Friday, May 27, 2022

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Ticker Tape - Construction


PM Modi inaugurates 5.21 lakh houses of PMAY scheme beneficiaries in Madhya Pradesh

Prime Minister Narendra Modi recently inaugurated 5.21 lakh houses of beneficiaries of the Pradhan Mantri Awas Yojna (PMAY)-Gramin in Madhya Pradesh while participating in the ‘Grah Pravesham’, a ceremony to hand over new houses to their owners.

Addressing the programme via video conferencing, Modi said his government has given topmost priority to providing houses to the poor people.

So far, 2.5 crore houses have been constructed under the PMAY scheme in the country, including two crore in rural areas, he said.

Madhya Pradesh Chief Minister Shivraj Singh Chouhan participated in the programme from Chattarpur in the state.

On the occasion, PM Modi also said that under the Nal-Jal scheme in the country, six crore families were provided pure water tap connections in their houses.

Besides, over four crore fake ration cards have been cancelled since 2014 by the present government in the country to prevent theft of food grains worth crores meant for the poor, the PM said.

“We have the policy to ensure that even the last man in the queue gets the benefit of government schemes,” he said.

 Modi also called upon people to take a vow to construct 75 ‘amrit sarovar’ (ponds) in every district of the country over the next 12 months, as the nation marks 75 years of its independence.



Hines partners with DNR group to develop 2 mn sq ft office project in Bengaluru

US-based real estate firm Hines has tied up with DNR group to develop a premium commercial project in Bengaluru comprising two million square feet of leasable area.

This is the second office project being developed by both the companies in partnership with each other.

The project ‘DNR Nagavara’ will be developed on a 11.3 acre land parcel and is located in an established micro market adjacent to Manyata Tech Park and Karle Town Centre in North Bengaluru.

With DNR as the project owner and Hines as the development manager, the total leasable area of the project is estimated to be two million square feet and is expected to be completed by the fourth quarter of 2026.

The company entered the Bengaluru office development business with DNR group in 2020 and today it has grown to be its largest project portfolio in the country. ‘Hines and DNR have established a successful partnership, which has laid the foundation to come together again and expand the relationship to build yet another Grade-A office project.

The project will be attractive to both built-to-suit and multi-tenanted options for its occupier partners, Diwan said.

Hines is a privately owned global real estate investment firm which was founded in 1957. It has a presence in 285 cities in 28 countries. It oversees investment assets under management totalling approximately USD 90.3 billion.

In addition, Hines provides third-party property-level services to 373 properties totaling 114.2 million square feet.

Historically, Hines has developed, redeveloped or acquired approximately 1,530 properties, totalling over 511 million square feet.

In India, Hines has completed two commercial projects ‘One Horizon Center’ and ‘Skyview Corporate’ in Gurugram comprising 1.4 million square feet. The company has exited from investments in these two projects.

Hines India is currently developing four housing and four commercial projects across major cities.

It has partnered with big realty players like DLF, Tata Realty and Shapoorji Pallonji to develop projects in India.

In December 2019, Laura Hines-Pierce, who has recently been elevated as the co-CEO of the firm, had announced plans to invest USD 500 million (around `3,795 crore) in India to develop new commercial and housing projects.



Sobha’s sales bookings up 23% to Rs 3,870 crore in FY22 on better housing demand

Bengaluru-based realty firm Sobha Ltd’s sales bookings rose by 23 per cent to its all-time high of `3,870.2 crore during the 2021-22 financial year on higher volumes driven mainly by low-interest rates on home loans.

According to a quarterly operational update, the company’s sales bookings in volume terms increased by 22 per cent to 49,09,567 square feet during the last fiscal from 40,13,581 square feet in the 2020-21 fiscal year.

In terms of value, Sobha’s sales bookings grew to `3870.2 crore from `3,137.2 crore. The average price realisation improved to `7,883 per square feet from `7,817 per square feet.

During FY’22, the company achieved best-ever sales volume and sale value. This is achieved despite operational hurdles at the start of the quarter due to Omicron wave.

During the last fiscal, Bengaluru, Pune, Gurugram, and GIFT City regions have shown high growth in terms of sales value and volume. The company’s cash flows remained strong resulting in net debt reduction as compared to FY-21. The company has improved the price realisation from past few quarters, which would act as margin protection against recent cost increase.

In terms of volume, the company sold 33,53,250 square feet in Bengaluru during the last fiscal as against 27,02,120 square feet in the previous year. Sales volume in Gurugram rose to 6,82,755 square feet from 3,73,058 square feet during the period under review.

The growth in housing sector is building on consistent demand prevalent from the past eighteen months, reducing the unsold inventory as well.

Sobha attributed the reasons for this growth to high customer confidence supported by a strong job market in an improving economy, low home loan rates, savings during the COVID pandemic period and desire to own bigger-better homes.

Recently, Macrotech Developers, which markets its properties under ‘Lodha’ brand, reported a 51 per cent growth in its sales booking to a record `9,024 crore in the last fiscal.

Sales of most of the listed real estate developers are expected to rise during the last fiscal year. Those companies that have a better track record of executing projects on time are performing better.

Housing sales fell significantly in 2020 because of the COVID-19 pandemic and a nationwide lockdown, but demand bounced back in 2021 calendar year. The trend has continued in the first quarter of the current calendar year. According to real estate consultant Anarock, housing sales across seven cities increased 71 per cent in January-March to 99,550 units. PropTiger reported that sales increased 7 per cent year-on-year to 70,623 units during January-March across eight major cities.

Knight Frank India said that housing sales rose 9 per cent to 78,627 units during the January-March period, the highest quarterly sales in the last four years, across eight major cities.

JLL India said sales of apartments across the seven major cities went up 83 per cent to 51,849 units in January-March 2022 from 28,352 units in the corresponding period of the previous year.



Rise in Construction Block prices on higher input costs to affect Real Estate projects

An increase in price of raw materials (lime, cement, petcoke & aluminum powder), could cast a shade on AAC Blocks industry which was already under margin pressure due to excessive competition intensity.

Over last decade Lightweight Construction Blocks have emerged as a building material of choice and a suitable replacement of clay bricks due to its superiority over later, like high thermal insulation, optimal fire protection, excellent acoustic & earthquake  resistance properties.

The industry has recently witnessed revival in demand from urban housing sector. However, a rise in volume accompanied by a moderate price hike in Lightweight Concrete Block prices is less likely to balance the impact of rising input costs for AAC firms. Operating profits are estimated to be much lower in FY23 due to higher costs and lower net margins.

Petcoke prices have increased by ~70%. Lime and Aluminum prices have increased by 25% and 60% respectively. Overall inputs have increased by almost 35% and on the contrary AAC manufacturers have been able to forward impact of these prices only partially. The product was selling at around Rs. 3800 per cbm in year 2013. The prices in the industry declined and remained low for a period of 8 years. At the other end industry is struggling to secure its flyash supplies. A sudden upswing in the raw material prices is the final nail in the coffin and has put AAC industry in doldrums.

AAC Block prices are still below `4500 per cbm and brick prices meanwhile have gone beyond `5500 per cbm in some areas. Cost of setting up new capacities has gone up by 70% over last few years. For the industry to survive, a pricing in range of `5000 - 5500 of `5000 would lead to healthy margins for the industry.

Pricing of all building materials have shot up significantly over past 12 months, leading to developers seeking a price increase of upto 10% in real estate projects.



Alliance Group plans to launch `8,600 crore projects in Bengaluru, Chennai and Hyderabad

Real estate developer Alliance Group plans to launch projects spanning about 25 million sq ft across Bengaluru, Chennai and Hyderabad, at an investment of `8,600 crore, in the current fiscal.

The company reported sales of `2,290 crore for 2021-22 and sales of 3,686 homes, largely driven by the residential segment.

2021-22 was a remarkable year in the company’s journey. In spite of the Covid-19 pandemic,  the company was able to cross many major milestones in the industry.

The firm is also in talks with institutional funds for a warehousing platform space, apart from expanding its footprint in the commercial sector. Financial discipline is in the organisation’s DNA and this is the strength the company uses to leverage large-scale investments in real estate across South India. It is this financial discipline that draws and attracts world’s best financial institutions to invest in our organization.

The developer has investment from Kotak Realty Fund totalling about Rs 800 crore across five projects in Chennai and Hyderabad.

The fund first invested in Alliance Group’s residential project in 2016 from its $400 million sovereign fund raised from Abu Dhabi Investment Authority in 2014.

The developer has 20,000 homes under various stages of construction and plans to build more than 50,000 units over the next three years.

The first quarter of 2022 saw a four-year high in sales, with 78,627 residential units sold despite the third Covid-19 wave, according to market assessment report by Knight Frank, India’s premier real estate consultancy.

Low interest rates, best affordability levels, healthy wage growth and the waning pandemic, with lower risk of further disruptions, have created a favourable environment for homebuyers, who have rediscovered the need for new and better housing.

Mumbai led the charts with 21,548 units sold during the quarter. Launches kept pace with sales, growing 3% year-on-year to 78,000 units. Prices rose across markets in the range of 1-7% year-on-year.



Welspun One Logistics Parks leases over 4-lakh sq ft of warehousing space to Ecom Express

Ecom Express, the logistics solutions provider has leased around 4 lakh sq ft of warehousing space in Bhiwandi and Farukhnagar in the Mumbai Metropolitan Region (MMR) and the National Capital Region (NCR) respectively, from Welspun One Logistics Parks (WOLP).

The space has been taken by Ecom Expres for nine years in both the parks, which are expected to be operational later this year.

The current situation has brought a dramatic and lasting change in consumer behaviour, with purchasing preference shifting towards online retail and further accelerating the demand for logistics infrastructure. Ecom Express association with Welspun One Logistics Parks in both Bhiwandi and Farukhnagar will  bolster its logistics services across the country.

The extension of the e-commerce area has been a key development driver for the ascent sought after for warehousing space the nation over. WOLP said it looks to use this interest and give manageable and mechanically progressed answers for organisations to consistently lead their warehousing tasks.

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