(MUMBAI) An Indian property group on Tuesday unveiled plans to build the world’s tallest purely residential tower in Mumbai, the country’s booming financial capital.

Lodha Developers said the tower would be 117 storeys high and would be designed by New York-based Pei Cobb Freed and Partners, the architects of the Louvre Pyramid in Paris and the Bank of China building in Hong Kong.

‘At 1,450 feet (442 metres), the tower will be the tallest of its kind,’ Abhisheck Lodha, managing director of Lodha Developers, told reporters as he presented a scale model of the complex.

Called World One, it will be located in central Mumbai on the plot of a defunct textile mill and should be completed by 2014.

The development will contain more than 300 apartments and include large green spaces, cafes and an open-air observatory.

Mumbai’s sky-high property prices continued to rise during the global economic downturn, even though the city is plagued by water shortages and poor infrastructure.

The city’s central district was a textile mill hub until a few decades ago, but a large labour strike in the 1980s and the entry of new power loom complexes led to the demise of the old mills.

In their place have risen shopping malls, luxury apartments, hotels and high-tech corporate offices.

‘This is to meet the aspirations of the global Indian and to establish a landmark for the city,’ Mr Lodha said. ‘We are trying to create the Rockefeller Centre-type experience.’

The developer expects the base price of an apartment to be upwards of 75 million rupees (S$2.25 million), while luxury multi-storey properties could cost up to US$10.5 million.

The tower will cost about US$440 million to build, the Lodha group said, and apartment sales will start this month.

At present, the world’s tallest residential tower is the 323-metre Q1 on Australia’s Gold Coast, while Mumbai’s 60-storey Imperial twin towers are India’s tallest, at 249 metres.

There are taller buildings around the world, including Dubai’s Burj Khalifa at 828 metres and the Canton TV Tower in Guangzhou, China, at 610 metres, but these are not purely residential.

Residential rates in central Mumbai have risen about 30 per cent in the past six months, analysts say, due to higher input costs.

‘The market for luxury homes in Mumbai is growing,’ said Param Desai, a real estate analyst with Mumbai’s Angel Broking.

‘Liquidity is improving and salaries, disposable incomes are on the rise,’ he added.

India’s economy recorded 7.4 per cent growth for the year to March, official data released last month showed.

India’s top property firm, DLF, has plans to launch Mumbai’s largest luxury residential project a few blocks from the proposed World One tower.

This project would have 1,000 apartments in three buildings of 80-90 floors each, industry sources said. — AFP

Source: Business Times, 10 Jun 2010

(MUMBAI) Asia’s third- most expensive office market, sold land for 40.5 billion rupees (S$1.2 billion) in the first successful auction in almost two years.

The Mumbai Metropolitan Region Development Authority sold the land in the central Wadala neighbourhood to Lodha Developers Ltd, the agency’s Additional Commissioner SVR Srinivas said on Tuesday. The authority will lease the land for 65 years and had set a reserve price of 19.8 billion rupees or 40,000 rupees a square metre, according to the tender document.

The agency’s first sale of land since 2008 gives Lodha Developers the largest development rights in the city, said managing director Abhisheck Lodha. The company can build 495,000 square metres (5.3 million square feet) of space on a 25,000 square metre area.

The authority, which failed to sell a block in the city’s emerging business district earlier this year, managed to attract buyers for a separate parcel of land on Tuesday after allowing builders to construct homes and offices. Earlier rules only allowed commercial development.

‘It’s a fair deal and in line with current prices in the area,’ Ashutosh Limaye, associate director at Jones Lang Lasalle Meghraj, said. ‘At this bid price their cost including construction and financing will work out to about 15,000 rupees a square foot.’ Lodha Developers, which is planning an initial share sale, will build mostly homes on the land, Mr Lodha said.

The four bidders included Sunteck Realty Ltd and Indiabulls Real Estate Ltd. Sunteck bid 70,002 rupees a square foot compared with Lodha Developers’ 81,818 rupees.

‘The bid price was better than we expected,’ said Mumbai development authority’s Mr Srinivas. The agency was optimistic of selling the Wadala plot because the area is expected to get metro and monorail connectivity, he said.

The sale comes after the authority didn’t attract any bids for land at Bandra-Kurla Complex this year priced at 300,000 rupees a square metre, unchanged from 2008. Rents in the area have dropped by more than a third in two years, according to data from property broker CB Richard Ellis India.

Mumbai, a city of 18 million people, ranks behind Hong Kong and Tokyo as the most expensive office location in Asia, according to a survey by Los Angeles-based CB Richard Ellis Group Inc. — Bloomberg

Source: Business Times, 27 May 2010

Guidelines implementing the long-awaited Strata Law were published by the Land Department on Tuesday, in a bid to help the emirate on its path to mature market status, but comes against a backdrop of residential and office oversupply.

‘An instant pick-up in transaction activity is not expected on the back of this new legislation,’ said Sana Kapadia, vice-president of equity research at EFG-Hermes in Dubai. ‘While these clear and transparent rules will undoubtedly give buyers more comfort over their purchase decision, demand is only likely to be positively impacted in the medium to long term,’ she said, adding the bank expected an overall decline in house prices and rents of up to 10 and 15 per cent respectively this year.

Dubai’s residential market, already oversupplied by about 20 per cent, will gain 41,000 more homes between now and the end of the year, while office space will rise to about 6.4 million square metres by the end of 2011 from about 3.6 million sq m at the end of 2009, according to Colliers International.

The framework, which offers guidelines for all types of property, sets new rules for general regulation, jointly owned property declaration regulation, constitution regulation and survey regulation.

Additional rules include regulation on the setting up and collection of service charges without the clearance of the Real Estate Regulatory Authority (RERA), the emirate’s property watchdog. ‘This move should put a cap on some of the unreasonable charges being levied by some developers currently,’ Ms Kapadia said. — Reuters

Source: Business Times, 27 May 2010

BPTP Ltd, an Indian developer backed by Citigroup Inc and JPMorgan Chase & Co, aims to tap demand for housing from India’s middle class, managing director Kabul Chawla said here yesterday.

The nation has a pent-up demand for half a million homes in the mid-tier segment, where houses cost two million rupees (S$61,584) to six million rupees each, Mr Chawla, 37, said in an interview yesterday. That’s likely to widen by up to 100,000 homes each year, he forecast.

‘The mid-segment space is a great story and many developers are now moving there,’ said Mr Chawla. ‘We’ll get volumes from this robust segment.’ The New Delhi-based developer has sold 18,000 homes over the past five years in the middle tier, Mr Chawla said. He declined to provide any forecasts for BPTP’s sales ahead of the company’s proposed 15 billion rupees initial public offering. BPTP, which mostly develops property in the National Capital Region around New Delhi, plans to use funds from the IPO for new projects and to pay debt.

The company is awaiting approval from India’s capital markets regulator for the share sale, he said.

Source: Business Times, 11 Mar 2010

Investors are more likely to choke on a glut of India property IPOs set to hit the market this year than gobble them up.

Even though Godrej made a strong debut this month in the first Indian property listing in two years, the initial public offers of other developers could meet more restrained investor buying as they compete with a slew of large public sector offerings.

At least 16 real estate firms have lined up plans for initial public offers to raise about US$6 billion, buoyed by an 81 per cent rise in the Mumbai stock index last year and as property buyers return.

‘If all the IPOs get bunched up, we have a problem. Everybody may not see the light of day,’ said Jayesh Shroff, fund manager at SBI MF, which manages about US$8 billion worth of funds.

What awaits India’s property IPO rush may be exactly what happened to China’s offerings in recent years. The Chinese property sector saw early success from some offerings several years ago, but a dozen or so that followed suffered as investors grew tired of the same old IPO story.

And it could also play out as it did in India in 2007, when DLF and others floated, but are now among the worst market performers, trading way below their IPO prices, with market valuations sliding between 70-90 per cent.

Godrej has already dropped 17 per cent from its Jan 5 debut high after its around US$100 million IPO.

India’s real estate industry, like the sector globally, was hard hit by the 2008 credit crisis after years of booming demand.

Property prices doubled in the two years to 2007, fuelled by interest from foreign investors.

But the sharp rise was followed by interest rate rises to calm inflation and the global financial turmoil, pulling down property sales by more than half. Left with unsold and incomplete projects, developers were forced to restructure spiralling debt obligations.

The equity market rally since March threw a lifeline, and several real estate firms are again dusting off plans to raise public money.

‘Although many developers were able to defer repayments, high interest costs and requirement of funds for project execution are still a concern,’ said Sushanto Roy, chief executive at Sahara Prime City, which plans a US$650 million IPO this year.

A recovery in the property market has also been encouraging.

A series of interest rate cuts and pent-up demand from a large urban middle class have helped push up prices by about 30 per cent from last year’s lows in the first quarter.

Indian companies sold shares worth US$17.5 billion last year, mostly by property and power sector firms. IPOs made a comeback in July after an 18-month drought, with 21 companies raising a total of US$4.1 billion since then.

These numbers should be dwarfed this year, mainly by a government roadmap to raise funds through stake sales in state-run firms, as it strives to speed up reforms and cover a widening fiscal deficit in Asia’s third-largest economy.

So all eyes will be on the next property IPO, which could be DB Realty, which set a price for its US$325 million IPO, sources said this week.

Others in the likely line-up include a US$650 million IPO by Lodha Developers, an US$830 million offering by Emaar MGF, an Indian joint venture of Dubai’s Emaar Properties, and a US$650 million IPO by Sahara Prime City.

Investors, still scarred by the sub-prime crisis, remain cautious of investing in a property market that is beset with red-tape, land disputes and difficulty in valuations due to the huge quality difference among India’s developers.

‘If greed overtakes you and you price it very high, the IPO might fail,’ Pranay Vakil, chairman of property services firm Knight Frank India, told Reuters Insider.

Mr Vakil is adviser to several of the upcoming offers.

Source: Business Times, 28 Jan 2010

# The property market contributes 5 to 6 per cent of India’s gross domestic product, or about US$50 billion annually to the US$1 trillion economy.

# Total foreign direct investment in housing and real estate in India, since investment norms were first eased in 2005, stands at US$7.7 billion, including US$2.2 billion in April-November 2009.

# The Bombay realty index underperformed the main index last year, rising 70 per cent after a slump in the first quarter, versus the market’s 81 per cent gain.

# The major cities of Mumbai, New Delhi and Bangalore have the most expensive residential property in India, with rates comparable to New York, London and Tokyo, due to limited land and the government’s push to develop the services industry.

Source: Business Times, 28 Jan 2010

India’s financial capital plans to sell office space in an emerging business district at a minimum price of 4.35 billion rupees (S$132 million) in a deal that may test demand for property amid an economic recovery.

The Mumbai Metropolitan Region Development Authority, or MMRDA, proposes to sell 14,500 square metres of built-up area on 3,162.5 sq m of land in Bandra-Kurla, where Citigroup Inc and the nation’s capital markets regulator are located.

The reserve price is 300,000 rupees per sq m, the authority said in an advertisement, unchanged from the last such offer in 2008.

The sale aims ‘to cater to the growing demand for business area’ in the north-central neighbourhood that was reclaimed from marshland, MMRDA said.

Indian and overseas companies in financial services, insurance, fund management, information technology, telecommunications, among others, can bid for the land, the advertisement said yesterday. Bids open on March 3.

Standard Chartered Plc and Nomura Holdings Inc are among companies expanding their India operations as consumer spending fuels growth in Asia’s third-biggest economy.

An 81 per cent rally in the benchmark stock index in 2009 has also revived developers’ interest, with Lodha Developers Ltd and Sahara Prime City Ltd among at least nine property companies planning to raise about 164 billion rupees in initial sale of shares.

Bandra-Kurla is centrally located in the Manhattan-shaped island-city and the authorities are increasing its access with a new Metro rail, in addition to the existing commuter train and road networks. The existing main business district in South Mumbai at the tip of the city lacks expansion space and stretches daily commuting to up to four hours for some.

The new business district is closer to the city’s two airports, compared with Nariman Point in South Mumbai, which is about 25 km from the closest domestic airport.

The last sale of land in 2008 attracted buyers for only three of the five plots on offer as the global economic slowdown dried up funds and demand for property. Jet Airways India Ltd then bidded 344,448 rupees per sq m for a land parcel with a maximum 24,000 sq m of development area.

India’s gross domestic product grew 7.9 per cent in the three months ended Sept 30, making it the fastest-growing major economy after China.

Finance Minister Pranab Mukherjee on Jan 8 forecast growth of as much as 7.75 per cent for the year ending March.

The Reserve Bank of India has slashed interest rates to a record low to shield India’s US$1.2 trillion economy from the global recession, fuelling demand.

Source: Business Times, 26 Jan 2010

Distribution per unit (DPU) for Q3 was 1.85 cents, also lower by 8 per cent.

Total property income for the quarter was $29.9 million, which was 4 per cent higher than the corresponding quarter last year. Net property income was $19.3 million, up 13 per cent.

The trust’s portfolio of 4.8 million sq ft of completed space is fairly evenly distributed among Bangalore, Chennai and Hyderabad. The properties house 248 tenants operating in various IT sub-sectors such as software development, business process offshoring, research and development, and data centres.

Portfolio occupancy remained high at 97 per cent as at Dec 31, 2009, while tenant retention rate over the last nine months was 79 per cent, the trust said.

Jonathan Yap, chief executive officer of Ascendas Property Fund Trustee Pte Ltd, the trustee-manager, said: ‘We are pleased to report another strong portfolio performance in the third quarter. Indicators are suggesting that an economic recovery is well underway.’ The Indian economy grew 7.9 per cent year-on-year in the quarter ended September 2009.

‘We will focus on positioning the trust to benefit from further improvements in the general operating environment,’ he said.

The trust will continue to focus on growing the operating earnings of its assets by actively managing the portfolio, optimising its capital structure, and further growing the portfolio through developing the land it owns and pursuing yield accretive acquisitions.

Source: Business Times, 23 Jan 2010

As a result, its distribution per unit for the three months ended Dec 31 fell to 1.85 cents from 2.02 cents in the previous corresponding period.

Net property income was up 13 per cent at $19.3 million.

For the nine months to end-December, distribution per unit rose 5 per cent to 5.76 cents on the back of a 17 per cent jump in net property income to $56.8 million.

On an annualised basis, the distribution works out to a yield of 7.4 per cent against a closing price of $1.03 on the Singapore Exchange on Thursday.

Ascendas India, the first listed Indian property trust in Asia, manages four IT parks in Bangalore, Chennai and Hyderabad.

The occupancy rate of its portfolio of properties remains high, well above the rates of other similar properties in the vicinity.

Lauding its strong showing, Mr Jonathan Yap, chief executive of the trustee manager of Ascendas India, said: ‘Portfolio occupancy remained high at 97 per cent as at Dec 31, 2009, while tenant retention rate over the last nine months was 79 per cent.’

Those who did not renew gave Ascendas India an opportunity to introduce new tenants and refresh its tenant profile.

Low gearing, or debt to equity, level of 18.7 per cent also means that the trust has the flexibility of taking additional debts to fund future expansion.

Ascendas India said it may make acquisitions from the market or through two right-of-first-refusal arrangements.

Already on its drawing board are plans to develop new space on land that it owns totalling about 1.7 million sq ft, of which about 1.2 million sq ft are due for completion this year.

When fully completed, the 1.7 million sq ft of new space will increase its current 4.8 million sq ft of income-producing space by about 35 per cent.

As payouts to unit holders are made twice yearly, the third quarter’s distribution will be made at the same time as that in the fourth quarter.

Ascendas India units yesterday ended three cents higher at $1.06.

Source: Straits Times, 23 Jan 2010

Unitech Ltd, India’s second-biggest developer, expects its share of sales from redeveloping Mumbai slums into luxury apartments to triple in three years and boost profit, managing director Sanjay Chandra said.

Unitech, based in New Delhi, is developing 100 acres of land in north Mumbai’s Santacruz area, near the city’s airport, by knocking down shacks typically built with tin, asbestos and plastic sheets, and building apartments in towers serviced by high-speed elevators. Slum dwellers will be resettled in smaller apartments in separate buildings on part of the cleared land.

The world’s second-fastest pace of economic growth is boosting incomes for India’s urban population and spurring demand for houses that cost at least 2.5 million rupees (S$76,420) in a Mumbai suburb. About eight million people live in slums in India’s financial capital and surrounding areas, more than the population of Switzerland.

‘Mumbai is a lucrative market and prices tend to go up firmly and demand is usually strong,’ said Jigar Shah, head of research at Kim Eng Securities India Pvt in Mumbai.

The measures to develop slum areas and build affordable homes ‘will help lift return on equity and profit’. Mumbai properties may account for 40 per cent of revenue in three years, up from the current 12 per cent, Mr Chandra said in an interview in Mumbai.

The government’s plan to redevelop larger shanty towns such as the 535-acre Dharavi slum near the new Bandra-Kurla business district has been delayed because of political indecision and disagreements, said Jockin Arputham, founder and president of the National Slum Dwellers Federation. Set up in 1975, the federation, spread over 70 towns, has 15 million slum dwellers as members through their respective local associations.

‘It’s not easy to do redevelopment as moving people is a complex task,’ said Anshuman Magazine, New Delhi-based managing director of CB Richard Ellis for South Asia. ‘Not everyone may want to be relocated for economic reasons, not to mention legal and other regulatory issues, and the state of the real estate market.’

Shares of Unitech gained 0.2 per cent to 88.7 rupees at the close of Mumbai trading. They more than doubled last year compared with an 81 per cent increase in the benchmark index.

Unitech, which posted a 51 per cent drop in profit in the three months ended Sept 30, is also building budget homes. It has cut the time to build low-cost housing by 40 per cent as it tries to boost revenue in a nation facing a shortage of 24.7 million homes.

The company is trying to emulate the success developers including Cyrela Brazil Realty SA Empreendimentos e Participacoes have had in boosting profit from selling budget homes, Mr Chandra said. Cyrela, Brazil’s biggest developer, tripled profit in the third quarter and plans to sell 19,000 homes this year, according to a company presentation.

‘We are looking at it as an assembly-line kind of business model,’ Mr Chandra, 37, said. ‘If you make an affordable product, the margins will be lower, but the capital will churn much faster, so your return on equity will be much faster.’

Success for Unitech will depend on government laws, Mr Chandra noted. The company, which began selling its Unihomes brand of budget housing in Bhopal, hasn’t built such properties in its biggest market near New Delhi because of rules restricting the number of residents in its housing complexes, he added.

The Unihome brand sells property for about two million rupees, according to the company’s website.

Source: Business Times, 14 Jan 2010