Lanco Infratech Ltd, the power producer, is reportedly seeking buyers for a real estate business it values at 27 billion rupees ($483 million). According to the sources close to the development the company has asked investment banks to submit proposals to manage the sale.
The unprecedented restructuring of project portfolio, selling of land bank, exiting non-core business and the job cuts have yet not led the Indian real estate into the desired comfort zone. The realization to shed the flab has on the contrary left some of the developers to outsource the project execution and pay more.
Dewan Architects & Engineers, architecture and engineering consultancy firm, has drawn up an ambitious plan to expand its footprints in the Indian realty business. The company recently announced its venture into the burgeoning Indian real estate market, in a move that comes as part of Dewan’s strategic expansion plans to reach out to more markets in South East Asia.
During the boom, many developers dreamed of transforming the urban landscape with millions of square feet of homes, offices and malls and set off on an aggressive expansion financed with debt that at 6 percent interest was cheap by Indian standards.
Realty sector may appear to be bullish and project that downside is over with rosy forecast ahead, yet the decline in fortune is far from being over. As a matter of fact, the learning in the last four years has made most of the leading players to restructure their project portfolio and shed the flab.
Below the line marketing company Theme Ventures has signed a group of well-known real estate companies in Mumbai to sell the residential properties directly to the corporate employees by setting up shops inside the large work premises, the news reports said.
Disney Consumer Products India, the licensing & merchandising arm of The Walt Disney Company India, has done its first licensing deal in the real estate sector with Mumbai-based real estate company Sunteck Realty to launch Disney Inspired Homes in Goregaon, the Northern suburb of Mumbai.
Indian real estate companies, which borrowed heavily during the peak of the economic cycle and rosy business forecast, are now caught in the vortex of piling debt post-slowdown. Most of the realtors who went on a land bank acquisition with borrowed money are struggling to repay even the interest and banks look reluctant to restructure the debt any more.
Over the last year, there has been an unequivocal crystallization of Indian cities that continue to attract serious investment into real estate. This is directly correlated to the economic dynamics now working in the country. If India is to achieve even a conservative GDP growth of 6% per year, it emerges that only three cities – Mumbai, Delhi and Bangalore – have the potential to deliver. The reason for this is that close to 2/3rd of the overall development of office space in the country is now taking place in Mumbai, Delhi and Bangalore.
While property still remains the preferred choice of investment of nearly all the Indians, as high as 92 per cent, they are pretty scared of trading in the property market now. While new launches have few takers, most of the transactions are happening in the ready-to-move and other secondary market options.