Sunday, July 25, 2021

Ticker Tape- Construction


Luxury real estate developers rely on consultants as sales hit due to Covid


India Sotheby’s International Realty, which lists prime residential property, has started listing luxury apartments as sale of independent bungalows and villas has slowed down due to the COVID19 pandemic. Developers, who are unable to find buyer in Indian market, are also looking for international tie ups to market globally. Although, many businessmen are looking to monetise the real estate assets by listing bungalows ranging from `50 crore to `300 crore, but there are not enough takers and deal usually takes a year to conclude.Sotheby’s International Realty’s ‘Keystone offering’ for marketing new developments has taken on board three luxury projects post lockdown, to keep the fund flow going. Since 2018, when it started the program in India, it has listed apartments from only four projects.


With pressure on margins and no visible upside on residential property prices, a rising number of real estate developers are outsourcing their sales and marketing duties to IPCs (International Property Consultancies), to cut recurring costs and link their outflows to sales inflows. Sotheby’s existing four projects are in Delhi, Mumbai, Kolkata, Colombo and Bengaluru with a total inventory of over $1 billion.




Salarpuria Sattva plans three new projects, `600 crore investment


Salarpuria Sattva, a leading player in Indian commercial real estate, is expanding its residential portfolio and will start development of three new projects in Bengaluru at an investment of around `600 crore. These three projects, put together, will have around 1,200 units, including 500 plots. One of the project will be in the affordable housing category.


Investment, will be around `600 crore, with an expected revenue of about `700-750 crore. Salarpuria Sattva has completed more than 115 projects across seven cities in India in about three decades. It has completed about 54 million sq ft area and around 32 million sq ft development is in progress. The development of 32 million sq ft is in planning stage.


Besides Bengaluru, the group has presence in Hyderabad, Kolkata, Pune, Coimbatore, Jaipur and Goa.




L&T completes divestment of electrical, automation business to Schneider Electric


Engineering and construction giant Larsen and Toubro  has completed the strategic divestment of its electrical and automation business to Schneider Electric. The move will see India becoming the third largest country in terms of revenues for Schneider Electric. With this, about 5,000 employees of Larsen and Toubro’s electrical and automation business will be integrated with Schneider Electric’s over 2,000 employees. The divestment is in line with L&T’s stated goal of unlocking value for future growth.


This newly merged company will serve the priorities of India: Make in India for India and the rest of the world, Digital India, Skill India, Sustainable Energy, Smart Cities and Infrastructure for self-reliance, to bring tremendous value to customers and stakeholders, employees, partners, suppliers, and community in which the company develops.




TMT bars demand to normalise by October: Electrosteel


Domestic demand for TMT bars is at about 85% of pre-Covid levels and is inching up according to Electrosteel Steels Ltd. This demand will be back to 100% in the next month itself. Electrosteel Steels Ltd (ESL) had exported about 50% of the steel produced in March. However, the export percentage has come down to zero since June.


With steel prices moving up by 25% in Q2, and demand picking up, the company is hopeful that it will be even doubling its Q1 Ebitda. The company’s plans to double capacity at its Bokaro unit and set up a greenfield facility in Karnataka are being reviewed.



Cement maker Dalmia Bharat aiming to emerge stronger, despite sluggish industry growth


Cement maker Dalmia Bharat  is aiming to emerge stronger despite a sluggish market condition, helped by initiatives such as cost reduction, marketing initiatives and premiumisation. Besides, the company expects the cement industry, hit hard by the COVID-19 pandemic, to rebound amid the government’s push towards big infrastructure projects and affordable housing. The firm would have a “greater emphasis” on digitalisation and remote-controlled plants. The company expects the government’s push towards big infrastructure projects and affordable housing to help the industry come back on the growth trajectory. The company is undertaking 7.8 million tonnes of brownfield capacity expansion in eastern India. It has also collaborated roadside eateries within a radius of 60 km of its plant and using them as dispatch centres, bringing down the average turnaround time.



Chandigarh housing board plans 11-storey housing tower for its employees.


The Chandigarh Housing Board (CHB) plans to build a 11-storey tower under the UT employees housing scheme 2008, offer more floor area ratio, charge only for the built-up area of the flat instead of the total area which includes land for road and green belt. The administration had started exploring different proposals for construction of flats on the directions of the central government. Recently, the Centre had directed the administration to recalculate the rates of flats to be made for different categories.


Last month, on the directions of the Punjab and Haryana high court, a meeting through video-conferencing was held under the chairmanship of Union home secretary Ajay Kumar Bhalla.


After deliberations to resolve the issue regarding rates of flats of the scheme, it was decided that the calculation of rates be made again for different categories by applying various factors like floor area ratio (FAR), collector rate and plot area in consultation with the representatives of petitioners in the case.


Last year, after opposition by employees, the administration had decided to reconsider high prices of flats under the UT Employees Self Finance Housing Scheme 2008. The CHB last year had finalised a three-bedroom hall kitchen (BHK) flat for `1.76 crore, `1.35 crore for two BHK flat, `99 lakh for one BHK flat and `58.07 lakh for one BHK (EWS) flat. Employees had decided not to give consent to the high prices. Earlier, the CHB had estimated `2.08 crore for a three BHK flat, `1.64 crore for a two BHK flat, `1 crore for a one BHK flat and `60 lakh for one BHK (EWS) flat. As the decision was taken to construct the flats for UT employees on “no profit no loss” basis, the prices were calculated to `1.76 crore for three BHK, `1.35 crore for two BHK, `99 lakh for one BHK and `58.07 lakh for one BHK (EWS).When the scheme was announced in 2008, the rates were `34.70 lakh for three BHK flat, `24.30 lakh for two BHK flat, `13.53 lakh for one BHK flat and `5.76 lakh for one BHK (EWS) flat. On January 2 last year, the cabinet meeting chaired by Prime Minister Narendra Modi approved the proposal of the housing scheme pending since 2008. A total of 73.3 acre land was earmarked for the construction of 3,930 dwelling units for the employees. Out of which, 11.8 acre was already in the possession of the CHB.



Affordable rental housing complexes included in infra sector


Affordable rental housing complexes have been included in the government’s infrastructure sub-sectors list, as per a notification. The notification, uploaded on the finance ministry’s website, said ‘Affordable Rental Housing Complex’ is included in the Harmonized Master List of Infrastructure Sub-sectors by insertion of a new item in the category of ‘Social and Commercial Infrastructure’. In July, the Union Cabinet had given its nod for the Affordable Rental Housing Complexes (ARHCs) scheme. The scheme, under the Pradhan Mantri Awas Yojana - Urban (PMAY-U), was part of the `20.97 lakh crore Aatmanirbhar Bharat Abhiyan package. The initiative has been taken up to provide dignified and affordable living spaces for urban migrants/poor. Affordable rental housing complex means a project to be used for rental purpose only for urban migrant/poor (EWS/LIG categories) for a minimum period of 25 years with basic civic infrastructure facilities such as water, sanitation, sewerage/septage, road, electricity along with necessary social/commercial infrastructure. The initial rent will be fixed by the local authority/ entities based on local survey of surrounding area wherein the project is situated. The project must have at least 40 dwelling units of double room or single room or equivalent dormitory units or a mix of all three in any ratio but not more than one-third of total built up area under double bedrooms units.



Delhi-NCR provides over 50 mn sq ft REIT-worthy assets


Delhi-NCR provides more than 50 mn sq ft REIT-worthy assets for around USD 6.5 bn value, according to a report by property consultant JLL. The Report said that Indian HNI follow similar investment trends in real estate as their global counterparts. However, the allocation towards equity has been higher than the global trend. JLL’s ‘Private Wealth Group report ‘(re)Imagine Real Estate Investments’ said that Delhi NCR has around 23 mn sq ft of strata office market.


The nature of investments within real estate has seen transition with higher allocation towards commercial office space assets and in publicly traded Real Estate Investment Trusts (REITs), helping investors reimagine deployment strategies. India.As per the report, office space will recover fastest post pandemic due to robust fundamentals.


The national capital region offers limited leased strata space of 3.6 mn sq ft as most of it is owned by marquee developers. On the other hand, higher supply in peripheral zones offers 6.9 mn sq. ft. of ready to lease space. It offers the highest under-construction investment opportunity with 12 mn sq. ft. The country’s office sector has witnessed a robust growth over the last four years with the average annual net absorption crossing 30 mn sq ft leading to steady rentals and capital appreciation, until the onset of the pandemic,” Delhi NCR, followed by Mumbai and Bengaluru, remained the top three cities in terms of warehousing space absorption in 2019 accounting for more than 20 mn sq ft of absorption.




Brookfield to acquire RMZ Corp’s assets worth `12,500 crore


Brookfield Private Capital along with one or more affiliate companies will acquire real estate projects housed under five special purpose vehicles including RMZ Ecoworld Infrastructure, RMZ Galleria (India) and RMZ Infotech, and a 100% stake in CoWrks as part of a `12,500 crore deal with Bengaluru-based office space developer RMZ Corp, as per the deal documents sent for CCI approval. The largest real estate transaction in the country will see RMZ Corp exit its co-working business CoWrks that has around 16 centres. In all, Brookfield is set to acquire around 12.8 million sq ft of income-generating assets from RMZ Corp. RMZ will use the proceeds of the transaction to reduce some of its debt of `13,500 crore. The deal will also help RMZ minimise risk of geographic concentration and lend greater focus on other greenfield and brownfield projects and enable it to transition towards its objective of being a near-zero debt company. The proposed properties to be acquired are engaged in the business of commercial real estate leasing.




Indiabulls Housing sells part stake in Oak North for `440 crore


Indiabulls Housing Finance Limited has sold a portion of its stake in Oak North Holding Ltd to High Sage Ventures LLC for `440 crore. The sale proceeds will be accretive to the regulatory net worth and the CRAR of the company. Indiabulls Housing plans to conclude a few other transactions on the partial stake sale in Oak North Bank in the near future. The divestments in Oak North Bank will result in boosting CRAR and shall free up capital to grow the loan book of the company.



Mahindra Happinest Developers Ltd launches 2nd residential project at Palghar


Mahindra Happinest Developers Ltd, a joint venture cum subsidiary of Mahindra Lifespace Developers Limited, has launched its second residential project at Palghar, Mumbai Metropolitan Region. The project - ‘Happinest - Palghar’ is registered with Maharashtra RERA.



Govt considering to permit FDI for LLPs in construction development


The government is considering a proposal to permit foreign direct investment (FDI) in limited liability partnership (LLP) firms engaged in construction development with a view to attracting overseas fund inflows. At present, FDI is permitted under the automatic route in LLPs that are operating in sectors where 100 per cent foreign direct investment is allowed through the automatic route and there are no FDI-linked performance conditions. In the construction development, 100 per cent foreign direct investment is permitted under automatic route but with certain conditions. The Department for Promotion of Industry and Internal Trade (DPIIT) is expected to soon approach the Union Cabinet to seek approval on this. The DPIIT has also worked on a proposal to permit 100 per cent FDI in AVGC (animation, visual effects, gaming and comics) sector. Last month, Commerce and Industry Minister Piyush Goyal had said that the government is looking at reforms in areas like foreign direct investment. Foreign direct investment (FDI) in India grew by 13 per cent to a record of $49.97 billion in 2019-20.



Funding of `10,300 cr approved for 101 stressed housing projects under SWAMIH


The government-sponsored and the SBICAP Ventures managed last-mile fund for stressed real estate projects has cleared investments worth over `10,000 crore for 101 proposals approved that will benefit around 71,000 homebuyers across various cities.The fund, Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects (SWAMIH I), has cleared these applications from realty developers for their stressed projects in the last 7 months including the lockdown period.


The fund is now sanctioning funding proposals at 12% Internal Rate of Return (IRR) as against earlier return expectations of 15%. A total of 22 projects with over 20,000 affected homebuyers have already started receiving funds. Recently, Finance Minister Nirmala Sitharamaan had announced the SWAMIH Investment Fund I has so far approved `8,767 crore for 81 stressed residential projects.


These projects are spread across a mix of markets including National Capital Region (NCR), Mumbai Metropolitan Region (MMR), Bengaluru, Chennai, Pune and also tier-II locations including Nagpur, Jaipur, Nashik, Vizag, Chandigarh, Karnal, Panipat, Lucknow, Surat, Dehradun, and Kota among others.


The ongoing Covid19 crisis may result in more projects getting stalled due to liquidity crunch. However, clarity on this will emerge only after November as the Reserve Bank of India has announced a 6-month moratorium on all term and working capital loans. Apart from this, Real Estate Regulatory Authorities (RERA) across several states have extended the deadlines for project completions.According to government estimates, there are 4.58 lakh stalled housing units in 1,509 residential projects stuck across the country. The `12,500-crore fund, with green-shoe option of additional `12,500 crore, aims to provide financing to enable completion of stalled housing projects and ensure delivery of apartments to troubled homebuyers. Once the first tranche of the fund gets deployed completely, SWAMIH will exercise the green-shoe option for additional funds and that call is likely to be taken soon.



Avigna Space plans to invest `2,000 crore in warehousing assets


Avigna Space, the warehousing arm of Chennai-headquartered Avigna group, is planning to invest `2,000 crore to develop nearly 10 million sq ft of warehousing space in southern India.


The company plans to first monetise its existing land bank to fuel further expansion.


The company will develop 95 lakh sq. ft. including 3 million sq. ft. at Karnataka’s Hosur and 4 million sq feet at Hoskote, besides 1.5 million sq feet at Chennai and one million sq ft at Andhra Pradesh’s Nellore. The Hosur one will be developed in three phases with 10 lakh sq ft in each phase. The total investment in this would be `400 crore and the first phase will be operational by December this year.


The company which specialises in providing turnkey warehousing solutions from land-acquisition to asset development and management also has plans for development in Coimbatore and Madurai.


Once the company reaches 20 million sq. ft. in southern India, it will move to the west and north. According to a Knight Frank India report, Warehousing demand has seen strong growth in the last few years and has recorded a significant rise of 44% CAGR since 2017. The currently committed land for the warehouse is estimated at 21,163 acres which has the potential of adding 63% more supply to the already existing 307 mn sq ft of warehousing stock. Avigna Space holds lands in pivotal locations including Bangalore—Chennai corridor and Hoskote—Hosur—Chennai corridor. The landholdings are in areas that can support industries and allow for better reach into catchment areas and markets in a cost-effective manner.


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