INDIA REAL ESTATE attracting US GIANTS - CAC

When Farallon Capital Management, a U.S. hedge fund, and its joint-venture partner, Indiabulls, snapped up an 11-acre property in central Mumbai in March 2005 for $54.5 million an acre, the purchase was called an act of idiocy by local developers.

"India is one of the last few countries where there is primary demand for real estate rather than individuals trading up," says Rajiv Sahney, who runs the India operations of New Vernon Advisory, a $1.4 billion New Jersey hedge fund

Merrill Lynch forecasts that the Indian realty sector will grow from $12 billion in 2005 to $90 billion by 2015. "India is the most exciting real estate market in Asia," says Michael Smith, head of Asian real estate investment banking at Goldman Sachs. "It's one of the last major countries in Asia with an improving market."

That improvement worries some. Concerns about an asset-price bubble have led the Reserve Bank of India to raise the risk weightage on real estate loans extended by banks, and mortgage rates have gone from 7.5% to about 9.5% as a result. That's still well below the 15% rates that most Indians were used to, but it's enough to raise questions about whether the speculation of the past year and a half, which has driven land prices up by 30% to 100% and real estate stocks up as much as 2,000%, may be coming to an end.

The run-up in prices has attracted the likes of Morgan Stanley, which has invested $68 million in Mantri Developers, a midsized construction firm in Bangalore, and Merrill Lynch, which invested $50 million in Panchsheel Developers, a regional builder. Foreign companies have also poured money into funds that invest in Indian developers. GE Commercial Finance Real Estate, for example, has invested $63 million in an $800 million fund that is building IT parks, and Calpers and the Oregon Public Retirement Fund have invested $100 million each in the IL&FS India Realty fund.

Real estate funds set up to invest only in India have already raised more than $2.7 billion. And new funds worth as much as $4 billion are being planned by J.P. Morgan, Britain's Knight Frank, and other foreign investors. Warburg Pincus, the largest private-equity investor in India, says it is spending nearly a third of its time studying opportunities in this area. And Deutsche Asset Management recently hired someone to head its real estate activities in India. "As the largest active managers of real estate funds in the world," says Edouard Peter, head of Deutsche Asset Management Asia Pacific and Middle East, "we expect to be actively raising and investing funds in real estate in India."

It isn't going to be a cakewalk. "It's not easy to do business in India," says Seek Ngee Huat, president of GIC Real Estate, an arm of the Singapore government that is planning to invest several hundred million dollars in Indian real estate over the next two years. "It's difficult finding suitable partners who have the same long-term objectives, as most firms are small and family run."

Already margins have shrunk. "The vast majority of the planned real estate funds are targeting annual rates of return of between 25% and 30%, but I'm skeptical that the vast majority will cross 20%," says Mumbai real estate advisor Rajiv Bhatia.

To achieve the target returns, several funds are focusing on second-tier towns and second-tier developers. "Many investors are going to lose their shirt here, as it's an opaque market, and a wrong partner can easily do you in," says S. Sriniwasan, executive director at Kotak Mahindra Realty fund in Mumbai. There's also bureaucracy and corruption to deal with. Says Ashwin Ramesh, who runs a boutique fund called Primary Real Estate Advisors: "There are a couple of hundred malls currently being developed across India, and predictions are that only 10% will be successful. Yet every developer feels his mall will be among the survivors."

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Mumbai Real Estate

Mumbai Real Estate Witnesses New Trends
Mumbai Real Estate market has always been a trendsetter. The city was the first to witness the rise of skyscrapers and the arrival of condominium culture. Now, the city is undergoing redevelopment and restructuring. Asia’s biggest slum and Mumbai’s biggest mess, Dharavi, is up for redevelopment. Big Real Estate Developers and constructors have pitched in for the projects. Indian real estate players like DLF, Akruti, Parasvnath are among the bidders. Along with them, some international players have also expressed their interests to re-build the area.

Another major trend is emerging in the city. Ageing industrial properties are being remodeled as commercial or retail property. Many industrial houses are selling off their ageing warehouses to property developers. Property developers are more than happy with this move. It gets them huge, spacious land banks at reasonable prices while the industrial houses get to encash on their ageing properties.

Another interesting trend is the remodeling of commercial spaces to retail spaces. The property values for commercial spaces are touching skies and developers are finding it difficult to sell their commercial/office property. Hence, many of them are positioning their property as retail space in a hope to find more takers.

Mumbai Property market is a case in point. This market needs to be studied carefully as most the property trends arise from this market.

India Real Estate

Invest in the most exciting Indian real estate and get burgeoning returns!

The Indian Real Estate market is considered the most exciting and constantly improving market in Asia.

As India’s economic growth curve rises, real estate in India has emerged as one of the most appealing investment areas for both domestic and foreign investors.

A survey by Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst & Young has predicted that Indian Real Estate industry is poised to emerge as one of the most preferred investment destinations in next few years.

Indian real estate has huge potential demand in almost every sector especially in commercial, residential, retail, industrial, hospitality, health care etc.

But maximum growth is attributed to its growth from the booming IT sector, since an estimated 70 per cent of the new construction is for the IT sector.

The main growth thrust is coming due to favorable demographics, increasing purchasing power, existence of customer friendly banks and housing finance companies, professionalism in real estate and also the favorable reforms initiated by the government to attract global investors.

Selling and buying Indian property is now considered as the most profitable and attractive business opportunity New demands have added to strength of real estate markets across the commercial, residential and retail sectors in India. Rapid growth is taking place in both residential and commercial segments that is attracting huge investments in Indian real Estate.

Lower interest rates, better job prospects, and increasing nuclear families have given a boost to residential properties in India. The net yields on residential properties are 4-6%. Capital values in the residential sector have risen by about 25-40% p.a in the last 2 years.

The Retail market has been growing due to increasing demand from retailers, higher disposable income and opening up of FDI in Retail. In this sector, the capital appreciation is close to 20-35% p.a. Changing consumer behavior combined with increasing disposable incomes will ensure further growth of retail sector in India.

In the last one year, capital values of the commercial office spaces have gone up by 40% owing to the increase in demand from IT / ITES and BPO sectors across major metros in India.

The booming IT industry has also resulted in a large number of young investors who with high income jobs chose real estate as an investment option. Moreover, as real estate sector expands beyond the city limits with government promoting industrial belts, real estate developers are eyeing Special Economic Zones (SEZs) as an extension of their business.

Several upcoming special economic zones are also expected to provide the momentum to the commercial office space development in related area where the land comes cheaper, and a SEZ developer is entitled for tax exemptions. Thus, the Indian Real Estate industry is lined up for a complete revolution.

Source: Indiarealestateblog

India Real Estate

India's rents soar in retail gold rush

FIRST came political misgivings and then street protests by small-store owners across India, fretful they will be put out of business by the deep pockets and discounting power of retail chains.

But that perhaps didn't worry Indian tycoons as much as the surge in rentals and space shortages they are now battling in a bid to open thousands of stores and change the way the subcontinent shops.

In the glitzy, glass-and-steel malls that dot Indian cities or are being built, square foot prices have almost tripled in three years, according to retail consultant Arvind Singhal.

“Rentals have shot up to a point where very few retailers will make a profit,” said Mr Singhal, head of the consultancy KSA Technopak, who says retail chains may have to slow expansion.

“Retailers don't want to get into a mall it if there's no financial viability, so a lot of current retailers and likely new entrants are putting their growth plans in review mode,” he said.

Mall rentals shot up as an economy expanding 9 per cent a year drove up land valuations and rising prices of steel and cement forced developers to pass on the increased cost of construction to tenants.

Retailers may get no relief until more space comes into a market in which 250 malls are under construction, on top of 300 that have opened this decade in what pundits call the “great retail gold rush.”

“The share of real estate in the cost of our operation is increasing, and that is certainly a very unhealthy trend,” said Bijou Kurien, a senior executive at Reliance Retail, an arm of India's biggest conglomerate.

“Sometimes you find that the cost of space being sought is so high that it doesn't make business sense for us to go into a particular mall,” Mr Kurien said on a recent visit to Bangalore in southern India.

The cost and space problems have been largely obscured by political reservations and street demonstrations against retail chains in a market dominated by 15 million mum-and-dad stores.

Reliance, the most aggressive retail player with plans to spend $US6 billion ($6.9 billion) on a giant chain of convenience stores, supermarkets and hyper-markets, has suffered the most.

In Uttar Pradesh, India's largest state, the government ordered Reliance to close its stores after attacks by traders.

The Marxist governments in West Bengal and Kerala are opposed to organised retail, which accounts for less than 5 per cent of the consumer market in a nation of 1.1 billion people.

Annual consumer spending is estimated by the consultancy McKinsey at $US370 billion and forecast to quadruple to $US1.5 trillion by 2025, as a youthful population earns more and millions climb out of poverty.

That has lured business groups such as Reliance, Tata and Aditya Birla into retail, only to find there is a heavy price to pay.

“If rentals were expected to be in the range of 60 to 75 rupees ($1.2 to $2.10) per square foot per month three years ago, the same malls are now expecting 150 to 200 rupees,” said KSA Technopak's Singhal.

“Some mall developers are quoting 400 to 600 rupees - a rate at which no retail business can make any money,” he said.

In New Delhi's luxury mall DLF Emporio, reputedly India's most expensive, tenants have to pay 900 rupees, real estate consultants said.

And it's not easy finding the right space in the right location for retailers, who also complain that many malls are badly located and designed, as well as shoddily managed. Many developments are behind schedule.

Ajit Joshi, who heads Infiniti Retail, part of the Tata group, would love to open an outlet in downtown Mumbai as he expands the Croma chain of stores selling consumer electronics and durables.

“What we want is about 15,000 square feet of space, but we won't get it even if we are ready to pay,” Mr Joshi said. In other areas, “if you are lucky and space is available, the rates are so exorbitant it becomes unviable.”

Some mall rentals have risen by 50 per cent in the past year, and developers are trying to wriggle out of old lease agreements under which tenants were offered cheaper space, said Pranay Vakil, India head of property consultancy Knight Frank.

Developers are today in a position to quote a price and tell retailers to “take it or leave it,” he said.
Courtesy - Australian News

India Real Estate - A Gold Rush?

Realty companies in India to double headcount!!!
Brokerage companies in India becomeing Builders!!!
Farmers in Bangalore rush to buy BMWs!!!
Brokers move from 2 wheelers to 4 wheelers!!!
Retired pensioners move to posh neighbourhoods!!!

This is definitely one Gold Rush!!! But what goes up has to come down. The change has been so exponential that noone believes in adages anymore. Real Estate in India has become a global economy that is defining the markets. What was once a home has now become a dream.

India Real Estate

Outlook for India’s real estate markets

Above-average economic growth in India. Strong population growth, a large
pool of highly-skilled workers, greater integration with the world economy and
increasing domestic and foreign investment are expected to drive India’s real GDP
by 6% p.a. over the next 10 to 15 years.

Services outsourcing revving up office demand. India is the prime
destination for IT services outsourcing. In the coming five years, at least 55 million of extra office space must be completed in the premium office segment alone.

600 new shopping centres by 2010. India’s burgeoning middle class will
drive up nominal retail sales through 2010 by 10% p.a. At the same time,
organised retail is becoming more important. At present organised retail accounts
for a mere 3% of the total; by 2010 this share will already have reached 10%.

By 2030 India will need up to 10 million new housing units per year.
Rapid population growth, rising incomes, decreasing household sizes and a
housing shortage of currently 20 million units will call for extensive residential
construction. The financing of owner-occupied housing in particular holds out
enormous market potential.

Capital market still underdeveloped. The total stock of commercial property is estimated at over USD 300 bn. So far the invested market accounts for only
USD 4 bn of this. Capital market products, such as commercial mortgage-backed
securities or listed property vehicles are still almost entirely lacking.

Heed risks. Property investments in India are not risk-free. Market transparency
is far behind European or US standards. It is therefore vital for foreign investors to have a professional local partner. The lack of liquidity and upward pressure of
pricing remain the main concern within the market.

courtesy - Deloitte research

Bangalore Dream Homes to launch Bharat Dream Homes

Bangalore's Real Estate has had a rapid face change in the last couple of years. One of them thanks to BangaloreDreamHomes. "What started out as a pilot project in providing a service for customers turned out to be huge" says Mrs.Manju one of the co-founders of the site. "The registered members grew to 650 in few weeks, we want to provide this service all over India by launching BharatDreamHomes BharatDreamHomes"

The site's cool color combinations of Orange, Green and Yellow makes any casual browser a definite customer. We from India Real Estate team wish them all luck!!!

India Real Estate

Tier-II cities set for realty juggernaut: Report

BANGALORE: Real-estate action in India is increasingly moving to tier-II cities. According to a study by real estate consultancy Jones-LangLaSalleMeghraj (JLLM), a new set of hot spots in the realty market include cities like Vizag, Vadodara, Dehradun, Indore, Nashik, Guwahati, Chandigarh among others.

According to the report, the reason for this state of flux is that the real estate boom is causing many of metros and even some of the previously popular tier-II towns to saturate at an incredible pace. It states that IT companies , who are now the primary drivers in Indian real estate market, are not dependent on central business locations.

“The crux of the whole outsourcing boom is that it makes more sense for foreign-based companies to offload back-office functions and even serious research processes to India than to undertake these in situ. However, what would necessarily be a CBDbased business function in, say, the United States, can be a non-CBD dependent function in India.

After all, both sellers and final buyers of IT-based products and services are based abroad anyway,” the report states. Which means the IT / ITeS companies can operate from anywhere in India as long as they have access to skilled manpower and other necessary resources.

“IT /ITeS companies catalyze every other sector of real estate wherever they go, so the retail, residential and infrastructure sectors soon start perking up in those localities. The fact that such companies can benefit from the advantage of cheaper real estate prices in smaller towns has led to the tier II/III city boom,” said JLLM chairman & country head Anuj Puri.

India Real Estate Blog

India's hot property market is likely to cool soon: Kamath

PUTRAJAYA (MALAYSIA): India's heated property market is likely to cool in 2008, top banker KV. Kamath has said on Tuesday in a forecast that could give pause to domestic and foreign investors, who have poured billions of dollars (euros) into the country's real estate.

The chief executive of ICICI Bank, said he sees “some correction in the next 12 months or so,'' and cited a slowdown in the number of homes sold this year _ as well as more land becoming available for sale _ which would ease demand.

Kamath said there would not be a drastic fall, however. ``Correction could have been sharp in the past, but this time around correction will not be sharp. Maybe 20 to 25 per cent,'' he told reporters.

Kamath, 60, was in Malaysia to receive the Forbes Businessman of the Year award for resurrecting ICICI from near-bankruptcy and turning it into India's largest private sector bank, as well as one of Asia's top 10.

ICICI's assets have grown 40 percent annually in the past three years to $93 billion (euro62.8 billion), propelled by a boom in Indian consumer credit where it has a dominant one-third market share, including in home loans.

As India's economy grows at faster than 8 percent a year, incomes have risen and more and more Indians are buying homes. The situation has propelled prices upward and attracted a wave of investors, many of them foreigners who are buying real estate funds.

Last year alone, about $10 billion was raised globally for Indian property funds. According to Merrill Lynch, India's realty sector will grow from $12 billion in 2005 to $90 billion by 2015. Kamath noted that property prices have increased almost four times in the past three years in big cities, primarily because of unavailability of land.

"How will it correct? Affordability gets to be impossible and prices start to come down. That's the 20 per cent I am talking of,'' he said. ``If you want to see more dramatic correction, then supply of land into market has to increase,'' he said, noting that it is already happening in Mumbai.

Kamath is the third Indian to be honored with the Forbes annual recognition in the last four years. The previous winners were Nandan Nilekani of Infosys Technologies last year and Ratan Tata in 2004. Kamath said 90 percent of the credit for the award goes to ICICI employees and the remaining 10 percent to him for picking the right people.

"No leader succeeds without a team,'' he said. Under Kamath's watch, ICICI's market capitalization has risen to US$31 billion (euro21 billion) compared to $1.6 billion in 2002, when the original corporate lending institution merged with its commercial banking offshoot.

Asked what is one trait that no businessman should be without, Kamath said it is the ``ability to take a decision.'' "It might sound funny, but most businessmen hesitate to take a decision. Decisions are not easy a lot of time ... how to process all the information and come to a decision you think is appropriate and go ahead and execute it."
--Courtesy http://economictimes.indiatimes.com/

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Why India? – and Why Now?

Commercial real estate in India has yielded impressive gains for the past two years, reflecting skyrocketing demand and constrained supply. Available, structurally sound, adequately equipped and attractive housing or business property is limited in both major cities and emerging business locales. Annual return rates now exceed 20% for office, 25% for retail and 75% for existing and newly developed residential property5. Annual market value appreciation for Indian real estate is now 30%, annual commercial property returns in Bangalore and Hyderabad are running about 12%6, among the highest in the world.

Consider office space. Driven by the IT industry’s 50% average annual growth7 rate since 1993, office buildings frequently are fully occupied at completion, and demand is projected to triple nationwide -- to at least 60-80 million square feet -- in the next three years8. Office and manufacturing demand are escalating in cities such as Pune, Hyderabad and Chennai, which may offer better infrastructure, lower costs and more available land than the traditional destinations of Mumbai, Delhi and Bangalore. In retail, large-scale malls and multiplexes are springing up nationwide. Yet, only 2% of retail sales come from modern retail9, suggesting major opportunity for organized retail. Hospitality is following suit as Indian and foreign-based travelers, both business and leisure, multiply.

In residential real estate, which constitutes 75% of India’s real estate market10, demand is being intensified by urbanization and easier credit access. Statistics are complicated by India’s large homeless population, but estimates of the current housing shortage run as high as 20 million homes annually, half in urban areas. Despite the construction of about 4.5 million new homes annually, demand11 estimates spiral further upward in coming years.12 A partial solution -- and an intriguing investment opportunity -- may lie in new, mixed-use "townships" that combine residential, office and retail facilities. Indian developers are embracing the concept of these self-contained communities, particularly in the vicinity of smaller and mid-size cities, that may each house thousands of residents.

Other notable prospects: bridges, ports and other infrastructure that can facilitate the nation’s growth. Large, undeveloped tracts held privately or by government entities, such as Indian Railways and state governments, also may be available for development.

Courtesy: Deloitte article on India Real Estate

India Real Estate Blog

India's Real Estate Boom

With China’s astounding economic growth rate grabbing all the headlines, it’s easy to overlook the equally impressive performance by India’s economy. But savvy investors have begun to take notice, especially when it comes to the Indian real estate market.

Unprecedented investment opportunities are beckoning in all sectors – retail, residential, commercial and hospitality. Real estate values have been appreciating at a staggering 30 percent annually, spurred by government reforms and the relaxation of foreign real estate ownership constraints. Direct foreign investment is surging – and with good reason. India is the world’s most populous democracy with a growing middle class and the largest English-speaking workforce outside of the United States. In purchasing power, India’s is the world’s fourth largest economy with a growth rate nearly equal to China’s. Thanks to urbanization and easier credit access, developers can’t build residential real estate fast enough. In spite of red tape, sometimes inadequate infrastructure and widespread poverty, skyrocketing demand in the office, commercial and manufacturing sectors is likely to keep the Indian real estate market hot for years to come. The question may no longer be “Why India?,” but “Why not India?”

Courtesy:
Pulling Out All the Stops: The Opening of India's Real Estate Market
Deloitte Insights podcast

India Real Estate Blog

MUMBAI: It’s not just RBI, but International Monetary Fund (IMF) and central banks across Asia too are concerned over the spiralling property prices and the possible impact on the banks’ books.

In its regional economic outlook for Asia-Pacific, IMF has warned that although rising home loans portfolio appears to be manageable, if home loans continue to grow at the current pace, it may pose challenge to the banks as well as the regulator. It has cited the recent crisis in the US sub-prime market and warned that financial sector woes triggered by housing can spread faster across the economy than expected.

In the 12 economies IMF studied, housing price increase has averaged 4.5% during 2002-06. Only three countries — China, India and New Zealand — experienced real annual price rise of more than 8% during the period.

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Courtesy:http://economictimes.indiatimes.com/Skyrocketing_real_estate_prices_strain_Asian_banks/RssArticleShow/articleshow/2078385.cms

New Project Approvals Bangalored

A new look for Brand Bangalore. That’s what is expected to take shape shortly with the approval of Bangalore Metropolitan Region (BMR) master plan, complete with integrated townships, ring roads and expressways. But developers have become restive since all project approvals have been kept on hold till the Bangalore Master Plan is finally cleared.

Sources in the Bangalore Metropolitan Region Development Authority (BMRDA) said the cabinet will take a decision on the master plan shortly in order to ensure a planned growth of the state capital on a formula that would also help retain the tree cover, water bodies and heritage sites. Recently, a presentation on this master plan was made to the Chief Minister H D Kumaraswamy by Sudhir Krishna, Commissioner, BMRDA, the sources added.

The Metropolitan Commissioner says the BMRDA would look into each plan (for conversion of land from agriculture to non-agriculture purposes) and approval of new townships, pending the government’s go ahead for the master plan.

The BMRDA has submitted the interim master plan for the local planning areas of Magadi, Kanakapura, Hoskote, Nelamangala and Anekal and area planning zones for Ramanagaram and Chennapatna.

However, land and township developers seeking quick approvals for their projects, have been growing restless. Their contention: With the master plan pending, land conversions and plan approvals have been put on hold.

The BMR constitutes around 8,000 sq km spread over Bangalore Urban and Rural districts and is covered under five Area Planning Zones (APZs).

“Investments of around Rs 10,000 crore have been blocked due to the delay. There are about 150 layouts that are coming up in BMR. We have to sustain the employees, suppliers and consultants,” said Roy C J, General Secretary, Karnataka Township Developers Association (KTDA).

To protest the delay in approval of the master plan, members of KTDA and Karnataka Land Developers Association even sat on, dharna last week and submitted a memorandum to Sudhir Krishna.

In the property market, the delay in project clearances has created a tenuous scenario. Industry sources said developers had pre-sold sites and taken bookings from customers and retailers for projects they hoped to launch.

On the other hand, these developers had simultaneously signed agreements with landowners. With the freeze on approvals, both landowners as well as property buyers are ruing their decision. The landowners are not being paid their money, while those who have booked property will have to wait a while to take delivery

India Real Estate Blog

Documents To Look For

This is pertained more to South India, say Karnataka, Tamil Nadu, Andhra Pradesh
Sale Agreement
KHATA
Certificate of Title
Transfer Deed
Encumberence Certificate for the last 16 years
Power Of Attorney if any

India Real Estate Blog

IN REAL ESTATE, IT'S NOT WHAT YOU KNOW, IT'S WHO YOU KNOW.

When was the last time you thought you knew everything about buying a house? No matter how much you know, out on the road you're on your own. Let me start out by giving my experience.

I always used to dream of a perfect home, only to realise there is no such thing as perfection. Uniqueness, yes. I realized everyone wants to rob me. The seller, the agent our neighbourhood bank with their loan schemes. Nothing seemed to fit my plan. Everyday my hunt grew more and the dream seemed only so distant. Thankfully I have become more of a traveller, so the idea of buying a home is no more on the cards. But the experience itself had all the ingredients of one fine thriller movie.

Now a days anybody can become an agent. Did you know the janitor who works in your company could make more than you in one day, than what you make in a month? When was the last time you went to see a property in your bike and the agent arrives in car. You actually mis-took the agent for the seller.

Buying a property in India has become a nightmare. The elements around it are painfully, in one way or another inevitable. And then there are these No 1 portals. Please give me a break. Its no more a home. Its no more a house. Its an investment.

India Real Estate Blog