Delhi-Mumbai industrial corridor will help create five new cities: Knight Frank

Pune: The first phase of the Delhi-Mumbai Industrial Corridor (DMIC) will lead to the creation of five new cities along its various nodes and the urban centres that will benefit through the first phase are Noida, Greater Noida, Gurgaon, Manesar, Jaipur, Ahmedabad, Indore and Aurangabad.

These are amongst the key findings of a comprehensive study on the DMIC released by Knight Frank India.

The report, which is the first in a series of studies undertaken by the company, will serve as a ready reckoner for all stakeholders and as well as those who wish to get an idea of the possible impact of the DMIC on the districts of Ahmedabad, Vadodara and Surat.

Amongst the takeaways of the report is that close to two crore jobs (direct and indirect) will be created by the seven nodes in the first phase. Assuming there are four members per household, the new cities in the first phase will house a population of nearly four crore.

Built-up demand

Providing a snapshot on the impact on real estate by the first phase of the DMIC (figures estimated till 2040) the report says that the total residential built-up demand will be 800 crore sq ft, while the total built-up commercial demand will be 251,622,000 sq ft. The total number of hotel rooms will be 18,233.

In a statement, Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “A total of 24 nodes have been planned along the entire stretch of the DMIC. Once all the phases of the project are completed, job creation along the DMIC will be unprecedented. The resultant effects of this astronomical job creation will lead to immense real estate development across verticals in and around the project areas. As these new urban agglomerations take shape, they will also attract interest from other sectors of the economy. Increased job opportunities, coupled with a superior quality of life offered by these new cities, would provide boost to the migration of businesses and people to these cities.”

Restricted focus

Samantak Das, National Director & Chief Economist, Knight Frank India, added, “There is no denying the fact that the DMIC and other corridors will have a major impact on real estate. However, for the purpose of this study, we have restricted the focus to the impact of the DMIC along its influence area in its first phase. According to our study, there will be a rub-off effect of the implementation of DMIC initiatives on the smaller urban centres in proximity of the respective nodes and going forward, these are expected to grow at a faster rate than the present-day major urban centres.” Source: Business Line

ASK Property Investment Advisors to raise INR 10 Billion by December

India’s ASK Property Investment Advisors aims to raise a 10-billion-rupee ($219 million) fund by December in a bet on the long-term case for property in Asia’s third-largest economy. The real estate-focused private equity firm, which manages assets worth more than 9 billion rupees, is in talks with developers in five of India’s largest cities to deploy the funds, Amit Bhagat, chief executive officer and managing director, said. 

“In the downturn, if you invest, chances are there for superior returns,” Bhagat told Reuters. Slowing economic growth is mounting pressure on property prices in India, which are expected to “correct partly” in locations such as Bangalore and Chennai, Bhagat said. “We will invest in cities and suburbs, not extended suburbs. The fund will focus on residential projects in Mumbai, Pune, Chennai, Bangalore and the Delhi area, he said. ASK has already received commitments for more than half of the 10 billion rupees it is plans to raise, he said. The first fund of 3.4 billion rupees, raised in 2009, has been fully invested, Bhagat said.

Fund Hit Realtors Selling Land Banks to Complete Projects

Sluggish sales, poor performance of the stock on the bourses and difficulty in raising money from banks and private equity (PE) players are forcing many real estate developers to turn to sell their land banks to raise funds to complete their projects. “A lot of real estate credit is lying unused by the banks and the banks are extremely cautious and selective in lending money to real estate players,” Naveen Raheja, chairman and managing director (CMD), Raheja Developers, said.

“Few players, who have good credibility and track records in terms of repayment of loans and overall past experience, are only being lent money by the banks,” Raheja added. As banks remain reluctant to lend to the realty sector large companies like DLF, Emaar MGF, Omaxe and HDIL, among others, that have huge debt portfolios are turning to sell their land banks to reduce their debt and raise money for their pending projects. DLF, the country’s largest developer, sold land worth Rs 403 crore in Pune, Amritsar and New Gurgaon in the third quarter of 2010-11. It is planning to sell 12 million sq ft this fiscal to raise about Rs 7,000 crore. DLF said it will continue to sell land assets to raise money.

DLF, in its annual presentation, had already indicated that going forward the company would focus on launching plots than group housing as it helps generate faster cash flows. DLF needs to repay Rs 2,700 crore debt this fiscal and has net debt of Rs 21,424 crore. The company said that of the planned launch of 12 million sq ft sales this fiscal, 10 million will be plotted development in cities like Indore, Gurgaon, Chandigarh and Lucknow. The rest will be group housing projects.