OMR + GST Road Real Estate Projects

We had an exclusive survey of the Old Mahabalipuram Road - OMR and GST Road. Survey was conducted between Jan-9th and Jan-16th.

Here is a list of projects forthcoming on GST Road, Chennai.
Developer's Name - Type - Project - Rate / sft - Analysis

• VGN - Plots - Southern County Rs 1,040 - 7 kms from MWC
• VGN - Plots - Nothwood Park Rs 1,000 - 2.5 kms from MWC
• Indus - Residential - Habiterra Rs 3,200 - 11 kms from the airport.
• Arun Excello Foundations - Residential Rs 2,850
• Akshaya Homes - Residential Metropolis - Rs 2,800 Dec-10 Total flats: 420. Royal Villas available at Rs2,950/sq. ft
• Arihant - Residential Villa Viviana - Rates not available - In JV with JP Morgan
• Bala Abirami Builders - Residential Abirami Pine Valley Rs 1,850 - 9 kms ahead of MWC, near the Pepsi factory.
• Bala Abirami Builders - Commercial - The Laurel Rs 5,500 -8 kms ahead of MWC, near the Pepsi factory.
• Hallmark Infrastructure - Residential - Golden County Rs 2,600 Jun-09 Infosys corporate booking
• Landmark Construction - Residential - Centralia Rs 3,500 - Initial discount of Rs250/ sq. ft and 3.5 kms from the airport

Here is a list of projects on Old Mahabalipuram Road, Chennai
Developer's Name - Type - Project - Rate / sft - Analysis

• Vijay Shanthi - Residential - Park Avenue Rs 2,800 - Project to be launched in the next 2 months
• Vijay Shanthi - Residential - Lotus Pond - Rs 2,800 - Project to be launched in the next 2 months
• Olympia - Residential - Opaline - Rs 3,380
  
• L&T - Residential - L&T Eden Park - Rs 3,600
• Mantri - Residential - Mantri Synergy - Rs 3,840
• Purvankara - Residential - Purva Swanlake Rs 3,590
• ETA Star - Residential - Rose Dale -Rs 3,400
• Yuga Homes - Residential - Shem park - Rs 3,500 - 70% complete. 38/60 sold
• Indus - Residential - Anantya Rs 3,900 - Jun-09 192 apartments
  

Acendas Singapore REIT active in India

Ascendas India Trust [a-iTrust] a Singapore-based business trust established with the principal objective of owning real estate and real estate-related assets used as income producing business space located in India. a-iTrust may acquire, own and develop land for use primarily as business space or acquire other uncompleted developments to be used primarily for business space with the objective of holding the properties upon completion.

We have reliably learnt that the company has four-income producing IT parks located in Bangalore, Chennai and Hyderabad with approximately 3.6m sq ft of completed development. The company has commercial space of 1.1m sq ft under construction at Chennai and Hyderabad and proposes to develop additional 1.3m sq ft in Bangalore and Chennai. In addition, the company also has 24 acres of land (of which 23 acres is part of an SEZ) with development potential of 2.7m sq ft.

a-itrust has more than 85% of its properties occupied by IT and ITeS companies in India. Average asset occupancy at the end of Dec-2007 was 99%.

Ahmedabad Ognaj + S. G. Road + Million Minds SEZ

Ahmedabad is emerging as one of the fastest growing commercial hubs in India and stands to benefit significantly from the ongoing industrial boom in Gujarat.

Ahmedabad's leading developer Ganesh Housing has projects in Ognaj Townships, S. G. Road and Million Minds SEZ. Here is the expected rates which the management indicated. All prices in Rs / sft

Ognaj Township
Residential Rs 1,890
Commercial Rs 3,426
Retail Rs 3,979
Hospitality Rs 6,646

Million Minds SEZ S. G. Road IT SEZ
Residential Rs1,995
Commercial Rs 3,737
Hospitality Rs 4,624

These prjects will not be completed before 2012 but Realty developers are cashing on the MAD Indian Real Estate Boom.

DLF MoU with Gayatri Projects

DLF has signed a MoU with Gayatri Projects (GPL), one of the leading infrastructure companies in India, to develop roads and highway projects across the country. DLF and GPL together aim to develop projects worth at least Rs 1,000 crore every year, and in turn build a strong portfolio of projects in a short period of time. Under the terms of the agreement, DLF-GPL would together leverage the strengths of both parties to form SPVs for development of highways.

DLF-Laing O'Rourke (LOR), the joint venture between DLF and LOR would be the contractor for the projects of DLF-GPL. DLF-LOR has already established its presence as one of India's leading contractors with a large order book in a short period of time. GPL at present has projects worth over Rs 3,450 crore under construction in states like Andhra Pradesh, Assam, Uttar Pradesh, Madhya Pradesh, Karnataka, Gujarat, Maharashtra and Orissa. These projects include national and state highways, dams, reservoirs, ash ponds and major canal works.

Bangalore Realty Slump by 25% in 2007

At the beginning of 2007, we had predicted that the year 2007 will be a slow one for Bangalore and its time for some self praise. According to data released by the Revenue Department, property registration was down 40%. [Data was also published in Jan-12th Deccan Herald Newspaper] Major slump in Bangalore, Mysore and Belgaum. Realty developers registration down by 25% in Bangalore.

The Government of Karnataka which projected $1.15 billion revenues from registration of properties is now facing a crunch with the number hovering around $650 million at the end of Dec-2007. Speculators are moving out and only genuine buyers will stay in this market. However, with detoriating infrastructure and no competitive state government in place, the market will remain lackluster over the next quarter.

Ahmedabad Godhavi + Adalaj Township Rates

Godhavi Township is being developed by Ganesh Housing and the project is going on stream in 2009. Here are the rates in the Township [all per sft]

Residential Rs 1,800
Commercial Rs 3,263
Retail Rs 3,789
Hospitality Rs 6,646

Adalaj Township Rates as told by the management of Ganesh Housing.

Residential Rs 1,890
Commercial Rs 3,426
Retail Rs 3,979
Hospitality Rs 6,646

Puravankara Windermere Housing Project Chennai

Puravankara Projects has informed us about the launch of its mega housing project Purva Windermere at Pallikarnai, Lake District in Chennai with an estimated project cost of over Rs 1,200 crore.

The project Purva Windermere is surrounded by three lakes. Spread over 54 acres of land, the project would have 2,072 units of 2 & 3 bedroom flats. Purva Windermere would have the most modern amenities like club house, meditation/yoga squash court, indoor games ball, basket ball post, gymnasium, steam, sauna, Jacuzzi, Swimming pool, etc. It would also have provisions for super market, restaurants, beauty parlours for men and women, outdoor children's play area, well-lit landscape garden etc.

The developers are offering the project with world class finish like, high end bathroom fixtures, premium flooring, UPVC windows and high end emulsion painting to name a few. This unique residential project is close to Vellacheri, a prime location Within the heart of Chennai. The water table of the area is quite good - potable and sweet. It's not surprising if one calls Windermere as the lake district of Chennai.

Mundra SEZ in trouble of losing Tax Incentives

The Mundra special economic zone does not qualify to be classified as a special economic zone (SEZ) as the SEZ Act lays down that the zone has to be built on an area vacant and free from all encumbrances. If the Mundra SEZ is disqualified by the government, it stands to lose all tax sops which come with the SEZ status. The Mundra SEZ is spread over an area of 2,648 hectares and was notified in June 2006.

Mundra Port and Special Economic Zone is principally engaged in providing port services for bulk cargo, container cargo, crude oil cargo and value- added port services, including railway services. It also generates income from land related and infrastructure activities.

Mundra Port and SEZ recently raised over Rs 1,700 crore in the Indian market.

Establishment of SRZs will end SEZ Scam in India

The largest Land Bank scam in the world is coming to an end with Real Estate developers making it clear that they want a special incentive zones - Special Residential Zones [SRZ] to ensure affordable housing in the country.

Mr. Kumar Gera, Chairman of Real Estate Developers said,

We need SRZs across India. With these zones patterned along the lines of SEZ Act entailing similar approvals, board structure and monitoring and executions. Concessions in terms of direct, indirect taxes and octroi must be provided.

These SRZs need to be supported by proper infrastructure, sustainable development and a realistic floor space index. He was silent on the Land Acquisition issue as most of the land around Tier-I & Tier-II cities now belongs to Politicians.

India Real Estate Investment Trusts - Analysis

Here is an analysis of the Draft Guidelines for Indian Real Estate Investment Trusts after studying various documents released by SEBI.

Guideliness will open a hitherto closed market, and provide developers/property market, another pool of money (IPO's, off-shore structures, and P/Es, were a rage in 2007).

• Structure - set-up under local laws; managed by a real estate investment management company
• Funds - close ended, listed on stock exchanges with valuations done by independent principal valuers disclosed annually
• Dividend distribution - not-less than 90% of post tax profits
  
• Issues - No clarity on taxation for REIT's or investors - this is key to the viability of these structures, and needs to be addressed.

The investment guidelines for REITs cover

• Non-income producing/under-development asset: Capped at 20%
  
• single Asset exposure: 15% cap
  
• Developer exposure/concentration: restricted at25% for projects developed/marketed/financed by a developer group
• Leverage: Capped at 20% of total gross assets
  
• Restrictions: Cannot invest in land/participate in development activities.

We see this as early signs of an evolving commercial asset sale market (office, IT Parks/SEZs, Hotels, Malls, Hospitals) in India; which could result in potential yield compression. Key beneficiaries should be developers with higher leverage towards such assets such as DLF and Unitech. Further, this should provide a new channel for financing projects and enhance levels of disclosures and transparency in the sector.

Parsvnath IT Park in Gurgaon

Parsvnath Developers has received LoI from director town and country planning, Haryana to develop an IT park project on main gurgaon sohna road just 3 kms away from Rajiv Chowk in Gurgaon. The approximate realization from the project is expected to be Rs 650 crore within 2 financial years.

IT Park is spread over an area of 6.8 acres and is located in sec - 48 in Gurgaon. The project sprawls over a total build-up area of 8.5 lakh sq ft. and will showcase state of the art IT Park giving boost to IT and ITeS services in the area. The project is expected to begin within three months and will be completed within next 24 months. The company already has one IT Park situated at Chennai.