Keppel Land markets India projects here

Keppel Land is looking to sell its residential properties in India to Indians based in Singapore, the developer told BT.

‘In Singapore we see a growing non-resident Indian (NRI) market,’ said Ang Wee Gee, KepLand’s director of regional investments.

‘In the past we have not been selling in Singapore. But now – with more Indian professionals coming here to work and live – we have decided to.’

KepLand showcased its India properties in Singapore last weekend.

About 300 people visited the company’s booth and about 40 of them are ’serious buyers’ the developer will follow up with, Mr Ang said.

KepLand is now marketing two projects in India – the 1,573-unit Elita Promenade in Bangalore and the 1,376-unit Elita Garden Vista in Kolkata.

It also has another project – the 1,168-unit Elita Horizon in Bangalore. The project is expected to be launched soon.

KepLand has so far sold 86 per cent of 1,340 units launched at Elita Promenade. Units went for between 3,000-3,400 rupees per square foot – a jump of more than 30 per cent since the project was first launched in 2005.

At Elita Garden Vista, the company has sold about 60 per cent of the 250 units launched. Prices were 2,600-3,000 rupees psf, Mr Ang said. The project was launched a few months ago.

About 15 per cent of all the units sold at both projects were bought by NRIs, Mr Ang said.

But most of these people are not from Singapore – they are from places such as the US, the UK and Hong Kong.

However, this is set to change as KepLand is seeing more interest among NRIs based here. ‘We have an advantage here – they know us and can see the projects we have launched here,’ Mr Ang said.

KepLand is upbeat about its future in India, where it has had a presence since 2003. More residential projects are planned there. ‘Definitely, we would want to expand,’ said Mr Ang.

‘Apart from Bangalore and Kolkata we are also looking in Hyderabad, Chennai and the gateway cities of Mumbai and New Delhi.’

Source : Business Times – 04 Dec 2007

World’s most expensive office rentals in London, Mumbai

London and Mumbai tenants paid the most for high-quality offices this year, while Singapore rents grew the fastest as economic growth lured international banks to Asia, said CB Richard Ellis Group Inc, the world’s largest commercial real estate broker.

London’s West End led with average annual rents of US$328.91 per square foot (psf) this month, compared with US$180.80 for the UK capital’s main financial district.

Mumbai had the second-most expensive leases at US$189.51, CB Richard Ellis said in its semi-annual Global Market Rents survey.

Asia’s booming economies drove up demand for financial and computing services in the region, catapulting Mumbai to second spot and fuelling Singapore’s 83 per cent growth in rents.

The US currency’s decline also drove up costs in dollar terms, while a dearth of new space bolstered London rents, CB Richard Ellis said.

‘Markets that moved up that quickly had the highest growth rates based on the economy’ as well as a scarcity of space, said Ray Wong, director of research operations for the Americas for Los Angeles-based CB Richard Ellis.

‘In the most expensive markets, if they’re close to their peak, the expectation for increase is marginal, but other markets, especially resource sectors, are enjoying an increase in demand so they’re going to move up a lot quicker.’

Mumbai’s rents rose 55 per cent, driven by computer related tenants, according to CB Richard Ellis.

Midtown Manhattan was the most expensive North American market, with rents averaging US$100.79 psf, 12th- highest worldwide. Downtown New York ranked 46th globally at US$53.47.

Moscow rents jumped 65 per cent after crude oil prices tripled in the past five years, bolstering the economy of the world’s second-biggest exporter of the fuel.

Rents in the oil hub of Edmonton, Canada, rose 43 per cent, the ninth- fastest worldwide, as energy companies leased more space to house expanding workforces, the survey showed. Edmonton did not rank in the top 50 markets by rental prices.

Eighty-five per cent of the 171 cities included in the survey saw rental increases in the year ended Sept 30, according to CB Richard Ellis. This bodes well for investment returns, Mr Wong said.

The survey measures the most expensive rents based on US dollars. Rental growth rates were measured in local currency terms. — Bloomberg

Source : Business Times – 22 Nov 2007

Ascendas India Reit beats forecast

HELPED by higher rental rates from its assets, Ascendas India Trust (a-iTrust) achieved distributable income of $22.2 million for the half year ended Sept 30, beating its estimate by 17 per cent.

Its distribution per unit for the period was 2.95 cents, giving an annualised yield of 5 per cent based on its initial public offer price of $1.18 per unit.

Its net property income touched $28.7 million, 66 per cent higher than the year-ago period and 18 per cent better than forecast.

a-iTrust has a diversified portfolio of four IT parks in Bangalore, Chennai and Hyderabad.

Over the first half year, 700,000 square feet of space within the portfolio of operating buildings was renewed or leased, at higher average rental rates than before. The overall occupancy rate of a-iTrust’s portfolio was 99 per cent as at Sept 30.

Ascendas Property Fund Trustee, the trustee-manager of a-iTrust, said it expects the trust to deliver the forecast performance for the second half of the year, and hence is confident of at least meeting the DPU forecast of 5.6 cents for the full year.

‘We are pleased to report a strong set of results which has benefited from the vibrant Indian IT-ITES sector, resounding support from the user-clients and the trustee-manager’s proactive asset and portfolio management,’ said the chief executive officer of the trustee-manager, Jonathan Yap. ‘We remain focused to build on the momentum and deliver returns to unitholders.’

The two completing buildings in the a-iTrust’s portfolio – Crest and Vega – have received strong pre-commitment of 73 per cent and 72 per cent of space respectively and income contribution is expected to start in the second half of 2007.

Besides having a right of first refusal from Ascendas Land International to acquire income-accretive business space, the trustee-manager said it is also pursuing acquisition opportunities from the market.

Source : Business Times – 24 Oct 2007

MUMBAI: Relentless rise in demand for office space

By Ravi Velloor, India Bureau Chief

NEW DELHI – EIGHTEEN months ago, when Mumbai real estate consultant Sanjeet Narain made arrangements for the British Broadcasting Corp’s new office in the city’s Bandra Kurla Complex (BKC), the rent was 120 rupees (S$4.50) per sq ft.

These days, the going rate for office space at BKC, as Mumbai’s emerging financial district is called, ranges from 350-400 rupees psf.

‘Demand is ever growing. Everyone seems to want to be here in Mumbai – whether you are into logistics, telecoms or any other business you can think of,’ said Mr Narain, managing director of Narains Corp, a top real estate firm in India’s business capital.

‘Right now, I am just helping to place a Swiss chocolate-maker in Andheri East,’ he says, referring to a less fashionable suburb further away. ‘Andheri rents now have reached where BKC was less than two years ago.’

Indeed, a recent lease for Droege & Co Singapore was fixed at 100 rupees psf for the 2,000 sq ft of space the consultancy hired.

As India’s economy expands at a steady 9 per cent on average, global firms are arriving to cash in on the boom, running headlong into established Indian players intent on expanding their operations.

While the housing market has softened, thanks to the central bank’s interest rate hikes, demand for quality office space shows no signs of abating. The result has been escalating rentals. The capital value of Mumbai’s office buildings rose 123 per cent last year, outpacing Singapore, according to a recent report by Jones Lang LaSalle.

Such property escalations are bound to affect business, even in a red-hot economy like India’s.

Many firms have moved out of Mumbai to locations where offices are cheaper and travel times shorter. Retailing, for instance, is increasingly based out of cities such as Bangalore or Hyderabad.

‘Cost escalations are taking place across all asset classes,’ said Mr Sameer Wagle, associate director of the investment management arm of Mumbai-based IL&FS, an infrastructure leasing and finance company. ‘But real estate is the hottest because of the Indian mentality to invest in fixed assets.’

Even so, he says, the lure of the billion-strong Indian market is so strong that most companies take the rental costs in their stride.

‘It is the shortage of talent that is their bigger headache because of rising salary costs,’ he added.

Still, some parts of India are beginning to register small declines.

In Gurgaon, on New Delhi’s western suburbs, which has become a fashionable location for back-offices of multinationals and upper-class residences, office rentals have cooled in recent months.

‘Thanks to a whole lot of new malls and office buildings, you can buy good quality office space for about 12,000 rupees psf, down from 15,000 rupees a few months ago,’ said chief executive Rajeev Sharma of New Delhi real estate firm Alpha Estates.

In Mumbai, the government is trying to change the Urban Land Ceiling Act of 1976 that limits the land available for development. According to Chief Minister Vilasrao Deshmukh of Maharashtra state, as much as 500 ha may be freed up for office buildings.

But for now, space is so tight that vacancy in the central business district area was at a record low of 2.1 per cent in the first quarter of the year.

Source: The Straits Times, 30 July 2007

Ascendas launches $550m IPO for Indian assets

Office park developer Ascendas on Monday launched the first property trust of Indian assets in Singapore, which would raise as much as $550 million (US$359 million).

Ascendas India Trust will sell 423.38 million shares at an indicative price of S$1.01 to S$1.18 a unit. The greenshoe option of another 10 per cent would increase the number of units to 465.71 million shares, raising the IPO size to $550 million, according to its prospectus, confirming an earlier Reuters report.

Singapore-based Ascendas is listing its assets in Bangalore, Chennai and Hyderabad.JPMorgan is sole financial adviser, while Citigroup and DBS are joint underwriters and book-runners.

Reits, which pay most of their rental income as dividends, have caught on in Singapore and Japan in the last five years.

Investors are keen on their mix of steady bond-like returns with potential for strong capital gains, if rents and property values rise.

Bangalore-based Embassy Group is also trying to list in Singapore with a US$150 million IPO, sources told Reuters in April.

Source: The Business Times, 02 July 2007

US$1.5b Hilton JV to build 50 hotels in India

Hilton Hotels Corp, the second-largest US provider of rooms, and joint venture partner DLF Ltd will spend about US$1.5 billion to acquire land and build 50 to 75 hotels in India, said Koos Klein, Hilton’s Asia-Pacific president.

‘We feel very comfortable’ about achieving the goal in five to seven years, Mr Klein said in an interview in Singapore on Tuesday.

Hilton, based in Beverly Hills, California, will invest US$143 million building the properties.

DLF, a real estate company owned by billionaire Kushal Pal Singh, will control 74 per cent of the venture.

New Delhi-based DLF received regulatory approval this week to sell at least US$2.1 billion of shares.

The fastest pace of economic expansion in two decades is drawing more business travellers to Asia’s fourth-largest economy. Tourism may expand at a rate of 8.8 per cent a year in the next decade, behind only Montenegro and China, according to the London-based World Travel & Tourism Council. Hilton joins companies such as Accor SA and EasyHotel Ltd in entering India, where demand for accommodation at key business and leisure destinations is expected to increase at a compounded annual growth rate of 10 per cent in the next five years, according to Crisil Research, unit of a credit-rating company.

Hilton’s average revenue per room in the Asia-Pacific region grew about 15 per cent in the first three months of this year, Mr Klein said.

The development of the first few hotels will be financed with equity from the joint venture, Hilton said in an e-mail.

‘It is not likely that the joint venture will use a lot of debt building, if any, in the first stage of development,’ the statement added.

Hilton said on Nov 28 that it will build its Hilton Hotels and Hilton Garden Inn brand in India, a move made possible by its US$5.7 billion purchase of Hilton Group based in the United Kingdom.

The venture will initially build 20 hotels in cities including Chandigarh, Chennai, and Kolkata to cater to business travellers, it said.

Source: The Business Times, 18 May 2007

Oversupply of India office space growing

A growing oversupply of quality office space in major Indian cities apart from Mumbai will lead to a plateau in rentals and then a correction even though demand will remain healthy, real estate consultants DTZ said yesterday.

A-grade leasehold office markets were at all-time highs in terms of rentals and space leased, and a correction, when it happened, would force builders, private equity and venture investors to re-evaluate their investment strategies, DTZ said.

‘Barring a few exceptions (primarily the CBDs), the oversupply situation will lead to a correction in office rental values,’ Ankur Srivastava, the managing director of DTZ India, said in a statement.

Of seven cities covered by the study, only Mumbai, India’s financial capital, still had a shortage of office space, while oversupply was greatest in the southern city of Chennai and the western city of Pune.

‘The threshold for this correction has been brought closer by the two recent interest rate hikes,’ the report said.

India’s central bank has raised benchmark rates 5 times in less than a year to contain inflationary pressures and increased reserve requirements for banks, leading to a sharp rise in banks’ lending rates.

Higher interest rates were slowing demand for property, DTZ said.

‘This phenomenon is already visible and leads to lower project and land valuations,’ the report said. ‘Project break-even periods are also likely to get extended.‘

An estimated US$10 billion was raised internationally last year for Indian property, which is drawing the property investment arms of Morgan Stanley, Citigroup and American International Group.

The study covered Mumbai, New Delhi, Bangalore, Chennai, Pune, Kolkata and Hyderabad.

Source: The Business Times, 15 May 2007