Unitech group company UCP plans to sell IT SEZ for about Rs 2,800 cr

NEW DELHI: Unitech Corporate Parks, a Unitech group firm listed in London, is planning to sell its IT Special economic Zone (SEZ) in Gurgaon comprising about 3.5 million sq ft of office space for about Rs 2,800 crore.

Unitech Corporate Parks (UCP) — listed on the London’s Alternative Investment Market (AIM) and formed to invest in commercial real estate of India — has 60 per cent stake in the Gurgaon SEZ. Unitech has remaining stake in the SEZ.

According to sources, UCP is looking to sell the Gurgaon SEZ and has given the mandate to property consultant Jones Lang LaSalle India to find out potential buyers.

JLL India has started the process to sell this asset by initiating informal discussions with the probable buyers, sources said, adding that formal bids could be called by the end of this month.

The valuation of the deal is expected to be around Rs 2,800 crore, sources said.

An Unitech spokesperson declined to comment. Unitech is expected to garner Rs 1,100-1,200 crore from this deal and the amount will be used to retire debt and fund construction of projects, sources said.

According to sources, the SEZ is expected to be completed by the year-end and 75 per cent of the area has already been leased.

UCP raised about £360 million by issuing and placing its Ordinary Shares on the AIM of the London Stock Exchange in December, 2006.

It had invested in six commercial projects in India in partnership with Unitech, of which five are in the national capital region and one in Kolkata. UCP has 60 per cent stake in these properties while Unitech has 40 per cent.

That apart, Unitech holds 12-13 per cent stake in UCP. “The Board is working actively on all future options for the Company and ways to monetise the assets as they progress,” UCP had said in its half yearly report in December, 2012.

“We continue to believe that the maximum value for shareholders will be achieved by creating investments which are substantially physically complete and well let, and so our strategy continues to be to progress the projects as quickly as tenant demand permits,” it had said.

http://economictimes.indiatimes.com/markets/real-estate/news/unitech-group-company-ucp-plans-to-sell-it-sez-for-about-rs-2800-cr/articleshow/21067073.cms

Residential Projects in Gurgaon

Realty project costs surge by up to 20%’

NEW DELHI: Real estate sector has witnessed substantial increase in project costs during the last couple of years as foreign fund flow has almost dried up, while interest rates and input costs have headed northward, said Jones Lang La-Salle in a report.

While rising interest rates have led to costlier bank credit, the strict RBI guidelines have made real estate lending all the more cumbersome, the report pointed out. “Currently, the costs of key inputs for real estate development are up by at least 7%. This is over and above a rise of about 25% last year,” JLL said, adding that labour cost is up 10-15 % and the prices of steel and cement have gone up by about 7%. “The net rise in construction costs is approximately 20%. Therefore, the Indian real estate sector is in dire need of foreign funding, both for maintaining growth and containing costs.”

As the Real Estate Mutual Funds (REMF) remained a non starter, FDI is the only saver which the real estate sector can look up to, JLL said. However, the ever-changing policies on FDI, taxation and development, coupled with lack of transparency and a high amount of friction in approval mechanisms have led to an uncertainty in yields and tenure of lock-in for investments in real estate, the report said, adding that this has proved to be the biggest stumbling block in attracting FDI.

The total FDI in 2012-13 came down to around $1.3 billion as against over $3 billion in 2011-12. In the current year, the situation has further deteriorated. The biggest problem is the uncertainty surrounding the investment period. Shobhit Agarwal, JLL MD (capital market), said, “At present, if a foreign investor is willing to invest for a medium term like 5-6 years, he is bound to be hesitant as it is most likely that the targeted projects would take longer than 5 years in completion. Also, foreign investors are bound to miss out on the cream of returns, which come only after the project reaches advanced stages of development or nears completion

Source http://timesofindia.indiatimes.com/business/india-business/Realty-project-costs-surge-by-up-to-20/articleshow/21640037.cms

Reliance Industries Ltd to go slow on 720,000-sq-ft Alaknanda mall following strong protests

NEW DELHI: Reliance Industries Ltd (RIL), the country’s largest privately owned company, has decided to go slow on its plans of constructing a gigantic 720,000 sq ft mall in a residential colony in south Delhi, following protests from an assorted group of upper middle class professionals who live there.

An RIL group company in 2007 had purchased a 4-acre plot in south Delhi’s Alaknanda through an auction from the Delhi Development Authority (DDA) for about Rs 304 crore. Over the years, the company has obtained reams of licences from the authorities to build a six-storey mall with three-floor basement. The mall is slated to be opened in 2014.

But Reliance had not accounted for the determined opposition from a group of local residents that calls itself the Citizens Allianceand includes economists, doctors, architects, lawyers and teachers.

This group, which held a 1,000 people-plus rally last month to protest the construction of the mall, says visitors to the proposed mall will choke traffic in the small bylanes of the locality and create pandemonium for its residents.

It claims that the residents were expecting the plot to be used for common facilities such as tennis courts, playgrounds and swimming pools, and that they were shocked to discover a mall being planned at the site. A DDA spokesperson, however, disputes this claim and says this plot was always reserved for commercial purpose in Delhi’s master plan.

A DDA spokesperson, however, disputes this claim and says this plot was always reserved for commercial purpose in Delhi’s master plan.

Citizens Alliance has in the past few months petitioned Delhi Chief Minister Shiela Dixit, BJP leader VK Malhotra as well as the Lt Governor of the city. While there has been speculation that Arvind Kejriwal was backing the protest, Ravi Kaimal, a prominent member of the Citizens Alliance, said this was not the case and the activist-turned-politician was not connected with their cause.

A person with direct knowledge of RIL’s retail plans said the company had decided to follow a ‘wait and watch’ attitude, after the protests gathered momentum. “The company is the process of executing several projects. It has plenty on its plate. It is in no hurry to complete the Alaknanda mall. All its documents for the plot are in order,” he said.

A Reliance official said the company was evaluating market conditions. “We can’t say anything as we are not sure on the return (on investment). The proposed mall is being discussed and if it is not suitable, we will postpone it,” he said.

An email sent to the Reliance spokesman on Monday did not elicit a response.

The construction of big supermarkets or malls in city centres is a controversial issue worldwide and has often led to face-offs between big retailers and local communities. Some big cities in the US such as New York and Washington DC have restricted the entry of Walmart, the world’s largest retail company. But the opposition being faced by Reliance is possibly the first anti-’big retail’ protest by local residents of a metro in India.

“In principal, if any project affects the communities, the communities should have the right to represent themselves and similarly the developer should also have right of its views. They should call an official negotiator and only then a conflict can be resolved,” said KT Ravindran, urban designer and former head of Delhi Urban Arts Commission.

Source http://economictimes.indiatimes.com/markets/real-estate/news/reliance-industries-ltd-to-go-slow-on-720000-sq-ft-alaknanda-mall-following-strong-protests/articleshow/21692003.cms

Real-Estate - news

After real estate, hospitality and healthcare, the Ansal API plans to foray in the education sector in a big way. The Ansal Medical Institute in Jaipur would be set up with an investment of Rs 10 cr in a span of two years from now in collaboration with the Hope Medical Institute in the US.


Financial consultancy firm Grant Thornton and Credai Bengal will hold an interactive session on the current real estate scenario, the regulatory environment and financing options on 26 July 2011 at The Bengal Club Kolkata at 6 pm.  



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