News & Updates

While on a house-hunting spree, prospective buyers do a great amount of homework before identifying their dream home - the location, property rates in the vicinity, carpet area, developer?s reputation, proximity to the railway station/bus stop and so on.

Country’s largest realty firm DLF has sold 150 plots, garnering more than Rs 500 crore, in a township project at Gurgaon, PTI reported, citing sources.
DLF launched a 100-acre township ‘Alameda’ in Gurgaon. In the first phase, it released 150 plots at Rs 60,000 a sq yard with inaugural discount of 10 per cent and they were sold within a few hours of the launch, sources said. The plots are available in two sizes — 540 and 700 sq yards.

DLF has launched plots in Gurgaon after a gap of few decades, although it has been developing many group housing project there. The company achieved a sales realisation of more than Rs 500 crore, with an average price for each plot at about 3.5 crore, sources said, adding that it received more than 150 applications.

DLF spokesperson could not be reached for comments.
DLF would launch another 200 plots in the township, where it plans to develop shopping centre and provide facilities like healthcare and recreational facilities for the residents.
At present, the company has 406 million sq ft develop-able area in-hand, out of which construction is under way in 57 million sq ft of area.

Religare Enterprises is close to buying 85% of the Ajay Piramal Group promoted real estate fund Indiareit Fund Advisors, valuing the entire fund at around Rs 250 crore, two persons directly involved in the transaction said. The deal is expected to be announced by the end of December, they said. Indiareit managing director and chief executive officer Ramesh Jogani and his team of 20 employees will hold the rest. The fund, started in 2006, is currently managing three domestic and an offshore fund with assets totalling around Rs 2,850 crore, and is planning to launch two more funds to raise Rs 1,350 crore. It also advises the London-listed Trikona Trinity Capital that manages a Rs 1,200-crore fund in India.

The Ajay Piramal Group is exiting from the fund because of a likely conflict of interest as the group is now focused more on land acquisition and development. “There is an inherent conflict in fund management and the real estate business. The realty fund is a small business (compared to realty) for Piramals and there is no reason for exiting this business other than focus on the land acquisition business,” said a real estate industry official. Realty constultancy firm DTZ is acting as the advisor for the transaction. IL&FS Investment Manager and Blackstone were also believed to be in talks for acquiring stake in the realty fund but have been edged out by Indiareit. Indiareit’s Jogani declined to comment on the story. Mr Piramal, when contacted, said he was in a meeting and will not be able to respond immediately.

Religare in its email response said: “Religare constantly evaluates opportunities of inorganic acquisition of various assets across the globe. As on date, Religare has not signed anything with respect to Indiareit as is being discussed and reported by certain section of the media.” Last week, Religare Enterprises announced a pact to acquire a 55% stake in Landmark Partners for $171.5 million. Landmark is a private equity and real estate fund-of-funds asset manager, focused on secondary transactions with more than $8.3 billion of committed capital. On Monday, shares of Religare Enterprises closed at Rs 482.95 on the National Stock Exchange , down 1.9% from Friday’s close.

Six real estate companies, all set to raise over $2.9 billion or Rs 13,000 crore through the capital market, have postponed their plans till the middle of next year. Industry experts have blamed the LIC scam for bringing down the interests of foreign and domestic institutional investors in public offers. For some, the government and market regulator the Securities and Exchange Board of India (SEBI) played spoilsport.

Developers such as Embassy Group, Lodha Developers, Emaar MGF and Raheja are not risking their initial public offerings (IPOs) and would be hitting the market only mid next year, sources say. While controversies do not seem to be ending for Sahara Prime and Lavasa whose IPOs, if they see the day of light, will only be able to raise liquidity through the primary market by next year middle. The total amount to be raised by these developers amounts to R13,000 crore. No developer, however, acknowledged that the delay was due to controversies surrounding the sector.

“Yes we had plans to raise funds by December but SEBI has still not given us the permission, and even if they do, we will only be able to raise money by December. We will be coming out with our IPO around March next year,” said Sandeep Subramanya, general manager, corporate finance, Embassy Group. The Bangalore-based realty group had plans to raise R2,400 crore of which a substantial part was to be raised through pre-IPO placement. However, domestic investors and some high net-worth individuals with whom the company was negotiating, has asked for some time till “the volatility reduces”, a person familiar with the development said. According to investment bankers, institutional investors are adopting a cautious approach when it comes to real estate.

“Investors will stay away from realty IPOs for at least three months, unless one more scam is unearthed. We hope that the appetite for the sector will improve next year, but that too cannot be generalised for all real estate firms,” said an investment banker with a multinational bank. “The market condition was volatile and we have decided to wait till the situation stabilises. Although we have never announced when we will hit the capital market, so there is no question of postponing the IPO,” said Abhisheck Lodha, managing director, Lodha Group. Lodha Developers is looking to raise R2,800 crore.

Emaar MGF, the joint venture between MGF of India and Emaar Properties of Dubai, too has postponed the issue, and reportedly reduced its issue size by around 40% to R1,600 crore. Hindustan Times had recently reported that the company was forced to postpone its hospitality expansion plans. The company did not respond to queries about its IPO. However, given the situation inside the company and outside in capital market, it would be tough for the company to raise the amount at least by mid next year, said a person close to the development. For many developers liquidity is going to be a problem. After the LIC scam, banks have tightened the loan outflows. And as capital market too is not a favourable place for some time, developers may opt to reduce prices of their properties to improve cash flows. “Its’ not just about FIIs and DIIs, even the retail investor will stay away from realty IPOs,” said the banker.

With the ‘bribe-for-loan’ scam casting a shadow over builders’ access to bank lending, real estate funds and private equity (PE) players now sense a business opportunity. They are actively scouting the deal street for bargains, hoping that the loan scam will put more equity transactions on the table and prompt “realistic” valuations in deal signing. Real estate private equity fund Red Fort Capital says it plans to be aggressive and step up investment activities in India, as more and more developers eye the PE route for funding projects in coming months. Another realty fund, Fire Capital, is rolling up its sleeves to deploy nearly $100 million into the real estate market, and expects to snap up 5-10 deals in the next one year.

“The main sources of capital for real estate industry are bank funding and capital markets. With those two options now seen slowing down, it is inevitable that they will look more towards PE for funding,” Mr Subhash Bedi, Managing Director of Red Fort Capital, said. “We are known to be bullish on the real estate sector. So as a result, when others become more cautious , we get more aggressive in funding. In this market, we are stepping up our investment activities,” Mr Bedi pointed out. Fire Capital Fund CEO, Mr O.M. Chaudhary, also agrees that bank loan scam will tip the scale in favour of private equity deals. “From a PE standpoint, it means more deals will come our way than before,” he said.

A senior official of a dedicated real estate fund, who did not wish to be named, felt that the scam-triggered scrutiny of loan disbursements would turn valuations “more realistic” in the sector, and allow PE players to drive a harder bargain. But Mr Chaudhary opines that despite the bargaining power, he would be careful not to push for terms that are unsustainable. “We do not want to negotiate deals which do not give builders a chance to do well. Also we would not like to do too many deals as the execution can then become a challenge,” he added. However, Mr Abhijeet Bhalla, Managing Director with Millennium Spire Asset Management, adds a word of caution. “While it is true that any liquidity pressure in the market will throw up more opportunities for PE, it may be just too early to comment on how much of it will materialise into actual funding,” he points out.