The country’s largest real estate developer DLF is in talks with leading domestic banks ICICI Bank and State Bank of India to refinance a $300-million loan it had raised via external commercial borrowings (ECB) last year. The company is likely to get the debt refinanced at a rate of around 7%. DLF had raised the debt from Standard Chartered last year at about 9.5% to develop integrated townships in the country.

Since the debt raised was in dollar terms, the refinancing would also be done in dollar terms, which means that it need not be according to the current base rate. The current base rate for lending by ICICI and SBI is 7.5%.

When contacted, a DLF spokesperson declined to comment. DLF’s prospects for refinancing becomes brighter since RBI has recently permitted take-out financing arrangement through ECB under the approved route for infrastructure sectors like sea ports, airports, bridges, power sector and integrated townships

Zuri Group Global, the multinational conglomerate, has chalked out a multi-pronged expansion approach for its hotel chain, Zuri Hotels and Resorts, in India and abroad over the next five years. The company is looking at an investment of Rs 1,200 crore in the hospitality sector to set up its own brands and take up management contracts as part of its strategy to increase the number of wholly-owned properties.

The management contract model will allow Zuri to rapidly build a presence in more cities around the world, Priti Chand, assistant vice-president, PR and Corporate Communications, said. Chand said the company intends to set up at least 10-15 projects under the management contract models in cities, such as Hyderabad, Chennai, Mysore, Kochi, while the owned projects will be coming up at Bangalore, Nairobi and in West Asia in the next two years. The company is in advanced stage of discussions with various private owners for management of these hotels, she added.

According to Chand, six acres of land adjacent to the new International Airport at Bangalore in Devanahalli has already been procured at an investment of Rs 200 crore. The 150-room 5-star luxury hotel is expected to be commissioned in mid 2012. Zuri Group started its operations in India in 1999 with its first hotel in Goa. Currently, it owns and operates six luxury hotel properties at various locations in India, Kenya and the UK.

Buoyed by an over 14 per cent jump in its consolidated quarterly net profit, the country’s second largest realty firm Unitech is all set to explore possibilities for acquiring new projects in the coming months.

The company had reported its consolidated net profit for the quarter ended June 30 at Rs 180.04 crore compared to Rs 157.77 crore in the same quarter last fiscal. The total income of the Unitech Group also increased by 53.87 per cent to Rs 843.57 crore in April-June compared to Rs 548.22 crore in the corresponding quarter last fiscal.

“With the financial leverage at a healthy level, the company is in a position to look at opportunities for acquisition of new projects,” Unitech managing director Sanjay Chandra said. He, however, did not elaborate on any specific projects or what could be the time-frame for any such acquisition.

“The company’s strategy to focus on the affordable housing segment, while having a wide range of product offering, is paying dividends. This has resulted in a significant improvement in cash flows,” Chandra said.

Unitech had changed its strategy last year and decided to focus more on mid and affordable housing segment. Before that it was primarily targeting luxury and upper middle-income housing segment. The company started offering product in the sub-Rs 20 lakh range under a new brand ‘Uni Home’.

The National Capital Region-based realty major sold properties worth Rs 1,299 crore during the first quarter of this fiscal, on the back of robust sales in the residential segment. In the April-June period, the residential segment contributed Rs 987 crore out of the total sales bookings of Rs 1,299 crore. The company sold 2.61 million sq ft of housing space and 0.4 million sq ft of commercial area.
Unitech had sold 16.6 million sq ft of area amounting to Rs 7,033 crore in 2009-10 fiscal.

India’s oldest pharmaceutical company Alembic on Friday announced its foray into the real estate sector with the launch of newly formed company Alchemy Real Estate. This business entity will be headed by Udit Amin as CEO. Udit is son of chairman and managing director of Alembic Limited Chirayu Amin.

It was in June this year that the city-based pharma major Alembic while announcing its de-merger plans had announced its intentions to enter into real estate sector with commercial and residential properties. Company official on Friday said that Alchemy’s upcoming maiden residential project Shangri-La is located on Alembic Road near Bhailal Amin hospital and overlooking Alembic cricket ground.

While announcing its intentions to foray into real estate, company officials had informed that the company holds 100 plus acres of land in the city of which around 50 acres land can be used for the purpose of real estate. “In this particular project, Alchemy is developer for which it has collaborated with another group company,” said an official, adding that the process of de-merger is still on. Spread on six acres land, the residential project will consist of 11 towers of nine floors and house 396 apartments of two, three and four bedroom flats.

The Canadian Real Estate Association has lowered its forecast for residential property sales after a weaker than expected start to the year in British Columbia and recent developments that pulled forward the timing as to when sales are expected to ease in other provinces.
CREA’s previous national forecast was heavily influenced by British Columbia and Ontario forecast trends, and this remains the case in the revised forecast. While sales activity is unfolding as expected in Ontario, the decline in affordability in British Columbia impacted sales in the province during the first quarter.

On top of this changes to mortgage regulations announced in February are expected to marginally affect activity. The changes prompted some homebuyers to finance their home purchase before the new regulations took effect in April, which pulled forward a number of sales that would have otherwise taken place at a later date, the association said.

April also saw the Bank of Canada drop its conditional commitment to keep interest rates on hold until at least July, opening the door to an interest rate hike before then and then on June 1st, the Bank announced its decision to raise its trendsetting overnight lending rate by 25 basis points to 0.5% and indicating that it expects the rate of growth to slow for consumer spending.

‘Interest rates are expected to rise slowly and at a measured pace during a new era of government spending restraint, so home financing will remain within reach for many homebuyers,’ said CREA President Georges Pahud.

CREA had previously forecasted sales would remain at elevated levels through the first half of 2010 before easing in the second half of the year and over 2011. While the forecasted trend for activity has not changed, it has been pulled forward, with the fourth quarter of 2009 marking the peak of national activity. This has had the effect of lowering the forecast for national activity over the rest of the year and in 2011.

National activity is forecast to reach 490,600 units in 2010, up 5.5% from 2009 and the second highest annual level on record. Lower expected activity in British Columbia accounts for more than half of the downward revision in national sales activity. Annual activity in Alberta was also revised downward due to weaker than expected activity in the first quarter. Ontario is still expected to see a record number of sales in 2010, but by a smaller margin than previously forecast.

CREA also said that interest rate increases will contribute to weaker national sales activity in 2011. The national average property price is forecast to climb 1.6% in 2010, reaching a record $325,400, with average price gains forecast in all provinces.

All provinces are forecast to post modest average price gains in 2011, except British Columbia and Ontario. The forecast decline in activity is sharpest in these two provinces, with higher-priced transactions weakening most. Average prices are forecast to sag in these two provinces in the second half of 2010 before stabilizing next year.

‘With interest rates soon expected to rise, Canada is widely believed to be entering a typical demand-driven downturn due to recent prices increases and rising interest rates. A downward trend in national sales activity combined with an increase in listings will result in a more balanced market,’ said CREA chief economist Gregory Klump.

‘In keeping with the return of a balanced housing market and typical demand-driven housing market cycle dynamics, prices will remain stable. Canada’s solid mortgage market trends, conservative lending practices, and prudent borrowing by homebuyers means that Canada will avoid the massive realignment in housing supply and demand being experienced in the United States. Accordingly, Canada will avoid a U.S.-style housing price correction,’ he added.

The world’s tallest residential tower is to be built in Mumbai, India, on the site of an old cotton mill, it has been announced. Mumbai based Lodha Group will build the 117 storey skyscraper on a 17 acre site in Lower Parel in the city centre. It will be 442 meters high, beating the current tallest residential building in Australia at 323 meters and will contain 276 luxury apartments.

The building will be an iconic tribute to Mumbai and a symbol of India’s arrival on the global economic and cultural stage, the company said.

It has appointed New York based architects Pei Cobb Freed and Partners, whose work includes the Louvre Pyramid in Paris, Bank of China Tower in Hong Kong and John Hancock Tower in Boston.

About two to three acres will be reserved for open spaces with construction expected to start in the next few months and scheduled to be completed by 2014.

‘Through the partnership with global architects, designers and engineers, we aim to bring to Mumbai a landmark, which would exemplify the spirit of Mumbai to always soar higher through hard work and passion,’ said Abhisheck Lodha, director of Lodha.

As residential property prices continue to rise in India the upmarket apartments are expected to be popular. The company is negotiating with foreign as well as local financiers to fund the project.

‘A project of such big magnitude would surely be priced at a premium. We anticipate that there would be some demand for the project from high net worth individuals,’ said Yashwant Dalal, president of the Estate Agents Association of India.

The project also includes luxury villas with private pools, a high end shopping mall and an office building. Some booking have already taken place in the pre-launch period but the main launch is expected at the end of the month.

Pawan Swamy, managing director western India, at Jones Lang Lasalle Meghraj, a global realty consultancy firm, said Lodha Developers have the necessary permission to build a similar project at their recently acquired plot at Wadala.

Anand Gupta, Honorary treasurer of the All India Builders Association of India, said the project is something that all should all be proud of. ‘The structure and the skyline of the city symbolise the development and the progress of Mumbai,’ he added.

A row has broken out in India over a proposed 2.5% service tax on all properties under construction amid concerns about the effect it might have on the country’s recovering residential real estate market.

The Urban Development Ministry wants the tax to be withdrawn despite it winning support when it was announced as part of the 2010/11 Budget. The UDM believes that the new tax will hamper the recovery from the economic slowdown.

According to the Urban Development Minister Jaipal Reddy the property sector is still going through a difficult phase and the service tax could hurt its interests as well as those of the middle class buyers who are needed to boost the industry.

Soaring property prices in Mumbai are believed to be putting buying a house beyond the reach of many people, especially families as all they can afford are one bedroom flats that are not suitable for their needs.

There is concern that greedy developers are hiking prices and while there is more demand in the higher price brackets, these kinds of prices for more normal properties is not sustainable. Analysts say some developers are adding on extra costs for flowerbeds, viewing decks and clubhouses that are not needed. Then hikes can be up to 50%.

The industry is hoping that the soon to be launched national real estate index will also help the sector as buyers, sellers, developers and analysts get a reliable set of figures. The yet to be finalized real estate price index is expected to be based on property prices in 13 cities.

These will be Greater Mumbai, Chennai, the National Capital Region of Delhi, Bangalore, Hyderabad, Kolkata, Pune, Jaipur, Greater Chandigarh, Ahmedabad, Lucknow, Bhopal and Bhubaneswar.

An expert committee, which was formed by the Reserve Bank in December 2008 for developing the information system on asset pricing, said it needed to track both sale and resale prices as well as the rental sectors on a regular basis.

It will use official data on house rents from the Consumer Price Index (Urban) that is compiled by the Central Statistical Organisation and will supplement bank data through a survey conducted annually so as to ensure the robustness of the data available within the banking system.

India has moved five places up on the list of most preferred markets for retailers due to heightened interest from international companies in emerging markets, according to a study which tracks the presence of top retailers worldwide. India moved to the 39th position in 2009 from number 44 in 2008. Nearly 22 per cent of retailers surveyed have presence in India. The UK is number one destination for retailers, while countries such as United Arab Emirates, the US, France and China are in subsequent positions, according to the study.

The study maps the global presence of 294 top retailers across 69 countries. “Emerging markets continue to play a critical role in the global expansion strategies of international retailers. The inherent medium-term growth potential of many emerging markets remains a key strategic magnet, helped by the fact that in some cases, these markets have as yet only been targeted by relatively few international brands,” said Peter Gold, head of EMEA Cross Border Retail, CB Richard Ellis.

According to Anshuman Magazine, chairman and managing director of CB Richard Ellis, the restriction on foreign direct investment (FDI) and lower purchasing power of consumers led to India’s poor ranking on the list. “If the government relaxes FDI norms, I feel India’s ranking will go up substantially. Given the country’s size and business potential, there is no reason why we cannot go up in the list,” Magazine said. Though India allows FDI in cash and carry ventures and 51 per cent in single-brand retail, FDI is barred in multi-brand retailing. “International retailers like to have majority control and quality control when they enter new markets.”

According to the study, 43 per cent of retailers set up stores outside their own region in 2009, compared to 40 per cent in 2008. Real estate is among the key factors for retailers to expand in the international markets. “Finding suitable real estate is a common barrier to entering a new market, and we are finding that the opening of new retail space and shopping centres are key triggers for international retailers, considering a move into particular new markets. The current decrease in the development pipeline is likely to restrict the opportunities for retailers to expand over the coming years,” Gold said.

The yet to be finalized real estate price index should be based on property prices in 13 cities, a committee has recommended.

The committee, which has submitted the report to Reserve Bank of Indian (RBI), has said the data can be collected from Greater Mumbai, Chennai, the National Capital Region of Delhi, Bangalore, Hyderabad, Kolkata, Pune, Jaipur, Greater Chandigarh, Ahmedabad, Lucknow, Bhopal and Bhubaneswar.

The expert committee, which was formed by the Reserve Bank in December 2008 for developing the information system on asset pricing, said it needed to track both sale/resale price index as well as the rent index of real estate prices on a regular basis.

“Considering the practical difficulty of collection of house rent data, the Group recommends using official data on house rent index of Consumer Price Index (Urban), being compiled by Central Statistical Organisation,” the panel said in its report.The committee has also said it was necessary to supplement bank data through a survey conducted annually so as to ensure robustness of the data available with the banking system.

ICICI Venture plans to launch Rs 1,000-crore real estate fund by the end of this month to invest in residential projects in the country, according to sources.  ICICI Venture which is planning to close the fund in 6-12 months, would invest in top seven cities. It is also looking to launch an offshore fund by the end of this year, said sources.

Sanjeev Dasgupta, president, real estate, ICICI Venture, confirmed the development but said the company was yet to decide the exact amount to be raised. ICICI Venture has $550 million (over Rs 2,500 crore) under management in domestic and offshore real estate funds.  “It is difficult to raise money for a real estate fund in international markets now as investors are very cautious about investing in the sector. Domestic funds offer a lot of flexibility in terms of investments as they are not governed by FDI (foreign direct investment) norms,” Dasgupta said.

With its latest fund, ICICI Venture will join a long list of fund managers like Ajay Piramal group-promoted Indiareit, Aditya Birla Financial Services, Motilal Oswal and developers such as Unitech and Ackruti City either planning or have launched property funds worth a total of Rs 7,500 crore. In fact, ICICI Venture had plans to launch an offshore fund of $1-1.5 billion but could not go ahead due to the slowdown in the realty sector.