Reliance Inds formally opts out of proposed Haryana SEZ

BY  Anuradha Verma

Reliance and HSIIDC had formed a JV in 2006 for setting up SEZs in Haryana.

Reliance Industries Limited’s (RIL) group company Reliance Haryana SEZ Limited (RHSL) has returned 1,383.68 acres of land in Gurgaon which it had acquired from the Haryana State Industrial & Infrastructure Development Corp (HSIIDC) to set up special economic zones due to revision of strategic priorities.

This formally ends RIL’s proposed plan to develop an SEZ, which was already in the cold storage for years.

RSHL – a joint venture between RIL and Haryana government-owned company HSIIDC – was formed to develop SEZs, model economic townships and other infrastructure facilities in Haryana. HSIIDC has also exited the venture and project, the company said on Monday.

However, RIL would continue with development of a part of the project.

“The model economic township project will continue to be developed in the Industrial Model Township framework on the directly-purchased land. The development work has started on 290 acres of land as an 'industrial colony'. Companies such as Panasonic and Denso have established their manufacturing units in the MET Project,” it said in the statement.

Reliance Ventures Ltd, a wholly owned subsidiary of RIL, and HSIIDC had formed a JV in 2006 for the development of a large multi-product SEZ in Gurgaon and Jhajjar districts of Haryana.

HSIIDC transferred 1,383.68 acres to RHSL in 2007 to development the project. In 2010, Haryana government approved the development of SEZ over the land transferred by HSIIDC in Gurgaon and development of Model Economic Township (Industrial Model Township Framework) on the directly purchased land.

However, the Indian government withdrew the fiscal concessions of exemptions of MAT of DDT for the SEZs following which RSHL decided to return the 1,383.68 acres in January 2012 as SEZs became unviable with the withdrawal of fiscal incentives.

Earlier this year, the Haryana state cabinet gave approval to return the land to HSIIDC at a price much lower than the price at which it was transferred to them. It also approved the exit of HSIIDC from the project. Source VCCircle

(Edited by Joby Puthuparampil Johnson)

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)

Training Program on Planning & Starting Property Consulting Business

In its objective to enhance professionalism in real estate and create a pool of knowledgeable and professionally competent property consultants, NIREM Institute of Real Estate Management has started offering a training program on ‘Planning & Starting Property Consulting Business’ on 11-12 November, 2013 at Delhi.

Through this training programs, NIREM aims to provide a knowledge platform to all those who want to start their own property consulting business. 

In the two-day program, participants are introduced to various aspects of real estate business including the right approach and method to start a property consulting business with a focus on handling customers in the most professional manner.

Few of the important topics are identifying and understanding the real estate markets, legal issues involved in property sales and transaction, coordination with builders and developers, lead generation and management, online marketing of properties, property sales skills, meeting clients’ expectation, quality in service delivery, consumer rights and protection, consultants’ rights and duties etc.

The course objective is to prepare a pool of professional real estate consultants who have thorough knowledge and competency to provide advice to clients about various aspects of property sales, purchase and investments.

Admission in this course is open to all those who want to start their own property consulting business and is offered on first-come-first-served basis. The program is scheduled on 11-12 November, 2013.

Those interested in joining the program may get in touch with the Admission Officer, NIREM at 011.42484988 or mail to info@nirem.org

Sobha Developers gives new sales guidance of $363M for FY13

BY  Pooja Sarkar; VCCircle

Has recorded drop in sales in sequential basis, but up 26 per cent year on year at 0.84 million square feet.

Bangalore based realty company Sobha Developers has seen growth in its first quarter operational numbers as compared to last year. For the quarter ended June 30, it managed to sell 0.84 million sq.ft of new space, which is valued at $87million (Rs 4,79 crore), with an average realisation rate of Rs 5,737 per square feet. Though year-on-year there is a growth in sales realisation of 26 percent, sequentially there is a decline. In Q4FY12, the realtor had sold 0.863 million square feet.

In the same period last year, Sobha had managed to sell 0.67 million square feet, for an average price realisation of Rs 4,547 per square feet.

The company has also given a new sales guidance for the year of $363 million (Rs 2,000 crore) for this fiscal for the period last year the developer managed sales of $309 million (Rs 1,700 crore). In the last quarter the developer managed to launch a new villa project called Sobha West Hill in Coimbatore with a total saleable area of 0.14 million square feet.

At present it is accruing money from projects across Bangalore, NCR, Chennai, Pune, Thrissur, Coimbatore and Mysore.

Kejal Mehta and Dhrushil Jhaveri real estate analyst from Prabhudas Liladher wrote in their report to their client “on account of strong launches and monetization of old sales, coupled with a steady execution, the company has brought its net debt down from $220 million (Rs1,210 crore) in FY11 to $207 million (Rs 1,140 crore ) in FY12. We further expect net debt to reduce to $161 million (Rs 890 crore) in FY13, resulting in a DER of 0.56, down from 0.67 in FY11.”

Sales from its Gurgaon project witnessed a strong sequential increase of 24 per cent.

Kotak Realty Fund Invests $16M In Orris' Gurgaon Residential Project

The transaction involved issue of optionally convertible cumulative preference shares to Kotak Realty Fund.

Kotak Realty Fund has invested Rs 80 crore($16.3 million) in  Orris Infrastructure’s group housing project in Gurgaon(Haryana), a top company executive told VCCircle. The latest deal adds to the list of such residential projects in the northern belt of the country to have attracted interest from private equity funds.

A senior executive of Kotal Realty Fund privy to the deal said the investment is for the project called Orris Carnation, which is already under implementation at sector-85 in Gurgaon. “We have invested from our domestic real estate fund,” he said.

The group housing project is spread across 29 acres with a near completed residential apartment called Orris Carnation Residency. The transaction involved issue of optionally convertible cumulative preference shares or OCCPS to the realty fund.

International property consultancy Cushman and Wakefield advised Orris Infrastructure whereas Kotak Realty Fund managed the deal on its own.

Orris Infrastructure is a Gurgaon-based realty company which is owned by Vijay Gupta and apart from real estate it has interests in energy, hospitality and education.

The group has also formed a joint venture with the country’s largest property developer by market value, DLF Ltd called DLF-Orris where it will develop a 50 acre land parcel in Sector 88, Gurgaon for a commercial office space.  According to the company, it has a land bank of 1,000 acres with an estimated valuation of Rs 2,500 crore.

Kotak Realty Fund at present has assets under management of $850 million and it has fully deployed its first fund of $100 million called Kotak India Real Estate Fund I.  It has recently raised a domestic fund of Rs 523 crore.

In another deal in the same space, Sun-Apollo Real Estate Fund invested Rs 75 crore to acquire 50  per cent stake in Assotech Ltd’s group housing project spread across 12 acres in Sector -99 in Gurgaon. Few months back, India Property Fund had picked up 49 per cent stake in Ramprastha Group's housing project Skyz in sector 37D in Gurgaon for Rs 120 crore.

These PE deals comes at a time when bank funding has become costlier for developers but residential segment of real estate looks attractive for investment as the rate of interest is now peaking out. Given high suppressed demand for residential units in the Delhi NCR area, investors are betting on uptick in consumer demand for housing as housing loan rates starts retreating from current highs.

Besides these small and mid-size PE deals, the real estate sector has also seen a few large size transactions in the past one year including Ascendas India Trust acquiring a portfolio of five buildings in Phoenix Infocity Pvt Ltd’s SEZ for Rs 855 crore. Kotak Realty Fund sold Peepul Tree Properties (an IT park in Goregaon) to Tata Realty and Infrastructure Ltd and Tata Realty Initiatives Fund 1 for Rs 525 crore. Blackstone invested around Rs 875 crore to buy 37 per cent stake in Manyata Promoters Pvt Ltd and more recently the PE giant also struck another large deal where it acquired Pune SEZ of DLF and Hubtown for Rs 810 crore. Source: VCCircle