INDIABULLS REAL ESTATE'S $ 400 MN GDR CONCLUDES

Indiabulls Real Estate has recently concluded its $ 400 million Global Depository Receipts (GDR) offering with the allotment of over 3.87 crore equity shares. The board of directors allotted 3,48,83,720 equity shares of Rs 2 each as underlying shares representing equal number of GDRs. Pursuant to the over allotment option exercised by the sole underwriter Merrill Lynch International, the company issued 38,75,968 equity shares. Each GDR of $ 10.32 represents one equity share. Accordingly, the total number of equity shares alloted underlying the GDRs amounted to 3,87,59,688 thus concluding the aforesaid GDR offering of the company. Merrill Lynch was the sole book runner for the offering, which is understood to be the first fund raising by any Indian developer in the international market. Earlier in May, the shareholders of the company had approved a special resolution authorising the board to raise $ 600 million through international offerings, including GDRs, American Depository Receipts and Foreign Currency Convertible Bonds. Shares of Indiabulls Real Estate were trading at Rs 474.90, up 1.38 per cent on the BSE.

ING REAL ESTATE TO INVEST IN INDIA

Dutch property manager ING Real Estate plans to invest in India, Turkey, Europe and the Americas to meet demand and benefit from relatively high returns. The real estate unit of financial services division of ING Group, which managed 94.4 billion euros ($130.2 billion) in property globally as of March 31, plans to invest 0.5 to 1 billion euros in these two countries by early 2008. Returns in India and Turkey are expected to be higher than the 4-7 percent generated in Western Europe and North America. Increased demand from customers is another reason for ING Real Estate's expansion into these two markets. ING Group desires to participate in markets that grow. This is also a reason why they started investing in Scandinavia in 2005 and central Europe in 1993. ING has been in China since the early 1990s. ING Real Estate, which last year bought Canada's listed Summit Real Estate Investment Trust, does not plan to take over local companies in India or Turkey. The company is also eyeing investments in Western Europe and the Americas via its Atlas Infrastructure Fund, set up earlier this year. This is the market where investors want to be now. Today, one should think of returns between 12 and 14 per cent on infrastructure projects. Therefore, ING Real Estate would not quickly make investments in East European countries such as Ukraine and Russia, as they lack sufficient availability of investment grade property, transparency, and a stable legal system, thereby making investment returns not very attractive.

HDFC ENTERS HOME EQUITY BUSINESS

HDFC, India's largest housing finance company has made a big move in the home equity business by offering loans against property at 13.25%. This could turn out to be a big business opportunity for the lender since most of its borrowers pre-pay home loans. The finance through the home equity route makes available finance at a cheaper rate than, say, auto finance or personal loans with easier repayment schedules. HDFC expects a big demand for this product from borrowers who have cleared their mortgage dues. This loan would also be available to existing borrowers, if the market value of the property is much higher than the outstanding home loan. The advantage of this loan over the existing top-up loans is that there is no Rs 5-lakh ceiling, which is applicable on top-up loans. Asset Plus, as this product is called, is not a new product from HDFC in the true sense. However, it is now structured differently and is aimed at assisting customers to meet their immediate financial requirements while they continue to occupy their homes. Also, if compared to a personal loan, the interest rate on Asset Plus is lower and loan term is much longer. This gives a borrower the option to spread the loan repayment over a longer period of time, in effect reducing the immediate financial burden.. Interest rate for Asset Plus loans will be charged from 13.25% onwards on floating rate loans and the loan term against residential premises is 15 years while the term for non-residential property is 10 years, subject to the age of customers. The product entitles customers to loan sizes beginning from 50% of the market value of the property. Subject to the market value of the property and loan eligibility criteria, HDFC's customers can have a total exposure of up to 70% of the market value of the property and at the same time get an interest rate, which would be lower than non-HDFC home loan customers. The eligibility criterion for Asset Plus is that the property needs to be freehold, self-owned and fully constructed, with a clear and marketable title. One can also mortgage a joint property by having all owners as co-applicants for the loan. Although a small business in India, loans against home equity are big business in developed market like the US. However, since this involved increased leveraging, the loan product increases the market sensitivity to interest rates and real estate risks.

NHB LAUNCHES HOUSING PRICE INDEX IN 5 INDIAN CITIES

In a move that is expected to bring transparency to the real estate market, finance minister P Chidambaram launched the official Housing Price Index, developed by India's home loans regulator, the National Housing Bank. Named as NHB Residex, the index has been introduced as a pilot for five cities-Bangalore, Bhopal, Delhi, Kolkata and Mumbai. The index covers different localities in each of the five cities for five years: 2001-2005. The index will track the movements of residential property prices and can be used to estimate the house wealth, considered an important component of personal wealth. Banks and housing finance companies can also use it in portfolio evaluation and collateral security for their housing loans.

DLF TO INVEST RS.1000 CRORES IN MULTIPLEX BUSINESS

Real estate giant DLF is likely to invest about Rs 1,250 crore on expanding its multiplex business, DT Cinema, by adding about 500 screens in the next four to five years. Currently, DLF is at a pre-operative stage with about seven screens. In another four to five years time, the target is to have 500 screens across India. By September this year, two DT Cinema complexes in Delhi and one in Chandigarh would be operational and 35 screens are expected to be functional in the next seven months. Once these initial projects start, the mid-term aim is to have about 150 screens operational within two years. Apart from north Indian cities, DT Cinema plans to set up multiplexes in Hyderabad , Chennai, Kochi, Bangalore, Mumbai, Pune, Ahmedabad, Goa andKolkata. The size of each multiplex could be between 35,000 sq ft to 90,000 sq ft. DLF believes that the multiplex business offered a big opportunity as there is a shortage of nearly 40,000 screens in India.

MUMBAI FLAT AUCTIONED AT A RECORD PRICE- RS.1.25 LACS FOR A SQ.FT!

India Shining!, remember the Slogan used by BJP during its past government?, here is a BJP person who has Proved this Literally. Cinestar and BJP MP Vinod Khanna has bought a residential apartment at Malabar Hill, in the tony South Mumbai area, from Citibank for Rs 1.25 lakh a sq ft. Khanna has paid Rs 31.25 crore for the 2,500 sq ft flat. The sale price was four times higher than the reserve price of Rs 32,000 per sq ft.

In a similar transaction nearly six months back, a London-based NRI acquired a 3475 sq ft property in NCPA apartments at Nariman Point for Rs 97,842 per sq ft.

Real estate industry experts said the price at which a property was sold cannot be viewed as a benchmark in South Mumbai as the area has a limited supply of real estate. "Buyers are keen on South Mumbai properties due to the status attached to it. Properties in the area will always sell at a premium," said Sanjay Dutt, deputy managing director, Cushman & Wakefield.

Citibank put the flat on sale a fortnight ago and property consultancy CB Richard Ellis was given the mandate to sell it.

While Vinod Khanna could not be contacted for comments, a Citi spokesperson said: "As common with many other multinational organisations, we periodically review our surplus residential estate portfolio in relation to employee requirements as the preference is towards a flexible remuneration policy."

The deal also marks the trend of foreign banks such as American Express, Deutsche Bank and HSBC selling their residential properties in Mumbai. The most prominent among them was high profile stock broker Rakesh Jhunjhunwala buying an apartment from American Express Bank in Mumbai's Malabar Hill for about Rs 25 crore.

Amidst the ongoing property sale by banks, Cushman's Dutt believes that the banks were taking a right step as the property prices were not sustainable in South Mumbai where prices have doubled over the last two to three years.

DLF, NITESH, HDFC VIE FOR BEACON HOUSE

DLF, Nitesh Estates and HDFC Realty are amongst the bidders reportedly in the fray to acquire NRI tycoon C Sivasankaran’s Beacon House, located off the upmarket Cenotaph Road in the heart of Chennai. The 3-acre property, a former residence of UB Chairman Vijay Mallya when he controlled Best & Crompton (B&C), may fetch as high as Rs 225250 crore, sources said.

Mr Sivasankaran has mandated CB Richard Ellis to sell the property through an auction, with five bidders indicating early interest. While multiple sources confirmed interests from DLF, Nitesh Estates and HDFC Realty, unconfirmed reports indicated that local developer Arihant and Bangalore-based Sobha Developers are also in the fray.

Mr Sivasankaran had acquired the property in early 2006 for Rs 100-110 crore, sources said.The bidders, like DLF and Nitesh, may be eyeing the property for premium residential units, which, going by the current FSI of 1.5, could see 4 lakh sq ft of fresh development. The area has houses of leading industrialists, including Murugappa Group family members, and Japanese Consulate. Recently, DMK leader and son of chief minister MK Karunanidhi, MK Stalin, has moved there.

It is believed that a leading local developer True Value Homes may sit down with HDFC Realty for joint development, if the latter shows up with the winning bid. Earlier, True Value Homes had attempted to join with Mr Sivasankaran for developing premium residential apartments on the land.

Several local real estate sources said, in view soft market conditions, the maximum price it can fetch is Rs 3.25 crore per ground (56 grounds in 3 acre). Recalling the objections raised in the past over building multi-story buildings in the posh area, the realty sources added that it is not easy to take up development unless the bidder is familiar with the local conditions.

However, the national players, which may view Chennai as a more sable market in terms of real estate prices, may put in an aggressive bid that could take the auction price t Rs 225/250 in the highest band. A few months back, Bangalore-based Nitesh Estates made a winning Rs 640-crore bid for a nine-acre plot on Chamiers Road, which is in close to Beacon House.

Nitesh is in the midst of developing a one million sq ft mixed use development including luxury hotel, retail, commercial space and serviced apartments.

Beacon House came to the fold of UB chairman Vijay Mallya after he acquired B&C. Later, when the company was acquired by Indonesia’s Polysindo, it decided to sell the property making use o the scrapping of urban land ceiling act. Since Mr Sivasankaran had picked up stake in B&C, it helped him to clinch the deal.