Lodha snaps Canadian embassy building in London for $530M

Lodha has been one of the biggest acquirers of land in India, especially in Mumbai, for the last few years.

Mumbai-based private property developer Lodha Group has acquired the Canadian embassy building in London's Mayfair district for $530 million (Rs 3,300 crore) in its biggest move overseas. Lodha Group, which claims to be India’s largest real estate developer, has exchanged contracts to acquire the landmark MacDonald House in central London from.

Located on Grosvenor Square, this prominent building bears the address of 1 Grosvenor Square and is touted as one of the most prestigious addresses in the world, located close to Buckingham Palace.

In February this year, the Canadian government first announced the sale of the building to reposition Canada House on Trafalgar Square in the heart of London to consolidate the Canadian High Commission’s diplomatic activity in the UK in one central London location.

The property is believed to have a total saleable area of 1.6 lakh square feet and with this project, Lodha will be able to connect with global investors.

Abhinandan Lodha, deputy managing director of Lodha Group, said “London and the United Kingdom offer significant opportunities for a high quality developer focused on creating a large-scale housing development business there. We plan to focus on Mumbai and London as our two main markets.”

“The acquisition of this marquee asset overlooking London’s most renowned garden square, in the heart of Mayfair and in close proximity to Bond Street and Mount Street is a great opportunity for our company,” Abhishek Lodha, Managing Director of Lodha Group, said.

Located on the corner of Grosvenor Square, the property is in the heart of London’s West End and is one of Mayfair’s most prominent buildings. The building first served as the High Commission for the US and subsequently, as the High Commission for Canada.

Lodha was advised by the London office of Knight Frank on this acquisition.

Lodha has been active in buying land assets over the past few years and as highlighted by VCCircle has been the biggest real estate buyer in the country.

Last year, it bought the US Consulate’s Washington House in South Mumbai for Rs 341.82 crore. The group is currently developing over 35 million sq ft in prime areas such as Napean Sea Road, Prabhadevi and Walkeshwar.

Source: BY  Bhawna Gupta, VCCircle

Canada co to invest $200 m in JV with Shapoorji Group

PTI | Mumbai | Updated: Nov 29 2013, 05:07 IST

Shapoorji Pallonji Group and Canada Pension Plan Investment Board (CPPIB) on Thursday

Shapoorji Pallonji Group and Canada Pension Plan Investment Board (CPPIB) on Thursday announced the formation of a strategic alliance to acquire foreign direct investment-compliant, stabilised office buildings in the major metropolitan areas of the country.

CPPIB will own 80% of the venture with an initial equity commitment of $200 million.

“We are pleased to be entering into this strategic alliance with CPPIB as a like-minded long-term global investor,” Shapoorji Pallonji Group chairman Shapoor P Mistry said in a statement.

Shapoorji Pallonji has a remarkable performance track record and reputation in the market for sourcing, delivering and executing value-added strategies and the company intends to use this experience of over 148 years in the Indian realty for the long-term success of this platform, he added.

The venture will target FDI-compliant office assets that are substantially leased to prominent tenants, with scope for value-added returns from active asset management. “We are delighted to be partnering with Shapoorji Pallonji to launch our first real estate venture in India focusing on stabilised office properties in major urban centres,” CPPIB president and CEO Mark Wiseman said.

India is a key growth market for CPPIB and, as a long-term investor, CPPIB believe there are attractive investment opportunities across various sectors, he added.

The venture will be supported locally by the Shapoorji Pallonji Investment Advisors team led by Rajesh Agarwal. CPPIB was advised by Vikram Gandhi, founder of VSG Capital Advisors, and Senior Advisor for investment opportunities in India. Source: financialexpress.com

Vacancy rates in Indian commercial realty market rises to 20% in 2013

A research report says calendar year 2013 is expected to see lowest absorption of office space in the country since 2005.

 

Indian commercial real estate space is witnessing higher vacancies in Grade A office locations and flat or falling rentals across the country, a reflection of slow business activity in the country even as there are some green shoots in the economy.

Realty consultancy Knight Frank India said in a report that in the Asia Pacific region 10 of 19 office markets witnessed softening rents in the last quarter. Mumbai has seen office rent declines 4 per cent.

According to the report, the country is slated to add 44.1 million sq ft of commercial office space this year which will take the total stock of commercial realty in the country to 490.3 million sq ft. Last year only 39.2 million sq ft of new stock was added in the country.

As the total area coming in the market hits an all-time high, the vacancy in the office space segment has also hit around 20 per cent. In 2011 and 2012, the country had seen a vacancy level of 19 per cent in the office space.

Samantak  Das, chief economist and director, research and advisory services at Knight Frank, said, “Though vacancy has gone up for this year we anticipate that by 2017 the vacancy levels will recede to 17 per cent.”

According to a separate report authored by Adhidev Chattopadhyay, a research analyst with HDFC Securities, calendar year 2013 is expected to see lowest absorption of office space since 2005. For the first nine months of this year, overall net absorption of 15.7 million sq ft is down 21 per cent year on year due to weak economic sentiment impacting expansion plans of occupiers and substantial relocations of offices within cities.

After factoring absorption of nearly 7-8 million sq ft in Q4 CY13, estimated net absorption of 22-23 million sq ft is well below CY11 levels of around 36 million sq ft and last year’s 28 million sq ft. In 2005 the country saw absorption of 25 million sq ft.

According to another real estate consultancy, CB Richard Ellis, the commercial office segment of India’s top cities is expected to see fresh supply of more than 150 million sq ft by end-2017.

Mumbai office market, the biggest market for commercial realty in the country, has witnessed drop of 11 per cent in absorption on an year-on-year basis in the last quarter. In Q3 CY13, the city absorbed only 1.58 million sq ft but compared with last nine months; the city saw absorptions go up by 2 per cent compared with the same period in 2012.

Also rentals have seen a slight softening across the city as developers are pushing down prices to sign up lessees. In the last quarter rentals in central Mumbai-Lower Parel region saw a drop of Rs 10-20 per sq ft to Rs 155-165 per sq ft from earlier Rs 175 per sq ft. The same was witnessed for key commercial property areas Bandra Kurla Complex and Nariman Point.

Anshuman Magazine, chairman and managing director, CBRE South Asia Pvt Ltd, said, “The period 2014–15 is likely to see the maximum share of this upcoming supply, since projects slated for a release during this period are both spillovers of pent-up supply from 2013–14, as well as planned projects already under-construction. With a considerable level of supply lined up for 2014–15, rental values of select micro-markets such as  Gurgaon, Outer Ring Road, Thane and Navi Mumbai are likely to remain under pressure.” Source: BY  Pooja Sarkar, VCCircle; (Edited by Joby Puthuparampil Johnson)

Indian realty industry to almost double to $140B by FY17

BY  Pooja Sarkar, VCCircle

The industry, which had been growing at around 8 per cent annually during 2009-11, saws a 6.5 per cent deceleration in 2012-13.

The Indian real estate industry is expected to grow to approximately $140 billion by FY17, said a research report on real estate released by advisory firm Ernst $ Young and industry body FICCI. The report said, according to industry estimates, the size of the Indian real estate market was close to $78.5 billion in FY13.

Niranjan Hiranandani, chairman of FICCI’s real estate committee and managing director, Hiranandani Constructions Pvt. Ltd, said, “Mumbai urgently needs change of infrastructure with the support of government and also reforms in taxation, with 34 per cent of cost of an affordable house going out as taxes.”

The realty industry, which had been growing at around 8 per cent during 2009-11, saw a 6.5 per cent deceleration in 2012-13 primarily due to the sluggish domestic growth, rising input costs and negative global economic sentiments.

The sector’s major growth driver has been the pumping of capital through foreign direct investment (FDI) route. Between April 2011and July 2013, the sector attracted FDI of close to Rs 100,000 crore. The report, however, said the volume of FDI into the sector has been declining.

Even for private equity funding, the sector saw its peak in 2007 when $6.8 billion came in. In 2012, the industry attracted $1.7 billion from limited partners in realty projects across the country, as per the report.

For the first half of the current calendar year, the realty industry has seen investment of close to $1.4 billion and industry experts indicate that this year would be one of the better years compared to last four years.

With negligible sales and developers’ reluctance to bring down prices of properties, even banks’ credit exposure to the real estate and housing sector declined from 10 per cent as a percentage of gross bank credit in FY10 to 7.9 per cent in FY13. While bank construction finance continues to be the cheapest source of funding, another instrument which has caught attention of developers is raising money through non-convertible debentures (NCDs). Reflecting this trend, NCDs worth $4.2 billion were issued in 2012 compared with $3.8 billion in 2011.

The realty industry recently witnessed a few big-ticked buyout transactions in commercial office space by private equity funds. Over the last three years, it has attracted investment of $1.14 billion in commercial office space portfolio development.

(Edited by Joby Puthuparampil Johnson)

Manipal Integrated Services buys residential campus operator Woodstock Ambience

IDFC PE-backed arm of the Manipal group seeks to build and manage student accommodations across the country as an extension of its education services business.

Manipal Integrated Services Ltd, a part of Manipal Education and Medical Group (MEMG) has acquired Bangalore-based Woodstock Ambience, gated living provider for students and young professionals, for an undisclosed amount, according to the company.

Founded in 2000, Woodstock has been in operation for over seven years. It is one of India's first campus style residence for post-graduate students and young professionals. The company offers facility management services to educational institutions, hospitals, corporate houses, research laboratories and hospitality institutions.

Woodstock is built on over two acres of land with single and double occupancy options which can accommodate over 1,000 people.

"Woodstock matched our requirements of providing a campus with facilities that encourage smart community living for students and young professionals. Woodstock has clientele like IBM, Infosys, Hewlett-Packard, TATA Consultancy Services and Wipro," said K Shobhit Agarwal, CFO of Manipal Integrated Services.

Incorporated in 2004, Manipal Integrated Services (formerly Manipal Servicecorp Facility Management Pvt Ltd) provides facility management services. It offers healthcare facility management, ancillary, engineering and food services.

It also seeks to build and manage student accommodations across the country as an extension of its education services business. The latest acquisition marks the first big move in tune with that strategy.

Last November, IDFC Private Equity Fund III, a fund managed by IDFC Alternatives Ltd had invested $18.10 million (Rs 100 crore) to pick a 40 per cent stake in the firm.

Manipal Education and Medical Group operates educational and healthcare institutions in India and internationally. It offers education and healthcare, continued medical education and distance education services. It also engaged in research of genomics, genetics and stem cells. 

Source: VCCircle (Edited by Joby Puthuparampil Johnson)

BY  Bhawna Gupta