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Real Estate

July, 2011

The real estate sector in India is on a growth path. The development in the real estate market encompasses growth in both commercial and residential spheres. Further, it has been estimated that there would be shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12), which provides a big investment opportunity, according to a report by the Technical Group on Estimation of Housing Shortage. The popularity of the Indian real estate sector is also highlighted by a report ‘Emerging trends in Real Estate in Asia Pacific 2011’ published by PriceWaterhouseCoopers and Urban Land Institute. The report focuses on various places where developers such as Ansal Properties and Omaxe are building commercial and residential developments. These places include Jodhpur, Agra, Punjab, Uttar Pradesh, Haryana, Madhya Pradesh, and Rajasthan among others.

Indian Real Estate: Investments

During 2010-11, the Indian real estate and housing sectors received US$ 1.12 billion in foreign direct investment (FDI), according to the Department of Industrial Policy and Promotion India (DIPP).

Further, the industry also witnessed growth in private equity (PE) investments as well. Around 20 deals worth US$ 1.32 billion took place during January-May 2011, as compared to 22 deals worth US$ 483 million during the same period last year, according to Venture Intelligence, a research service focused on PE and mergers and acquisitions (M&A).

Some of the major deals that were undertaken during the first five month of the current calendar year include investment of US$ 320 million by Jeff Morgan Capital in Compact Disc India’s film city project, investment of US$ 318 million by Warburg Pincus in Oceanus Real Estate and Ascendas India’s investment of US$ 190 million in Phoenix Infocity. Further, US$ 86 million was invested by Tata Realty in Peepul Tree Properties.

Indian Real Estate: Major Developments

  • Phoenix Group, an infrastructure company, plans to invest around US$ 44.68 million in six real estate ventures in Hyderabad.
  • Mumbai-based infrastructure and real estate company Atlanta is looking for a partner to buy 26 per cent stake in a US$ 2.12 billion entertainment township project it is developing at Suvali near Surat in Gujarat.
  • Patel Realty India Ltd, a wholly-owned subsidiary of Mumbai-based publicly-held Patel Engineering Group, plans to launch 3-3.5 million sq ft of projects valued around US$ 66.48 million during 2010-11 across the country.
  • Phadnis Group plans to invest US$ 176.68 million in sectors such as real estate, hospitality and infrastructure in the next three years.
  • India Property Fund, managed by NRI investor Purnendu Chatterjee's TCG Real Estate and US-based Vornado Realty Trust, will be investing US$ 60.32 million in two residential developments in national capital region (NCR) and Mumbai.
  • Shapoorji Pallonji Group has floated a US$ 500 million private equity (PE) fund, mainly focussed on real estate.
  • Real estate company Ambuja Realty is planning to set up three more tourist resorts in West Bengal and Sikkim on the lines of the Ganga Kutir model in West Bengal.
  • Real estate industry has grown to over US$ 2.49 billion in Chhattisgarh with the state government collecting revenue of US$ 181.65 million from stamp duty and registration fee on land transactions.
  • Real estate developer DLF has decided to develop its US$ 226.18 million Infopark project spread over 54 acres comprising of an IT block, a luxury hotel, a retail chain, service apartments and recreational facilities in three phases.
  • The Government of Punjab has approved the master plans for the planned development of eight towns - Sultanpur Lodhi, Hoshiarpur, Tran Taran, Sangrur, Bhaga Purana, Rama Mandi, Kotkapura and Fatehgarh Sahib.
  • DBS Affordable Home Strategy Ltd, in association with SAATH, a non-government organisation, will launch a 3,800 residential housing project in US$ 8,985-US$ 22,464 bracket under the brand name 'Umang Vinzhol' in Ahmedabad.
  • Puravankara Projects Ltd has announced US$ 379.68 million luxury residential project at Pallikaranai in the suburbs of Chennai.
  • Chennai-based real estate developer, True Value Homes India Pvt Ltd (TVH), plans to invest around US$ 178.39 million over the next three years to develop around 12 projects, majority of which will be in the residential segment.
  • Tata Housing Development Company Ltd plans to invest nearly US$ 22.22 billion in developing another 40 million sq ft of housing across India in the next three years, including around US$ 77.80 million in low-cost and affordable housing.