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Where are Indians investing today?

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Real estate is a good investment option, but not by taking leverage because returns will remain low when compared to cost of funding

Traditionally, there has been a high affinity among Indians for physical assets such as precious metals, jewellery and real estate. This trend has been changing over the past decade. The reasons are varied. One important factor playing a role here has been the increased penetration of financial instruments tapping populations living even in remote villages. The result has been that the ‘only store of value’ feature offered by physical assets is fast disappearing.

Also, technology is enabling banking solutions to reach remote villages much faster, while also making financial transactions easier and less expensive. With focus on direct subsidy transfers, opening of bank accounts is becoming mandatory for all, including those who were out of the banking circle so far. With these developments, the only reason left for an individual to invest in physical assets is for returns.

Real estate is a good investment option, but not by taking leverage because returns will remain low when compared to cost of funding. However, residential real estate can be rented out, which helps offset the monthly outgo of installments to some extent. And, of course, there is no denying the feeling of security and pride that every Indian derives from owning property.

Investing successfully in commodities or physical assets requires a higher degree of research, given their heavy dependence on fund flows.

Not many, in their individual capacity, would want to or can even indulge in research-oriented investments on their own. One saving factor in this scenario will be Real Estate Investment Trusts (REITs), which will play a crucial role in bringing such individual investors into the real estate investment fold.

A REIT provides the option to take part in real estate as an investment class without having to invest either a lot of money or a lot of research. For those investors who are interested in regular income along with the possibility of capital value appreciation, participating in REITs will be the ideal option.

Overall, real estate is still a preferred investment route for Indians from the standpoints of social status and financial stability. However, in a country where the population is rising at a rapid pace, land and house prices have increased exponentially, more so in the primary cities.

The unaffordability of real estate in many of these cities has not only affected the middle class but even the upper-middle class. While there is more than sufficient end-user interest for residential properties in India, what potential buyers are waiting for is reasonable and affordable prices.

In the past 2 years or so, almost all housing markets in India have been reeling because of weak demand. Over this period, the highest end-user interest has been seen for projects from developers of good reputation and credibility, with reasonably good amenities for the price offered.

Buyers have become significantly more educated about what works and what doesn’t in Indian real estate, and have been shying away from developers who do not appear to have the will or wherewithal to complete their projects in the promised timelines. The media have played a big role in bringing instances of developers misleading their customers to public attention.

On the positive front, many new opportunities are opening up in Indian real estate because of initiatives such as smart cities, tourist circuits and infrastructure developments.

Transparency in the sector is receiving several new boosts thanks to the government’s recent demonetization effort and its determined push towards deploying the much-awaited Real Estate (Regulation and Development) Act, 2016, across the country by next year.

Simultaneously, Indian property investors in the upper income brackets are also increasingly attracted to real estate options abroad.

The preferred locations include cities such as New York, London and Singapore, and also Dubai, because of the relatively cheaper options available there.

According to the leading UAE property portal Bayut.com, Indians looking for Dubai properties accounted for 66.86% of total search hits on the website in 2015.

The rationale driving such interest is not difficult to identify—$1 million will buy an investor a mere 96 square meters of land in Mumbai, while the same amount gets 145 square meters in Dubai.

So where does this leave Indian real estate as an investment class? Currently, the sector is moving out of the veritable limbo it has been in for the past 2-3 years, and back onto investors’ radar screens.

Real estate is by no means the most preferred investment asset class as yet. Though commercial real estate is once again hitting the high notes in India, this is an asset class which is firmly out of reach of any but high net worth individuals and institutional investors.

However, given the rapid-fire developments in terms of price corrections, increasing transparency and the possibility of Indian REITs seeing the light of day soon, we are likely to see Indian residential property move back into the preferred investment category in less than 5 years.

Source : Livemint

Commercial

Indiabulls Real Estate Acquires A Commercial Building With Leasable Area Of 2.5 Lakh Sq Ft. In Gurgaon

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Indiabulls Real Estate

Indiabulls Real Estate has earned a distinct reputation for building projects that turn spaces into inspiring places, since its inception. Indiabulls Real Estate went on to expand its projects portfolio, with its prime focus on construction and development of residential, commercial & SEZ projects, across major Indian Metro cities. Today Indiabulls Real Estate is ranked amongst the top Real Estate companies with a total Gross Development value of INR 32,189 crores and net worth of INR 5,480 crores as of 2017.

Indiabulls Real Estate has commercial development with a leasable area of 3.15 million sq.ft. under construction. Further, it has a land bank of 1,046 acres and also possesses 2,588 acres of SEZ land at Nasik, Maharashtra. In 2014, the company acquired the prime property, 22 Hanover Square in Central London for Rs.1630 Cr. The group has also been conferred the status of a Business Super brand by the brand council Superbrands, India. Indiabulls Real Estate is known for its successful delivering of superior products, services to its customers, partners and shareholders.

Indiabulls Real Estate is planning to acquire a large commercial building with a leasable area of 2.5 lakh sq ft in Gurgaon.

To acquire this large area of prime and newly constructed commercial building, Indiabulls Real Estate’s wholly-owned subsidiary has entered into a definitive and a binding agreement. A BSE filing by the Indiabulls reveals that, the deal has an expectancy period of four months, mainly after receiving the Occupation Certificate of the building. Although the name of the seller and deal value was not disclosed.

With many leading multi-nationals operating in the vicinity, makes it a developed prime commercial location. Equipped with an additional leasable area, the company expects to enhance its annuity revenue to Rs 1,450 crore in FY 20-21 from the rental properties portfolio of Indiabulls Real Estate.

With its expansion spree, Indiabulls Real Estate, is counting on the revival in the real estate market in Gurgaon for making its project a success. The commercial realty market is witnessing a strong demand in Gurgaon. So Indiabulls Real Estate is looking forward to set up a state of the art business park in Gurgaon, which would be able to draw reputed corporates and MNCs. As some big-ticket commercial space rentals and deals are expected to be finalized in this space.

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Adani’s Bandra-Kurla Complex Project To Be Taken Over By Shapoorji Arm For Rs 2,000 Crore

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Adani’s Bandra-Kurla Complex Project To Be Taken Over By Shapoorji Arm

Shapoorji Pallonji Investment Advisors which is an investment arm of conglomerate Shapoorji Pallonji Group is set to acquire a commercial project Inspire BKC from Adani Realty in a nearly Rs. 2,000-crore transaction. The project is located in Mumbai’s business district Bandra-Kurla Complex (BKC), informed two persons familiar with the development.

Shapoorji Pallonji Investment Advisors has emerged as the frontrunner from a total seven shortlisted interested entities including US-based private equity major Blackstone Group and an alliance between Qatar Investment Advisors (QIA) and Bengaluru based realty developer RMZ.  For this over 8 lakh sq ft project Shapoorji Pallonji Investment Advisors has already completed the due diligence process.

One of the people mentioned above said, “The due diligence process for the asset has been concluded recently, and currently the final documentation is going on. The deal is expected to be concluded soon as both the parties have frozen the structure of the transaction.”

The project has recently been completed and the developer is in the process of receiving few civic approvals, following which it will be concluded. Adani Realty is also one of the companies that is working on closing few leasing transactions here.

In one such lease deals, Swiss multinational pharmaceutical major Novartis’ India arm has entered into an agreement to pick up over 1lakh sq ft office space in this commercial project. This was one of the largest front office commercial transactions in terms of space in the Mumbai in 2017.

Shapoorji Pallonji Investment Advisor is also kept in the loop on the progress of space leasing transactions in this commercial project.

In its first-ever real estate related engagement in India in October the global insurance and asset management major Allianz Group teamed up with Shapoorji Pallonji Group to create an investment platform for office properties.

The platform, SPREF II, will be a Singapore-domiciled, rupee-denominated and close-ended fund planning to raise $500 million in equity.

After partnering with the Canada Pension Plan Investment Board (CPPIB) in 2013 for a platform with an initial target corpus of $200 million this is Shapoorji Pallonji Investment Advisors’ second such tie-up.

The commercial real estate has been registering a healthy growth across prime office markets in past three years.

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Japyee’s Yamuna Expressway Sees A Bidding By Tata Housing And Lodha

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Yamuna Expressway

Jaypee Infratech shares saw a jump of nearly 10 per cent in Monday’s trade after some of the major developers like Tata Housing and the Lodha Group, filed initial bids for the debt-laden realtor and road builder.

These two real estate giant have shown their keenness to own Yamuna Expressway, a project by Jaypee Infratech, the fate of which is now being decided at the Supreme Court. Also the other major participant is the country’s dedicated platform for insolvency resolution, the National Company Law Tribunal (NCLT).

Being the prime concrete road project, Yamuna Expressway starts at the eastern end of Noida-Greater Noida Expressway and runs up to Agra. A toll of slightly more than Rs 2 per kilometre is being charged by the Yamuna Expressway, for every car. An extensive land bank makes the property’s richest attraction, with facilities that are either proposed or already functioning in the immediate vicinity of the access-controlled motorway.

Yamuna Expressway is one such major structure sharing the connectivity with some of the important landmarks in the state. One such architecture is India’s only operational Formula One racing track, located along the expressway. Another influential attraction is the site of the capital region’s second proposed airport, which is closer to the first toll gate from the Greater Noida end. The motorway shares its vicinity with one of the biggest urban campuses of a state-run university. The mega convention centre hosting the annual Auto Expo is also connected to the Yamuna expressway.

In an anticipating decision in regards to a Supreme Court’s ruling, of barring the promoters of Jaypee group from selling or transferring assets, the Reserve Bank of India has ordered banks not to initiate the bankruptcy proceedings against Jaiprakash Associates. Which is the parent group of Jaypee Infratech.

It all started after the IDBI Bank filed to start insolvency proceedings in August against Jaypee Infratech, causing an appeal by homebuyers resulting into the court ruling. The bidding has seen many responses, but eventually all these initial expressions of interest will boil down to a binding offer. Which is a commitment from an interested party to purchase the assets. These bidders, apart from purchasing the assets, are supposed to infuse around Rs 2,000 crore to complete the projects already taken up by Jaypee Infratech.

Earlier in the August, the National Company Law Tribunal (NCLT) Allahabad bench admitted IDBI’s insolvency proceedings against Jaypee Infratech. As Jaypee Group failed to repay its various loans amounting to Rs 526 crore. Anuj Jain has been appointed as the interim resolution professional (IRP) by the NCLT, to carry out proceedings under the Insolvency and Bankruptcy Code. But in September, there came a stay on this process by the Supreme Court, after the appeal by Jaypee Infratech homebuyers.

The company’s saw a total debt of Rs 8,300 crore, with an interest overdue of Rs 1,400 crore on last year’s March. Supreme Court will see a resolution plan from the Jaypee group, in order to ensure a debt restructuring process, enabling the group to meet its obligation.

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