Bombay Dyeing, which has seen fortunes dwindle from its textiles division, expects realty to generate over half of its revenues this financial year and three quarters in five years. “We will essentially become a real estate firm in the years to come,” managing director Jeh Wadia said. Jeh took charge of Bombay Dyeing in a management reshuffle earlier this year.

The Wadia Group and Bombay Realty, the group’s real estate arm, have a land bank of about 10,000 acres spread across the country. This includes 700 acres of prime land in the financial capital, Mumbai, acquired at rock bottom prices in the 1800s and 1900s by group firms Bombay Burmah, Bombay Dyeing, Britannia and the current and erstwhile promoters. The transformation of the 132-year-old company into a property firm could mean a windfall for its shareholders.

Its real estate division commenced partial property development at Spring Mills at Dadar, in central Mumbai in 2005-06, but the big thrust is expected from this fiscal year. Last financial year, only a quarter of its Rs 1,950 crore revenue came from real estate. “We are launching four projects spread over 180 acres by the March end. This includes projects at Dadar and Worli, spread over 70 acres in the island city of Mumbai and 100 acres in mainland Mumbai,” Wadia said. While Bombay Realty will act as a developer, the title of the land will continue to be with group companies. Subsequently, all other group companies will develop the land along with Bombay Realty through development pacts.

Shares of real estate companies are witnessing some intense selling pressure at the bourses with the BSE Realty index slipping almost 4% compared to 2% fall in the benchmark index Sensex on concerns of weak earnings growth during the recently-concluded quarter and liquidity concerns. At 01:50 p.m., shares of Sobha Developers Ltd, DLF Ltd and Indiabulls Real Estate had slipped more than 4% each. Unitech, Prestige Mills, Oberoi Realty were trading lower by 2 – 3% each on the BSE.

According to a report by Motilal Oswal, the brokerage firm has downgraded target prices for many companies under its coverage by 2-29% and FY12/13 estimates by 2-18%, on the back of (1) moderating sales assumption of next 5 years, along with certain increase in construction cost by 10-15%, and (2) assigning higher discount factor to NAV. Besides liquidity, the revision factors in multiple concerns for real estate companies, including delay in new launches due to regulatory hurdles, escalating commodity prices dampening margins, sluggish demand across markets, slower revival of commercial vertical, and several company-level issues such as CCI probe, 2G spectrum issue, farmers’ protest on land acquisition, etc.

The brokerage advices investors to prefer stocks with prudent balance sheets and strong business models such as Oberoi Realty, Prestige, Phoenix and Mahindra Lifespaces, or stocks with near-term triggers like DLF, which offers play on de-leveraging theme with valuation comfort. Most banks have adopted a more vigilant approach towards the real estate sector for new loan disbursement or refinancing. The banks are selectively biased towards projects with lower uncertainty and/or lease income support, and developers with long-term relation and goodwill. Costlier home loan rate coupled with plummeting customer sentiment is affecting residential sales volume, another major source of fund to developers

DB Realty, the Mumbai-based property developer, is in talks with major real estate companies for joint developments in two of its prime properties in the city which are valued around Rs 3,000 crore, DNA reported, citing two persons with knowledge of these talks. The first property is located in the tony Bandra Kurla Complex, which has a development potential of a million sq ft. The second one at Kala Nagar in Bandra has a potential of 500,000 sq ft. Residential apartments sell for around Rs 20,000 a sq ft in these two areas.

According to the sources, DB’s bankers are in talks with Mumbai-based Rustomjee, which is looking at the deal seriously. When asked, a DB Realty spokesperson did not offer any comments. A Rustomjee spokesperson said: “We have received the proposal and like any other proposal, we are looking into it.” DB was earlier in the news for the arrest of its key promoters, Shahid Balwa and Vinod Goenka, in connection with the telecom spectrum scam. DB has 25 projects in various stages of construction. Recently, it acquired a 50 per cent stake in DB Hospitality, an unlisted firm where Shahid Balwa and Vinod Goenka held 80 per cent stake.

National Real Estate Development Council (NAREDCO) has named its new panel of members in its 13th annual general meeting, held in New Delhi. Navin M Raheja, chairman and MD, Raheja Developers Ltd was elected as its president. The unanimously elected office bearers will serve for a period of two years. Sunil Dahiya, MD, Vigneshwara Developers Pvt Ltd was elected as senior vice president, while Sunil Mantri, chairman, Sunil Mantri Realty Ltd was named as vice president. Rajesh Arora, MD, Arora & Associates Infradevelopers Pvt Ltd was appointed as member finance.

Addressing members, Navin M Raheja the president elected, said, “My vision is to open Real Estate Development Councils in all states of India and enroll new members in large numbers. I will work relentlessly to transform the Housing and Real Estate Industry and make it responsive to the needs of millions houseless, especially poor. I will also take support of Central and State governments in removing various obstacles in the smooth functioning of the sector.” NAREDCO, the apex regulatory body of Real Estate Sector established under the aegis of Ministry of Housing & Urban Poverty Alleviation, Government of India, is working for the promotion of the Housing and real estate sector in India.

It encompasses all stakeholders of the Real Estate Industry such as developers, financers, real estate agents and material manufacturers, etc. Kumari Selja, the Union minister of housing & urban poverty alleviation and minister of culture, is its chief patron. KP Singh, chairman, DLF Ltd, Ramesh Chandra, executive chairman Unitech Ltd, Sushil Ansal, chairman Ansal API, G L Raheja, chairman, K Raheja Constructions and K Raheja Hospitality Housing and Urban Development Corporation Ltd (HUDCO), and National Housing Bank (NHB) are amongst the founders and torchbearers of the Council. Self regulation and transparency in business are the main objectives of NAREDCO.

The country’s largest real estate firm DLF has sold 10.8 acres in Gurgaon to a Dubai-based Indian investor for Rs 280 crore, as part of efforts to reduce its debt burden by a third this fiscal. The company is also in talks with other NRI investors to sell another 20 acres in Gurgaon, which is expected to fetch around Rs 400 crore, reports Financial Express. DLF’s debt stood at Rs 21,524 crore as on June 30. The company plans to reduce this by Rs 7,000 crore this fiscal.

Earlier this month, DLF had sold a plot to M3M India for Rs 400 crore. The company is also in the process of selling two IT parks to Blackstone and IDFC. The deal could fetch another Rs 1,500 crore, the report said, citing sources. In a first, DLF is selling land with the floor space index (FSI), which means the buyer will need no more sanctions and can start construction right away. The FSI-based sale would help DLF mop up more than twice what a normal sale would have got, sources were quoted as saying. Today, developers either sell land from their existing bank or sell their end-use properties.

It is understood that DLF will now sell land with respective FSIs wherever it has the option to do so. FSI is a ratio of the area of construction allowed on a plot against the available land. In the Gurgaon deals, with an FSI of 2.5, buyers have the option of building more than double the plot size. With 10.8 acres, after leaving the mandatory space, a builder can construct commercial units on nearly 18 acres, experts said.

DLF has a land bank of close to 370 million sq ft, of which 10 per cent is non-core. All the Gurgaon land parcels, Noida and Pune IT park are part the ‘non-core assets’. The company is in the process of identifying more such non-core land for monetisation in other cities. It has so far realised over Rs 3,600 crore from sale of non-core assets including hotel plots.

DLF has again started looking for a strategic partner for its luxury hotel chain Aman Resorts, which it acquired for Rs 3,500 crore in 2007. The search has resumed after a year’s hiatus as the company feels the burden of mounting debt. DLF reported a 12.81 per cent decline in its consolidated net profit at Rs 358.36 crore during the first quarter ended June 30.

The government has given more time to as many as 37 special economic zone developers, including Navi Mumbai SEZ, DLF Commercial Developers and Tata Consultancy Services, to execute their projects.
At a meeting on September 19, the Board of Approval (BoA) headed by Commerce Secretary Rahul Khullar also allowed five SEZ developers to surrender their projects. The BoA is a 19-member inter-ministerial body that deals with Special Economic Zones (SEZs) and related issues.

However, the developers surrendering their projects have to obtain a certificate from the respective Development Commissioners that “they have refunded all the tax/duty benefits availed under SEZ Act/Rules,” a senior Commerce Ministry official said.
SEZ developers, including Maharashtra Industrial Development Corporation and Benchmark Realty, had approached the BoA to surrender their projects.
According to an industry expert, uncertainty over whether new SEZs will be eligible for tax exemptions — which are proposed to be confined to existing units in the latest draft of the Direct Taxes Code Bill — has dampened interest in the tax-free enclaves.

Other developers that got more time to execute their projects include Raheja SEZ, Parsvnath SEZ, and Wockhardt Infrastructure Development.
It has deferred the extension of two applications — Peninsula Pharma Research Centre and Meditab Specialties — as the issues were sub-judice before the apex court.
The BoA also approved three new proposals, including one for setting up a sector-specific SEZ for the petroleum and oil and gas industry in Visakhapatnam.
Regarding the revision of guidelines for power generation, transmission and distribution in SEZs, the board gave two weeks’ time to the Department of Revenue for their comments.

Under the SEZ Act, SEZ units get 100 per cent tax exemption on profits earned in the first five years of operation, a 50 per cent exemption for the next five years and another 50 per cent exemption on re-invested profits in the following five years.
SEZ developers, on the other hand, get 100 per cent tax exemption on profits for 10 years, which they can choose to invoke within the first 15 years of operation.
Merchandise exports from the 143 operational SEZs in the country totalled Rs 72,255 crore in the April-June period, an increase of 23 per cent vis-a-vis the same period last year.

Real estate developer Parsvnath today said it has received shareholders’ approval to raise up to Rs 2,000 crore through the issue of securities to qualified institutional buyers. In a filing to the Bombay Stock Exchange (BSE), the company said it has received approvals to raise up to Rs 2,000 crore in long-term funds through the issuance of securities. The company will raise the amount “by way of Qualified Institutional Placement (QIP) to Qualified Institutional Buyers (QIB),” it added.

The board of the company had earlier sanctioned the implementation of the fund-raising plan over a 12-month period in August, subject to shareholders’ approval. Parsvnath Chairman Pradeep Jain had said the company would raise this amount primarily to reduce its debt. The company’s debt stood at about Rs 1,200 crore as of June 30. Earlier, Jain had said the company plans to reduce its debt to Rs 500-700 crore by the end of 2011. Since 2009, Parsvnath has raised Rs 410 crore through the sale of stake in four projects being developed in the Delhi-NCR to private equity players.

In addition, the company has raised nearly Rs 440 crore through two rounds of private placement of equity with institutional investors to reduce debt. Delhi-based Parsvnath Developers has a land bank of 193 million square feet, which is spread over 44 cities in 15 states. It is focusing on execution of 54 projects covering 80 million square feet of saleable area. In February, the company had said it would invest Rs 4,700 crore over the next three years to complete its existing projects. It expects a sales realisation of over Rs 14,000 crore during this period.

Parsvnath had reported a 19.04 per cent fall in its consolidated net profit for the quarter ended June 30 to Rs 25.76 crore. The consolidated total revenue of the company also declined by 15.75 per cent to Rs 216.57 crore. Shares of the company were trading 2.38 per cent lower at Rs 65.50 apiece in the late afternoon today on the BSE.

Home sales are far and few, but a section of Gujarat builders is planning to raise prices by 10% post-Diwali. Real-estate experts however, feel that the move could possibly boomerang in the present market conditions. Rising construction and labour costs are the main reasons for a possible hike being considered by the developers most of whom operate in Ahmedabad and Gandhinagar. “Profit margins of the developers are being heavily dented by the rising costs. Therefore, we may consider a 10-12% rise in prices after Diwali,” Suresh Patel, president of GIHED (Gujarat Institute of Housing and Estate Developers), told ET.

“Of the total home bookings that happen throughout the year, 35% happen between Navratri (September 28 onwards) and Diwali (October 26),” Mr Patel said about the realty market in Gujarat which is worth Rs 60,000 crore. Of this, 40% share belongs to Ahmedabad. When asked if the builders were considering to offer any discounts to buyers who visit GIHED exhibition between September 30 and October 2, Mr Patel said, “There was no mention of discounts in our last meeting. The prices are not expected to go down. There could be an increase after Diwali,” he added. The builders’ body is organising a property show in Ahmedabad that will showcase over 500 projects worth about Rs 12,000 crore. Even the invites for the exhibition carry the phrase “now or never”, cajoling the buyers to go for an immediate buy.

Real-estate experts who did not wish to be named pointed out the possible move considered by GIHED was “irrational” and could back fire. “It is not possible to hike prices. At present there are no buyers in the market. Except for apartments costing Rs 25 lakh and below and some plotted developments, the sales are poor. For instance, the sales of three bedroom-hall-kitchen apartment and bungalows are down by over 60% in Ahmedabad,” the expert said.

Since Diwali, last year, there has been hardly any rise in real-estate prices in Ahmedabad. While prices have remained stagnant for the last several months, the sales have nose-dived. “Real-estate prices are their peak in Ahmedabad. Any further attempt to raise it will dry up whatever little demand remains in the market. However, if a discount of 15% is offered, the lost demand could be revived,” said a developer on conditions of anonymity.

Earlier while addressing a press conference on Monday, Mr Patel seemed to be in a denial mode. “The happenings in the global economy have never touched the property markets in Gujarat. In 2008, during the slowdown, the property markets in Delhi and Bangalore corrected by 12%, while Ahmedabad grew by 8%. This time too we don’t not see any effect on the local markets,” Real-estate experts point out otherwise. During the global slowdown, certain micro-markets in Delhi and Mumbai corrected by a maximum of 40%, while those in Ahmedabad saw a dip between 15-20%.

He also went ahead and compared Ahmedabad with Pune. “While homes costs a maximum of Rs 5,700 per square feet in Ahmedabad, in Pune they cost between Rs 4,200 and Rs 16,000 per square feet,” Mr Patel said. However a glimpse at only the office space market (which is a smaller market compared to residential) in both the cities shows that Pune with a supply of close to 3 lakh square feet of office space in the just the second quarter of calendar year 2011, was three times the size of Ahmedabad.

Realty firm Omaxe has shelved its Rs 80,000 crore investment plan aimed at developing 10 lakh affordable houses across the country over a period of five years. “The project could not take off after the slowdown impacted all the developers in 2008. We tried to develop some houses at some locations… The project is shelved now,” said Rohtas Goel, chairman and MD, Omaxe. In May, 2008, the company had announced an elaborate plan to build 10 lakh affordable houses for low-income consumers across tier II and III cities, at a price ranging between Rs 3 lakh and Rs 15 lakh, over a period of five years. The National Capital-based developer had tied-up with farmers in Gujarat and Maharashtra to acquire land for developing the affordable houses, he added.

“However, it did not finally materialise,” Goel said. He, however, declined to divulge if the company had put in any money in initiating the project. The 2008-09 global financial crisis had hit the realty sector hard and the same is expected again under the current economic environment. Omaxe had formed a subsidiary, National Affordable Housing and Infrastructure Ltd (NAFHIL), for the low-cost housing project and had also initiated an international design competition, besides publishing advertisements. Later, the company divested 51 per cent stake in NAFHIL to a promoter group firm. The company had initiated dialogues with the state governments in Uttar Pradesh and Madhya Pradesh in February 2008, to implement the affordable housing project. It had also placed a concept plan for consideration before the Union State Minister for Urban Housing at that time.

Goel had said Omaxe would construct 800 million sq ft to develop 10 lakh housing units of size starting from 300 sq ft to up to 1,500 sq ft. About 20,000 acre of land would be required to develop the project. The company had planned to develop 5,000-10,000 housing units at every location over an area of about 100-200 acre. It had said it would sell these units through lottery system and would charge only Rs 100-150 per sq ft as profit. It had identified Indore as the first location for the proposed project with plans to develop 10,000 low-cost homes at a 200-acre township at an investment of about Rs 1,000 crore. It planned to offer the flats, sizes of which would have started from 350 sq ft, for Rs 4-10 lakh. Similar projects were also planned in other locations such as Raipur, Bhopal, Bareilly and Allahabad.

Non-metros set to witness much of the action, too, while metro lease rentals begin a canter. Retail chains across the country are signing up for space in a big way, after a long pause that had followed the economic downturn. For instance, the Future Group, Shoppers Stop and Reliance Retail together picked up more than 10 million sq ft of retail space recently, according to Rituraj Verma, national director, retail agency, Knight Frank India. These were all long-term lease deals.

Another real estate advisor, DTZ, says “to grab their share of the Indian market, several retailers, both Indian and international brands, are expanding their footprints across the country”. DTZ has cited market information to say nine chains have planned to open at least 200 retail outlets across the country between 2011 and 2014.

These chains include Shoppers Stop proposing 24 new outlets, Lifestyle 25, Pantaloons 55, the Bharti Group 20, Tanishq 15, Marks & Spencer 10, McDonalds 30, Hamleys 20 and Mango, six. In the first two quarters of 2011, large-format retail chains such as Pantaloons, Reliance Trendz and Marks & Spencer were among a few top names to occupy large retail spaces, said Jaideep Wahi, director, retail agency, Cushman & Wakefield, India.

While Pantaloons occupied 20,000 sq ft at Delhi’s South Extension during the first quarter and 35,000 sq ft on SG Highway in Ahmedabad during the second quarter, Reliance Trendz took up 12,000 sq ft at Jubilee Hills, Hyderabad, and 21,000 sq ft at Kamanahalli in Bangalore during the first quarter, Wahi elaborated. In addition, lifestyle brands such as Levis, Nautika, Peter England, Vero Moda, Bata, Catwalk and Hush Puppies have been on an aggressive spree to pick up space in major cities, according to Cushman & Wakefield. In the catering services segment, Café Coffee Day, Domino’s and US Pizza were on an expansion drive.

The action is all over the country, including in tier-2 and tier-3 markets. About 70 per cent of new mall space will come up in the non-metros, says Verma of Knight Frank. The non-metros witnessing significant growth are Jaipur, Kolhapur, Lucknow, Guwahati, Mangalore, Coimbatore, Amritsar, Ludhiana, Indore, Srinagar and Belgaum, he said.

Hyderabad, Pune, Kolkata, Chandigarh and Ahmedabad are among major cities likely to witness renewed momentum in retail leasing activity, according to DTZ. Additionally, Surat, Nagpur, Jalandhar and Coimbatore have potential to emerge as significant retail hubs in the future, it said. According to Cushman & Wakefield Research, Bangalore is likely to witness the highest cumulative demand for mall space at 7.7 million sq ft by 2014, followed by Mumbai at 6.5 million sq ft.

In a recent report, real estate consultancy firm CB Richard Ellis, showed an upward movement of retail outlets and mall rentals, in the range of 10 to 20 per cent in some key cities of India. According to CB Richard Ellis South Asia chairman and managing director Anshuman Magazine, with the possibility of the government allowing 51 per cent foreign direct investment in multi-brand retail, the Indian economy will attract more international attention and investment in the future.

The CB Richard Ellis report said India had witnessed addition of more than six million sq ft of organised retail mall space in the country across various primary and secondary locations of the National Capital Region, Mumbai, Bangalore and Chennai in the first half of 2011. Currently, India is the fifth largest retail market in the world, the report said.

Coinciding with action in the retail real estate space, leasing rentals have also gone up. For instance, in Mumbai, most high street outlets witnessed an increase in rentals. The Colaba Causeway rental was up by 10 to 11 per cent and malls in Central Mumbai recorded a rise in the range of 18 to 20 per cent due to high demand and low supply of quality space, according to CB Richard Ellis.