amit001

Lovely post belief...

My belief in your knowledge and judgement has gone stronger

matrix_55

DLF to sell convention centre project, wind power business for Rs 1800 crore

The executive, who did not want to be named, said DLF is close to finalising a joint venture agreement for the convention centre at Dwarka, in west Delhi, with a Japanese company that executes mega mall projects. The source declined to name the company but said DLF may hold a very small stake in the joint venture as part of a structured deal. The convention centre is expected to fetch DLF about 800 crore (in 2012).
DLF had acquired a 35-acre plot from the Delhi Development Authority (DDA) in 2007 for 901 crore to ready a convention centre ahead of the 2010 Commonwealth Games. But the project, which was to include three hotels, commercial complexes and meeting areas, could not take off. Later, when the company wanted to exit the project and sought a refund from the DDA, the development body refused after seeking legal advise.

DLF to sell convention centre project, wind power business for Rs 1800 crore - Economic Times

amit001

Matrix - it is not clear from the article

whether DLF is selling the whole plot for abt 800 crores, which it acquired for 900 crore.

it may be selling only a portion of the plot bough from DDA...

Kyoki DDA se vaise hi market price se kam pain cheez milti hain

I find it difficult to assume that DLF has to sell the plot at less than the cost price from DDA.

The article does not provide clear answers

amit001

Also this is not a straight forward deal...

it is more complex...

we do not know if there were issues related to that land parcels...cud be possible that the land was not as commercially viable as was assumed by DLF at the time of buying

One can not use this article to define a trend...

Evidence is not conclusive as per my judgement

amit001

A top DDA official told ET, "DLF has sought permission to change the structure of the company that has got the land for the convention centre. They want to convert it into a consortium with a foreign partner, but DDA has not taken any decision yet."

This is a circumstances driven (Not able to use the land for which it is bought) distress sale and not a market driven distress sale...

Read this - "The project, which was to include three hotels, commercial complexes and meeting areas, could not take off. Later, when the company wanted to exit the project and sought a refund from the DDA, the development body refused after seeking legal advise?

This is the reason for distress sale and this in no way signifies that the value of the same land has got reduced due to any sort of correction in the market.

Thanks,
Amit

vatsalbajpai

Alok Realtors, the real estate arm of Alok Industries, which had bought a commercial building from Peninsula Land in Lower Parel four years ago, is now desperately trying to dispose it of even at a loss. Alok Realtors had bought the property for Rs 1,075 crore in 2007, in the middle of the property boom. A top executive in the publicly-listed Alok Industries confirmed that the company has the option of selling the property by March 2012, "even at a loss", as it has decided to exit the real estate business completely to repay the mounting debt. "We are considering various options for the property.

amit001

You can find options in greater noida which are lower than its purchase price (2007)

at the same time you can find plots in rohini which have gone up by 3 times from 2007

You can also find flats in Ggn which have become 2.5 times since 2007

So there are good properties/location which gives great ROI and bad properties/location which gives no or negetive ROI

PS - I am in no way justifying that a correction/stagnation can not happen in the market.

Belief111

Hi Matrix, Bajpaiji,

Appreciate your posts above.

Will just go back to school. At exams, same question paper appeared difficult to manageable to easy to different set of pupil. The paper was always the same, only the answer changed depending on who was asked the question. The answer was ultimately dependent on the preparation (qualitative and quantitative) of the strong and weaker respondents.

In Indian RE, it, likewise, will also be a matter of positioning of stronger and weaker players, qualitatively and quantitatively. The buying price (when and how one started preparation), balance sheet size (inherent and fundamental knowledge), cashflows (preparatory simulated tests) will hence be of utmost importance.

The examples I used in previous post were (1) most central possible property - in C.P. (of Parsvnath) and (2) most valued possible property exit (of 3000-4000 crore by DLF, at the same time being in Mumbai central). The choice of these examples was intentional - choosing quality and quantity.

I will be worried if both these deals happen at close to cost price or say anything less than 20% cagr (this being debt servicing rate normally for builders).

Alok, Ajay, Brijesh, Patel, etc. (questionable still as Amit pointed out) will be more akin to a mad dog gone further astray.
In school and college, there always were those pupil repeating years. If more than even 10% repeated, it was akin to a black swan.

Till we reach that 10% fail mark, I, for one, am not halting my sundowners...

Cheers.

vatsalbajpai

Venkys,

Will rupee not depreciate now...well i do not think so but then future is almost always mostly opaque. we all can just throw educated guesses.

vatsalbajpai

Never ever has indian RE industry has seen such type of leveraged business activity ever...hell there was'nt anymuch organised RE industry in india before 2003 et.all.
And as happens with any new sector in india that it creates lot of hoopla during its initial years with insaner valuations , all being justified.
remember TELECOM SECTOR, INFRASTRUCTURE sector in india only.
i have personally seen people put there life savings (retirement funds) in SBI INFRASTRUCTURE FUND because for them infra is the next thing and nothing can go wrong...why..because india needs INFRA ( hell yes) , govt is trying its best to bring better infra ( i believe they are trying) , people are ready to pay for better infra ( do'nt you).
But despite all these compelling reasons , everybody can see what happened to INFRA sector .( i.e. in terms of valuations).
now the valuations of infra are at a saner level or i must say Valuations of Infra sector has matured.
Same is true in case of RE sector ,RE sector has to mature and it will , given some time and more supply which will keep on increasing in a exponential way , while the actual demand will keep on increasing in a linear way , of course speculators are welcome as they give boost to exponential supply curve in initial phases but then these speculators exit when supply curve goes up in a straight line upwards.
Now when all seems well , there comes something unanticipated which has been called as black swan...it has came always , irrespective of country,sector,race, religion, mindset and it will also come in RE sector.
The only thing remaining is anticipating from where and when ???