Embassy Group to launch residential projects this year

Bangalore based realty developer, Embassy Group is all set to re-enter the residential segment with a few launches this year,

Chairman and Managing Director, Embassy Group, Jitu Virwani said, “We have launched two residential projects in Bangalore and have lined up few more.” The total cost of these projects is estimated to be around Rs 1,800 crore.

The company is thinking about meeting its fund requirement through sales and bank debts.

Embassy Pristine, located at the Outer Ring Road Sarjapur Road junction, would have a saleable area of 1.4 million sq ft. The project would offer apartments upwards of Rs 1.7 crore.

The company has also launched a 53-acre, 170-villa project — Embassy Boulevard — on Bellary Road for which it has acquired land at Rs 265 crore. “We have already sold 68 villas at Rs 10,000 per sq ft,” said Virwani, adding that the price has now gone up to Rs 12,500 per sq ft.

Another high-end apartment project — Embassy Lake Terraces — would offer 470 units, of which, 40 would be large units of about 7,000 sq ft each. The other units would be in the 3,200-4,500 sq ft range. The price of these units has been fixed at Rs 2.8 crore and above. 

The company also has plans to launch an IT park project in Belgrade in April this year. The first phase of the 125-acre project would see development of 1.2 lakh sq ft.

The company, which develops two million sq ft of commercial space every year, is looking at another IT park in Bellary Road. Embassy Group is developing a 250-key hotel at its Embassy Golf Links Business Park to be operated by Hilton.

Pillars to be dressed up with advertisements

Ending months of speculation, Bangalore Metro Rail Corporation Ltd. (BMRCL) plans to adorn the concrete pillars of Namma Metro with advertisements.

There were suggestions by sections of people to paint the pillars as the concrete façade was not aesthetically appealing. Now, BMRCL has decided to lease them out for advertisements.

Initially, Pillar Nos. 10 to 207 on the 7-km stretch of Reach 1, between Anil Kumble Junction on M.G. Road and Byappanahalli, will be up for auction for ad purposes, tenders for which will be called shortly.

BMRCL General Manager (Finance) U.A. Vasanth Rao told , “Painting the pillars is an expensive affair and they will require fresh coats of paint after every monsoon. If we leave them as they are, the pillars will be ‘decorated' with posters and buntings, making things worse. If they are given for advertisements, the agency will prevent any disfigurement,” he said.

The move will bring in revenue to BMRCL. Mr. Rao said, “Our aim is to cross-subsidise the travel cost as much as possible. Revenue from advertisements will help cushion the operation cost.”

Mr. Rao denied that the advertisements would distract motorists. He said pillars at busy traffic junctions will not sport any advertisement. If ads are found to be distracting, motorists and traffic police can say so, and BMRCL will remove them, he said. The BMRCL has now invited tenders to provide electricity supply to these pillars so that the selected bidder will not have any problem in arranging power supply.

METRO SET TO BECOME EXPENSIVE

GE to open validation lab in Bangalore

The American conglomerate GE today announced launch of a state-of-the-art validation laboratory in Bangalore which will support repair and calibration of Kaye range of products designed to meet industrial requirements.

The lab which has a capability to calibrate temperatures to an accuracy of 0.005° C will meet vital requirements of pharmaceutical and life science industries, a company statement said here.

GE's measurement and control business is a leading innovator in sensor-based measurement, inspection, asset condition monitoring, controls and radiation measurement solutions to a wide range of industries including oil and gas, power generation, aerospace, transportation and healthcare.

"The new lab supports GE's 'In Country, for Country' strategy to build on capabilities and resources within India," GE regional general manager for measurement and control division Ashish Bhandari said.

The lab will also help reduce turnaround time for customers from three months to just one week, he said.

IT majors like Mahindra Satyam, EMC, Cognizant save on office rents to weather slowdown storm

A rising number of information technology firms are consolidating and re-aligning leased office spaces across the metros, hoping to save their rents and operating costs that will help them sail through the global economic storm.

Among the big-ticket lease agreements locked recently is that of Mahindra Satyam. The IT services provider, which operates from multiple locations in Bangalore, has taken up 5,00,000 sq ft of space in Manyata Tech Park in the city.

Following suit are IT majors, such as EMC, Cognizant, Persistent Systems and Nokia-Siemens, all of which have leased large office spaces to house multiple units under one roof.

According to real estate services firm Jones Lang LaSalle, 80-85% of the demand for office spaces in India comes from the IT/ITeS sector. The sector occupied 28 million sq ft of office space last year compared with 32 million sq ft in 2010.

"IT firms grew in sporadic manner as their clients were located in multiple locations," said Ram Chandnani, deputy managing director at commercial real estate broker CB Richard Ellis. "Now companies are looking at moving into one or two locations to bring efficiency and reduce transport and other costs."

While EMC, a provider of storage hardware solutions, has picked up 3.5 million sq ft of office space on the outskirts of Bangalore, Cognizant has taken up 250,000 sq ft in DLF Akruti in Pune.

The IT and BPO services firm has also rented three strategic sites to expand operations in Hyderabad. This is in addition to around 7,00,000 sq ft the company had recently taken on lease in Hyderabad's K Raheja Mindspace SEZ.

Earlier, Persistent Systems, a software product development services provider, had taken up 4,70,000 sq ft of space on lease in Pune, while wireless equipment maker Nokia-Siemens rented 8.5 million sq ft in Bangalore's Manyata Tech Park.

Real estate and transport of staff constitute about 24% of an IT firm's total costs. Consolidating offices could translate into a 15-22% saving under this head, according to some analysts. Moreover, housing staff under one roof saves expenditure on energy and housekeeping and maintenance staff.

"Rental forms a large part of the total operational costs and we are looking at maximum utilisation of real estate," said N Venkatraman, CFO of Sonata Softwares, which recently closed its facility in Bangalore's central business district and moved to Global Village Tech Park. "Even if we can save a rupee on fixed costs, it will directly reflect on our bottom line. All our new headcount addition will be in the new campus."

Sonata, a technology solutions provider, occupies 1,15,000 sq ft in the Global Village Tech Park. The company also owns a campus in Hyderabad besides the corporate headquarter in Bangalore.

Slowdown in the US and the lingering debt crisis in Europe have put nearly 85% of Indian IT firms' revenues under a cloud. Experts say the global outlook will determine real estate spends by IT firms in the days ahead.

Anil Ambani sells 8% stake in NICE for over Rs 300 cr

Industrialist Anil Ambani has sold nearly half of his 15 per cent stake in NICE Ltd, an entity developing Bangalore-Mysore infrastructure corridor, for over Rs 300 crore.

Ambani, who heads telecom-to-financials conglomerate Reliance Group, has sold an eight per cent stake for USD 65 million (over Rs 300 crore) out of his total holding of 15 per cent in NICE Ltd held in his personal capacity, sources said.

When contacted, a Reliance Group spokesperson declined to comment.
Ambani had acquired 15 per cent stake in NICE (Nandi Infrastructure Corridor Enterprises Ltd) for Rs 60 crore way back in 2005 and the latest deal has given him a return of nearly 10-times in about seven years ago.

NICE was formed by industrialist Baba Kalyani-led Kalyani Group of Companies and SAB International Ltd to develop the Bangalore-Mysore Infrastructure Corridor.

As the owners of this Build-Own-Operate-Transfer (BOOT) project, NICE will implement the project in its various phases and operate the facilities after completion of construction.

Sources said that the shares have been sold by Ambani to a Mauritius-based fund affiliated to global financial services giant JP Morgan and values NICE Ltd at over Rs 4,000 crore.

Pursuant to this deal, JP Morgan's stake would rise to 18 per cent in this entity, where Kalyani group's BF Utilities holds nearly 75 per cent.

Shares of BF Utilities today soared by over 10 per cent to close at Rs 431.65 at the BSE. Shares of another group company Bharat Forge Ltd also rose over 5 per cent to Rs 326.90.

Bangalore emerges as safest property market

During the year 2011 when almost all other matured property market witnessed dip in transaction and price correction was on everyone’s lip, Bangalore registered both healthy transaction as well as upward price movement. While the home loan interest rate hikes are dampening the property market in other parts of the country, sales are steady in Bangalore because there has been substantial wage inflation too.

Bangalore typically has first home-buyers in the 27-35 years of age. “Younger home-buyers are willing to take the rate hike,” says Archana S. Bhargava, Executive Director, Canara Bank.

Some property analysts believe Bangalore is possibly the safest location for investments in the world. Prices do not skyrocket or get hyped here and they do not go downwards too like they have in many other prominent locations in India. This is because Bangalore is a market where most of the property purchases are by end users and not speculators. Speculators treat it as a pure investment for financial gains.

A leading real estate company conducted a study on the pattern of first purchases (purchase straight from developer) by end-users. The study found a surprising and comforting factor that 81.2 percent of first purchases in Bangalore were by end-users and not speculators or investors who look for just financial returns. This figure in locations such as Mumbai could be as low as 40 percent.

The advantage of end-users buying more is prices do not appreciate or depreciate at abnormal percentage across the city. This is comforting factor for a homebuyer since the prices would be stable and would move upwards or downwards within a small band. Even during the recession, the salability in Bangalore property was quite visible. Also, the market here is not driven by economic sentiment in some other parts of world but by the actual demand and supply situation in the particular location where the project is located.

Bangalore real estate has, of late, seen a spate of transactions where high networth investors (HNIs) have scooped up fixed rental income assets. Traditional business families from Kolkata and Uttar Pradesh, who in the past financed developers in cities like Chennai, have moved their capital in Bangalore in recent years. A Kolkata-based investor has acquired 2.17 lakh sft of commercial space from Embassy Property Developments for Rs 141 crore. The office space at Embassy Paragon in Bangalore’s IT suburb Brookefields is occupied by tech giant Intel.

The Silicon Valley of India is also witness to more and more land being dedicated to the establishment of tech parks and commercial real estate Grade-A office space. According to global workplace solutions provider Vestian CEO (Asia Pacific) Shrinivas Rao, “In the last five years, around 50 million sq ft of commercial real estate Grade-A office space has been absorbed, out of which more than 75 per cent has been taken by IT/ITeS.”

Bangalore has also seen an escalation in rents of residential apartments during Q2’11 (April-May-Jun-2011) over Q2’10, according to the real estate portal 99acres.com. The rate of appreciation differs in each micro market but most localities have witnessed double digit growth.

“The commercial property prices in Bangalore are more affordable compared to those in NCR and Mumbai. Tenants here are more stable and pedigreed, given the dominance of the IT industry. And these are huge positives for HNI investors,” says Anuj Nautiyal, Executive Director, Redwoods Capital, a real estate brokerage and asset management firm.

He reckons that Bangalore may now be the top metro in terms of HNI transactions by volume even though Mumbai and NCR would outstrip it by value. Standard Chartered Bank, Kotak Mahindra and ICICI Securities are pushing Bangalore’s commercial real estate story to their private banking clients and often syndicating deals on their behalf for 10-12% annualized return. The city’s realty is seen as more competitive and open, which often enables investors to wrest better deals.

Now that metro rail has zoomed across Bangalore, the real estate industry in the city is also seeing property prices zoom. From Old Madras Road to Byappanahalli, realty has zoomed up by the sq ft – from Rs 3,000 to Rs 6,000 per sqft. Developers as expected are now rushing to start projects along the first phase of metro. What is getting property developers really excited is the second phase of Bangalore metro which will be launched in December 2012. This phase will connect most suburbs to the commercial hubs of the city. Property prices in these areas are increasing by 10 to 15 per cent in anticipation of the metro.

Real estate prices along the Metro will follow the same pattern as in Delhi where prices shot up by 15% to 20%, says Sushil Mantri, CMD of Mantri Developers.

Namma Metro MD N Sivasailan says, “In fact the people who protested are now the biggest champions of the metro, they are happy that business is booming.”

Irfan Razack, CMD of Prestige Group says the action has moved from downtown to the suburbs. Metro connectivity to areas like Kanakapura and Mysore Road will see a lot of realty traction. Hence, price escalation on the periphery is sharper than in the Central Business District.

Moreover, with the value revision coming into effect, most localities in Bangalore could see an upward revision of 15-20 per cent in property values. This is likely to impact property-buying in the city.

No wonder, large industrial houses such as the Tatas, L&T, Godrej, Murugappa, Mahindra & Mahindra etc have established presence in the real estate sector here, and the Coimbatore-based LMW and Lakshmi Mills also are gearing to enter. This makes Bangalore the most sought after property market. Mumbai-based Godrej Pro­perties (GPL) has already launched three projects in Bangalore.

As S.S. Asokan, Executive Director, Shriram Properties says, “The presence of reputed corporates in the real estate sector provides an assurance of quality to real estate projects and the buyers are the biggest gainers from their entry.”

Advantage Bangalore

1. Healthy transaction & upward movement
2. No boom-no bottom market
3. HNIs choice
4. Bullish corporates
5. Metro connectivity to periphery