Realty cos line up IPOs to raise over Rs 11,000 cr

Emaar, Lodha Developers, Sahara Prime, Ambience file draft prospectus.

New Delhi: Buoyed by positive market sentiments and demand revival in housing, four real estate companies — Emaar MGF Land, Lodha Developers, Sahara Prime City and Ambience Ltd — are looking to mop-up over Rs 11,000 crore through public offerings.

The four realtors on Tuesday filed their preliminary draft prospectus with market regulator SEBI and, according to industry observers, at least a dozen more realtors may be lining up to tap the capital market in the coming months.

More on bandwagon

In its second attempt at the primary market to raise funds, Emaar MGF is hoping to garner Rs 3,850 crore through its IPO. There will also be an offer-for-sale component of 1.17 crore shares as part of the issue. The amount is substantially lower than what the company had intended to raise in February 2008, when it announced plans for a Rs 7,072-crore public issue. However, it had been forced to withdraw the IPO due to a sudden downturn in market conditions at that time.

Other realtors rushing to jump onto the IPO bandwagon now include Mumbai-based Lodha Developers. It expects to raise Rs 2,500 crore through its public offering to be pumped into the development of its existing land assets. About 20 per cent of the IPO realisation would be utilised for retiring debt, sources said.

Sahara Group’s realty arm, Sahara Prime City Ltd (SPCL), is eyeing an IPO of Rs 3,450 crore including a greenshoe option — the proceeds will be channelled into residential and commercial projects. The company’s business plan is focused on developing 88 integrated townships under the ‘Sahara City Homes’ brand name and 15 residential complexes under the ‘Sahara Grace’ brand across 99 cities in India.

Ambience Ltd — which develops premium commercial and luxury residential complexes in the National Capital Region — has filed a draft prospectus for a Rs 1,294-crore IPO (including a greenshoe option).

“A large portion of the proceeds will be utilised by builders to construct their land holdings. The real estate companies believe that the end-user demand is back for finished products and hence the funds raised would be used largely for delivery of existing projects,” the Jones Lang LaSalle Meghraj Country Head, Mr Anuj Puri, told Business Line.

Analysts feel that this time round the investors would carefully scrutinise the past track record of the realtor in executing projects, the valuation, and the proposed areas for utilisation of funds, before taking an investment call.

Second round

The IPO-filings mark the second round of fund-raising in the real estate industry, which had been wobbling under the impact of a global financial crisis and a resultant lull in sales. However, since March-April this year the tide has started to turn with builders claming an improvement in booking and sales enquiries, especially in the affordable housing space.

As a result, the cash-strapped industry that had shelved projects during the slowdown began leveraging the turnaround in consumer sentiments and went on a fund raising spree. Earlier this year, Unitech, in two tranches, raised nearly Rs 4,320 crore while Indiabulls Real Estate raised Rs 2,656 crore through issue of shares on institutional placement basis. In May, promoters of DLF Ltd offloaded 9.9 per cent stake in the company to institutional investors for Rs 3,860 crore.

“In the last 18 months, the real estate sector has not tapped the IPO market. So clearly there is an investor appetite for public issues in the sector. Now with the stock markets stabilising, another dozen real estate companies are looking to tap the market in the next four months,” said Mr Puri.

Mr Puri’s comments come at a time when speculations have been rife that developers such as BPTP, Oberoi Constructions, Nitesh Estates and Godrej Properties are finalising plans to raise funds through a public offer in the coming months.

India leads real estate investment market in Asia

New Delhi: India leads the top real estate investment markets in Asia for 2010, according to a study by PricewaterhouseCoopers (PwC) and Urban Land Institute, a global non-profit education and research institute. The study is prepared by over 270 international real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants.

The report provides development trends and outlook on Asia-Pacific real estate investment and indicates Mumbai and Delhi as particularly good destinations in India.

Mumbai, Delhi and Bangalore lead in the hotel ‘buy' prospects. Also, residential properties are viewed as more promising than other sectors.

“The recapitalisation by players in equity markets across Asia has been successfully replicated by some Indian developers, which has helped ease the liquidity stresses,” said Mr Gautam Mehra, India Leader for Real Estate Practice, PriceWaterhouse Coopers.

Cities see boom in sales of luxurious housing

Mumbai: DLF sold apartments worth Rs 1,000 crore in December

The country’s largest real estate developer, DLF, sold apartments worth Rs 1,000 crore in December. This is the highest monthly sale the company has recorded in its history.

There are many developers like DLF who have seen a surge in the sale of apartments across the country in the quarter ended December, especially in the luxury and semi-luxury category.

A large chunk of DLF’s sales are also from the luxury and semi-luxury segments. It sold 76 apartments of Rs 5 crore each in The Magnolias, Gurgaon, netting nearly Rs 400 crore. The project has apartments of 5,825 sq ft each and duplexes and penthouses of 9,000 to 10,000 sq ft each.

It made another Rs 200-300 crore each in its relaunched projects, DLF Belaire and Park Place, in Gurgaon. Belaire had a price of Rs 2-3 crore each and Park Place of Rs 1.25-1.5 crore.

Indiabulls Real Estate has sold 100 apartments in its 65-storey ‘Indiabulls Sky’ in the Lower Parel area of Mumbai in the past four months. It has also recently launched Indiabulls Sky Suites with full-age advertisements, promising ‘A head in the clouds experience’’. While, apartments in Sky were priced at Rs 6.75-22.5 crore, depending on the size, Sky Suites are expected to be higher.

Indiabulls is also working on a super-luxury, ‘By invitation only’, Indiabulls Sky Forest, where homes are more than 10,000 sq ft each and priced 10-20 per cent higher than Sky projects.

Buoyed by response for its premium housing projects, Orbit Corporation, another Mumbai-based developer, says it will launch one luxury project in the city every quarter. Orbit has sold off its first lot of 18 flats in Orbit Terraces — a premium housing project in the Lower Parel area where apartments ranged from Rs 3.3 crore to Rs 6.6 crore — within 17 days of its launch in September. It sold another dozen flats in the same building later.

Orbit earlier sold its Orbit Arya project in South Mumbai, where apartments were priced at Rs 10-15 crore, within a month.

The increasing sales are a result of many factors, besides general economic recovery. “A host of reasons have helped property sales. Interest rates are down, property prices are down 30 per cent from the peak and markets are doing well. All these are giving confidence to buyers to buy premium homes,” says Rajeev Talwar, executive director, DLF.

Agrees Raminder Grover, chief executive of Homebay Residential, part of Jones Lang LaSalle Meghraj: “Post slowdown, this segment has clearly picked up and we must have marketed and sold 60-70 of homes of Rs 5 crore and above.”

Developers are cashing on this demand by offering even more expensive and exclusive apartments. For instance, Pune-based Kumar Builders is planning to build ‘sky villas’ in the Worli area of Mumbai, where the first villa will start from the twelfth floor. Called Kumar Couture, it will overlook the Bandra-Worli Sea Link and will be priced at Rs 30 crore each, for about 8,000 sq ft.

Beyond Delhi and Mumbai

In Hyderabad, Dax Properties Pvt Ltd (part of Countryside Realtors Pvt Ltd) has sold 65 to 70 villas in its Golf Retreat Project since the launch last month. Costing Rs 1.2-2.5 crore each, they vary from 500 sq yards to 2,000 sq yards.

“There are takers from all over the country,’’ says Hassan, managing director of Dax. Another developer, Aditya Housing and Infrastructure Development Corporation, has sold 20 villas out of 30 at Empress Park in the Jubilee Hills area of Hyderabad. Each villa costs Rs 3.5 crore.

A few days earlier, Aditya Housing announced Mount Castle at Nandagiri Hills in the city, where each floor was occupied by a single flat. Of the 24 it plans to develop, it has already sold five.

In Pune, Kumar Builders sold 77 flats within a short span of time in its premium project, 45 Nirvana Hills, where apartments are priced above Rs 1 crore. The company plans to launch two or three luxury housing projects — flats, bungalows and row houses — in prime localities like Kalyani Nagar and Hadapsar.

Bangalore is also likely to see more luxury projects in the category of Rs 4 crore-plus by developers such as Prestige and Nitesh Estates, as developers have seen good response for the premium products in the past three months.

Rs 600-cr Infinity project set to change Guwahati IT outlook

Kolkata/ Guwahati: At a time when Assam and North-East hardly figure as a promising investment destination for IT companies, Kolkata-based Infinity Infotech Parks Limited (IIPL), a company providing infrastructure solutions to IT companies, has ventured into the region with an ambitious Rs 600-crore world-class IT park project in Guwahati and, moreover, has said would try and rope in investments for the park.

Besides, the company will construct two “elite” residential projects in the city at a cost of Rs 200 crore. “If you can provide the IT companies a world class infrastructure, they would surely come and invest here,” said Ravindra Chamaria, chairman and managing director of IIPL.

All the formalities and land acquisition have almost been completed and by this year, the work on the project will begin. Work on one of the residential projects has started and work on another will begin soon.

Pulak Chamaria, executive director of IIPL, told Business Standard that the company was in “touch” with its clients to impress upon them to invest in the park.

Some of IIPL’s clients include HCL Technologies, Mphasis, KPMG, Bharti Airtel, Nortel Networks and so on.

He added that though law and order and security was “surely a concern” that would not act as a deterrent for its clients to come and invest in the park.

He said: “If you create anything iconic, everyone will follow you. We are here to create a benchmark.”

Ravindra Chamaria said that they were studying other North-Eastern towns and cities which have potential for growth of IT sector, especially Shillong and Agartala, and would like to venture into those places in future.

He said that the two residential projects would be based on “Green Homes” concept, which would be for the first time in eastern India, and would conform to the Indian Green Building Council norms.

Infinity has been the pioneer in creating infrastructural solutions for the IT and ITes sector in India and abroad. The twin tower ‘Infinity Think Tank’, ‘Infinity Benchmark’ and ‘Godrej Waterside’, in collaboration with Godrej Properties, are few landmark infrastructures constructed by Infinity in Kolkata.

Real Estate

The Indian real estate sector plays a significant role in the country's economy. The real estate sector is second only to agriculture in terms of employment generation and contributes heavily towards the gross domestic product (GDP). Almost five per cent of the country's GDP is contributed to by the housing sector. In the next five years, this contribution to the GDP is expected to rise to 6 per cent.

According to Jones Lang LaSalle, faster economic growth in Brazil, Russia, India and China (BRIC) could result in the property markets of those nations recovering at a faster rate than the UK and US real estate markets. It has also been suggested that India's property sector could begin to improve from late 2009 and may attract up to US$ 12.11 billion in real estate investment over a five-year period.

Almost 80 per cent of real estate developed in India is residential space, the rest comprises of offices, shopping malls, hotels and hospitals. According to the Tenth Five Year Plan, there is a shortage of 22.4 million dwelling units. Thus, over the next 10 to 15 years, 80 to 90 million housing dwelling units will have to be constructed with a majority of them catering to middle- and lower-income groups.

Moreover, India leads the pack of top real estate investment markets in Asia for 2010, according to a study by PricewaterhouseCoopers (PwC) and Urban Land Institute, a global non-profit education and research institute.

The report, which provides an outlook on Asia-Pacific real estate investment and development trends, points out that India, particularly Mumbai and Delhi, are good destinations. Residential properties are viewed as more promising than other sectors and Mumbai, Delhi and Bangalore top the pack in the hotel ‘buy' prospects as well.

The study is based on the opinions of over 270 international real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants.

Apart from the huge demand, India also scores on the construction front. A McKinsey report reveals that the average profit from construction in India is 18 per cent, which is double the profitability for a construction project undertaken in the US.

The real estate sector is also likely to get a boost from Real Estate Mutual Funds (REMFs) and Real Estate Investment Trusts (REITs). In fact, according to a CRISIL paper, the REITs would have the potential to hold at least 5 per cent share of the total global real estate market by 2010, the size of which would reach US$ 1,400 billion in the next three years. The paper titled, ‘Indian REITs; Are We Prepared', says that by 2010, REITs alone would hold a market size of US$ 70 billion of the total real estate market as its concept is gaining ground in countries like India and other developing nations.

According to the Federation of Indian Chambers of Commerce and Industry (FICCI), the Indian real estate sector is likely to experience consolidation wherein bigger players may opt for outright buy of smaller firms or forge joint ventures or business alliances with them.

Foreign direct investment (FDI) into India in the real estate sector for the fiscal year 2008-09 has been US$ 12.62 billion approximately, according to the latest data given by the Department of Policy and Promotion (DIPP).

Moreover, buoyed by positive market sentiment and demand revival in housing, four real estate companies—Emaar MGF Land, Lodha Developers, Sahara Prime City and Ambience Ltd—are looking to mop-up over US$ 2.35 billion through public offerings.