Realty companies on a stronger wicket in Q3

The uptick in the quarterly sales of most listed players is perhaps an indication that housing demand may have picked up after a prolonged slump.

The improved show is also on account of the fact that qualified institutional buyers (QIB) have pumped in money which has helped boost liquidity levels for realty firms. By paring debt, these companies have been able to check interest outflows, making it easier to raise funds in the future.

All these are expected to be reflected in the upcoming December 2009 quarter results. On a quarter-on-quarter (q-o-q) as well as year-on-year (y-o-y) basis, there should be an improvement in sales. In fact, it is not only just first-time buyers who are in the market, there is also an upswing in resale activity. Commercial and retail segments are seeing signs of a recovery but there’s nothing that firmly signals an upward trend.

source – Economic Times

Godrej Properties lists at 16% premium

Chennai, January 6, 2010: Godrej Properties Ltd. listed at Rs. 510, a premium of 16% over the issue price of Rs 490 per share on the BSE.

Godrej Properties Limited a part of Godrej group of businesses had entered the capital markets with its IPO of 9,429,750 shares with a price band of Rs. 490 – Rs. 530 aggregating up to Rs. 500 crore.

Commenting on the listing, Mr Sudip Bandyopadhyay, Group President- Finance, Spice Group, said: “The great listing of Godrej properties once again shows that credibility of promoter group coupled with leaving margin on the table for the IPO investors always works wonder for post listing performance for any IPO.”

The IPO of Godrej Properties Limited received an overwhelming response as it got subscribed four times. The Global Coordinators and Book Running Lead Managers to the issue are ICICI Securities Limited and Kotak Mahindra Capital Company Limited, and the Book Running Lead Managers are IDFC – SSKI Limited and Nomura Financial Advisory and Securities (India) Private Limited. Karvy Computershare Private Limited is the registrar

source – mydigitalfc.com

Affordable housing: Boom or bust?

BANGALORE: It started with a big bang. Affordable housing ventures by popular realty groups promised what the middle-class could not even dream of. Owning a flat in one of the metros, at rates which were within their reach, was a dream too good to be true. But after the initial blitzkrieg, the real picture emerging is far from promising.

for more detail visit – Economic Times

What drives real estate prices in India?

What drives real estate prices in India? The factors vary from city to city. In most countries, the construction of a noisy airport may be reason

for residents to flee, but in India, the prospect of Mumbai’s second airport coming up near Khargar is driving up prices.

According to Gulam Zia, national director—research and advisory services, Knight Frank, the Navi Mumbai area — from Vashi to Panvel — is likely to grow faster than other locations in Mumbai.

for more detail visit – Economic Times

After dismal year, realty firms see ray of hope in 2010

After five years of robust growth till the middle of 2008, the $14 billion Indian realty industry faced a major crisis this year, not just because of a sharp fall in demand but due also to high cost of credit in executing ongoing projects.
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The same set of realtors who were happy hiking the cost of both residential and commercial project three-four fold in the past years were forced to launch low-cost ventures and reduce prices.

Even the big players like DLF and Unitech had to mop up funds through qualified institutional placements to feed their cash-starved enterprises – most of it to retire old debts and fund new projects.

The city-based real estate developer BPTP even had to surrender the biggest ever land deal in India worth Rs 5,006 crore ($1 billion) that was clinched in 2008 at Noida in the outskirts of New Delhi as it was unable to make the payment.

‘It was definitely a tough year for the realty sector, mainly because of the global crisis,’ said Pradeep Jain, chairman of Parsvnath Developers. ‘But strong fundamentals helped us overcome it to some extent,’ Jain told IANS.

According to data compiled by leading brokerage and research firm SMC Capital, some Rs 10,300 crore (more than $2 billion) was mobilised by realty firms such as DLF, Unitech and Indiabulls in the first half of 2009 through private placements.

This apart, over 15 players such as Emaar MGF, Lodha Developers and Sahara Prime City are set to come up with initial public offerings to raise about Rs 15,000 crore ($1.8 billion) to tide over their funds crisis.

Among them, Delhi-based Emaar MGF Land alone proposes to raise Rs 3,850 crore ($770 million), while Sahara is targeting Rs 3,450 crore ($690 million). Lodha Developers have targeted Rs 3,000 crore ($600 million) and Godrej Properties want to raise Rs 600 crore ($12 million).

Emaaar MGF, in fact, has filed its prospectus with the markets watchdog, the Securities and Exchange Board of India (SEBI), for the second time, after calling off its offer in February 2008 because of a falling stock market.

The woes of the realty sector also showed on the stock markets, where for the first half of the year the sector-specific index was languishing and was quoting well below the gains by the benchmark sensitive index (Sensex) of the Bombay Stock Exchange (BSE).

As the year draws to a close, it has regained momentum in sync with the broader market and the realty index is now quoting 75.11 percent above the levels seen on Dec 26 last year.

‘The realty index under-performed for a larger part of the year. As this industry is sensitive to interest rates and credit, investors were cautious in trading on the shares of realty firms,’ said SMC vice-president Rajesh Jain.

Added Ajit Krishnan, partner with consultancy and accounting major Ernst and Young: There was a 20-22 percent decline in demand for realty projects. The belief that real estate prices can’t go down any further was also erased with drastic correction in prices.

Yet, as the year draws to a close, realty industry is optimistic over the prospects in the New Year and believes it would pay to remain focused on low-cost housing projects.

But analysts fear that the rising inflation may trigger a rise in interest rate. As a result, real estate players could once again be seen grasping for breath in 2010 as well, especially while seeking funds for their projects.

SMC Global Vice-President Rajesh Jain said that rising inflation is an area of concern. If inflation continues its upward march, the Reserve Bank may tighten the money supply, which would hit the sector hard.

‘The year 2010 will be a buoyant one. But it would not be so euphoric as 2007. There would be genuine buyers, but no speculative investments,’ said Ansal API spokesperson Kunal Banerjee.

‘Affordable housing will be the mantra for 2010.’

And there are already signs of such predictions. The Tata Group’s housing arm is investing in a 1,200-unit township at Boisar, on the outskirts of Mumbai, to offer apartments at prices ranging between Rs 390,000 and Rs 670,000.

Similar plans are on for 15,000 low-cost homes over the next four years across several cities, including Mumbai, Delhi and Bangalore, joining a host of other developers like Jaypee and Vipul who are catering to the low-to-middle income segment.

Property consultancy Knight Frank, in fact says, says 367,000 such housing units will be available by 2011, mainly two-three bedroom units, which were the main areas of focus till a few years ago.

‘As real estate sector’s growth continues to improve, the country will witness a supply of 138,000 residential units in 2010, which is 57 percent more than the supply seen in 2009 mainly at Hyderabsd, Pune, Bangalore, Chennai and Kolkata.’

source – http://sify.com/finance/after-dismal-year-realty-firms-see-ray-of-hope-in-2010-news-editors-picks-jm0naddegae.html

CFO: Ackruti gets Rs 10 billion funding

Real estate firm Ackruti City Ltd has received a funding of 10 billion rupees for 15 projects and is in talks to raise funds for another 3-4 projects, a top official said late on Wednesday.

“We have achieved financial closure of around 1,000 crore rupees (10 billion) from various banks and financial institutions. The funding has been received for 15 commercial and commercial projects in Mumbai, Thane and Pune regions, Ackruti Chief Financial Officer Bharat Mody told Reuters.

The real estate firm received funding from State Bank of India, Union Bank of India, Canara Bank, Bank of India, Indus Bank, Indian Overseas Bank and IFCL, he said.

Ackruti is building 12 million square feet of residential and commercial properties, of which 3.5 million is in Pune and the rest in Mumbai and Thane regions.

The company is in talks with various banks and financial institutions for raising funds for another 3-4 projects, Mody added.

Ackruti is also lining up another 6-7 residential and commercial projects for the next quarter, he said.

On Monday, Ackruti City Managing Director Vyomesh Shah had told reporters the company would look at private equity funding for its projects that would cost over USD60 million to USD150 million.
source – http://www.moneycontrol.com/news/business/cfo-ackruti-gets-rs-10-billion-funding_432450.html

India Inc raises over Rs 150,000cr in 2009

NEW DELHI: Companies knocking on government doors for bailout funds may have been the norm in the West, but India Inc begged to differ from this
rule by raising over Rs 1,50,000 crore of capital for expansion from investors across the world in 2009.

Nearly two-thirds of these funds are estimated to have come from investors in overseas markets, which themselves were in shambles and where companies were in dire need of capital, forcing them to beg their respective governments for money.

Also, Indian companies took the quickfire QIPs to meet their immediate capital needs, instead of the time consuming IPO route. As a result, the funds raised by Indian companies during 2009 were more or less equal to the levels seen in 2008, when economic downturn was not a reality for most part of the year.

A total of about 50 companies raised a record-breaking cumulative figure of about Rs 55,000 crore through sale of shares to qualified institutional investors, mostly overseas private equity firms and also local and foreign financial services firms like banks, insurers and fund houses.

According to global consultancy firm Grant Thornton, private PE and QIP space saw 221 deals till December 13, totalling $11.17 billion (about Rs 52,000 crore). “The worst seems to be over for PE investing and clearly there is renewed PE interest in investing in the country, specifically in sectors supporting India’s domestic consumption like education, healthcare and real estate. As a result PE activity in 2010 is expected to rise significantly,” said S Krishna, executive director, PwC.

E&Y’s partner and national director Pankaj Dhandaria said: “PE investment activity is on the rise again as is evident from the deal activity, which has picked up in the past couple of months.”

Dhandaria added that India, which is on a growth trajectory and with its ability to generate relatively superior returns, would attract even higher degree of capital (including PE) in the years to come.

It was realty major Unitech which kicked off the QIP bandwagon earlier in the year and raised a total of close to Rs 4,500 crore in two separate deals. Other major QIP deals of the year included a consortium of foreign players putting in close to Rs 3,000 crore in Indiabulls Real Estate. Similar amounts were raised by Axis Bank and Hindalco, while a number of smaller fund-raising deals were also striked successfully.

The QIP performance of 2009 was even better that a total of little over Rs 20,000 crore — a record at that time — raised through this route during 2007, when markets and economy, both in India and abroad, were flying high.

The QIP funds raised were not even Rs 2,000 crore in 2008. It was the QIP-push that took India Inc’s fund raising spree in 2009 to the overall levels seen in the previous year, as capital raising activities turned tepid in 2009.

source – http://economictimes.indiatimes.com/news/economy/indicators/India-Inc-raises-over-Rs-150000cr-in-2009/articleshow/5364499.cms

India tops Asian real estate investment markets

India leads the pack of top real estate investment markets in Asia for 2010, according to a study by PricewaterhouseCoopers (PwC) and Urban Land Institute, a global non-profit education and research institute.

The report, which provides an outlook on Asia-Pacific real estate investment and development trends, points out that India, particularly Mumbai and Delhi, are good destinations. Residential properties are viewed as more promising than other sectors and Mumbai, Delhi and Bangalore top the pack in the hotel ‘buy’ prospects as well.

The study is based on the opinions of over 270 international real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants.

Asia-Pacific hold up

Since the global economic meltdown, asset markets in the Asia-Pacific region have been holding up surprisingly well compared with their peers in Europe and the US. While pricing and rentals in the region fell steeply in 2008 and early 2009 in line with those in the West, markets across the region were boosted in the second half of the year by the remarkable resilience of the Chinese economy, which was buoyed by a series of fiscal and monetary stimulus measures.

As a result, many Asian markets have begun to flash positive signals toward the end of 2009. Transaction volumes have rebounded, although from a very low base, led overwhelmingly by China, the report said.

“The relatively stronger fundamentals and the lack of dependence on foreign demand are seen as key advantages as India has managed to mitigate the severe recession that has hit most other Asian countries.

“The recapitalisation by players in equity markets across Asia has been successfully replicated by some Indian developers, which has helped ease the liquidity stresses,” said Mr Gautam Mehra, India Leader for Real Estate Practice, PriceWaterhouse Coopers.

Unlike the US and Europe, distress sale in Asia had been relatively minimal. This was due to several factors, including a relative abundance of liquidity; low loan-to-value ratios, leaving borrowers less vulnerable to loan servicing problems when the prices declined, the report said.

Further, Asian banks remain well-capitalised, having experienced few major losses from derivative investments and also because of the ability of many large investment institutions to recapitalise via the capital markets, (particularly in Australia and Singapore) allowing them to pay down debt.

Tentative rebounds

Despite the recent bullish atmosphere, rebounds in most Asia-Pacific markets (with the exception of China) appear tentative and fragile. Although Asia-Pacific governments will probably be able to sustain high rates of liquidity for the foreseeable future, their near term prospects are probably tied to developments in the West and in particular the US, where de-leveraging is far from over.

“The idea that the recession is likely over gives rise to the widespread notion that global economies will now revert gradually to the same trajectories as in the past, which is normally what happens when recessions end,” said the ULI Chief Executive Officer, Mr Patrick L. Phillips.

He said the aftermath was likely to be different because the imbalances that led to the global downturn remain embedded in the system and could not be quickly eliminated. Moreover, with spending by the Western consumers no longer acting as the primary engine of global economic growth, a new driver was needed to boost the world’s economy, and, in turn, the global real estate industry.

source – http://www.thehindubusinessline.com/2009/12/15/stories/2009121550300300.htm

Godrej Property sets issue price at Rs 490/sh

After receiving lukewarm response from retail and non-institutional investors, Mumbai based Godrej Properties has fixed the issue price at Rs 490 per share, at lower end of price band of Rs 490-530. Maximum bids came in at Rs 490 per share on the last day.

The IPO (initial public offering) of 9,429,750 equity shares of Rs 10 each was opened during December 9-11, 2009 and was subscribed four times, as per data available on the NSE website. The major support was seen from qualified institutional investors; their reserved portion got subscribed 7.45 times. Retail and non-institutional investors’ portion remained undersubscribed.

The company has collected over Rs 460 crore from this issue. It had already received commitment from anchor investors and collected nearly Rs.90 crore fromthem at Rs 530 per share.

The issue constituted 13.5% of the post issue paid-up capital of the company. Parent company, Godrej Industries currently holds 80.26% of equity share capital in the company.

It is in the business of real estate development in India. It currently has real estate development projects in 10 cities in India, which are at various stages of development.

The proceeds of the issue will be used for acquisition of land development rights for forthcoming projects; construction of forthcoming project and repayment of loans. In an IPO press conference, the company said would use 30% of IPO funds to repay debt.

The company has land reserves of 391.04 acres, developable area of 82.74 million sqft and saleable area of 50.21 million sqft (including 27 million sqft in Ahmedabad).

Global Co-ordinators and book running lead managers to the issue were ICICI Securities Limited and Kotak Mahindra Capital Company Limited. The book running lead managers to the issue were IDFC – SSKI Limited and Nomura Financial Advisory & Securities (India) Private Limited. Karvy Computershare Private Limited was the registrar.

source – http://www.moneycontrol.com/news/ipo-issues-open/godrej-prop-sets-issue-price-at-rs-490sh_430562.html

Returning NRIs boost demand for residential property

An estimated 25 million NRIs living in 130 countries have remitted US$52 billion so far this year. In fact India topped the list of countries in
Realty remittance flow followed by China and Mexico, according to World Bank report on Migration and Development Brief.

Migrant remittance flow to developing countries will be around $317 billion this year. It was $338 billion in 2008, higher than the previous estimate of $328 billion. A substantial portion of the NRI/PIO investment was directed towards Indian real estate.

The impact of global slowdown, job losses and unviable job offers has necessitated a section of NRIs to return to Indian shores. Time was when Gulf NRIs were bristling with confidence on noticing certain Gulf countries like Dubai in the UAE, Qatar and Kuwait changing local land laws to permit expatriates to invest in local real estate.

While a few HNIs had invested, others could not afford the high cost of local real estate and felt that they were left out in the race. But times have changed now.

source – http://economictimes.indiatimes.com/markets/real-estate/realty-trends/Returning-NRIs-boost-demand-for-residential-property/articleshow/5317267.cms