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Real Estate : Some valuable info at one place!!!


Real Estate : Some valuable info at one place!!!

Last updated: June 3 2007
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  • Real Estate : Some valuable info at one place!!!

    Indian Real Estate (source

    The real estate story in India is growing bigger by the day as it continues to receive an ever-increasing influx of funds. While more than 35 big-ticket foreign funds have already checked in, the first half of 2007 will see at least 20 more funds making an India entry. Meaning, US$ 10 billion of foreign direct investment (FDI) will be injected into the real estate sector.

    Merrill Lynch forecasts that the Indian realty sector will grow from US$ 12 billion in 2005 to US$ 90 billion by 2015. Prominent global funds including Carlyle, Blackstone, Morgan Stanley, Trikona and Warbus Pincus are sitting on a total corpus of US$ 12-15 billion, say experts.

    Retailers in India--the most aggressive in Asia when it comes to expanding their businesses--are creating a huge demand for real estate. The Jones Lang LaSalle third annual Retailer Sentiment Survey-Asia revealed that India topped the chart with 45 per cent expanding rapidly followed by Greater China at 27 per cent and other South East Asian capitals at 6 per cent.

    Global majors in India's real estate

    Eminent global real estate business houses like the Philippines-based Ayala, and Signature group, Och-Ziff Capital, EurIndia and Old Lane from Dubai are keen on sizeable investments into India. And, while FDI from the UK is also likely to pick up in the next few months, investors in the US, Israel, Malaysia and Singapore want to be a part of the India story.
    • Australian real estate consultancy major LJ Hooker, with 700 odd franchisees in South East Asia, has opened its India account with a franchisee in Bangalore
    • US-based global investment bank Goldman Sachs and Unitech, the largest listed real estate company in India, will set up a special purpose vehicle (SPV) with a corpus of US$ 208.7 million for investments in the real estate sector
    • DLF Ltd is forging a 50:50 joint venture with Nakheel, a large property developer of the UAE, for two integrated townships in India at a whopping investment of US$ 10 billion
    • Zurich-headquartered Credit Suisse, the world's leading financial house, is finalising on a US$ 1 billion fund to invest in India's real estate sector
    • Hilton Hotels Corporation (HHC) announced a joint venture company with DLF Ltd to develop and own 75 hotels and serviced apartments over 7 years
    • Dawnay Day International, the US$ 10 billion UK-based investment company, plans to invest US$ 1.5 billion in Indian real estate in the next two years

    Retailers and Malls

    With the retail sector also on a boom, the country is witnessing a spurt in extremely large retail spaces. Shopping malls with over 1 million sq ft of space have become the order of the day. About 20 of these are now at various stages of construction across the country. In the National Capital Region (NCR), Unitech's Great India Place has a million square feet (sq ft) of retail space. In Mumbai, at least eight malls covering over 1 million sq ft each include R-Mall at Ghatkopar, and two 1 million sq feet plus malls proposed for Thane. In Bangalore, at least three malls with similar dimensions are under development. Ludhiana will soon have a 1.6-million sq ft mall by Today Homes.

    As the competition in the market intensifies, builders are going out of their way to be different. Specialised malls, designer brands and multi-movie options are marking the shopper's day out. Gurgaon, on the suburbs of New Delhi, has a jewellery mall and will soon have an auto mall. Bangalore will get an exclusive furniture mall. Two malls, first of their kind, targeting foreign tourists, will come up at tourist hotspots--Goa and Udaipur--with a projected cost of around US$ 22 million each. A furnishings mall is coming up on Elgin road in Kolkata. And India's largest theme amusement park, Noida Entertainment City (E-City), will stand upon 150 acres approximately.

    In what could perhaps become a trend in the booming retail business, Reliance Retail, Future Group and Bharti-WalMart are among leading retail companies that are acquiring housing societies and colonies in Ahmedabad to knock down and build mega-retail stores.

    Big deals in realty

    The biggest mall of the world--Mall of India--planned by DLF Universal along NH-8--will have 32 acres spanning a huge entertainment area and large city town squares offering a total retail experience.

    Chennai, on the radar of foreign real estate funds, recently witnessed two big-ticket property deals. AIG Real Estate Fund and RMZ Corporation purchased an 11-acre plot at Guindy for US$ 686.9 milion and Shyam Kothari, in another deal, bought IDBI's 2.5 acres Boat Club property in Chennai for US$ 40.3 million.

    Residential Development

    Majority retailers are now planning to expand within the current city, and a similar percentage is willing to open new stores in other cities within India. The most confident among them are home and interior retailers and sports apparel/equipment retailers, followed by department stores and jewellery and food retails.

    While the last decade saw the transition of sleepy towns like Gurgaon, Noida and Faridabad into enviable addresses, today these tier I towns, as they are called, are saturated and far beyond the means of the middle class. Naturally, the opportunity in the residential development in Tier-II and Tier-III cities--like Hyderabad, Cochin, Chennai, Coimbatore, Gurgaon, and Pune--is equally enormous.

    For instance, Pune, the engineering and automobile hub of western India--about 160-km south-east of Mumbai--is emerging as a major IT centre. With sprawling software parks coming up all over the city and its suburbs, the demand for high-value apartments is growing. Beyond professionals and people looking to relocate from Mumbai or even overseas, are the older people who have sold a bungalow and want to live in spacious, easy-to-manage surroundings. Developers maintain that the bar for the super-premium luxury housing has risen from Rs 1 crore (US$ 231,964) to over Rs 2 crore (US$ 463,929) per unit.

    If the year 2006 was marked by some of the country's biggest land deals, the future of India is set to usher in the gold rush of realty.
    Manoj Misra

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