NAFIS, Shabbir Husain

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Dawnay Day to invest $1.5 bn in Indian realty.

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Source Business Standard (India):

  • Dawnay Day International, the $10 billion UK-based investment company, is planning to invest $1.5 billion in the booming Indian real estate sector in the next two years.
  • Dawnay Day has entered into a joint venture with a Bangalore-based family to develop a mixed property development including office and retail on 16 acres with an investment of Rs 400 crore. Dawnay Day India Land, headed by MK Singh, will execute the project.
  • G Naggar, chairman of Dawnay Day International, said, “Though realty prices are cooling down and interest rates are going up, Indian real estate space is very interesting. We want to actively develop properties by forming JVs with landowners, apart from outright purchase, consortium tendering/auctions. We will be part of India’s development and growth and will invest in property and infrastructure projects across India’s geography.”
  • Unlike Europe where Dawnay Day is mostly into development of commercial space, the firm would focus on residential development in India, Naggar said.
  • “We like to invest mostly in commercial development. But, we want to focus on the enormous opportunity in the residential development equally in Tier-II and Tier-III cities. Finding the right partner and the right property is our priority,” he said.
  • Dawnay Day is even exploring possibilities in warehousing, as the group sees a lot of potential in the sector in wake of burgeoning organised sector in the country.
  • On the Indian real estate sector, Naggar said, “With rising interest rates and inflation on one side and rapidly developing Indian economy on the other, realty prices should soon stabilise. This cooling off and drop in the stock prices of realty firms provides an excellent opportunity for us to invest in realty projects, including integrated townships.”
  • The UK-based companies has three subsidiaries in India — financial services provider and advisory firm Dawnay Day AV India, Dawnay Day Hotels India and real estate development firm Dawnay Day India Land.
  • Dawnay Day Hotels India has plans to invest $200 million to build 10-15 hotels in the next three years. It has acquired properties in four cities — Pune, Ahmedabad, Delhi and Jaipur — and are close to finalising deals to buy properties in three other cities.

Dawnay is surely trying to capitalise on the shortage of ~19.4 million housing units, including ~6.7 million units in urban India, hence it makes sense for them to invest in residential spaces in India than in commercial.

Seems like foreign investors in the Indian reality sector are mushrooming at the same pace as Web 2.0 companies, both wanting a bite of their respective spaces.

With so much money and so many players, in the reality sector, it would be interesting to see how the developers differentiate themselves from one another based on cost, amenities, payment facilities, brand name, transparency, quality, customer service et… One’s mistake will be other’s advantage. I am sure the firms will be working hard not to make a mistake and loose credibility and market share.

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Written by shabbirhusain

February 22, 2007 at 5:38 am

Posted in Business, India, Real Estate

Analysts build fortunes on realty boom

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Source Business Standard (India) :

  • India Inc’s booming realty sector is triggering an unprecedented demand for real estate analysts.
  • Demand for analysts, experts and consultants is not only emerging from brokerage houses and advisory companies, but also from merchant bankers, media, aviation and big corporate houses, which plan to develop their land-banks.
  • There, however, exists a shortage of professionals. According to Jai Mavani, executive director, KPMG India, “This is because, traditionally, the sector was opaque and did not have the scale and institutional involvement. After companies started hitting the markets and more realty-based financial products rolled out, the need for superior research and financial engineering arose.”
  • KPMG has a team of 25-30 professionals, who specialise in real estate.
  • This year, students of the Indian School of Business were flooded with lucrative offers from real estate consultancies and finance companies.
  • Mutual funds are also gearing up for infrastructure and real estate schemes, even though the latter has not yet received the regulator’s nod. UTI Mutual Fund has already hired experts for infrastructure and would be exploring real estate schemes, once permitted.
  • Leading private airline Jet Airways is also scouting for real estate experts to gear up its proposed pilot training institute project.
  • The demand for analysts grew significantly after the realty sector was opened to foreign investment and companies tapped domestic and global capital markets to raise funds. Kirti Dalvi of Angel Broking feels that compared with other sectors, real estate analysts have to focus more on valuation part of the company.
  • “Valuing a land bank is different from the process followed in other sectors. A fresh talent choosing this area has to spend much time in adopting these skills. Few years back, this was not seen as a drawback, but now companies highly appreciate these skills,” she said.
  • On the remuneration front too, analysts are having a good time. An analyst with 2-3 years of experience is drawing anywhere between Rs 8 lakh and Rs 10 lakh.

Seems like a boom time for analysts and real estate agents. Each time foreign money starts to flow in the country, the sector sees a growth in the demand for professionals – IT, real estate, tax planners, financial consultants are a few examples. A similar trend might be on the rise in the retail setor too. Professionals with sourcing, logistics and distribution experiences will in high demand.

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Written by shabbirhusain

February 22, 2007 at 5:21 am

Posted in Business, India, Real Estate

$102 billion realty market by 2010

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Source Business Standard: 

  • Indian real estate market is expected grow from the current level of $14 billion to $102 billion in the next 10 years, according to Shyam Prasad Reddy, managing director and chief executive officer of Indu Projects Limited.
  • Reddy said that reforms initiated by the government, favourable demographics, increasing purchasing power, emergence of customer friendly banks and housing finance companies would fuel the growth rate of the real estate sector in the country.
  • Reddy said that the shortage of 19.4 million housing units, including 6.7 million units in urban India, and mushrooming of retail projects would provide a huge opportunity for domestic as well as global infrastructure players in the country.
  • He, however, pointed out that Indian real estate industry was ailed by lack of transparency and credibility, an acute shortage of data and academic research and a lack of uniform laws and regulatory systems.
  • Emphasised the need for more clarity and professionalism, particularly in the light of foreign funds and investors eyeing the Indian real estate market.

Written by shabbirhusain

January 24, 2007 at 5:24 am

Posted in Business, India, Real Estate

1 billion USD investment in Indian real estate.

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Are 1 billion USD investments in Indian real estate on it’s way? Seems so, based on the news by Economic Times.

I reckon real estate investments in India is outgrowing the investment happening in the IT sector.

Boom period for builders, investors and real estate agents.

So if you have a more than 3 million INR to invest in real-estate, you fill find yourself with a host of options to choose from. Something similar to what the automobile sector is these days, if you have a million bucks (INR) to spend on a car, you will have loads of options very unlike what it is used to be 10-15+ years ago.

And for those who don’t have that kind of a money to invest in a property, things aren’t going to get any cheaper in the near future either. So better grab one today, or settle for something more expensive, small or remote tomorrow.

Written by shabbirhusain

January 22, 2007 at 10:08 am

Posted in Business, India, Real Estate

Morgan Stanley invests INRs 675cr in Oberoi Construction of India.

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Source Times of India:

  • In the single largest FDI in the country’s booming real estate sector, Morgan Stanley has invested $152 million (Rs 675 crore) in a city-based firm, Oberoi Construction.
  • The world’s largest private equity realty fund, which manages $100 billion (one-seventh of India’s GDP), will in return get a 10% stake in the three-decade-old unlisted company which has a land bank of 15 million sq/ft, most of it in western suburbs of the city. The deal has valued Oberoi at Rs 6,750 crore.
  • Anand B Madduri, an ED at Morgan Stanley, said the three drivers that attracted the fund were the property developer’s execution of projects, entrepreneurial vision of promoter and delivering housing and commercial establishments to a community.
  • Oberoi said the money can be leveraged to raise around Rs 2,500 crore of debt for speedy execution of projects that will give him a cash flow of $1b in 3-4 years.
  • The scramble for buying assets was evident recently when three prominent real estate companies-Hirandani Constructions, Rahejas and Unitech raised close to $2.3 bilion from the London market.
  • Last year, US’s Farallon Investments along with LN Mittal had invested close to Rs 1,429 crore in four real estate companies of IndianBulls, a financial services firm which diversified into property development.
  • Ten Indian real estate companies have raised money by selling shares to the public, which eagerly lapped up the issues.
  • Industry sources say around 150 foreign PE have lined up nearly $10 billion to invest in real estate in the next two years as government relaxes norms to ramp up the country’s inadequate infrastructure. Indian and multinational institutions such as J P Morgan, Falcon, 3i, Blackstone, Carlyle, Kotak Real Estate, IL&FS, ICICI and HDFC are some of them who are waiting to storm the sector.
  • ICICI Realty fund is learnt to be raising $1 billion and Kotak Mahindra $500 million.

Seems like more investment is on its way. This will lead to price hikes and beyond reach to even think of buying a house for a normal person. Are these price hikes justified? Is this organic growth or hyped? Is it in any way benefiting the common man of India?

Written by shabbirhusain

January 19, 2007 at 10:16 am

Posted in Business, India, Real Estate

DSP Merrill Lynch beefs up India real estate investing

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Source FinanceAsia:

  1. DSP Merrill Lynch poaches Nipun Sahni from GE Commercial Finance, to spearhead real estate principal investments for the firm in India.
  2. Sahni’s will be responsible for the firm’s real estate principal investments in the country, based in Mumbai.
  3. Hemendra Kothari, chairman, DSP Merrill Lynch, says, “We look forward to capitalising on the many opportunities within the rapidly emerging real estate sector in the country.”
  4. India’s real estate market has attracted interest from a host of global players including Citigroup, Goldman Sachs, Morgan Stanley and others.
  5. With the Indian economy forecast to grow at 9% this year, real estate in the country is still considered undervalued.

Lots of constructions and development on its way from a reat estate perspective. Prices are only going to move up.

Written by shabbirhusain

January 12, 2007 at 1:28 am

Posted in Business, India, Real Estate

Cost of Indian Real Estate will continue to rise.

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Source The Hindu:

  • The real estate boom of 2006 is set to gain further momentum in 2007 to get India foreign capital of over Rs. 8,000 crore with leading international investors establishing their presence, providing employment opportunities for over two lakh skilled and unskilled people.
  • According to Associated Chambers of Commerce and Industry of India (Assocham), overseas real estate giants such as Royal Indian Raj International, Blackstone Group, Goldman Sachs, Emmar Properties, Pegasus Realty, Citigroup Property Investors, Lee Kim Tah Holdings, Salim group, Morgan Stanley and GE Commercial Finance are likely to bring in all capital of $8 billion with the opening up of India’s real estate sector to 100 per cent foreign direct investment (FDI).
  • Morgan Stanley has already forayed into India’s booming real estate sector in March 2006 through its real estate investment arm, Morgan Stanley Real Estate, investing Rs. 300 crore (around $68 million) in Mantri Developers Pvt Ltd. of Bangalore.
  • Morgan Stanley plans to invest more than $1 billion over the next four-five years in the Indian real estate sector.
  • Tishman Speyer of the U.S. tied up with ICICI Bank to invest $1 billion
  • Efficient regulatory framework and simpler tax regime for the sector are imperative to boost public-private participation and bring in managerial and technical expertise.
  • The biggest U.S. pension fund, CalPERS, hedge fund Farallon Capital Management, US-based developer Tishman Speyer and NRI fund Trikona Capital too have drawn up plans to invest in the booming market.
  • Domestic funds including Kotak Realty Fund, HDFC India Real Estate Fund, Pantaloon Retail’s Kshitij Real Estate Fund and UTI Venture Fund are also active.
  • With the rules relating to investment and repatriation relaxed to a large extent, an estimated 25 million non-resident Indians (NRIs) living in 125 countries, are investing in immovable property in India.
  • Strong economic growth, rising income levels, growing middle class, increasing urbanisation and improving transparency brought resurgence for the Indian real estate sector in 2006 which will continue to grow further in 2007 with easy availability of financing facilities.
  • The chamber forecasts that investment in real estate will go up from $12 billion in 2005 to $90 billion by 2015.
  • Greater integration with the global economy and the increase in domestic as well as foreign investments are encouraging demand for real estate. Despite ill-founded doubts of a bubble, foreign investors are lining up, it observed.

With ever increasing prices of Indian real estate, no better day than today to get hold of a property. The era is very similar to that of mid-90s. It is a builders market again. So if one is looking for a reasonably priced property, chances are it will get even more expensive tomorrow.

Written by shabbirhusain

January 3, 2007 at 4:47 am

Posted in Business, India, Real Estate