Office space demand down 26% in 2012

Office spaces rented by companies, a clear indication of the economy's health, for 2012 dipped by 26% compared to 2011 in seven major cities, according to a report by leading commercial property and real estate services adviser, CBRE India.

According to the report, about 26 million sq ft of office space was absorbed in 2012 as against 35 million in 2011. "The decline in absorption across key cities is primarily due to the continuing global and domestic uncertainty in the economy which is a deterrent for corporates in their expansion plans. For the demand to revive, the economic reforms in India need to be fast tracked besides global economy has to show some improvement in growth," said Anshuman Magazine, chairman and managing director, CBRE (South Asia).

Real estate developers have witnessed a bad phase in the commercial real estate space since 2008. While the residential real estate saw a rise in demand between 2008 and 2010 followed by a price rise, commercial real estate continued to witness pressure on rents. As a result many developers have converted their commercial real estate projects to residential ones especially in Tier I cities.

While the demand remained slow for the office space, the supply has reduced only marginally, creating further pressure on rental yields. "The total office space supply that entered the market in 2012 was about 31 million sq ft, compared to about 30 million sq ft in 2011," the report said.

The seven cities surveyed were National Capital Region, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata.

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Real estate developer SARE Homes plans to sell over 4,600 residential units in FY13

CHENNAI: Real estate developer SARE Homes (South Asian Real Estate) plans to sell over 4,600 residential units this financial year, a top company official has said.

SARE Homes sold about 2,000 units last year. "We are focused in residential real estate business. This year we are expecting to sell over 4,600 units. We have sold 4,500 units till date," SARE Homes Executive Director David Walker told reporters here.

Stating that demand for affordable residential units has been growing over the last two years, he said the company is currently engaged in several projects across India.

"Currently, our land bank is about 700 acres. We are engaged in three projects in NCR, one in Mumbai, one in Indore, one in Amritsar and two in Chennai," he said.

Walker and senior company officials were here to announce their second expandable villa project -- SARE Crescent ParC, near Chennai, to come up on 112 acres valued at Rs 1200 crore.

"This is our second project in Chennai. We completed our first project 'MeadowVille' comprising 400 apartments and it was very successful," he said.

He said the apartment units in the second project would be priced between Rs 40 lakh (for two BHK duplex villas) and Rs 55 lakh (for 3 BHK duplex villas).

The expandable villa project are designed to enable owners add additional room at their convenience. Layouts are pre-approved to ease this expansion, he said

Source: http://economictimes.indiatimes.com/markets/real-estate/news/real-estate-developer-sare-homes-plans-to-sell-over-4600-residential-units-in-fy13/articleshow/15902304.cms

Indian Property Investments by Private Equity Rise 69% in 2011

Jan. 11 (Bloomberg) -- India’s property investments by private-equity firms rose 69 percent last year, according to Venture Intelligence, a research company that tracks private equity, and mergers and acquisitions.

Private equity made $2.68 billion of real-estate investments through 53 transactions in the country, Chennai, India-based Venture Intelligence said in an e-mailed statement late yesterday, based on deals that have been announced. In 2010, they spent $1.58 billion on 55 investments, it said.

Indian developers are chasing private-equity funds because of a liquidity squeeze after sales dried up, and banks and finance companies cut funding. Private-equity deals are getting transacted at internal rates of returns, or the yield of the investment, of 25 percent to 30 percent, Amit Goenka, national director of capital transactions at the Indian unit of London- based Knight Frank LLP, said Sept. 15.

The largest investment last year was Jeff Morgan Capital Ltd.’s $320 million in Compact Disc India’s film city project. Other major deals included Warburg Pincus LLC’s 14 billion rupee ($270 million) investment in a residential joint venture with Lemon Tree Hotels and Blackstone Group LP’s $200 million investment in Bangalore’s Manyata Embassy Business Park. Housing projects accounted for 57 percent of the transactions, while commercial projects made up 19 percent, the study showed.

A total of 69 private-equity investments were made in India’s real-estate market in 2011, of which 53 were announced. In the previous year, 55 of the 63 deals were publicly disclosed.

Divestments

Buyout firms made 19 exits last year. A total of 14 were announced with a combined value of $603 million, Venture Intelligence said, compared with eight in 2010, it said.

HDFC Property Ventures Ltd., which accounted for five of the exits, sold its stake in the Embassy Property Developments Ltd.’s information technology park in Bangalore in south India back to the developer for 4.9 billion rupees in a deal funded by Blackstone. HDFC also divested its two-year-old investment in Nitesh Estates Ltd.’s Bangalore mall project back to the developer for 4.5 billion rupees.

Kotak Realty Fund realized $86 million from its stake sale in Peepul Tree Properties Pvt., a commercial information technology park in Mumbai, to Tata Realty Initiatives Fund. Kotak also sold a 20-acre land parcel in the south Indian city of Chennai that it had acquired from the Pentamedia Graphics group in February 2007. Indiareit Fund Advisors Pvt. and Red Fort Capital Advisors Pvt. also reported exits during the year, Venture Intelligence said.

Source: http://www.businessweek.com/news/2012-01-11/indian-property-investments-by-private-equity-rise-69-in-2011.html

Property deals peak ahead of guideline value revision

CHENNAI: With the new market-based guideline values for property registration set to come into effect from January, builders and buyers in the state are rushing to seal deals before the charges go up. The number of property deals has seen a sharp rise ever since the plan to revise guideline values was announced. In November alone, the state government earned Rs 715 crore from stamp duty and registration charges.

"There is panic in the minds of buyers and builders, as stamp duty and registration charges will go up once the new guideline values come into effect. A huge number of transactions take place daily these days, especially in Chennai and Coimbatore," a senior government official said.

In all, the government realized Rs 3,965 crore till November in the current fiscal from property registrations, 23.17% higher than the corresponding period last year. The November earning is the highest for a month in the last 20 years. In 2010-11, the government's revenue from stamp duty and registration charges was Rs 5,020 crore, and this fiscal it's expected to go up to Rs 6,500 crore.

Guideline value is the minimum value of a land fixed by the government, based on which stamp duty and registration charges are calculated. The charges add up to 9% of the property value. The draft of new guideline values is expected to be published on December 15, and the final values will be announced in January. The values were last revised in 2007.

While Chennai, expectedly, recorded the maximum number of property transactions -- 3.45 lakh deals in the last eight months -- Coimbatore was close behind with 3.18 lakh deals. The reason can attributed to the fact that Coimbatore has become a preferred destination for tier-two investments in the state with many business houses setting up facilities in the city, thereby giving a push to the real estate market.

Members of the Confederation of Real Estate Developers Association of India (CREDAI), a body of organized real estate developers, have taken exception to the new guideline values proposed by the government saying they do not reflect the market reality.

If the guidelines values of properties on Oppanakara Veethi, Cross Cut Road, DB Road and Trichy Road in Coimbatore have seen a three-fold rise in the revision, properties on Dr Radhakrishnan Salai, Boat Club Road, Poes Garden, Gopalapuram IInd Street and Montieth Road in Egmore in Chennai have been valued eight to ten times higher, they say.

CREDAI president T Chitti Babu said they were not against revision, but "a multifold increase was not acceptable." "There is a need for a study to understand the market prices. Otherwise, it will lead to malpractices and actual transactions will not come into revenue records. The officials have also found justification in our demands," he said. A crucial meeting convened by chief secretary Debendranath Sarangi on tax revenue on December 19 will throw some light on the final guideline values.

Tamil Nadu is among a very few states that do not revise guideline values periodically. Hence, major discrepancies exist between guideline values and market prices of properties.

Source: http://timesofindia.indiatimes.com/city/chennai/Property-deals-peak-ahead-of-guideline-value-revision/articleshow/11054212.cms