October 2009

A quarterly India real estate update

Eye on real estate

From the industry leaders desk

In this edition
Point of view

In fo cus

Deal tracker

Buys and ties

New money

Upcoming proje cts

Regulatory update

10

The SEZ zone

11

Industry buzz

12

Global market moves

14

Dear readers,
r
We ar e pleased to present the 13 th issue of Eye on real estate, which
coverss the quarter ended September 2009.
In this issue, Point of view presents an interview with Ajay Chandra, the Managing
Director of Unitech, in
n which he provides his view on affordable housing. The In focus
section contains a brief article on affordable housing the need of the hour. India is
currently facing a majjor shortage of affordable housing. This scarcity can be reduced
if both the government and developers work collaboratively to effectively meet the
high demand for afforrdable housing in the country.
This edition also highllights significant deals, projects and developments in the industry
and on regulatory fronts in the last quarter. The government has unveiled a draft bill
on a real estate regulatory body. If implemented, this bill will help increase
transparency in the in
ndustry.
The real estate industtry outperformed the overall market in the past quarter,
reflecting the revival of investor interest in real estate stocks. The Ernst & Young Real
Estate Index (EYREX) increased by 39.5% during the quarter, as compared to 16.4%
growth in the overall market represented by the Sensex.
We hope you enjoy re
eading this issue. It is our constant endeavor to make this
publication more usefful to you and would appreciate your comments and suggestions
in this regard.

Ganesh Raj
R
Estate Industry Practice
Partner and Leader, Real

Point of view:
Affordable housing

Q. In your opinion, wh
hat is the definition
of affordable housing?
The definition of afforrdable housing will
vary from region to re
egion. It is a relative
term, indicating that the
t product is
affordable to a largerr section of the
population. Generally, these houses are
smaller in size of up to
o 1,000 sq ft. At
present, Unitech is focusing on offering
houses priced in the range
r
of INR1 million
to INR5 million mainly
y in metros and
tier-1 cities.

Ajay Chandra
Managing Director,
Unitech Limited
The opinions expressed in this
article are the authors, and do not
necessarily reflect those of Ernst &
Young.

e demand for this

Q. What is driving the
segment? Why are de
evelopers now
focusing affordable housing?
h
India has a large custo
omer base, which
was largely untapped till the recent
downturn. Customerss are also excited at
the prospect of ownin
ng a house in an
integrated developme
ent within a price
range that was not av
vailable earlier.
Affordable housing orr mid-income housing
as you may like to call it has really
increased the volume
e of sales in the last
six months. Thus, there seems to be a
win-win proposition fo
or both developers
and customers.
n challenges? How
Q. What are the main
can the government help in increasing
the supply of affordable housing?
Affordable housing prrojects have to have
a low-cost structure. Developers have to
continually explore op
pportunities for
reducing costs. State governments also
need to support the development
d
of
affordable housing by
y streamlining the
approval process, tim ely development
of infrastructure and by introducing
policies to promote th
he development of
affordable housing.

Eye on real estate

Density norms, FSI and government

charges are the main factors that
governments should consider relaxing.
Density defines the number of apartments
that can be built per acre, thus outlining
the minimum size of an apartment, which
are generally large for affordable housing.
This, in turn, has an impact on the overall
price that a buyer will have to pay for the
apartment/ house he is proposing to buy.
If the density norms can be relaxed then
smaller houses, which will cost less, can
be built and thus increase the supply of
affordable housing.
The government should also consider
having lower/nil government charges for
products below a certain selling price. As
government charges are generally borne
by the customers, lower charges will help
in reducing the selling price substantially.
FSI is the last factor that can help in
pushing affordable housing. The
government may consider allowing higher
FSI for the same. But this has to be in
tandem with relaxed density norms,
otherwise this may not be helpful.

In focus
Affordable housing: the
e need of the hour

Introduction
Indias ever-increasing population has
made housing a necessity. Approximately
42.8 million (more than 15% of the
countrys urban population) people live in
slums, which can be defined as poorly built
congested settlements that are unhygienic
and lack proper infrastructure and
sanitation and drinking water facilities.
Meanwhile, 35% of all urban households
live in single-room dwellings.
Thus, housing, or the residential segment,
accounts for the majority of the demand
for real estate in India. Over the years, the
demand for residential real estate has only
increased. Increasing urbanization, rising
income levels, decreasing household sizes
and the easy availability of home loans
and tax incentives for borrowers have
primarily fueled this trend.
India faces a severe housing shortage
While the demand for housing has
increased substantially in the past
several years, the supply has not kept
pace. Moreover, the housing projects real
estate players are developing are in the
premium and/or mid-income segments,
while the majority of the requirement is in
the low-income and economically weaker
sections (EWS). Although the economic
slowdown and the decline in demand
prompted developers to launch
affordable housing, these projects were
targeted at the mid-income group (MIG)
and were largely an outcome of price
corrections. Therefore, the shortage
of affordable housing in the country
is significant.
According to the Eleventh Five Year Plan
(20072012), the housing shortage in
urban areas in the country was estimated
to be 24.7 million units in 2007, of which
more than 99% was in the EWS)/lowincome group (LIG). This shortage
(including the backlog) is expected to
increase to 26.53 million during the
plan period.

Housing shortage in India by

states (2007)
M adhya
P radesh
5.2%
Karnataka
6.6%

Delhi
4.6%

Gujarat
6.7%
Andhra
P radesh
7.9%

Parameters

Others
24.6%

M ahar ashtra
15.1%

West B engal
Tamil N adu
Uttar Prradesh
8.3%
11.4%
9.6
6%

Various government initiatives to

promote affordable housing
overnment has
Over the years, the go
evolved into an enable
er for housing, from
being a provider prev iously, and has
announced various po
olicy measures in its
five-year plans to redu
uce the housing
shortage in India. Morre recently, one of
the governments prim
mary objectives has
been to provide afforrdable housing for
all. In line with this objective, the
government set up a task
t
force on
affordable housing, he
eaded by Deepak
Parekh, the Chairman
n of HDFC, in January
2008. In December 2 008, the task force
submitted its report to
o the Ministry
of Housing.
Affordable housing is finally defined
The definition of affo
ordable housing
varies among stakeho
olders. While some
define it as having the
e characteristic of
LIG housing, there are
e others who tend to
align it with the MIG. The
T Deepak Parekh
Committee (DPC) in its report has finally
defined affordable ho
ousing in terms of
size, cost and EMI,or rent.
r

Eye on real estate

EWS/LIG

MIG

Size

300600 sq.
ft. carpet
area

Not
exceeding
1,200 sq. ft.
carpet area

Cost

Not
exceeding
four times
the
household
gross annual
income

Not
exceeding
five times
the
household
gross annual
income

EMI/rent

Not
exceeding
30% of gross
monthly
income

Not
exceeding
40% of gross
monthly
income

The DPC believes that any delay in

providing an adequate number of
affordable houses in the country will
adversely affect Indias growth and
poverty-reduction strategies. According to
the estimates of the task force, mitigating
the urban housing shortage could have a
positive impact on Indias GDP growth
rate, which could increase by at least 1
1.5%. Therefore, the task force has
recommended that affordable housing
be put at the center of public policy.
The task force has also made
recommendations related to the
availability of land for affordable housing,
fiscal and financial framework,
technology for cost-effectiveness
and institutional framework.

Substantial investments are required to

reduce the housing shortage.

The Eleventh Five Year Plan (the Plan) has

estimated the total investment required to
meet Indias housing requirements to be
around INR3,613.2 billion. This includes
INR1,471.95 billion to reduce the housing
shortage at the beginning of the plan and
INR2,141.23 billion for new additions
during the plan period. According to the
report submitted for the Eleventh Five
Year Plan by the Working Group on Urban
Housing to the Planning Commission, the
total estimated investment for meeting
the housing requirement up to 2012 was
estimated at INR36,131.8 million.
While affordable housing is a priority for
the government, developers continue to
be apprehensive about the segment. The
primary reasons for this are:

High cost of land: The high cost of

land, which constitutes nearly 2530%
of the total project cost, is one of the
major hindrances for low-cost housing
in India. In the past few years, land
prices across the country have
increased substantially, resulting in a
100200% increase in costs.
Therefore, low-cost housing is not
lucrative for developers, as high
costs, along with the low prices of
houses, reduce their margins.
Supply of land: Developers need large
land parcels to develop low-cost
housing so that increased volumes
can compensate for lower margins.
As cities are saturated both in terms
of space and land supply, most of
these projects are being developed in
the suburbs of larger cities or in
smaller cities, which may not have
adequate infrastructure and may not
be well-connected. Moreover, most of
the land is for agricultural use, and
the conversion process of agricultural
land into non-agricultural land is
extremely cumbersome.

Long approval prrocess: The approval

process in India is highly bureaucratic,
complex, cumberrsome and often
delayed, since a developer
d
needs to
obtain 5070 approvals from close to
30 agencies for a single project.
Therefore, a typiical residential project
in India is comple
eted in 44.5 years,
of which 1.52 years
y
are spent in
obtaining approv
vals. It typically takes
more than a yearr to receive all the
approvals requir ed to launch a
project. This is a significantly long
time as compared to other countries;
the US takes only
y 40 days to provide
all necessary app
provals. These long
processes not on
nly delay supply and
widen the deman
nd-supply gap, but
also expose deve
elopers to rising input
costs, which, in turn, dampen their
margins. As a ressult, developers
increase the pricces of their projects
to sustain margin
ns.
Rising input costts: Rising input
costs, including those
t
pertaining to
land acquisition, land development,
cement, building material and
interiors, increasse the total cost
of developing a project,
p
thereby
serving as roadblocks in achieving
low-cost projectss.
Expectationss from
the governm
ment

Provide land to
t developers at
subsidized rattes
Facilitate the approval process
and reduce th
he number of
approvals nee
eded
Allocate certa
ain portions of each
project to low
w-cost housing on a
compulsory basis
Provide incen
ntives to both
developers an
nd consumers
Offer a higherr FSI
Promote pre--fabricated
technology

Eye on real estate

Government support: Most low-cost

housing projects are not high-rises, as
the developer is usually unable to
utilize the floor space index (FSI) fully
due to the prevailing development
rules, which specify how much area
should be left for open spaces and
common facilities in a development.
Moreover, the government should
provide land at subsidized costs for
such projects.

The way forward

There is no denying the fact that the
housing shortage is achievable if both
the government and developers work
toward it collectively. The low-cost
housing segment provides significant
opportunities, as the demand-supply
gap is the widest in this segment. To
successfully create a housing surplus, it
is imperative to integrate the efforts
and resources of local urban bodies,
financial institutions, city planners and
the private sector.

Housing
surplus

Expectations from
the developer

Earmark a percentage of land

in different projects,
especially larger projects such
as townships, for low-cost
housing
Develop projects in larger
volumes to achieve
economies of scale
Implement low-cost building
technologies

Deal tracker

Completed
Name of entity

Nature of deal

Value

Additional details

Piramal Sunteck
Realty

Acquired two plots from City and

Industrial Development Corporation
(CIDCO) in Navi Mumbai

INR310 million

The company plans to develop these plots

for both residential and commercial
purposes. CIDCO sold three more plots in
Navi Mumbai to Millennium Enterprise,
Atul Aggarwal & Sons and Prajapati
Constructions.

DLF

Acquired a 350-acre recreation and

leisure project from Haryana State
Industrial and Infrastructure
Development Corporation in Gurgaon

NA

The company quoted a bidding price of

INR12,000 per sq. m. as against a reserve
price of INR11,978 per sq. m.

Maruti Suzuki

Acquired 700 acres of land in Rohtak,

Haryana, to set up an R&D facility

INR10 billion

NA

Hiranandani Upscale

Acquired 135 acres of land across

Bengaluru, Chennai and Hyderabad

INR8 billion

The company plans to develop townships in

these cities.

Name of entity

Nature of deal

Value

Additional details

Sobha Developers

Plans to sell two land parcels in

Bengaluru, with a total area of 44 acres

INR1.2 billion

NA

Sobha Developers

Plans to sell 103 acres of land in Pune

INR2.5 billion

NA

Rail Land
Development
Authority

Invited bids to commercially develop

two of its properties in Vijayawada
(1,272 sq. m.) and Visakhapatnam
(1,500 sq. m.)

NA

NA

Akruti City

Plans to sell 15 small and medium land

blocks in Mumbai, Thane, Pune
and Ahmedabad

INR5 billion

The proceeds of the sale are expected to

help the company improve its liquidity
position. Akruti City also plans to convert its
Mumbai and Ghatkopar-based commercial
complexes into 3,000 residential apartments
to generate funds worth INR5 billion.

Unitech

Plans to sell 2025 land parcels that

the company had earmarked for its
hotel projects

INR5 billion

The company has deferred its hospitality real

estate expansion plans due to the slowdown
in demand.

Anant Raj Industries

Plans to acquire a land bank in

North India

INR4.5 billion

The company plans to develop low-cost

housing projects on the acquired land.

DLF

Plans to sell its 2-acre plot in Gurgaon,

Haryana, to Duet India Hotels, an Indiaspecific real estate fund of
Duet Group

INR1.11.2
billion

The plot was earmarked for a five-star

hotel project.

In the making?

Eye on real estate

Buys and ties

Completed

Name of entity

Nature of transaction

Additional details

Morgan Stanley Mauritius

(MSM)

Raised its stake to 5.53% in Unitech Ltd.

MSM, along with its subsidiaries, acquired

shares worth 4.11% stake in Unitech through
the private placement route.

DLF

Sold its stake in its 50:50 joint venture

v
(JV)
with Akruti City to a US-based re
eal estate fund
for INR2 billion

DLF plans to utilize the funds to reduce its

debt. The JV is developing two office buildings
at Mumbai.

Reliance Capital Asset

Management

Acquired a 5.09% stake in Sobha

a Developers
for INR1.04 billion

The transaction is a part of Sobha Developers

qualified institutional placement (QIP).

Housing Development &

Infrastructure Ltd.

Raised INR16.8 billion through a QIP from

global investors, including KKR, Blackstone
and Fidelity

NA

Laxey Partners, a UK-based

hedge fund

Sold its entire stake of 10.3% in Hirco Plc to

Halbis Capital, a part of HSBC Grroup

NA

Sea Valley Resorts

Private Ltd.

Entered a management agreeme

ent with Accor
Hospitality to manage a hotel in
Visakhapatnam under the Novotel brand

The estimated cost of the hotel project is

INR1.25 billion.

Orbit Corporation

Raised INR1.45 billion through a QIP

NA

Goldman Sachs Whitehall

Real Estate Fund

Acquired a 73% stake in a seven-star hotel

project being developed by Beng
galuru-based
Century Real Estate for INR5 billlion

NA

Garv Buildtech Private Ltd., a

subsidiary of Omaxe

Entered a memorandum of unde

erstanding with
the Lucknow Development Autho
ority to
develop a 2,700-acre township in
i Lucknow

NA

DB Realty

Entered a JV agreement with the

e Thackerseys
to develop the six-acre plot in Crrown
Mills, Mumbai

The JV plans to develop a residential project on

the plot.

Eye on real estate

In the making?
Name of entity

Nature of transaction

Additional details

Parsvnath Developers Ltd.

Plans to raise USD100150 milliion via a QIP

The company plans to utilize 60% of the funds

to repay debt. The rest of the amount will be
utilized to enhance its business.

Lodha Group

Plans to raise USD180 million for three

projects

The company is in discussion with Deutsche

Bank, JP Morgan and ICICI Venture for private
equity (PE) investments.

Peninsula Land Ltd.

Plans to raise INR5.5 billion through a QIP

The company plans to utilize the funds to

purchase land in Mumbai.

IPRO, Mauritius-based
investment fund

Plans to acquire a 10% stake in Ansal

A
Properties & Infrastructure Limitted (APIL) for
INR880 million

APIL plans to use the funds for its

upcoming projects.

Puravankara Projects

Plans to enter an alliance with Ho

omex, a
Mexico-based developer focused on
affordable housing

NA

Hiranandani Constructions
Ltd.

Plans to enter an alliance with th

he Maharashtra
government to develop cluster/r ental housing
in the state

NA

Nitesh Estates

Plans to raise INR12 billion throu

ugh PE
investments and an initial public offering (IPO)

The company plans to raise around INR6 billion

through a PE placement. The size of the IPO is
expected to be INR56 billion.

DLF

Plans to sell its stake in its life insurance JV

with US-based Prudential Financiial

DLF plans to exit its non-core businesses.

Unitech

Plans to sell its telecom tower-m

manufacturing
business for INR77.5 billion

NA

Unitech

Plans to raise INR10 billion throu

ugh a third
round of QIPs

The company plans to utilize the funds in

affordable housing projects.

Tata Housing

Plans to raise funds from PE fund

ds for its
various affordable housing projects

The company is in discussion with PE funds

such as Sequoia Capital and Atlanta Equity.

Eye on real estate

New money

Expected

Name of entity

Fund

Size

Additional details

Millennium Spire,
Millennium Globals
real estate
investment arm

Plans to launch an India-focused real

estate fund by 4Q09

USD350400 million

NA

Indiareit Fund Advisors

Plans to launch its second real

estate fund by March 2010

INR5 billion

The new fund will invest in residential

real estate projects in New Delhi
and Maharashtra.

Eye on real estate

Upcoming projects

Residential
Name of entity

Project

Value

Additional details

Century Real Estate

Century Indus, an affordable

housing project in Bengaluru

NA

The company has entered this segment.

The project will comprise a 14-floor,
800-apartment complex with two- and
three-bedroom flats in the range of
INR23 million.

Unitech

Launched a residential project at

Worli, Mumbai as part of slum
rehabilitation scheme in Mumbai

NA

NA

Unitech

Affordable housing projects under

its Uni Homes brands in seven cities

INR6 billion

NA

Unitech

A township in Chennai

INR45 billion

NA

Omaxe

Three residential townships, one

each in Allahabad (1,535 acres),
Lucknow (2,700 acres) and
Bulandshahar (3,601.2 acres)

NA

With these projects, the company plans

to earn revenues of more than INR125
billion over the next five to seven years.

Omaxe

A township in Vrindavan, UP

INR2.5 billion

The project is expected to be competed

in 18 months.

Omaxe

An affordable housing project in

Faridabad

INR700 million

NA

Parsvnath Developers

An integrated township in Rohtak

NA

The project has a realization value of

INR7 billion.

Emaar MGF Land

A residential complex in Shillong

INR4 billion

NA

3C Company

A residential project in the NCR

INR15.5 billion

Red Fort Capital, a PE firm, holds a 50%

stake in this project.

DLF

A residential project at Delhi

INR4 billion

NA

Kerala State Housing

Board (KSHB)

Three township projects, one each in

Kozhikode, Kochi and
Thiruvananthapuram

INR20 billion

KSHB plans to develop these projects

on a public-private partnership mode.

Vedant Constructions

A residential complex in Thane

NA

NA

E V Homes
Constructions

A residential complex in Kakkanad

NA

NA

Annapurna Properties

A residential complex in Thane

NA

NA

Abad Builders

A residential complex in Kochi

NA

NA

Paranjape Scheme
Construction

A residential complex in Baner

NA

NA

Eye on real estate

Regulatory update

Loans for the commercial real

estate segment are expected
to become costlier

Haryana Governm
ment plans to
promote affordab
ble housing
segment in the sttate

Government incentives are

expected to increase the demand
for housing

Reports indicated that the Reserve Bank of

India (RBI) may increase the cost of funds
for the commercial real estate (CRE)
segment by around 200 basis points to
prevent another bubble in the domestic
property segment. The RBI may increase
the risk weightage on loans to CRE, which,
in turn, is expected to increase the cost of
funds for the companies.

The Government of Haryana

H
announced
new policy initiatives to promote
affordable housing in
n the state. The
government has anno
ounced price caps for
homes and has entitle
ed developers to build
more units of a smaller size in the same
area. According to th
he scheme, the
developers incentive
es include a relaxed
density norm (from th
he existing 250
people per acre to 60
00 people per acre)
and higher ground co
overage area (from
35% to 50%). The sch
heme, which will be
open to developers until 20 November
2009, has also annou
unced the maximum
prices for units in acccordance with their
sizes. For instance, homes
h
with a minimum
carpet area of approx
ximately 350 sq. ft.
will have a maximum price of INR400,000
throughout the state..

The government announced various

incentives to increase the demand for
housing in India. One of the key incentives
is the interest subvention of 1% on home
loans of up to INR1 million, provided that
the cost of the house does not exceed
INR2 million. The government has also
provided a tax holiday for projects that
were approved during FY08 and
completed before 31 March 2012.

(Source: Anto Antony, Loans to real estate players set to get

costlier, The Economic Times, 29 September 2009, via Dow
Jones Factiva, 2009 The Times of India Group)

Government unveils a draft bill on

a real estate regulatory agency
The government disclosed a draft of its
new bill on a real estate regulatory entity,
which, on implementation, is expected to
help increase transparency in the real
estate industry. According to the draft bill,
it will be mandatory for real estate players
to register their projects with the regulator
before promoting them. In addition, the
developers will not be allowed to accept
any advance from the buyer prior to a
formal sales agreement. The developer is
required to submit a bank guarantee of 5%
of the total project cost. The regulator will
be allowed to encash this amount in case
the developer does not complete the
project in time or violates any other

(Source: Divya Pall, India - No

orms changed to make way for
cheaper homes in Gurgaon, DT
TZ Asia Property Market Update,
16 September 2009, via Dow Jones
J
Factiva, 2009 DTZ
Debenham Tie Leung Limited)

Haryana Governm
ment plans to offer
land to construct 38,000 houses
for EWS

The regulatory authority is expected to

comprise a chairman and two members.

The Government of Haryana

H
recently
announced its plans to
t provide land to the
Haryana Housing Boa
ard to develop 38,000
houses for the EWS in
n the state. The
government plans to provide land in urban
areas on collector rates and in rural areas
on floor rates.

(Source: Sanjeev Choudhary & Arindam Ghosh, Draft bill on

realty watchdog unveiled, The Economic Times, 26 September
2009, via Dow Jones Factiva, 2009 The Times of India Group)

(Source: Haryana to construct 38,000 homes for poor,

Financial Express (India), 7 August 2009, via Dow Jones
Factiva, 2009 Indian Expres s Pty. Ltd.)

conditions agreed upon previously.

10

Eye on real estate

(Source: Incentives set to spur demand for housing, Business

Line (The Hindu), 28 July 2009, via Dow Jones Factiva,
2009 The Hindu Business Line)

The SEZ zone

Ansal plans to convert its SEZ

projects into residential project

The RBI relaxes bank-lending

b
norms for SEZ de
evelopers

APIL recently announced its plans to

convert three of its notified IT SEZs into
residential projects, as the demand is low
due to the slowdown. Of the three SEZs,
two are in Haryana and one is in Uttar
Pradesh, with its size varying between 25
and 75 acres. The company is also
setting up another IT SEZ in Gurgaon in
partnership with IL&FS.

The RBI has relaxed bank lending norms

for SEZ developers by
b keeping a few
activities within the SEZ outside the
ambit of CRE. Consequently, the risk
weightage on lending
g for these projects
will be reduced, whic
ch, in turn, will reduce
interest rates.

(Source: India's Ansal mulls converting it SEZ into residential

projects, Asia Pulse, 11 September 2009, via Dow Jones
Factiva, 2009 Asia Pulse Pty Limited)

(Source: RBI eases norms for commercial

c
realty lending,
Indian Express, 10 September 2009,
2
via Dow Jones Factiva,
2009 Indian Express Pty. Ltd.)

Eye on real estate

11

Industry buzz

Omaxe plans an INR15-billion

investment

Raymond enters th
he real
estate market

Accor Hospitality aims to invest

USD130 million by 2012

Omaxe has announced its plans to invest

INR15 billion to develop four residential
projects by 2012. The company plans to
launch the projects by November 2009.

Textile company Raymond recently

announced its plans to
t enter the real
estate industry to utiilize its surplus land.
The company is aimin
ng to build
residential projects on
o 20 acres of land in
its Thane plant. The company
c
also
intends to invest arou
und INR6 billion to
develop real estate projects
p
in Mumbai.

Europe-based Accor Hospitality recently

announced its plans to build a portfolio of
50 hotels in India at an investment of
USD130 million by 2012. The company
currently has five hotels in the country.

(Source: Raymond forays into realty biz, The Economic

Times, 18 September 2009, viia Dow Jones Factiva, 2009
The Times of India Group)

Emaar MGF plans INR4-billion

investment in Shillong

Plaza Centers plan

ns to invest INR30
billion in malls

Emaar MGF announced its plans to tap

the real estate market in Meghalaya
through an investment of around INR4
billion in Shillong. The company plans to
strengthen its presence across other the
northeastern states in India, such
as Assam.

(Source: Omaxe to invest Rs1,500 crore (by 2012 to develop

four new housing projects), Indian Business Insight, 30
September 2009, via Dow Jones Factiva, 2009 Informatics
(India) Ltd.)

Indian real estate companies to

raise more than INR110 billion
through IPOs
Domestic real estate companies are
looking to raise about INR110 billion
through the IPO route. Four companies
Emaar MGF, Lodha Developers, Sahara
Prime City and Ambience have filed a
draft prospectus with the SEBI and are
planning to raise INR38.5 billion, INR25
billion, INR34.5 billion and INR12.9
billion, respectively, through the IPOs.
(Source: Realty companies line up IPOs to raise over
Rs11,000 crore (four companies have filed preliminary draft
prospectus with the SEBI), Indian Business Insight, 30
September 2009, via Dow Jones Factiva, 2009 Informatics
(India) Ltd.)

Nitesh Estates plans to raise INR5.5

billion through an IPO
Nitesh Estates announced its plans to
raise up to INR5.5 billion through an IPO
by the end of 2009. The company intends
to divest around 35% of its stake through
the IPO.
(Source: Bobby Kurian and Sachin Dave, Nitesh Estates looks
to tap market with Rs 550-cr IPO, The Economic Times, 30
September 2009, via Dow Jones Factiva, 2009 The Times
of India Group)

Plaza Centers India recently announced

its plans to invest aro
ound INR30 billion in
the development of six malls across
Chennai, Bengaluru, Kochi and Pune.
(Source: Plaza to set up six ne
ew malls, Business Line (The
Hindu), 13 September 2009, viia Dow Jones Factiva, 2009
The Hindu Business Line)

Ambuja Realty pla

ans to invest
INR10 billion by 20
014
Ambuja Realty plans to invest around
INR10 billion over the
e next five years to
strengthen its presen
nce in the hospitality
and hospitals segmen
nts. The company
intends to open a cha
ain of resorts in West
Bengal. The company
y also plans to
construct a hospital in
i Siliguri at an
investment of INR65 0 million.
(Source: Pooja Sarkar, Ambuja
a Realty in big hospitality
push, DNA - Daily News & Anallysis, 12 September 2009, via
Dow Jones Factiva, 2009 Di ligent Media Corporation Ltd.)

Parsvnath Develop
pers intends to
reduce its debt
With the objective of reducing its debt by
March 2010, Parsvnath Developers
recently announced its plans to sell a
stake in one of its ressidential projects to
a PE fund. The compa
any is aiming to sell
shares worth USD10 0 million to
institutional investors.
(Source: Parsvnath plans to se
ell shares, stake in project to
pare debt (to repay two-thirds of
o Rs1,700 crore debt by Mar
2011), Indian Business Insightt, 4 September 2009, via Dow
Jones Factiva, 2009 Informa
atics (India) Ltd.)

12

Eye on real estate

(Source: Accor to invest $130 million in 50 hotels ; Even as

the ongoing recession has forced most hotel groups...,
Business Standard, 3 September 2009, via Dow Jones
Factiva, 2009 Business Standard Ltd.)

(Source: Emaar to invest Rs 400 crore in Shillong, Assam

Tribune, 1 September 2009, via Dow Jones Factiva, 2009
HT Media Limited)

Nitesh Estates to develop

affordable housing
Nitesh Estates announced its plans to
enter the affordable housing segment by
developing apartments in the range of
INR24 million. This is a shift from the
companys previous strategy of focusing
exclusively on luxury residential projects.
(Source: Nitesh Estates shifts focus to affordable housing
(the company is planning to launch two projects in
Bangalore), Indian Business Insight, 28 August 2009, via Dow
Jones Factiva, 2009 Informatics (India) Ltd.)

Pride Group plans

INR8-billion investment
Pride Group of Hotels plans to invest
INR8 billion to expand its hotel portfolio
from 10 to 30 by 2015. The company is
currently exploring various funding
options, including term loans, internal
accruals and PE, for these projects.
(Source: Shilpa Phadnis, Pride Hotels lines up Rs 800-cr
expansion, DNA - Daily News & Analysis, 28 August 2009, via
Dow Jones Factiva, 2009 Diligent Media Corporation Ltd.)

Sahara Prime City plans to raise

an IPO

The Park Hotels to

o invest
INR10 billion

DLF to sell land and wind power

business to raise funds

Sahara Groups Sahara Prime City

recently announced its plans to raise
INR50 billion through an IPO by the end
of the year.

Apeejay Surrendra Groups The Park

Hotels plans to increa
ase its portfolio by
constructing four mo
ore hotels in India at
an investment of INR
R10 billion. The
company plans to lau
unch these hotels in
Hyderabad, Pune, Jaipur and Kolkata
over the next three to
t four years.

DLF announced its plans to sell nonstrategic land reserves and its wind
power business to raise INR19 billion
by FY10.

(Source: India's Sahara Group plans IPO for realty arm, eyes
US$1 bln, Asia Pulse, 20 August 2009, via Dow Jones
Factiva, 2009 Asia Pulse Pty Limited)

IIDL intends to strengthen its real

estate business
IFCI Infrastructure Development Ltd.
(IIDL) plans to launch three serviced
apartment projects, with a total area of
2 million sq. ft., across Chennai,
Guwahati and Lucknow to strengthen its
presence in the real estate industry. IIDL
had previously developed a similar
project in Delhi and signed a contract
with Singapore-based Frasers Hospitality
to manage the property.
(Source: IFCI to expand presence in real estate business,
The Times of India, 20 August 2009, via Dow Jones Factiva,
2009 The Times of India Group)

Oberoi Constructions plans a

public issue
Oberoi Constructions announced its plans
to raise INR7.510 billion through an IPO
by the end of 2009 to finance its
expansion plans.
(Source: Sachin Dave, Oberoi Const plans to raise Rs 1k cr
from the market, The Economic Times, 11 August 2009, via
Dow Jones Factiva, 2009 The Times of India Group)

Premier Inn plans to launch 80

hotels in the country
UK-based Premier Inn announced its
plans to launch around 80 hotels in India
over the next 10 years. The company has
planned investments worth INR40 billion
to set up three-star hotels with 9,700
rooms across various locations in India.
The company has formed a JV with
Emaar MGF for this purpose.
(Source: Premier Inn plans 80 hotels (forms joint venture
with real estate firm Emaar MGF), Indian Business Insight, 10
August 2009, via Dow Jones Factiva, 2009 Informatics
(India) Ltd.)

(Source: Meenakshi Verma Amb

bwani, Park plans Rs 1k-cr
expansion, The Economic Time
es, 10 August 2009, via Dow
Jones Factiva, 2009 Times of India Group)

Shriram Properties
s delineates a
three-year investm
ment plan
Shriram Properties announced
a
its plans
to invest INR49 billion
n over the next
three years to develo
op both residential
and commercial proje
ects. The company
aims to develop afforrdable housing
projects across Sout h India and Kolkata
at an investment of I NR1012 billion and
housing projects for the
t MIG at an
investment of INR25 billion. Shriram
Properties also plans to raise INR5 billion
through equity.
(Source: Shriram Properties to
t invest rs4,900 crore in 3
years (proposed investments will
w be funded through debt and
internal accruals), Indian Busin
ness Insight, 27 July 2009, via
Dow Jones Factiva, 2009 Infformatics (India) Ltd.)

Real estate playerrs enter the house

rental business
Impacted by the ongo
oing slowdown in the
real estate market, a number of real
estate players have announced
a
plans to
foray into the rental homes business. The
Mumbai Metropolitan
n Region
Development Authority (MMRDA) has
entered a contract with
w HDIL to build
43,000 small houses of 160 sq. ft. area
each on a 525-acre plot
p in Mumbai. Other
players planning to enter this segment
include Akruti City, Dosti
D
Group, Nirmal
Lifestyles, Dhanashre
ee Developers and
Matheran Realty.

(Source: India's DLF to sell more land, wind power biz to raise
funds, Asia Pulse, 15 July 2009, via Dow Jones Factiva,
2009 Asia Pulse Pty Limited)

Lalit Group of Hotels plans to

venture into the budget hotels
segment
Lalit Suri Hospitality Group, which
currently focuses on five-star hotels,
announced its plans to diversify into the
budget hotels segment. The group plans
to invest INR1215 billion to launch a
new brand for such hotels.
(Source: Meenakshi Verma Ambwani, Lalit Group to invest
Rs 1,500 cr in budget hotels, The Economic Times, 12 July
2009, via Dow Jones Factiva, 2009 The Times of
India Group)

Carlson is seeking a JV partner

in India
Reports indicated that the US-based
Carlson Hotels Worldwide (Carlson) is
exploring JV opportunities in India to
develop hotel projects in the country.
Carlson currently manages 24 hotels in
the country under brands such as
Country Inn and Suites, Park Inn, Park
Plaza and Radisson.
(Source: Carlson scouting for deals with realty cos (in India),
Indian Business Insight, 2 July 2009, via Dow Jones Factiva,
2009 Informatics (India) Ltd.)

(Source: Divya Pall, Realty big

ggies enter rental housing
scheme, DTZ Asia Property Ma
arket Update, 21 July 2009, via
Dow Jones Factiva, 2009 DT
TZ Debenham Tie Leung
Limited)

Eye on real estate

13

Global market moves

Global: Bloomberg World Exchange Market Cap

(WCAUWRLD) vs. FTSE EPRA NAREIT Global
REITs Index (RUGL)

India: Ernst & Young Real Estate Index (EYREX)

vs. BSE Sensex

1 40
1 30
1 20
1 10
1 00
90

160.00
140.00
120.00
100.00
80.00

E YREX

WCAUWRLD

30-Sep-09

23-Sep-09

16-Sep-09

9-Sep-09

2-Sep-09

26-Aug-09

19-Aug-09

12-Aug-09

5-Aug-09

29-Jul-09

22-Jul-09

S ENS EX

Note: EYREX on 1 July 2009 = 965.4; SENSEX on

1 July 2009 = 305.81

RUGL

Note: WCAUWRLD on 1 July 2009 = 35,503,804; RUGL on

1 July 2009 = 1,863.13

USA: S&P 500 Index (SPX) vs. FTSE NAREIT All

REITs Index (FNARTR)

Asia: EPRA NAREIT Asia Index (RUGA) vs.

Bloomberg Asian Market Index (BWORLDPR)

SPX

FNARTR

3 0-Sep -09

2 3-Sep -09

1 6-Sep -09

9-Sep -09

2-Sep -09

2 6-Aug -09

BWORLDPR

Note: RUGA on 1 July 2009 = 1,793.07; BWORLDPR as on

1 July 2009 = 144.35

EYREX is a market cap-weighted index of a group of 25 real estate companies.

Bloomberg; All values in USD, except WCAUWRLD, which is in USD
U million

Eye on real estate

1 9-Aug -09

1 2-Aug -09

5-Aug -09

RUGA

Note: SPX on 1 July 2009 = 923.33; FNARTR on

1 July 2009 = 1,927.16

Note:
Source:

29-Ju l-09

3 0-Sep -0 9

2 3-Sep -0 9

1 6-Sep -0 9

9-Sep -0 9

2-Sep -0 9

2 6-Aug -0 9

1 9-Aug -0 9

1 2-Aug -0 9

5-Aug -0 9

29-Ju l-09

22-Ju l-09

15-Ju l-09

8-Ju l-09

1-Ju l-09

80

22-Ju l-09

100

15-Ju l-09

120

8-Ju l-09

140

1-Ju l-09

12
20
11 5
11 0
10
05
10
00
95
90
85
80

160

14

15-Jul-09

1Ju
l- 0
9
8
-J
ul
-0
9
15
-J
u
-l 0
9
22
-J
ul
-0
9
29
-J
ul
-0
9
5
-A
ug
-0
9
12
-A
ug
-0
9
1
9A
ug
-0
9
26
-A
ug
-0
9
2Se
p09
9
-S
ep
-0
9
16
-S
ep
-0
9
23
-S
ep
-0
9
30
-S
ep
-0
9

1-Jul-09

40.00

8-Jul-09

80
70

60.00

Sources

1.

In Focus section: Report of the 11th Five Year Plan (200712) workin g group on urban housing with focus on slums, Planning Commission
(Government of India) website, http://planningcommission.nic.in, acce
essed 5 April 2008; Report of the High Level Task Force on affordable
housing for all, December 2008, National Housing Bank website, accesssed 15 September 2009.

2.

Sunteck Realty's JV company wins bid for two plots in Navi Mumbai, Accord Fintech, 21 August 2009, via Dow Jones Factiva.

3.

DLF bags 350-acre leisure project in Gurgaon, Financial Express (Ind

dia), 20 August 2009, via Dow Jones Factiva, 2009 Indian Express Pty. Ltd.

4.

Paul Newton, Maruti Obtains 700-Acre Plot of Land to Set Up R&D Uniit in Haryana, IHS Global Insight Daily Analysis, 12 August 2009, via Dow
Jones Factiva, 2009 IHS Global Insight Limited.

5.

Sachin Dave, Hiranandani co buys land worth Rs 800 cr, The Econom
mic Times, 18 July 2009, via Dow Jones Factiva, 2009 The Times of
India Group.

6.

Sobha to sell 2 land parcels in city (with a total area of 44 acres for Rs120 crore), Indian Business Insight, 15 September 2009, via Dow Jones
Factiva, 2009 Informatics (India) Ltd.

7.

Sobha set to raise another Rs250 crore from land sale (plans to sell ab
bout 100 acres of its land in Pune), Business Standard, 28 July 2009, via
Dow Jones Factiva, 2009 Informatics (India) Ltd.

8.

Bids called to develop Railways land, Business Line (The Hindu), 13

3 September 2009, via Dow Jones Factiva, 2009 The Hindu Business Line.

9.

Akruti City to sell land to tackle credit woes (hopes to generate about Rs500 crore in 2009-2010), Indian Business Insight, 5 August 2009, via
Dow Jones Factiva, 2009 Informatics (India) Ltd.

10. Vivek Seal, Unitech eyes Rs 500 cr selling 20 hotel plots, DNA - Daily News & Analysis, 5 August 2009, via Dow Jones Factiva, 2009 Diligent
Media Corporation Ltd.
11. Anant Raj to invest rs450 crore (to acquire a land bank), Indian Busin
ness Insight, 3 August 2009, via Dow Jones Factiva, 2009 Informatics
(India) Ltd.
12. DLF offloads prime hotel plot (to Duet Group's India specific real estate
e fund), Indian Business Insight, 1 July 2009, via Dow Jones Factiva, 2009
Informatics (India) Ltd.
13. Morgan Stanley hikes Unitech stake (to 5.53 percent by acquiring 9.81 crore shares worth Rs795.33 crore), Indian Business Insight, 9 July 2009,
via Dow Jones Factiva 2009 Informatics (India) Ltd.
14. DLF sells stake to Akruti city in 50:50 JV (to a US-based real estate fu
und for Rs200 crore), Indian Business Insight, 9 July 2009, via Dow Jones
Factiva 2009 Informatics (India) Ltd.
15. Rel Cap Arm Picks Up Stake In Sobha Developers (stake purchase unde
ertaken at Rs209.4 per share), Indian Business Insight, 9 July 2009, via Dow
Jones Factiva 2009 Informatics (India) Ltd.
16. HDIL raises Rs 1,688 cr from KKR, Fidelity ; Housing Development & In
nfrastructure Ltd (HDIL), a Mumbai-based property developer,..., Business
Standard, 3 July 2009, via Dow Jones Factiva, 2009 Business Stand
dard Ltd.
16. UK's Laxey Partnerys Sell Entire Stake In Indian-Owned Hirco Plc, As ia Pulse, 3 July 2009, via Dow Jones Factiva, 2009, Asia Pulse Pty Limited.
17. Varun Group ties up with Accor Hospitality, The Hindu, 26 August 20
009, via Dow Jones Factiva, 2009, Kasturi & Sons Limited.
18. Orbit Corp raises Rs145 Crore(through issue of shares to QIBs), India
an Business Insight, 15 August 2009, via Dow Jones Factiva 2009
Informatics (India) Ltd.
19. Goldman buys into B'lore hotel, DNA - Daily News & Analysis, 24 September 2009, via Dow Jones Factiva 2009 Diligent Media Corporation Ltd.
20. Arm Of Ndia's Omaxe To Develop Township In Lucknow, Asia Pulse, 15 September 2009, via Dow Jones Factiva, 2009 Asia Pulse Pty Limited;
Omaxe Unit Signs Pact With Lucknow Development Authority, Dow Jones
J
International News, 14 September 2009, via Dow Jones Factiva, 2009
Dow Jones & Company, Inc.
21. Crown Mills to be developed by JV, DNA - Daily News & Analysis, 10 September
S
2009, via Dow Jones Factiva 2009 Diligent Media
Corporation Ltd.
22. Parsvnath in talks to raise $100-150 million through QIP (company in
ntends to use 60 percent of the fund for repaying debt and the rest for
augmenting its business), Indian Business Insight, 31 July 2009, via Dow
D
Jones Factiva 2009 Informatics (India) Ltd.
23. Lodha Group in talks with PE players to mop up Rs 850 crore, The Ecconomic Times, 6 July 2009, via Dow Jones Factiva 2009 The Times of India
Group.
24. Peninsula will QIP it for Rs 550 cr to buy a patch, DNA - Daily News & Analysis, 31 August 2009, via Dow Jones Factiva 2009 Diligent Media
Corporation Ltd.

Eye on real estate

15

25. Mauritius Fund To Pick Up 10% In Ansal Properties (which will use the proceeds for its new projects), Indian Business Insight, 29 August 2009,
via Dow Jones Factiva 2009 Informatics (India) Ltd.
26. Puravankara, Mexico's Homex talk JV, DNA - Daily News & Analysis, 25
2 August 2009, via Dow Jones Factiva 2009 Diligent Media
Corporation Ltd.
27. Hiranandani Tie-Up Plan (to enter into affordable housing segment), Indian Business Insight, 7 August 2009, via Dow Jones Factiva 2009
Informatics (India) Ltd.
28. Nitesh Estates Looking To Raise Rs1,200 Crore (through the private equity
e
route and also a possible initial public offering), Indian Business
Insight, 5 August 2009, via Dow Jones Factiva 2009 Informatics (Ind
dia) Ltd.
29. DLF Looking For Buyer For Life Insurance JV Stake Report, Dow Jo
ones International News, 6 August 2009, via Dow Jones Factiva, 2009
Dow Jones & Company, Inc.
30. Unitech to sell tower business for Rs 750 cr, DNA - Daily News & Analysis, 4 August 2009, via Dow Jones Factiva 2009 Diligent Media
Corporation Ltd.
31. Unitech To Raise Rs1k Crore Via Qips For Fresh Investment (in its affo
ordable housing projects), Indian Business Insight, 3 August 2009, via
Dow Jones Factiva 2009 Informatics (India) Ltd.
32. Tata Housing In Talks With Pes For Building Low-Cost Houses (as they
y were willing to return to real estate projects), Indian Business Insight,
10 September 2009, via Dow Jones Factiva 2009 Informatics (India)) Ltd.
33. UPDATE 1-Millennium Spire to launch $400 mln real estate fund, Reu
uter News, 23 September 2009, via Dow Jones Factiva 2009
Reuter Ltd.
34. Piramals' Indiareit Plans Rs500-Crore Realty Fund (by Mar 2010), Ind
dian Business Insight, 18 September 2009, via Dow Jones Factiva
2009 Informatics (India) Ltd.
35. Century real estate to enter housing market (and is targeting home bu
uyers who are looking for flats in the price range of Rs20 lakh to Rs30
lakh), Indian Business Insight, 24 September 2009, via Dow Jones Facctiva, 2009 Informatics (India) Ltd.
36. Vivek Seal, Unitech launches Worli project at 36% discount, DNA - Daiily News & Analysis, 23 September 2009, via Dow Jones Factiva, 2009
Diligent Media Corporation Ltd.
37. R Balaji, Unitech launches affordable housing project in Chennai, Bussiness Line (The Hindu), 11 August 2009, via Dow Jones Factiva,
2009 The Hindu Business Line.
38. Pallavee Dhaundiyal Panthry, Oh max! Omaxe goes max and launches new projects, The Economic Times, 21 September 2009, via Dow Jones
Factiva, 2009 The Times of India Group.
39. Omaxe plans township in UP (the company has obtained approval to se
et up Omaxe Eternity), Indian Business Insight, 21 August 2009, via Dow
Jones Factiva, 2009 Informatics (India) Ltd.
40. Parsvnath developers to develop township in Rohtak (and receives a Letter
L
of Intent), Indian Business Insight, 13 September 2009, via Dow
Jones Factiva, 2009 Informatics (India) Ltd.
41. Emaar mgf complex to come up in Shillong (with an initial investment of Rs400 crore), Indian Business Insight, 25 August 2009, via Dow
Jones Factiva, 2009 Informatics (India) Ltd.
42. 3C housing project (to launch residential project called Lotus Boulevard in the National Capital Region), Indian Business Insight, 7 August
2009, via Dow Jones Factiva, 2009 Informatics (India) Ltd.
43. Omaxe launches affordable homes project at Faridabad, Accord Finte
ech, 20 July 2009, via Dow Jones Factiva.
44. Housing board to develop township projects on public-private partnersship basis (worth Rs2,000 crore), Indian Business Insight, 20 July 2009,
via Dow Jones Factiva, 2009 Informatics (India) Ltd.
45. Vedant constructions to develop residential complex (at Panchpakhadii in Maharashtra), Indian Business Insight, 6 July 2009, via Dow Jones
Factiva, 2009 Informatics (India) Ltd.
46. E V homes constructions to develop residential complex (at Kakkanad in Kerala), Indian Business Insight, 6 July 2009, via Dow Jones Factiva,
2009 Informatics (India) Ltd.
47. Annapurna Properties to develop residential complex (at Bhayander (E
East) in Thane, Maharashtra), Indian Business Insight, 6 July 2009, via
Dow Jones Factiva, 2009 Informatics (India) Ltd.
48. Abad builders to develop residential complex (at Kochi in Kerala), Indian Business Insight, 6 July 2009, via Dow Jones Factiva, 2009
Informatics (India) Ltd.
49. Paranjape schemes construction to develop residential complex (at Ba
aner in Maharashtra), Indian Business Insight, 6 July 2009, via Dow
Jones Factiva, 2009 Informatics (India) Ltd.

16

Eye on real estate

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SCORE No. EYIN0911-158
Eye on real estate (India)
Artwork by Jayanta Ghosh