Real Estate

  APPOINTS DIRECTOR; TO OPEN 75 HYPERMARKETS AND BOUTIQUES IN FIVE YEARS Delhi-based realtor Parsvnath Developers will open 10 retail stores this year and develop 21 commercial projects as part of its plan to foray into retail, Chairman Pradeep Jain said today. The company, in a release to the Bombay Stock Exchange, also named an independent director for the venture. The developer is pursuing its retail plans even as consumer spending is expected to slow hurt by a series of interest rate hikes by the Reserve Bank of India to contain inflation, which is at a 13-year high. Parsvnath Retail, a subsidiary of Parsvnath Developers, will build 21 projects with a saleable area of 4.77 million sq ft and open 50-75 outlets in the next five years, which will include super markets, hypermarkets, premium boutique stores and convenience stores, among others. The company is also developing 114 multiplexes across the country, it said. The company, however, did not disclose any investment figures. DLF and other property developers in the country have announced similar plans to tap the growing potential of the sector. Parsvnaths foray will pitch it against other corporate retail chains such as Future Group, Reliance Retail, Aditya Birla Retail and Tata groups Trent, among others. The domestic retail market, which is currently valued at $511 billion, is projected to grow to $833 billion in the next five years, according to retail consultancy AT Kearney. The company has entered into concessional agreements with the Delhi Metro Railway Corporation (DMRC) on a build-operate and transfer (BOT) basis, which will enable the company to develop shopping malls and multiplexes at 13 stations, comprising 3 million sq ft, it said. Commenting on the company’s reported plans of a possible tie-up with French retailer Carrefour for retail operations in the country, Jain said: “We will announce a tie-up once we sign the documents.” According to property consultancy CB Richard Ellis, nearly 100 million sq ft of retail property development is in the pipeline. “The situation of over-supply and saturation resulting in the subsequent correction of rentals may occur in certain pockets and micro-markets in the short to medium term, said the CB Richard Ellis report. Parsvnath Retail has appointed R J Kamath as an independent director on its board. “It is to bring more focus to the vertical and integrated development with the existing real estate activities,” said an official from the Parsvnath. On asked about why the company is moving into a sector that is bearing the brunt of high inflation, Jain said: “We are not worried about it. We will pass on to consumers rise in manpower costs or the rental increase,” he said. DLF, the countrys largest developer, has tied up with Italian retail brands Giorgio Armani and Salvatore Ferragamo to set up their stores across the country. DLF has announced a dozen malls across the country and a similar number of malls are in planning stage. The company is building The Emporio in Vasant Kunj in Delhi, which is expected to house many global luxury brands. Unitech, the country’s number two realtor, has confined its plans to the development of malls. It runs two malls in the National Capital Region and has announced 15 malls in the coming years with an investment of Rs 20,000 crore. “Though the market is very big, if you do not have the strategy right, success will be hard to come by. Realtors do have some synergies in the retail sector but at the same time, many of the stores are closing due to high rentals,” said R Subramanian, promoter of food and grocery chain Subhiksha. Future Groups joint venture with French brand Etam has closed five stores across the country and the RPG groups Spencer’s has relocated 40 stores due to high rentals.                                                                    Courtesy: - BS dtd: - 12^th Aug. 2008

  Most of the properties put up for sale belong to small developers, who don’t have the holding power. They are now approaching bigger developers for a buyout. A buoyant real estate market last year saw several realty firms foray into the hospitality sector. But with slowdown hitting real estate and choking cash flow several small realty firms have been forced to put at least half a dozen hotel projects on the block. A developer has put on the block a 200-room hotel project in Ahmedabad that has a management tie-up with a reputed international hotel brand. Work on the project is around 60% complete. Similarly, two mid-size hotel projects in Bangalore, which are in the early stages of construction, and one each in Pune, Chandigarh and NCR have been put on the block. Almost all the projects are mid-size. Some developers are looking at completely exiting the hotel projects while others are looking at stake sale. “The developers are looking for equity dilution and are now willing to settle for lower valuation in their hotel projects,” says Cushman & Wakefield director (hospitality) Akshay Kulkarni. Till six months back when the going was good, several realty developers, who had parcels of land at strategic locations, were trying to get into the glamorous hotel business. With hotel room shortage taking room revenue to new levels, the hospitality business looked very attractive. And with foreign hotel chains looking to aggressively expand in India, even small developers could easily tie up with them for a management contract.  “The initial excitement is over. The hotel room rates are sliding. Moreover, the hotel projects are capital-intensive and payback period is very long, compared to other assets such as housing or commercial,” says Knight Frank India Chairman Pranay Vakeel. Most of the properties put up for sale belong to small developers, who don’t have the holding power. They are now approaching bigger developers for a buyout. “We have received proposals to buy out a few hotel projects. We will go for it, if we get an attractive valuation,” says a senior executive of a Delhi based realty firm, which is developing at least a dozen hotels across cities. In several cases, where actual construction work has not begun, developers have deferred the projects. “Developers are now looking at a longer timeframe for their new projects,” says Marriott area vice-president Rajeev Menon. Marriott has six operational properties in India and plans to add 15 by the end of 2009. The company only has management tie-ups with local hotel owners and developers.                                                                                        Courtesy: - E.T. dt 1^st August 2008 

Kochi will soon attain global status with the coming of a Rs 5,000-crore hi-tech city project. The Bangalore-based Shobha Developers have signed up an MoU with the state government for setting up this hi-tech city. Sobha Hi-Tech City will be an integrated city with focus on research and development, knowledge dissemination, information technology and pure and applied sciences. The city is located close to the National Highway 47 bypass near Maradu in Kochi. It will have 7 million sq.ft. of knowledge park, commercial space to provide business-friendly ambience, hospitality and leisure projects, entertainment and amusement facilities, a marina and residential complexes. The project will be completed in eight years and would generate 75,000 direct jobs.                                                                                                             Realty Plus