India’s largest listed developer, DLF Ltd, is set to acquire a property trust owned by its founders K P Singh and family for around 100 billion rupees (S$3 billion), The Economic Times reported yesterday.

The transaction will be done through DLF Cyber City, a wholly-owned unit of DLF, the paper said citing two unidentified executives involved in the transaction. According to the proposed deal, DLF Cyber City will acquire Caraf, an investment firm owned by K P Singh and family, which owns DLF Assets, the news report said citing an unidentified senior DLF executive.

The move is aimed at repaying some of DLF Assets’ debt and bring the commercial properties of the group under DLF, the Financial Express newspaper said. The deal will be a combination of cash and equity, it said.

DLF said in a notice to the stock exchanges yesterday that its board would meet today to consider integration of Caraf Builders & Constructions Pvt Ltd and its subsidiaries with DLF Cyber City.

The Economic Times report said that DLF Cyber City will issue fresh shares to the founders, who will own 38 per cent in this unit after the transaction, while DLF’s holding will go down to 62 per cent. The equity value of the deal is around 25 billion rupees, it said.

A spokesman for DLF told Reuters he would not be able to provide comments other than what was already in the company’s notice to the stock exchanges. ‘The full details will be known on Tuesday,’ he said.

Last week Indian newspapers reported that hedge fund DE Shaw had sold a 36 per cent stake in DLF Assets to its founders for US$500 million. Earlier this month, The Economic Times had reported that the property trust would be listed in Singapore by June next year to raise US$1.2 billion.

Source: Business Times, 15 Dec 2009

Starwood Hotels & Resorts plans to add another 15 hotels in India by 2012 and the hotel operator’s chief executive said that untapped demand in the country could spell swift returns for the new properties.

Starwood on Sunday opened its 25th hotel in India, the Westin Pune Koregaon Park, which falls under the upper-upscale category of hotels. The No 8 hotel operator also operates Le Meridian and Four Points by Sheraton hotels in India.

Typically, hotels begin to deliver a return on their investments in their third or fourth year, but Starwood’s chief executive Frits van Paasschen said in an interview last Friday that he expects Indian hotels to fare better.

‘Because India is relatively underserved and business is so strong, these hotels will ramp up more quickly,’ Mr van Paasschen said, adding it could take only two years.

The majority of the costs associated with building the properties are borne by the developers, he added.

Hotel experts have been discussing India’s merits as an investment ground for years, but India (the world’s second biggest country with 1.2 billion people) remains underserved.

By contrast, Starwood has more than 500 hotels in North America.

‘The major thing for all non-Indian companies to focus on is how to compete with homegrown chains such as Taj, Oberoi and Welcomgroup,’ said FBR Capital Markets analyst Patrick Scholes.

‘For these companies to grow meaningfully, they will have to expand beyond the major three or four cities.’

Among the 15 hotels Starwood is expected to roll out are six Aloft-branded hotels, Mr van Paasschen said. Given the size of the market, Starwood is likely to exceed that target over the next 2-3 years, he said.

The new hotels will be in New Delhi, India’s capital, as well as Mumbai, Hyderabad and Chennai.

Source: Business Times, 8 Dec 2009

RESIDENTIAL real estate will lead the recovery of India’s wounded property market in 2010 thanks to accelerating economic growth, lower interest rates and improved liquidity, Indian ratings and research agency CRISIL said Wednesday.

Prices for commercial and retail space will likely remain weak through 2010 because of oversupply and slack demand, CRISIL said in a new study of 10 cities across India.

‘Residential real estate is where we think by 2010 we can look for some kind of recovery,’ head of research Sudhir Nair said in a conference call with reporters. ‘There is a significant overhang of supply in commercial projects. … You can’t see a lease rental increase for a couple of years in this market.’

India’s property market, like many around the globe, boomed from 2005 to mid-2008. Average prices of both commercial and residential space more than doubled during that period, according to CRISIL.

In some high-demand places, like Mumbai, the nation’s financial capital, commercial prices went up 231 per cent, while residential prices rose 121 per cent.

Since July, prices have softened. CRISIL predicts commercial lease and rental rates will fall by 38 per cent from early 2008 peaks. Residential prices have already fallen by an average of about 20 per cent, and will likely correct another 10 per cent, CRISIL said.

But falling prices have done little to redress fundamental mismatches of supply and demand in the residential market, Nair said.

From 2009 to 2011, an additional 110 million square meters of residential real estate has been planned – far more than predicted demand of 47 million square meters – but most of that has been targeted at high-end luxury properties, where demand has withered.

What India needs is affordable housing close to jobs. Developers who snapped up pricey land in urban centers during the boom, however, can’t afford to build cheap housing there and instead are sitting on the land, Nair said.

Source: Straits Times, 24 June 2009

(NEW DELHI) As New Delhi prepares for the Commonwealth Games in 2010, a shortage of hotel rooms has left organisers scrambling to house the 100,000 spectators expected to descend on the Indian capital.

Planners insist that the 39 planned hotels will be finished by the time the Games are due, but the numbers tell a different story. Only 19 of the hotels have begun construction work, according to a parliamentary report, which predicted a shortfall of 14,000 hotel rooms. The situation has forced the government and tourism officials to look elsewhere for accommodation, and private homes are topping the list as part of a bed-and-breakfast scheme that has proved popular with homeowners who have room to spare.

More than 300 houses and 800 rooms have been registered as bed-and-breakfasts in the year and a half since the plan was launched, according to the Delhi Tourism and Transport Development Corporation (DTTDC), which is responsible for the programme.

Most applicants live in the posh southern and central parts of the city, where large, landscaped houses in gated communities are nestled among plenty of green space and upmarket shopping areas. Many are older couples or retirees who have extra space and time because their children have left home.

Tourism officials also hope promoting the more personal homestay option rather than costly luxury hotels will boost flagging tourism numbers, which have declined steadily in recent months due to the global financial meltdown and November’s Mumbai attacks.

The bed-and-breakfast concept, while popular in Europe and North America, has taken time to catch on in India, and tourism officials say the Commonwealth Games present an opportunity.
‘Necessity is the mother of invention. In India we had never thought these kinds of schemes can work,’ said Vijay Thakur, president of the Indian Association of Tour Operators (IATO), which suggested the bed-and-breakfast plan to the government.

While the focus is on the Commonwealth Games, Mr Thakur said there was wider potential for attracting tourists ‘who want to see India on their own and experience Indian hospitality’. Various government promotions mean the concept is ‘slowly and steadily picking up’, despite some initial teething problems, said Pervez Hameed, who runs the three-room Delhi Bed and Breakfast with his wife and mother.

Mr Hameed registered his three-storey home in south New Delhi in 2005 under a previous government tourism programme after stumbling upon another bed-and-breakfast in the city. ‘I didn’t understand much about it. I thought it was like a hotel,’ he said. ‘But then I did a Google search on it and it appealed to me.’ – AFP

Source: Business Times, 10 Mar 2009