding will come down to 75% and the family’s to around 15%, Godrej said, adding that merchant bankers would be appointed shortly. “We are in discussions with three or four of them and a decision will be taken very soon,” he said, without revealing their identities.

While Godrej declined to reveal the issue size, saying “it is too early to talk about this”, industry sources feel it could be anywhere between Rs400 and Rs600 crore. While not totally ruling out any pre-equity placements, Godrej, however, said that it was not on the radar at present.

Elaborating on the company’s expansion plans, Godrej said property development would be a thrust area for the group and in five years Godrej Properties could emerge as the largest player within the group.

As a part of its expansion plans, Godrej Properties is eyeing new markets such as Chennai, Kochi, the National Capital Region (NCR) and Goa. The company is presently active in Mumbai, Pune, Kolkata, Bangalore and Hyderabad.

Godrej said that one-third of the real estate development was residential while the rest was commercial which included offices, IT parks and malls.

The company is presently engaged in the development of the tallest residential towers in the country comprising of of 50-storeys. Five such towers are being built in the posh Mahalakshmi area of Mumbai, he said, adding “of course, taller towers are now being planned in places like Hyderabad.”

On the proposed repealing of the Urban Land Ceiling Act by the Maharashtra Government in the near future, Godrej expected it to greatly benefit property development in the already-congested metropolis as vast areas of land would get released for development.

He said that both the Centre and practically all states barring Maharashtra, Andhra Pradesh and West Bengal had repealed the Act. Calling for the immediate scrapping of both the Urban Land Ceiling Act and octroi, Godrej said that their continuation severely handicapped the economic progress of the state. “It is high time Maharashra abolished them,” he said. States which have done away with these outdated laws have progressed far ahead of Maharashtra which was once the citadel of industry in the country, he said.

On floor space index (FSI), the area that is allowed to be developed by the authorities in a given plot, Godrej said that “the present restrictions are ridiculous and should be done away with soon.”

“Maharashtra has the most restrictive FSI in the country and India the most restrictive in the world,” he said, adding that while Maharashtra has a FSI of 1.3, Hyderabad 3 and Kolkata 6, other places such as Hong Kong and Shanghai had FSIs of 10 each and Manhattan in New York, even higher at over 20.

He disputed claims Godrej Properties was developing residential accommodation only for the top-end segment of the population, saying that there were several properties on the outskirts of Mumbai like Thane and Kalyan which were very much in demand by the middle-class.

Asked about the existence of under-the-table transactions in the real estate industry, Godrej said that as far as his company was concerned, every transaction was cheque-based. Confident that the high economic growth momentum would be maintained in the future, he said that he did not expect any slowdown in property requirements.

“Real estate prices are now stabilising and in certain areas, falling marginally, but demand is expected to only grow,” he said.

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