Oracle, NetApp look at exclusive campuses

BANGALORE: Corporate India’s growth plans are being cemented on Bangalore’s real estate turf. In the last three months, hectic parleys between developers and corporate entities have been taking place over possible land buys or lease agreements.

There has been speculation about Oracle looking to pick up a million sqft of space in Bangalore. NetApp is said to be looking at buying land in Whitefield. According to sources, NetApp India, the Indian arm of the global data storage equipment maker NetApp, is in talks with DLF over a possible 15-acre land buy in the IT hub.

DLF, which was thinking of constructing an IT Park on this particular land parcel, but has now decided to hive it off. Brokers in the Whitefield belt told TOI that the prevailing land rates in the area, where this particular land parcel is located, is around Rs 8 crore to Rs 10 crore an acre.

So if the deal goes through, NetApp would spend between Rs 120 crore to Rs 150 crore. The company currently operates out of a leased facility in the Embassy Golf Links Business Park.

Several real estate consultancy firms told TOI that Oracle and NetApp are the only companies that are looking at outright land buys at the moment. “We expect these deals to go through by either December or before the last quarter of the ongoing fiscal,” said a source.

A senior real estate consultant, who requested anonymity, said, “There are a whole lot of other companies looking at leasing office space between 100,000 sqft and 200,000 sqft.”

Nitesh Estates expects to sign leasing agreements with pharma, insurance and banking companies for over 100,000 sqft of space in the coming three months. Quintiles, a clinical research company , is said to be among these.

So what’s driving this sudden interest in real estate ? The Bangalore real estate market is seen to have bottomed out and a slow revival is on the cards, with realty prices heading up. “Since prices are far less than what they were, by around 10% to 30% as compared to 2008, companies are looking to cash in before another price rise cycle sets in,” said a developer who is currently talking with an IT company on a possible land sale.

Prestige Group and Embassy Group are two other real estate companies that are said to be in talks for the sale of prime land parcels to corporate entities. The Bangalore real estate market is seen to have bottomed out and a slow revival is on the cards, with realty prices heading up.

In the last three months, hectic parleys between developers and corporate entities have been taking place over possible land buys or lease agreements.

Source – http://economictimes.indiatimes.com/infotech/ites/Oracle-NetApp-look-at-exclusive-campuses/articleshow/5250009.cms

Biggest Indian-Canadian landlord eyes India’s ‘dream’ market

TORONTO: Canada’s biggest Indian landlord Bob Dhillon, who started his company from the back of his car and now owns more than 6,000  across the country, is set to enter the Indian real estate market.

Dhillon, who has been invited by Prime Minister Stephen Harper to join him during his visit to India
beginning Monday, is bullish on the Indian market.

“Despite the current slowdown, I am sure the Indian real estate sector will take off in a big way. We are ready to come here next year,” says 43-year-old Dhillon whose Mainstreet Equity is the first Indian-owned company to be listed on the Toronto Stock Exchange.

Dhillon, who started selling homes at the age of 19 and became a millionaire at the young age of 21, says: “Today, India is a realtor’s dream. It is the fastest growing real estate market in the world after (western) Canada.

Three things make India a dream destination for him, he says.

“One, 50 percent of India’s population is below 25 and they will spur demand for housing. Two, a vast majority of Indians live in rural areas which are set to see a huge housing activity. Third, as prosperity increases, people’s hunger for home ownership will also increase.

“These three things are any real estate man’s dream,” he says.

Dhillon, who was born in Japan and educated in India, keeps a close watch on the Indian real estate market and has made many presentations on it at various fora.

About his inclusion in the prime minister’s delegation, he says: “Because the prime minister wants to focus on economic ties with India… He sees that Canada and India have a huge economic future.

“We have a new generation of Indian businessmen in Canada who will bridge these two great economies. We will bring financial and intellectual inputs into this relationship.”

Dhillon says the visit of the Canadian prime minister could not have come at a better time as the worst of the economic slowdown seems to be over.

“We have two great like-minded prime ministers. Stephen Harper and Manmohan Singh are both economists and policy driven. The visit will definitely boost our business relationship,” he says.

Interestingly, Dhillon’s company has boomed even in these troubled economic times. In fact, he has smartly leveraged the current crisis to expand his company to take its fortunes to well over $1 billion.

Explaining it, he says: “We have flourished because of the type of real estate business we do. We own mid-segment apartments mostly in western Canada which was not that badly hit.

“Then we had a lot of cash flow which we used to buy back 40 per cent of shares. Further, we have taken advantage of low prices to buy more properties.”

The Indian king of the Canadian real estate considers his upcoming 2,300-acre island in Belize (Central America) the jewel in his crown. He is developing it into a world-class tourist resort for Hollywood celebrities. The island amid pristine blue sea waters will have hotels, golf clubs, casinos, condominiums, high-end houses and other facilities.

The likes of Madonna and Leonardo DiCaprio will be its residents, says Dhillon whose family first emigrated to Hong Kong, then Liberia and finally Canada from Tallewal village near Barnala in Punjab.

Sources of this News  – Economy Times

Birlas plan $500m realty fund

Mumbai, Nov. 13: The Aditya Birla group is launching a $500-million Mauritius-based real estate fund that will target investments in India.

The fund, which is called the Aditya Birla India Real Estate Vision Fund, has been launched by the group’s asset management arm, Birla Sun Life Asset Management.

The real estate fund has a targeted corpus of $350 million and a greenshoe option of up to $150 million. The greenshoe option of the six-year fund is still open.

Sources in the Aditya Birla group confirmed the development.

The fund will invest in equity, equity-related and debt instruments of firms that develop real estate, including residential, commercial properties and retail malls.

“The fund will invest in unlisted real estate companies that primarily target the residential segment,” said Shashi Kumar, joint president and head of real estate advisory services at Birla Sun Life Asset Management.

Real estate circles said the Aditya Birla group had been trying to find investors for this fund for over six months.

During an investor presentation in July, the group had identified a fund targeted at the real estate sector as one of its future strategies to build the financial services business.

Several large corporate houses and banks have floated real estate funds in India that invest in realty companies and projects.

The Aditya Birla group is betting that this is the right time to target the realty sector.

“This is the best time to enter Indian real estate as the industry has matured, prices have already seen an upswing in Mumbai and it has become much easier to identify the real estate players a fund like ours should partner with,” Kumar said.

This fund will, however, not invest in AV Birla group projects, including retail.

“We are clear that our investment will be outside the group. The idea is to target residential space by partnering developers from the initial stage of acquiring land,” said Kumar.

He added that the fund might invest in commercial or retail projects if these were part of a project that was geared towards residential development.

Kumar said the fund would bring the Birla processes right from the due diligence stage to the table and domain expertise that would help it identify the right partners.

Tax firm Nishith Desai Associates advised the group in establishing the fund.

source of news – The Telegraph

Mumbai, Nov. 13: The Aditya Birla group is launching a $500-million Mauritius-based real estate fund that will target investments in India.

The fund, which is called the Aditya Birla India Real Estate Vision Fund, has been launched by the group’s asset management arm, Birla Sun Life Asset Management.

The real estate fund has a targeted corpus of $350 million and a greenshoe option of up to $150 million. The greenshoe option of the six-year fund is still open.

Sources in the Aditya Birla group confirmed the development.

The fund will invest in equity, equity-related and debt instruments of firms that develop real estate, including residential, commercial properties and retail malls.

“The fund will invest in unlisted real estate companies that primarily target the residential segment,” said Shashi Kumar, joint president and head of real estate advisory services at Birla Sun Life Asset Management.

Real estate circles said the Aditya Birla group had been trying to find investors for this fund for over six months.

During an investor presentation in July, the group had identified a fund targeted at the real estate sector as one of its future strategies to build the financial services business.

Several large corporate houses and banks have floated real estate funds in India that invest in realty companies and projects.

The Aditya Birla group is betting that this is the right time to target the realty sector.

“This is the best time to enter Indian real estate as the industry has matured, prices have already seen an upswing in Mumbai and it has become much easier to identify the real estate players a fund like ours should partner with,” Kumar said.

This fund will, however, not invest in AV Birla group projects, including retail.

“We are clear that our investment will be outside the group. The idea is to target residential space by partnering developers from the initial stage of acquiring land,” said Kumar.

He added that the fund might invest in commercial or retail projects if these were part of a project that was geared towards residential development.

Kumar said the fund would bring the Birla processes right from the due diligence stage to the table and domain expertise that would help it identify the right partners.

Tax firm Nishith Desai Associates advised the group in establishing the fund.

Realty companies eye Rs 15K-crore mop-up

MUMBAI: Cash-strapped real estate companies looking for succour from the capital market are likely to run into headwinds on the pricing front.

Market watchers say unless the promoters price their issues a bit more realistically, they are likely to see a tepid response from investors. Some of the high-profile new issues over the past few months were felt to have been priced expensively, resulting in the stocks faring poorly on listing.

Nearly a dozen real estate companies are looking to mop up over Rs 15,000 crore through public offerings in the coming months. Godrej Properties, DB Realty, Emaar MGF, Lodha Developers, Sahara Prime City, Kumar Builders, Ambience, Ashoka Buildcon are among the companies which have filed their draft red herring prospectuses (DRHP) with Sebi. Those in the pipeline, but which have not yet filed their DRHPs, include Nitesh Estates, Prestige Constructions, BPTP and Oberoi Constructions .

The IPO-filings mark the second round of fund-raising in the real estate industry, which had been wracked by the global financial crisis and the resultant drop in demand. Signs of a revival in the residential segment in April-May this year, prompted many to hit the capital market to raise funds.
Merchant bankers are, however, sceptical about investor appetite given the huge overhang of paper. “There are serious challenges on the pricing front,” says Nimesh Shah, MD, Fortune Financial. Mr Shah is of the view that there is too much paper on offer at the moment, which is dampening investor appetite.

“And with almost all of the recent quality companies quoting at a discount to the offer price, the prospects look bleak,” he added.

Industry experts point out that investors should look at the earnings model of the real estate companies rather than the landbank model because in the latter, prices tend to be volatile.
Also, there are concerns that builders are putting value to the whole piece of land where they have partial ownership.

“Investors need to do due diligence as to whether the land bank is agricultural land or non-agricultural land. Currently, valuation of land is being done arbitrarily. If it is agricultural land, one needs to factor in the cost of conversion (property tax & cost to be paid to the government etc),” said a real estate developer on condition of anonymity.

Investment bankers believe that this phenomenon is not true of India alone but is also seen in other countries like China. “Real estate companies are quoting at an almost 60% discount to their NAVs,” said a banker with interests in the region.

“Given the overall weakness in the IPO market in the recent months, pricing and quality of promoters will be paramount,” says Munesh Khanna, CEO & MD-investment banking, Centrum Capital.

However, JC Sharma, MD, Shobha Developers, believes one should look at the macro picture. “The real estate industry is still not getting proper representation in India. In a developed/developing economy, it constitutes 10% of the market cap of the country. We still have a long way to go,” he told ET.

Source of News Economy Times

Stakeholders of the real estate sector

To bring the Indian property industry on par with the global real estate sector, the Indian parliament is gearing up to pass the much talked about real estate regulatory bill in the winter session. The industry is keenly watching out for this one as the first draft was found to be faulty and rather lopsided , excluding the government bodies from its purview.

So while the experts feel that it is time to have a single-point regulatory body on the lines of SEBI or TRAI, which would prove beneficial in the long run to the endusers and developers, there is also a cry for bringing total objectivity and professionalism in the workings of the body, to truly achieve its goal. Developers also point out the dangers of overregulation in an industry that already faces several stumbling blocks.

The bill seeks to grant approvals to projects on certain parameters and also expedite all the approval processes mandatory for projects to take off. It is expected to help improve transparency in the sector by rating developers on their financial strength in terms of turnover, liquidity and profitability, scale of operations, intellectual expertise based on the qualification and experience of the management team, and past performance.

According to Ashutosh Limaye, associate director (Strategic Consulting), Jones Lang LaSalle Meghraj, “The stock market has SEBI to provide guidelines, define conduct and processes, provide a redressal system for both buyers and sellers and install necessary consistency and standardisation. The proposed real estate regulatory body intends to do the same for the Indian property market, which currently presents a rather under-organized picture.”

Deepak Parekh, chairman of HDFC, had expressed the urgent need for a real estate regulatory body, which should play the role of a monitor for promoting and overseeing real estate reforms, ensuring transparency in sales and protecting buyers from a fraudulent case, if any.

Parekh recommended that the state housing boards should also be brought within the ambit so that there is complete transparency in its working mechanism, the checks and balances are well achieved from every quarter.

The developers have welcomed the move too, but not in its current draft form. Kumar Gera, chairman of CREDAI, India, says, “The intention is good but a lot of thought needs to go into formulating the role of the body, otherwise the effect can be counter-productive . Two main intentions are stated in the preamble : protection of consumers’ interest and speeding up the clearances to facilitate the smooth development of real estate. There are enough provisions to achieve the first objective , but I haven’t seen anything regarding the second. It needs inclusion of processes. In the present form it is likely to create more processes and hence obstacles. The Urban Land Ceiling act was also formulated with a noble intention, but the outcome was disastrous.”

R Vasudevan, MD of Vascon Developers, has a similar view: “I think the intention is very good if followed in its spirit with modification to include the process of speeding up approvals. It will revamp a sluggish and a beleaguered system. In fact, no reputed developer would want a short cut to achieve his end, as his intention would be to become a long-term player. It is not in his interest to delay projects and offer bad products, as it will tarnish his image and his brand. Hence this is welcome but only if it fulfils its intent. A professional approach is the need of the hour now for all of us.”

Sunny Bijlani, director, Supreme Universal, which has projects in Pune and Mumbai, says, “It is fine with us to have a regulatory body, which helps bring in transparency to the customers . We are more than happy.
But they have to bring more changes in the rating system to actually do proper justice to the customers, by doing a complete financial analysis of the developers, and not just by collecting some data. Secondly, it should be a single point for all clearances and NOCs so that the project starts on time. Most delays are caused by non-availability of clearances from the government authorities.”

Real estate is a major contributor to GDP growth and employment generation. The minister of urban development acknowledges this fact and feels that a single regulatory body at the state level is most needed, for faster approvals , besides faster delivery of projects, accountability of the project developers, professionalism and finally loan acquisition to make affordable housing a reality.

Source of this news – economictimes