Marriott Adding Three India Hotels in Expansion,

Source:Suprotip Ghosh(Bloomberg)April 2,2010 and BS

April 2  -- Marriott International Inc. plans three new hotels in India as part of a $2 billion expansion in five countries this year, Business Standard reported, citing Don Semmler, an executive vice-president.

The hotels in India would be located in Bangalore, Chandigarh and Chennai and have a total of 796 rooms, according to the report. Another seven properties would be in China, Colombia, Turkey and the U.S., the newspaper said.

Kotak Mahindra Bank acquires Bandra property

Source:Swati Deshpande, TNN, Apr 1, 2009, 12.38am IST



MUMBAI: In a major development in the city's sluggish real estate sector, Kotak Mahindra Bank Limited on Tuesday acquired the ownership rights of the 10-story Apple Tower at Bandra Kurla Complex for around Rs 470 crore.

The deal was made as part of consent terms signed before the Bombay high court between the bank and Apple Finance Limited, which owned the 1.5 acre piece of real estate. The building designed by Hafeez Contractor and constructed by Shapoorji Pallonji had come up in early 2000.

The consent terms signed and submitted before Justice R Y Ganoo ended the seven year long legal battle involving Apple Finance and its creditors. The detailed consent terms also included Kotak Prime limited, as one of the parties, since it along with Kotak Mahindra Bank had become the sole debenture holders of Apple Finance. The bank essentially agreed to pay off the creditors of Apple Finance and clear off all its debts too. Apple finance, which was represented by law firm Kanga & Co, therefore agreed to sell off its building to the Kotak Mahindra Bank limited, which was represented by Manilal Ker & Ambalal.

Given the slump in the property market, observers say that Kotak Mahindra Bank may have walked away with a good deal. The possession of the building which is right now with the receiver will be handed over to Kotak Mahindra Bank later. According to real estate sources, the bank has the option of pulling down the building in order to take advantage of the additional floor space index (FSI) granted to BKC recently. The FSI here has been hiked from 2 to 4. The bank could end up shelling out another Rs 175-Rs 180 crore as premium if it chooses to take the benefit of this additional FSI. The existing building has a carpet area of 1.23 lakh sq ft.

In 2002, Canara Bank, the original debenture trustee of the company, had moved the high court to recover over Rs 200 crore which was payable to the debenture holders, mainly the five nationalised banks to whom the property was mortgaged.

The court had appointed a court receiver but efforts to sell the tower through public auctions had not succeeded. In fact, Jet Airways, had also bid Rs 206 crore for the property in December 2005, but it was turned down by the HC last March as being too low after Apple Finance claimed that the market price was Rs 600 crore.

Earlier in 2005, Jet had outbid its rivals for the property and also deposited Rs 51 crore as part of the undertaking to carry out the offer. Its price of Rs 206.10 crore, however, was much less that the reserve price of Rs 250 crore. After the auction, two other companies Financial Technologies India Limited and Parasvnath Developers Limited had approached the court with higher bids of Rs 225 and Rs 235 crore respectively. The court rejected all the bids.

In 1997-98, Apple Finance had issued debentures totally valued at Rs 74.90 crore as security for various loans taken by the banks. When Apple Finance failed to redeem the debentures, the debenture trustee Canara Bank moved high court for sale of the property. In April 2004, the court appointed a receiver and subsequently the property was put for auction.

The property was put up for sale five times but did not fetch high rates. In April 2005 auction, the Lodha Group was the highest bidder at Rs 135 crore.

SBI hikes rates on home loans

Source:Partha Sinha, TNN, Apr 2, 2010, 12.38am IST


MUMBAI: State Bank of India (SBI), the largest bank in India and one of the leading players in the housing finance market, has raised interest rates on home loans. Although the bank will continue with its 8% teaser rate — which the SBI had introduced more than a year ago — for the first year, it has increased rates for the subsequent years, effective April 1. The hike in home loan rates by SBI was triggered by the recent increase in its cost of funds.

Till March 31, SBI had two schemes — The Easy Home Loan (up to Rs 50 lakh) and Advantage Home Loan (above Rs 50 lakh). ‘‘From April 1, both the schemes have been merged and extended for a month,'' an SBI spokesperson confirmed to TOI. ‘‘The rates applicable for new loans sourced from April 1 till April 30 are 8% for the first year, 9% for the second and third years and floating rate at 1.75% below SBAR (SBI's equivalent of prime lending rate, or PLR) thereafter,'' the spokesperson added.

So in effect, the home loan rates for the second and the third years have gone up by 50 basis points (100 basis points=1%), from 8.5% earlier to 9% now. While fourth year onwards, at the current structure, the interest rate will be at 10% per annum, since currently SBAR is at 11.75%. Earlier, from the fourth year onward, the floating rate was at 2.75% below the SBAR and the effective rate was 9%.

Under the new rate structure (assuming a 10% rate from the fourth year), on a 20-year loan of Rs 30 lakh, a customer would have to shell out about Rs 3.9 lakh over the tenor of the loan. Thus the effective rate that the customer would be paying over the 20-year period is 9.5%.
Explaining the rationale for hiking rates on home loans, the SBI spokesperson said it mainly reflected ‘‘the increased cost of funds from April 1 stemming from the new methodology for paying interest in savings bank accounts on daily balances.'' In April 2009, Reserve Bank of India (RBI) had mandated all the banks in India to move to a new methodology of calculating interest rates on savings bank accounts that would add interest on a daily basis. This is a significant departure from the earlier practice of calculating interest rate on minimum balance after the tenth of every month.

For sometime now, with the annual rate of food inflation hovering around 20% level and the yields on benchmark 10-year government securities around the 8% mark, bankers and home finance veterans were talking about the possibility of a hike in interest rate in the economy. And now with SBI, the country's largest bank, hiking housing loan rates, industry players are almost sure that interest rates have bottomed out in the current cycle.

Lately a number of banks and financial institutions, including the country's home loan pioneer HDFC, have withdrawn their home loan products at 8% or at a slightly lower rates, and are moving to a more sustainable interest rate structure.

Unitech board meet to appoint advisors for demerger

Source: Press Trust of India / New Delhi March 31, 2010, 11:35 IST

Unitech, the country's second largest realty firm, today said its board will meet on April 6 to discuss appointment of advisors for exploring opportunities for a potential restructuring of its businesses to unlock value for shareholders.

In a filing to the BSE, Unitech said the board will "consider appointing advisors for exploring opportunities and making suggestions to the board and the company for potential merger of subsidiaries, demerger and other forms of restructuring, or acquisitions, or spin-off with the ultimate object of enhancing and unlocking shareholder value."

According to industry sources, the realty major is planning to demerge its non-core businesses of telecom and hotels.

The new infrastructure company would include Unitech's telecom, hotel, SEZ and construction businesses, they added.

Unitech also plans to list the new company, sources said, adding that the company's shareholders would get shares in the new firm at a swap ratio, which will be decided in due course.

According to the sources, IDFC and UBS are likely to be appointed as advisors for the demerger process.

"The objective is to unlock the value of non-core businesses for Unitech shareholders. The current market price does not reflect the value embedded in the various non-core businesses of the company," a source said.

Unitech's holding in its telecom joint venture 'Uninor' would be transferred to the new company, sources said.

Norway's Telenor holds 67.25 per cent stake in Uninor, while the remaining is with Unitech. Telenor has paid over Rs 6,000 crore for the stake, valuing the company at close to Rs 10,000 crore.

Uninor has started operations in eight telecom circles and is planning to ramp up business in coming months.

Shares of Unitech were quoting at Rs 72.85, marginally up by 0.14 per cent in morning trade on the Bombay Stock Exchange.

Godrej Properties To Sell 49% Of Godrej Estate For INR450 Million

Thursday, March 31, 2010
Source: Dow Jones Newswires:Ameya Karve


MUMBAI - Godrej Properties Ltd.
said on  Monday the 22nd March, it is planning to  sell a 49% stake
in unit Godrej Estate Developers Pvt. Ltd. to HDFC
Asset Management Co. for INR450 million.

 in a note forwarded to National Stock Exchange, Godrej
Properties stated  that it has given Godrej Estate the
rights to develop a real estate project in the
northern Indian city of Chandigarh.

Godrej Properties, a part of the Godrej grop.

HDFC Asset Management is a joint venture between
Indian mortgage lender Housing Development
Finance Corp.  and U.K.-based
Standard Life Investments Ltd.

Puruvankara forms JV company with Mexico's Homex

Source:BS Reporter / Mumbai March 30, 2010, 11:52 IST

Puravankara, Bangalore-based real estate developers, announced a joint venture with Homex a subsidiary of Desarrolladora Homex of Mexico.


In a filing to Bombay Stock Exchange (BSE), the real estate developer said that the companies have established the rules for a non-exclusive joint venture company to undertake projects in the affordable entry-level housing segment.

The first project of the joint venture company is expected to be in the metro area of Chennai.

“We look forward to this exciting opportunity that the JV represents. There is a huge requirement in India for affordable entry-level housing to be built across the Country, and with the expertise and proven business model of Homex and Puravankara’s track record and experience in Indian housing, we feel confident that through the combination of skills and market understanding -which is unparalleled in India-, we can become industry leaders in this segment,” said Ravi Puravankara, the Chairman and Managing Director of Puravankara Projects Limited.

“Our plan has been to cautiously assess opportunities to replicate our proven business model in other populous countries where the housing market is underserved. We will be adding our expertise and business model to what we both feel is a strong business opportunity in India’s affordable, entry-level market,” said Gerardo de Nicolas Homex’s Chief Executive Officer.

At BSE, the shares of the company were trading at Rs 97.50 up 2.79 per cent from its previous close at 11:51 am.

Any rate hike to dampen residential segment

Source:BS:Debasis Mohapatra / Chennai/ Bangalore March 30, 2010, 0:47 IST

Any further hike in policy rates by the Reserve Bank of India(RBI) is expected to dampen the demand for the residential real estate segment due to the rising cost of home loans.



RBI recently hiked the repo and reverse repo rates by 25 basis points to check the spiraling inflation in the country. Any further rate hike is also expected as the RBI has hinted to do so in order to suck excess liquidity from the market.

However, the only silver lining for the real estate players is that banks are yet to raise home loan rates despite the hike in policy rates.

“In the post-hike scenario, we don’t see any kind of impact on demand for residential houses as banks are yet to raise rates. However, any further hike in policy rates is expected to put pressure on demand as banks will follow suit,” J C Sharma, managing director of Shobha Developers said.

He also said that as long as home loan rates stayed within single digit, the present demand would persist.

Presently, home loan rates are hovering in the range of 8-9 per cent with schemes of teaser loans floated by some banks.

“There is a clear indication by RBI of tightening rates and rolling back of stimulus package. However, it is yet to be seen how the policy rate hike is transformed into a rise in home loan rates,” H S Upendra Kamath, executive director, Canara Bank said.

He also said that though there would be some kind of a hike in housing loan rates, that would not be abrupt to destabilise the demand scenario.

In addition to home loan rates, policy rate hike will fuel higher lending rate by banks. So, real estate players with higher cost of funds are expected to pass this cost to the consumers, which in turn may see price rise in this segment.

As per a CRISIL report, residential market is expected to turn positive this year owing to improvement in affordability, steady economic growth and greater liquidity.

A research report of Fitch also notes that fundamentals of Indian real estate sector is improving as seen by better liquidity and improved demand in the residential segment. However, concerns of moderately adverse policies still remain as economic conditions become more stabilised, the report says.

“Demand from residential segment remains robust as of now and any rate hike will work as a deterrent for this sector. However, demand will not be substantially impacted,” Shailesh Kanani, an analyst of Angel Broking said.

He also said that real estate players had again started raising prices in residential segment, which could negatively impact demand scenario with further rate hik

Sarovar Hotels to add 18 properties

Source: Business line:V. Rishi Kumar: Hydrabad,March, 26,2010

 

Sarovar Hotels, the Delhi-based hospitality management services provider handling 42 properties, including two overseas, is set to add around 18 properties next financial year.

The company is scouting for opportunities to enter into deals for hospitality projects in Special Economic Zones, along manufacturing clusters and growth corridors, according to the Executive director of Sarovar Hotels, Ajay K Bakaya.

“In addition to developments of properties in India, after two successful associations abroad, we are exploring opportunities to work on projects in the Middle East, and South East Asia in particular,” said Bakaya.
“The expansion process will help sustain the growth plan initiated by the company. During 2009-2010, we have added nine properties and plan to add about 18 more during 2010-2011. This will take the total number of rooms under management to close to about 5,000,” Bakaya added.

Sarovar is set to add a 230-room property in Hyderabad at the Gachibowli IT hub by the end of the year, marking its entry into Andhra Pradesh.

Sarovar Hotels expects to close next year with revenues of about Rs 800 crore.

Realty Regulatory Bill this year: Reddy

Source: PTI:28 March 2010
The much-awaited real estate regulatory bill, which seeks to protect home-buyers from fly-by-night developers, will be passed this year, urban development minister Jaipal Reddy said.

“The bill will be passed in 2010 and there will be a regulatory authority in Delhi,” he said when asked about the status of real estate regulatory bill. He was speaking on the sidelines of a realty conference organised by Assocham.

The proposed bill is meant for Delhi and will be a model for other states to follow, he had said earlier.

Reddy said the comments from different ministries on the bill is being sought. “The regulator will see that buyer is not cheated and fly-by-night operator do not flourish in the market to the frustration and dicomfiture of consumer,” he said, adding the regulator would have no role in determining the prices.

In its 100-days agenda unveiled on June 29 last, the urban development ministry had said Real Estate Management (Regulation & Control) Bill for NCT of Delhi will be taken up for decision.