Here is what we have on the show today:
1. The tier-II and tier-III price bubble burst a few years ago. We find out how these cities are performing in our Price-O-Meter.
2. Delays in debt reduction come back to worry the country's largest developer DLF. CNBC-TV18 learns the closure of the USD 300 million sale of Aman Resorts has been delayed by five months.
3. We find out if Ireo's apartments for a whopping Rs 12-30 crore in Gurgaon are worth your while.
4. We touch base with Piramal Group's real estate private equity fund Indiareit.
DLF has been a stock in focus. The company's shareholders on the April 4 approve the sale of the fresh equity of shares via an institutional placement programme (IPP), the move is to pare promoter KP Singh and family's stake to 75 percent.
The fresh equity of shares ensures all the capital raised flows directly into the company's balance sheet. DLF till very recently was hoping to raise USD 500 million from that exercise, but like most other companies has been caught off guard by the recent market volatility.
Sources say DLF will go ahead with all the regulatory filings to be in a position to launch that IPP any day after April 15. Then on April 5, DLF announced it has sold wind power assets for Rs 240 crore.
Since October 2012, DLF has announced asset sales for around Rs 5,000 crore, most of which will be used to bring down its debt of over Rs 21,000 crore, but it plans have hit rough weather as the USD 300-million Aman Resorts deal announced in December 2012 is yet to close.
DLF is selling Aman Resorts the super luxury hospitality chain back to the founder Adrian Zecha.
DLF was supposed to close the deal and get the money by end of February. DLF is yet to get that USD 300 million. Sources say Adrian Zecha is still organising the funds and the deal closure will be achieved in the end of June that's a delay of five months.
One positive cue the street is watching out for is DLF'ss big bang launch of apartments and golf course in Gurgaon from which the company hopes to realise Rs 8,500 crore. This project is informally being referred to as Magnolia 2 and apartments here are expected to be launched at Rs 15-20 crore. It was built as Gurgaon's most expensive launch, but DLF's new competitor Ireo has already hit the market with an equally expensive offering.
Ireo has tied up with Grand Hyatt to sell luxury branded residences in Gurgaon. The project will come up on 29 acres and will also include a Grand Hyatt hotel. There will be a 265 luxury residences coming up in configurations of 4BHK, duplexes and penthouses.
The penthouses come with private pools. Apartment sizes vary from 4,600-10,000 sqft.
Ireo says the project will overlook a 50-acre golf park inspired by Hyde Park in London and may even include a driving range. Foster & Partners of London's newest landmark, the Gherkin are the lead architects of the Ireo-Grand Hyatt Project.
Now let us talk about prices. Ireo tells Prime Property it has not finalised the pricing as yet. However, many high net worth individuals (HNI) we spoke with have got a pricing list from Ireo.
The starting price could be as high as a whopping Rs 12.50 crore and go up all the way to Rs 30 crore for the Penthouse. Ireo is charging top dollar for its association with the Grand Hyatt, but it did not give us details about its arrangement with the hotel major for using that brand.
Also, there is an electricity grid and an electricity sub-station right behind that project site. Ireo believes this should not be seen as a dampener.
Back in 2006, tier-II and tier-III cities have caught the fancy of real estate developers. We saw projects being launched from Jaipur to Lucknow to Kochi, but then the market crashed, plans were shelved, developers trying to exit projects and put barren land on the block. So, where do things stand now, we put real estate rating agency Liases Foras on the job for our price-o-meter.
The smaller cities in North India were far too speculative and have started witnessing the price correction. Indore has seen prices come off. In Chandigarh many builders are now offering discounts. Supply in Lucknow has been thin, but now DLF and Ansal has started launching projects here.
Pankaj Kapoor, founder and MD, Liases Foras: North India is mostly a investor-driven market and the prices have really surged very high. You look at some markets except for Jaipur where lot of supply has come from state agencies and the housing boards. In cities like Lucknow and Kanpur the supply size is very thin and beside that supply size the way the prices have really surged it is highly speculative and we see a downside corrections.
Whole of the North we are seeing that the corrections in the property prices can be seen today like Chandigarh also there are various kind of discounts, which developers have started offering because there is lot of investor supply, which is available and there is very little sentiment for investors.
Nagpur was seen as India's most promising tier-II city. A lot was riding on the Multi-modal International Hub Airport at Nagpur (MIHAN) project that never really took off.
Prices here had compounded by over 30 percent annually till the market crashed. Goa though continues to see healthy activity.
Kapoor: You see 30 percent compounded annual growth rate (CAGR) growth in the prices and it has just gone up and the property which were earlier marketed at Rs 1,800 has gone up to Rs 3,600 to Rs 4,000.
For the investors he may think today and realise that yes, my property is appreciated to that level, but important thing is that the consumption of the property also has to take place at this price. So if the asset is ready and it is unproductive, neither it is giving you rental income nor you can sell it and exit with the profit because end-user demand is not there.
Liases Foras believes that in smaller towns in South are far better off. Its top pick is Kochi followed by Mangalore.
Kapoor: If you look at the property prices today, it is still 20 percent less than what it used to be in 2008. So if you look at time and price correction it is very poised and very well at the level. It is not really been showing any sign of improvement because lot of investment used to come from the Middle East and which has really stopped.
Time now for our Deal Street:
Indian Hotels from the house of Tatas has moved an injunction in Delhi High Court against the proposed auction of its marquee Taj Mansingh hotel in the capital.
Indian Hotels sought legal recourse just a few days prior to the Delhi administration finalising the terms of the auction.
Mahindra Lifespaces have allotted Rs 500 crore worth of non-convertible debentures these bonds have a yield of 10.78 percent.
Report suggest the Wadia Group has offered land worth Rs 913 crore in Thane as collateral, this is to avail bank loans for GoAir.
Godrej Properties has signed a joint development agreement to develop six housing societies in the Chembur area in Mumbai. Spread across four acres this will free up nearly 7,50,000 square feet of space that can be sold. Nearly 200 residents will also be rehabilitated.
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