NRI Real Estate and Property Investment in India
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Indian Real Estate Firms Plan Large-Scale Investments
Tuesday, June 12, 2007

Furious activity is being noticed in the builders’ camp as real estate developers in India chalk out mega projects, seek global partners or plan for public issues to finance their businesses. While Emaar-MGF has announced an investment of USD12 billion over the next five years on 9 Special Economic Zones and 50 hospitals, DLF will set up 3 townships in Simla, Chandigarh and its satellite towns.

Land for these projects by DLF has already been acquired, ranging between 100-200 acres. Two shopping malls in Panipat and a residential project in Sonepat are also on the cards. Expanding its retail base, DLF proposes to set up shopping malls in Ludhiana, Jalandhar and Amritsar.

DLF has inked an agreement with the Tata Group’s retail arm, Trent, for a partnership for their retail formats, letting out 150,000 sq. ft in each mall. A MOU has also been signed with Metro Cash and Carry to run retail outlets at several locations in India. The Mall of India spanning 32.87 acres in Gurgaon is DLF’s largest mall project

Debutants in Indian Realty

MTNL makes its debut into the Indian realty market with IT parks on prime properties owned by the company in Mumbai and Delhi . An 80,000 sq.ft Core Knowledge Park is slated for take off in Noida’s Sector 62, and the telecom major expects tenants to move in by December 2008. The company is opting for a revenue-sharing agreement with its developers in the project.

Israel, unrepresented so far in India’s property market, will make its mark in India’s Silicon Valley. Elbit Medical Imaging Ltd has signed an MOU with an Indian developer for luxury apartments and commercial properties in Bangalore on 190 acres with an investment of USD 180 million. A shopping center, golf course, a 300-400 room apartment hotel and recreation centres are integral to the project which would take off in a year from now.

Funding - Equity and IPO in Equal Measure

Abu Dhabi’s Noor Capital has agreed to finance Ansal API’s Agra and Ghaziabad township projects with an investment of USD 740 million, while Godrej Properties is planning to leverage its expansion plans on an Rs.400-500 crore IPO, approximately 10% of its equity, later this year.

The company is executing real estate projects on 2 crore sq.ft across the country currently. Also relatively new to the Indian real estate industry, GE Commercial Finance Ltd is planning a USD 2 billion investment through private equity capital and loans to developers of commercial property in India. Project-specific joint ventures are also under consideration.

Convergence of Indian Real Estate and Hospitality

An interesting trend being observed is the crossover between hospitality and real estate, exemplified by DLF and the Talera Group of Hotels. DLF has announced its luxury and budget hotel projects in Kolkata, accompanied by a serviced apartment complex at an investment of Rs.3000 crore. 570 rooms would be added to the city in 3 years through the two hotels which would be managed by the US based Hilton Group.

On the other hand, the Pune-based Talera Group of Hotels is committed to Rs.1,500 crore for 100 fully automated "Smart Inn" range of economy hotels. With each hotel budgeted at Rs.15 crore for 100 rooms, 10 Smart Inns are expected to come up in Nasik, Mysore, Nagpur and Ahmedabad, amongst other cities by mid-2008. The Pune Smart Inn is already operational, with facilties like automatic check-in through credit cards and a price range of Rs.865 to Rs.1155, ideal for middle-rung executives.

Property Consultants Seeking Tie-Ups

Too Not to be left behind are property consultants Trammel Crow Meghraj (TCM) in talks with Jones Lang La Salle and possibly a UK based real estate advisor for a merger or a partnership to expand its presence in the fast expanding Indian real estate market.. Rumours are afoot that CB Richard Ellis has also been approached.

TCM operates in India through 10 offices and 1300 employees, offering property consultancy services, and top-up conveniences like facility management and project management. It has a share of 15% of the organized property consultancy business in India

Related Readings

NRI Investments Homing Down to Nagpur
NRIs seek Properties in Mysore

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