HDFC, India's largest housing finance company has made a big move in the home equity business by offering loans against property at 13.25%. This could turn out to be a big business opportunity for the lender since most of its borrowers pre-pay home loans. The finance through the home equity route makes available finance at a cheaper rate than, say, auto finance or personal loans with easier repayment schedules. HDFC expects a big demand for this product from borrowers who have cleared their mortgage dues. This loan would also be available to existing borrowers, if the market value of the property is much higher than the outstanding home loan. The advantage of this loan over the existing top-up loans is that there is no Rs 5-lakh ceiling, which is applicable on top-up loans. Asset Plus, as this product is called, is not a new product from HDFC in the true sense. However, it is now structured differently and is aimed at assisting customers to meet their immediate financial requirements while they continue to occupy their homes. Also, if compared to a personal loan, the interest rate on Asset Plus is lower and loan term is much longer. This gives a borrower the option to spread the loan repayment over a longer period of time, in effect reducing the immediate financial burden.. Interest rate for Asset Plus loans will be charged from 13.25% onwards on floating rate loans and the loan term against residential premises is 15 years while the term for non-residential property is 10 years, subject to the age of customers. The product entitles customers to loan sizes beginning from 50% of the market value of the property. Subject to the market value of the property and loan eligibility criteria, HDFC's customers can have a total exposure of up to 70% of the market value of the property and at the same time get an interest rate, which would be lower than non-HDFC home loan customers. The eligibility criterion for Asset Plus is that the property needs to be freehold, self-owned and fully constructed, with a clear and marketable title. One can also mortgage a joint property by having all owners as co-applicants for the loan. Although a small business in India, loans against home equity are big business in developed market like the US. However, since this involved increased leveraging, the loan product increases the market sensitivity to interest rates and real estate risks.

Dutch property manager ING Real Estate plans to invest in India, Turkey, Europe and the Americas to meet demand and benefit from relatively high returns. The real estate unit of financial services division of ING Group, which managed 94.4 billion euros ($130.2 billion) in property globally as of March 31, plans to invest 0.5 to 1 billion euros in these two countries by early 2008. Returns in India and Turkey are expected to be higher than the 4-7 percent generated in Western Europe and North America. Increased demand from customers is another reason for ING Real Estate's expansion into these two markets. ING Group desires to participate in markets that grow. This is also a reason why they started investing in Scandinavia in 2005 and central Europe in 1993. ING has been in China since the early 1990s. ING Real Estate, which last year bought Canada's listed Summit Real Estate Investment Trust, does not plan to take over local companies in India or Turkey. The company is also eyeing investments in Western Europe and the Americas via its Atlas Infrastructure Fund, set up earlier this year. This is the market where investors want to be now. Today, one should think of returns between 12 and 14 per cent on infrastructure projects. Therefore, ING Real Estate would not quickly make investments in East European countries such as Ukraine and Russia, as they lack sufficient availability of investment grade property, transparency, and a stable legal system, thereby making investment returns not very attractive.

Indiabulls Real Estate has recently concluded its $ 400 million Global Depository Receipts (GDR) offering with the allotment of over 3.87 crore equity shares. The board of directors allotted 3,48,83,720 equity shares of Rs 2 each as underlying shares representing equal number of GDRs. Pursuant to the over allotment option exercised by the sole underwriter Merrill Lynch International, the company issued 38,75,968 equity shares. Each GDR of $ 10.32 represents one equity share. Accordingly, the total number of equity shares alloted underlying the GDRs amounted to 3,87,59,688 thus concluding the aforesaid GDR offering of the company. Merrill Lynch was the sole book runner for the offering, which is understood to be the first fund raising by any Indian developer in the international market. Earlier in May, the shareholders of the company had approved a special resolution authorising the board to raise $ 600 million through international offerings, including GDRs, American Depository Receipts and Foreign Currency Convertible Bonds. Shares of Indiabulls Real Estate were trading at Rs 474.90, up 1.38 per cent on the BSE.

In a move that is expected to bring transparency to the real estate market, finance minister P Chidambaram launched the official Housing Price Index, developed by India's home loans regulator, the National Housing Bank. Named as NHB Residex, the index has been introduced as a pilot for five cities-Bangalore, Bhopal, Delhi, Kolkata and Mumbai. The index covers different localities in each of the five cities for five years: 2001-2005. The index will track the movements of residential property prices and can be used to estimate the house wealth, considered an important component of personal wealth. Banks and housing finance companies can also use it in portfolio evaluation and collateral security for their housing loans.

Real estate giant DLF is likely to invest about Rs 1,250 crore on expanding its multiplex business, DT Cinema, by adding about 500 screens in the next four to five years. Currently, DLF is at a pre-operative stage with about seven screens. In another four to five years time, the target is to have 500 screens across India. By September this year, two DT Cinema complexes in Delhi and one in Chandigarh would be operational and 35 screens are expected to be functional in the next seven months. Once these initial projects start, the mid-term aim is to have about 150 screens operational within two years. Apart from north Indian cities, DT Cinema plans to set up multiplexes in Hyderabad , Chennai, Kochi, Bangalore, Mumbai, Pune, Ahmedabad, Goa and Kolkata. The size of each multiplex could be between 35,000 sq ft to 90,000 sq ft. DLF believes that the multiplex business offered a big opportunity as there is a shortage of nearly 40,000 screens in India.

Berggruen Holdings is a private company, with interests in private equity, stocks and bonds, hedge funds, art and real estate. Berggruen Holdings is a New York-based fund which manages proprietary capital worth over $1.5 billion, plans to invest over $300 million in India over the next three years in hospitality, real estate, education, construction equipment leasing and logistics businesses. Out of this, a major portion of nearly $200 million would go into real estate projects spread across commercial, residential and retail , while the remaining would be for setting up 40 budget hotels across the country. For its foray into the education business, Berggruen Holdings has partnered with a group of hospitality professionals to offer short and long term specialised programmes through 50 training schools across the country. Apart from the hospitality sector, the education business would also focus on offering specialised training in sectors such as retail, aviation and tutorials. The fund has already made investments worth $60 million in the real estate sector so far. It has recently co-invested in a 125-acre mixed-use property in Mohali, near Chandigarh, and is part of an IT park project in Hyderabad. A typical deal size in the real estate sector is likely to range between $30-50 million. Earlier this year, the fund had announced plans to launch its budget hotel brand in India, Keys, with an investment of around $100 million over a three-year period across 40 sites. The first property is expected to be operational by the year end at Goa. Construction is currently on in three sites, including Trivandrum, Bangalore and Kovalam.

India Shining!, remember the Slogan used by BJP during its past government?, here is a BJP  person who has Proved this Literally. Cinestar and BJP MP Vinod Khanna has bought a residential apartment at Malabar Hill, in the tony South Mumbai area, from Citibank for Rs 1.25 lakh a sq ft. Khanna has paid Rs 31.25 crore for the 2,500 sq ft flat. The sale price was four times higher than the reserve price of Rs 32,000 per sq ft.

In a similar transaction nearly six months back, a London-based NRI acquired a 3475 sq ft property in NCPA apartments at Nariman Point for Rs 97,842 per sq ft.

Real estate industry experts said the price at which a property was sold cannot be viewed as a benchmark in South Mumbai as the area has a limited supply of real estate. "Buyers are keen on South Mumbai properties due to the status attached to it. Properties in the area will always sell at a premium," said Sanjay Dutt, deputy managing director, Cushman & Wakefield.

Citibank put the flat on sale a fortnight ago and property consultancy CB Richard Ellis was given the mandate to sell it.

While Vinod Khanna could not be contacted for comments, a Citi spokesperson said: "As common with many other multinational organisations, we periodically review our surplus residential estate portfolio in relation to employee requirements as the preference is towards a flexible remuneration policy."

The deal also marks the trend of foreign banks such as American Express, Deutsche Bank and HSBC selling their residential properties in Mumbai. The most prominent among them was high profile stock broker Rakesh Jhunjhunwala buying an apartment from American Express Bank in Mumbai's Malabar Hill for about Rs 25 crore.

Amidst the ongoing property sale by banks, Cushman's Dutt believes that the banks were taking a right step as the property prices were not sustainable in South Mumbai where prices have doubled over the last two to three years.

Visit www.mybangaloreproperty.com  for Properties in Bangalore

DLF, Nitesh Estates and HDFC Realty are amongst the bidders reportedly in the fray to acquire NRI tycoon C Sivasankaran’s Beacon House, located off the upmarket Cenotaph Road in the heart of Chennai. The 3-acre property, a former residence of UB Chairman Vijay Mallya when he controlled Best & Crompton (B&C), may fetch as high as Rs 225250 crore, sources said.

Mr Sivasankaran has mandated CB Richard Ellis to sell the property through an auction, with five bidders indicating early interest. While multiple sources confirmed interests from DLF, Nitesh Estates and HDFC Realty, unconfirmed reports indicated that local developer Arihant and Bangalore-based Sobha Developers are also in the fray.

Mr Sivasankaran had acquired the property in early 2006 for Rs 100-110 crore, sources said.The bidders, like DLF and Nitesh, may be eyeing the property for premium residential units, which, going by the current FSI of 1.5, could see 4 lakh sq ft of fresh development. The area has houses of leading industrialists, including Murugappa Group family members, and Japanese Consulate. Recently, DMK leader and son of chief minister MK Karunanidhi, MK Stalin, has moved there.

It is believed that a leading local developer True Value Homes may sit down with HDFC Realty for joint development, if the latter shows up with the winning bid. Earlier, True Value Homes had attempted to join with Mr Sivasankaran for developing premium residential apartments on the land.

Several local real estate sources said, in view soft market conditions, the maximum price it can fetch is Rs 3.25 crore per ground (56 grounds in 3 acre). Recalling the objections raised in the past over building multi-story buildings in the posh area, the realty sources added that it is not easy to take up development unless the bidder is familiar with the local conditions.

However, the national players, which may view Chennai as a more sable market in terms of real estate prices, may put in an aggressive bid that could take the auction price t Rs 225/250 in the highest band. A few months back, Bangalore-based Nitesh Estates made a winning Rs 640-crore bid for a nine-acre plot on Chamiers Road, which is in close to Beacon House.

Nitesh is in the midst of developing a one million sq ft mixed use development including luxury hotel, retail, commercial space and serviced apartments.

Beacon House came to the fold of UB chairman Vijay Mallya after he acquired B&C. Later, when the company was acquired by Indonesia’s Polysindo, it decided to sell the property making use o the scrapping of urban land ceiling act. Since Mr Sivasankaran had picked up stake in B&C, it helped him to clinch the deal.
Source: Economic Times, April 18, 2008.

In view of the appreciating rupee, high wages and increasing real estate prices, big, medium and small IT firms have made a successful entry into tier-II cities. Encouraged by their progress, many small IT firms are now exploring tier-III cities such as Udupi, Manipal, Hubli and Belgaum in Karnataka, Kozhikode in Kerala, Tirunelveli in Tamil Nadu, Jaipur in Rajasthan, and Durgapur and Kharagpur in West Bengal. The reasons are manifold. These cities have a good number of engineering colleges, and the firms do not find it difficult to meet their modest requirements of staffing, usually in the low hundreds, at affordable costs and without being plagued by high attrition. Smaller IT companies cannot compete with large brands in software services across domains. They have to specialise in niche areas and require a smaller workforce. It is easier for them to recruit in smaller towns where the big players are not competing. Consequently, they can bring down their operating costs, also. A case in point is Zeta Infotech which operates a remote R&D centre from Manipal for Synopsis, an electronic design automation software provider. Similarly, software product development services company Robosoft Technologies operates a centre in Udupi. The company has been able to attract local talent and Robosoft now employs more than 300 people. They have lower operating costs. The quality of life is good (less traffic problems, less pollution, good environs for creative work) for the employees. Udupi, Mangalore and Manipal have many educational institutes and engineering colleges. They have good healthcare facilities too. Another firm, Karmic, which offers design services, has set up a 220-member centre in Manipal. They have trained about 240 engineers in the difficult area of chip design and 220 of them are still with us. They have already opened a centre in Coimbatore and hope to open centres close to where professionals hail from, based on their inputs. Kochi as an IT destination is already witnessing the emergence of new locations. Thiruvananthapuram-based International Business Services (IBS), which provides IT solutions to the transportation and logistics sectors, is planning a 25-acre campus in Kozhikode. Jaipur, too, has its share of small IT firms. At present, there are eight firms working out of Jaipur. Intecons, which provides software services, has set up a centre in Jaipur. The company started with a target of local clients and Jaipur was comparatively less competitive with fewer software service providers. But it is a developed town and needs all IT-related facilities. They are targeting overseas clients and the company is 95 per cent export-oriented as of now.

Smaller towns in West Bengal such as Kharagpur and Durgapur are also attracting the attention of small players in the IT sector. Sankalp Semiconductor, which provides services to the semiconductor sector, is planning to open a centre, its third, in Kharagpur or Durgapur. At present, they have two centres in Hubli and Belgaum. They will start another centre in an engineering college in West Bengal. Kharagpur is home to an IIT and Durgapur has a regional engineering college. A high tech cluster is coming up in Kharagpur, which has new ventures promoted by IIT graduates, and can absorb regional talent down the line. NASSCOM has been promoting a number of secondary and tertiary cities with engineering talent.

Mukesh Ambani promoted Reliance Industries Limited, Wadhwa Builders, TCG Infrastructure and Hiranandani Constructions have emerged as the leading bidders for the three Bandra-Kurla Complex (BKC) plots in Mumbai measuring 75,350 square metres. The total value of the top bids is Rs 2,790 crore.

Milind Mhaiskar, joint metropolitan commissioner and project director (Mumbai), MUTP, told The Indian Express: “The highest bid per square metre this time is somewhere over Rs 5 lakh, which is easily three times our base price of Rs 1.56 lakh, the amount which was the per square metre bid by Reliance last year when they bagged the convention centre.

In that sense, we are happy with the bids as it reflects a steep upward trend in prices.” According to Mumbai Metropolitan Region Development Authority (MMRDA) Commissioner Ratnakar Gaikwad, MMRDA would lease out its properties for 80 years for the development, operation and maintenance of the commercial complex and car park. “Plots C-70, C-54 and C- 55 (the latter two have been offered as one plot) have been ear­marked for commercial and office use while plot C-66 has been reserved for a multi-storeyed car parking for a minimum of 500 cars along with a commercial complex,” he said.

“This is just the first phase of the bidding process and each bid needs to be analysed before they are awarded. These bids will now go to the executive committee after whose approval it will be announced,” Gaikwad said. “Our target is to raise Rs 2,60,000 crore for the development of the entire MMR region based on our draft plan. The bulk of this will be towards all the mass transit projects that have been earmarked as priority, which will partly come from such bids. MMRDA has another 50 acres of area in such plots.”

MMRDA officials said Reliance Industries emerged as a leading bidder for the C-66 Plot (30,550 sq m) with Rs 918 crore at the rate of Rs 3,00,501 per sq m. The second runner-up is RR Mega City, which had quoted Rs 2,13,093.28 per sq m, and the first runner-up is Business Park Town Planners Limited (BPTP) at Rs 2,48,348 per sq m.

For plot C-70 measuring 16,500 sq m, Wadhwa Group has quoted Rs 5,04,000 per sq m for the total at Rs 831 crore. JSW Property Group is the runner-up by quoting Rs 4,50,000 per sq m. Third bidder is Suzuki Powertrain India Limited (SPIL), who have quoted Rs 4,03,000 per sq m.

For plots C-54-55 with an area of 28,300 sq m, a joint venture between TCG Infrastructure and Hiranandani Constructions quoted a bid of Rs 3,67,992 per sq m totalling Rs 1,041 crore. The second bidder for this plot is SPIL at Rs 3,57,000 per sq m and JSW Property Group at Rs 3.33 lakh per sqm.      

Source: The Indian Express