Blackstone to Finalise its First Real Estate Deal in India Soon

Blackstone, the global private equity giant based in the US which has a corpus of $9.5 billion, is understood to be closing in on its first real estate deal in India. The private equity fund, present in India with its real estate team for the past three years, is understood to be in discussions with Bangalore-based Embassy Property Development to invest around Rs 200 crore in one of its projects.

Embassy Property Development is understood to be raising private equity even as it is awaiting Securities & Exchange Board of India (SEBI) clearance for a planned public offer of Rs 2,400 crore which is expected during this calendar. The issue is expected to be managed by investment banks UBS, Citigroup, Nomura and Edelweiss. While Blackstone could not be reached for comments, Embassy denied any such plans of raising funds from Blackstone. According to recent reports, Embassy was also in talks with Temasek and HDFC Property Ventures for a $100 million private equity infusion, the status of which is not yet clear

Mafatlal’s Byculla land sale likely to be delayed

MUMBAI: The proposed sale of Mafatlal Industries’ seven-acre land near Byculla zoo in central Mumbai is unlikely to be concluded anytime soon due to fear that the state government may scrap the policy of allowing extra floors if developers build public parking space in their residential projects.

Lodha Developers was the frontrunner to bag the land parcel with its Rs 1,200 crore bid against the reserve price of Rs 1,000 crore. However, there has been no discussion on the transaction for nearly three months as the state government is reviewing its floor space index (FSI) policy, a person close to development told ET.

“There is no clarity on parking FSI policy of the state government, it is being reviewed and most likely it will be scrapped,” the person said on condition of anonymity.

Implemented in April 2009, the parking FSI policy offered realtors extra FSI of maximum up to four floors, provided they constructed multi-storey parking facility on their land and handed it over to the civic administration free of cost.

Recently, opposition parties, social activists and town planning experts said the policy was being misused and most parking slots were approved only in central Mumbai. It was brought to the state government’s notice that more than 20,000 car-parking slots were approved in the central Mumbai’s Sewri, Worli and Lower Parel in just about an year’s time.

The government is now reviewing the policy and there is speculation that it may scrap the policy altogether, although there is no official word yet.

This has hit Mafatlal’s plans. “Earlier bids for Mafatlal’s Byculla land were completely based on the math of parking FSI, which is not going to be the case,” the person said. “Commercials of this deal will change substantially. If the deal gets concluded hereon, it will be at a much lower price,” he added.

Real estate market in Pune & Suburbs

In the City Profile series that evaluates the real estate markets of different cities across India, ET Wealth and Magicbricks take a look at Pune.For mid-income homes , most new launches are now in western Pune in locations like Hinjewadi, Wakad, Pimple Nilakh, Pimple Saudagar, Aundh and Balewadi. The increase in supply has also kept prices in these locations affordable.

Buying options (Average property rates in Rs per sq ft)

Locations in demand

Aundh: High rental demand from software professionals from Hinjewadi IT Park; good infrastructure and central location.

Baner: Proximity to the Mumbai-Pune expressway, good connectivity to city centre and lower rental and capital values compared to Aundh make it an attractive destination.

Kharadi: Location on Pune-Nagpur Road and proximity to international airport have sustained demand.

Price appreciation compared to cities in the region

There was a minor correction in property prices at some locations in Pune in 2008. However, an abundance of residential property has resulted in a slow pickup in prices compared to most cities in the region.

Growth drivers

Some big infrastructure projects under way that could influence real estate prices in nearby locations

Road transport

The Pune Municipal Corporation recently approved a proposal to implement the Bus Rapid Transit System (BRTS) on 27 more roads in the city. Prominent among the selected roads are Tilak Road, Bajirao Road, Shivaji Road, Fergusson College and Jungali Maharaj. The total length of the BRTS will be about 101 km. In the first phase, it will be implemented on roads which have already been widened to 36 metres.

Century Real Estate Plans to Raise Rs 700 crore Through PE Players

Century Real Estate Holdings, the realty development arm of three-decade old Bangalore-based Century Group, is looking to raise Rs 700 crore through private equity players in three tranches. The company which during the past four years have been focusing on development of projects, is understood to be effecting this deal at the holding company level. The company which raised around $200 million from Goldman Sachs during the recession of 2008-09, is beefing up its land asset base in the development holding arm to cross the 1,500 acre mark to raise additional funding. The Group during during 2010 is understood to have launched projects spanning 1.2 million square feet and is looking to launch projects spread over 1.7 million square feet during 2011.

The company currently has 343 acres from 12 SPVs (Special Purpose Vehicles) under its control and is set to add another 1,205 acres by merging another 32 SPVs into itself as it embarks on the fresh round of fund raise which is expected to tied up within third quarter of calendar 2011.

The first round of Rs 200 crore is expected within March 2011. Investment bankers close to the deal indicate that Century is in discussion with global & Indian private equity giants including Morgan Stanley, Goldman Sachs, Kotak Realty Fund, Baring Private Equity, HDFC Realty Fund among others for this deal. Howeve, the management of Century Real Estate Holdings declined to comment. Century Real Estate which had earlier initiated discussion with bankers for a possible public offer, seems to have put those plans on the back-burner and is actively courting PE players now. Century has been focusing heavily on development of residential projects with as much as 90 per cent of its development focusing on developing these units, while the rest has been for commercial projects. Bankers indicate that Century may be working towards a ratio of 70:30 (residential – commercial) over the next few years.

The PE fund raising is slowing picking up in the Bangalore real estate market with as much as $1 billion waiting to be raised from a clutch of players. Shriram Capital is close to raising $100 million from TPG, Brigade Group is looking at around Rs 500 crore most probably through the QIP route, while Embassy may come in with its Rs 2,400 crore IPO during 2011 and Mantri Developers looking to raise another Rs 500 crore.

Cautious NRI’s Investigating Before Investing into Indian Real Estate

Non-resident Indians (NRIs) and people of Indian origin (PIO) investing in premium real estate projects have become cautious and are doing a thorough check before investing, say senior executives in real estate firms. ‘‘The mood is to verify and ensure it is a good property, land and approvals are in place, the location is good, and the project conforms to the master plan,’’ said Kunal Banerji, president, M3M India, after a road show in Abu Dhabi last week. ‘‘Gone are the days of euphoric buying. Today, people are doing calculated buying. They are doing thorough due diligence, checking out the location,’’ said Banerji, who met over 150 prospective investors in Dubai and Abu Dhabi over the weekend.

M3M, which is selling 3-bedroom and 4-bedroom apartments and penthouses at its Golf Estate project, Gurgaon, for Rs 3.6-10 crore each, plans to sell a quarter of these homes to NRIs and PIOs. Niranjan Hiranandani, chairman, Hiranandani Group, says there’s a resurgence of NRI investment in India as opportunities have dried up in West Asia. ‘‘NRIs are more interested today; enquiries and conversions from them have gone up,’’ he said. But there’s a difference. ‘‘Earlier, the NRI investor was euphoric – they would cut a cheque, thinking how much one would earn in three months. That exuberance is gone. Today, the NRI investor is taking a medium to long-term call on the property,’’ said Ashish Jerath, vice-president (sales), Emaar MGF.

Today, the NRI investor has a two-three year investment horizon, not less. Hence, he’s more concerned about the record of the builder, the location, and the project, realising only a good property would survive a shock, say experts. ‘‘They realise property prices can quickly go up or down, so it is important to own a good property and not invest in just any. Investors have become cautious. They want to invest in a project which will always have a demand (for resale),’’ said Jerath. Abhishek Kiran Gupta, head of research at real estate consultancy Jones Lang Lesalle, feels investors have become cautious because real estate valuations abroad are attractive and real estate prices in India have moved up sharply in a short span of time. They’ve gone up by 15 per cent (NCR) to 40-50 per cent (Mumbai’s suburbs) in many markets.

Vigneshwara Developers to build technology park for HSIIDC

CHANDIGARH: Vigneshwara Developers is developing a ten-acre business-cum-technology park for the Haryana State Industrial & Infrastructure Development Corporation ( HSIIDC )) within the 150-acre technology corridor at Manesar in Gurgaon.

Sunil Dahiya, managing director, Vigneshwara Group , said: “One ought to have a vision to effect a paradigm shift in industry standards and rewrite trends and utility norms to stand out and ensure scalable and sustainable development, rather than just follow conventional methods and applications.

India is on the threshold of becoming a super power, and we need to come out with out-of-the-box thinking to build infrastructure compatible with global standards. Hence, we at Vigneshwara are always on the toes to feel the pulse of the people and build customized and utilitarian projects. It is not for nothing that we turned out to be the official real estate licensee for the Commonwealth Games 2010.”

Vigneshwara has already developed and handed over three lakh sqft of prime residential space in the Commonwealth Games Village corridor besides an integrated township spread over 17,424,000 sq ft with a road network of 25 km on the campus.

Vigneshwara bagged the Most trusted Developer Award for the second consecutive year. The BIB (Builder Information Bureau) Building Industry Leadership Awards were instituted in 2006 to honor leaders of building industry in various categories across the industry.

The company is also coming up with a chain of ambitious technology park projects across the country and overseas. The Group has already developed an infrastructure project in Haryana measuring approximately 17,424,000 sq. ft. integrated township with gated complex and a 22-foot wide road network of 25 kilometers.