Tag: flats for rent

Revenue sharing partnership between landowners and builders on the rise

12 Jul 2012, ET Bureau.

NEW DELHI: Businessman Vijay Gupta has accumulated so much land in Gurgaon over the years that he is left with 1,500 acre even after selling huge tracts to builders as the Delhi’s suburb has grown into a global business hub. Finding it difficult to sell off the land, Gupta has joined hands with builders and given them the rights to build the property on his land on a revenue share basis.

Gupta is just one among several land aggregators who have turned developers.

“Land owners see an upside in holding on to their land and doing such joint developments rather than selling. Returns are better this way,” says Anckur Srivasttava, chairman of GenReal Property Advisers.

Gupta, chairman of Orris Infrastructure, recently tied up with the Noida-based The 3C Company for a 48-acre parcel of land in Gurgaon. Since Gupta had already taken approvals and permissions to build a group housing project on the land, his partner is in a position to launch the project in just four-five months. If 3C had bought land on its own, it would have taken at least a year or more to kick-start the project.

Gurgaon-based Sidharth Chauhan of Sidhartha Developers, Sharab Reddy of the Triangle Group in Bangalore and Prashant Solomon of Chintels in Gurgaon are tying up such agreements with developers to maximise their returns.

“Land prices have shot through the roof, so developers don’t see value in buying land outright,” says Sidharth Chauhan, who has been consolidating land for over a decade and is now developing properties on his own as well. In the past, he has also aggregated land for Adani’s SEZ in Gurgaon.

“Most developers today are already leveraged to the hilt and can’t invest to buy land today. Joint development agreements (JDA) are the only way out for them,” says Amit Bhagat, CEO of ASK Property Investment Advisors.

Home sales have dropped by more than 50 per cent over the past year and a half and banks have turned cautious while lending to the sector. This has pushed developers into a liquidity crunch, making it difficult for them to buy land, even as they need to launch newer projects in order to sustain their cash flows. Several developers have also taken huge amount of debt for construction and other activities.

“The cost of doing projects has gone up with higher construction cost and approvals taking time. In a JDA, the developer is rid of all these issues and since there is no interest burden the overall margins are better as well,” says Sharab Reddy, managing director of the Triangle Group, which holds over 500 acre that it started collecting in the mid-1980s. “The risk, too, is shared between the two partners.”

Reddy, who turned a developer in recent years, is building close to one million sq ft of space in Bangalore. Just last week, he signed a JDA with a large developer in Bangalore for a 100-acre township.

In a typical agreement, the landowner and the developer sign an agreement to share revenues in 40:60 ratio. Where the price of land is very high, in city centre locations, for instance, the ratio can reverse as well.

“There is very little a developer has to put in upfront in a JDA,” says Solomon, who holds over 500 acre in and around Gurgaon. His company identified and bought land in an untapped area of Gurgaon in the 1980s. With the Dwarka-Manesar expressway being built here, land values have soared. Chintels has tied up with Sobha Developers and ATS Group for two JDAs, which will also include the Chintels brand name in the projects.

Bangalore-based builder Puravankara Projects has adopted a similar strategy for its affordable housing brand, Provident. “Land is expensive and there is no point investing such large sums upfront, especially for affordable housing projects,” says chief operating officer Jack Bastian Nazareth.

Hyderabad 3rd most affordable office location in 2011: Study

22 Apr 2012, PTI.

NEW DELHI: Hyderabad has emerged as the world’s third most affordable office location in 2011 in a list prepared by global realty consultant DTZ, which has also named Chennai and Pune among the top five such positions.

According to DTZ’s latest study ‘Global Occupancy Costs – Offices’, Surabaya in Indonesia and Qingdao in China were placed in the top two positions of the chart as the most affordable office locations in the world last year.

“While Tier II cities in India and China dominate the list of top 10 most affordable markets globally, Surabaya in Indonesia remains number one,” DTZ said in the report.

The consultant said Hong Kong, London, Geneva, Tokyo and Zurich were the five most expensive office markets in 2011.

DTZ said Surabaya and Qingdao saw average rentals of $ 1,680 and $ 2,380 per workstation a year, respectively in 2011.

Hyderabad, Chennai and Pune followed the top two places with rentals of $ 2,430, $ 2,570 and $ 2,590 a year per workstation respectively, it added.

The study showed that Hong Kong was costliest office place with an annual rental of $ 25,160 per workstation in 2011, followed by London and Geneva at $ 22,590 and $ 18,740, respectively.

DTZ, however, said many cities across the world are likely to witness decline in their rentals during this year.

“Under the downside scenario, 2012 offers occupiers a window of opportunity in which to realise cost savings as rents decline… In the top five least affordable cities of Paris, Tokyo, Geneva, London and Hong Kong, office rents fall in 2012 under the euro break-up scenario,” it added.

Occupiers in Rome and Milan are likely to benefit from falling occupancy costs over the next five years as sharp decreases in rents are expected in 2012 and 2013, DTZ said.

It further said office rentals in low-cost Indian cities may see double-digit falls in this year.

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