Mumbai, May 12 (IANS) Over 7,400 office space leases spanning around 90 million square feet area will come up for renewal in 2021 across the top six cities -- Bengaluru, Mumbai, Pune, Chennai, Gurugram and Noida, as per the Anarock data.
Data further reveals that 2021 has the highest lease expiry pipeline when compared to the next two years, 2022 and 2023.
The next year will see nearly 7,000 leases for around 78 million square feet come up for renewal and around 4,200 leases for over 55 million square feet in 2023.
Out of the around 7,400 leases expiring in 2021, Mumbai has the highest share at about 44 per cent, followed by Pune with a 17 per cent share. These two cities have been among the worst-affected by the second wave. The impact on leasing activity there over the year bears watching.
The total number of leases coming up for renewal in 2021 account for 90 million square metres area. In terms of area, Bengaluru has the largest share at about 37 per cent, with Mumbai coming in a distant second with a share of about 19 per cent.
Anarock Property Consultants Director & Head of Research Prashant Thakur said: "The office market has been under strain since the pandemic came in. However, the IT/ITeS sectors have been on a hiring spree in 2020 and 2021 due to massive business accruals.
"To accommodate these employees in a future when we see a gradual return of employees and adoption of hybrid workplace practices by infotech giants, office space demand will grow."
"Office demand also is expected to gather momentum from 2022 in the wake of robust hiring by large corporates. These big corporates will definitely renew their leases, though some of the smaller companies may consider rationalising space," he added.
"The leases coming up for renewal in 2021 were entered into at much lower rentals - at rates that prevailed 3 to 5 years ago - since office leases are usually signed for the long-term. There is some room for rental escalation in many of these leases," he added.
The price gap between ready-to-move-in and under construction homes has declined to just 3-5 per cent in the first quarter of 2021, according to a report by Anarock Property Consultants.
It noted that the price gap between ready and 'off plan' or under-construction housing has been narrowing on year-on-year basis since 2017 across the top seven cities.
In 2017, the difference between the two categories was anywhere between 9 per cent to 12 per cent across cities, while in 2018 it was 5-8 per cent.
The National Capital Region (NCR) and Mumbai Metropolitan Region (MMR) recorded the least price difference between ready-to-move-in and under construction homes at 3 per cent.
The average prices of RTM homes in NCR were Rs 4,650 per square feet while for under construction homes it was Rs 4,500 per square feet and in MMR it stood at Rs 10,700 per sqaure feet and Rs 10,350 per square feet respectively.
Pune, Hyderabad and Chennai have the highest RTM/UC price difference at around 5 per cent. In Bengaluru and Kolkata, the difference is just 4 per cent.
"Previously, buyers of under-construction homes had one major advantage," said Anuj Puri, Chairman of Anarock Property Consultants, adding that "their patience and willingness to court construction risk were rewarded by notably lower prices."
However, construction delays and stalled projects had a predictable outcome and risk-aversion set in, with demand tilted heavily towards ready properties. While the fact that RTM homes do not attract GST has been an added attraction, even the price gap between RTM and UC homes has eroded substantially, from 9-12 per cent in 2017 to just 3-5 per cent by Q1 2021, Puri said.
The shrunk price gap works well for end-users as well as investors. End-users can see what they buy and save rent by moving in immediately, while investors focused on steady rentals can start earning right away, said the report.
In the past four years, developers have been reluctant to increase the prices of ready homes as they need to clear their inventory. "Not surprisingly, ready homes are the 'in' thing," it said.
Amid revival in housing demand, the residential segment witnessed private equity (PE) investments worth $234 million in Q1 2021 which was 64 per cent of that witnessed during the entire 2020, said a Knight Frank India report.
It noted that in terms of the number of deals, the investment activity touched 100 per cent of 2020 levels and 39 per cent of 2019 levels in the first three months of 2021.
The report titled 'Investments in Real Estate - Trends in PE Investment (Q1 2021 update)' said that Indian real estate attracted private equity (debt and equity) investments ($3.24 billion) across 19 deals in Q1 2021 (January - March) period.
In the first quarter of 2021, the investment in the sector has grown by 16 times compared to $199 million in Q1 2020.
The investments in Q1 2021 in value terms were 80 per cent of that witnessed in full year 2020 and 48 per cent of full year 2019.The strong momentum in Q1 2021 was predominantly driven by two major factors, spillover of certain deals from 2020 and the rise in investor confidence due to the drop in Covid-19 infections during early parts of Q1 2021, which had created some ripples of positivity in the economy, it said.
The sustainability of this momentum in investors' sentiments will therefore depend on how soon the second wave of infection subsides and also the pace of vaccination, as per the Knight Frank India.
Out of the total PE investments in real estate, the office segment attracted 71 per cent share, followed by retail at 15 per cent, residential and warehousing with 7 per cent each respectively.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said: "The deal street market of Indian real estate witnessed an impressive surge in both value and volume of private equity investments in the first quarter of 2021, when compared to the entire year of 2020."
He said that office assets continue to be the preferred segment attracting over 70 per cent of PE investments Q1 2021 as the segment moves towards maturity which includes sustained demand, stability in rental income and change in ownership profile over long -term. Investors are expecting demand to recuperate faster as the pace of vaccination increases.
"While Q1 2021 has been an encouraging quarter for PE investments, however, the upward trajectory can be impacted by the rising second wave of Covid-19 infections in India which started in the month of April 2021. The sustainability of revival in investor sentiments will therefore depend on how soon the second wave of infection subsides and the pace of vaccination," Baijal said.
The Centre proposes to prod states to initiate asset monetisation of state public sector enterprises (PSEs) by setting up specialised asset management (AMC) and asset reconstruction companies (ARC).
The idea is to expand the scope of government's asset monetisation exercise and enable state entities to unlock value for the next round of the investment that will help generate growth and employment.
AMC and ARC or a bad bank has been proposed for the banking sector in Budget 2021-22 to acquire, manage and turnaround bad loans. The Budget also talked about asset monetisation to unlock the true value of assets lying with government entities.
The plan now is to create a special purpose vehicle (SPV) under the government route that could take the shape of an AMC/ARC and help to maximise value of assets of PSEs. Similarly, exercise is now being thought as state level, where state specific AMC/ARC could do the same thing for local enterprises.
As per the plan being finalised by the Centre, assets may first be transferred to the proposed SPV which will then devise a plan to improve it before finding a strategic buyer and completing the transaction.
Earlier speaking to IANS, disinvestment department DIPAM secretary Tuhin Kanta Pandey had said that the SPV could look at monetising non-core assets of PSEs that are unable to undertake the work on their own and help them realise better value for assets that are unutilised or underutilised or are just lying idle without generating any revenue.
This would also mean that states, which are unable to undertake asset monetisation on its own, could consider taking the help of the Central SPV. In any case, both central and state SPV are proposed to work in close coordination to see that state assets get maximum value.
Asset monetisation is the process of creating new sources of revenue for the government and its entities by unlocking the economic value of unutilised or underutilised public assets. A public asset can be any property owned by a public body, roads, airports, railways, stations, pipelines, mobile towers, transmission lines, etc. or even land that remains unutilised.
The disinvestment department DIPAM has already asked all government bodies and PSEs to identify a list of assets that needs to be monetised. These would then be transferred to the SPV that will help improve the assets so that to maximise its value in the monetisation exercise.
With regard to land to be under monetisation, the plan is to create a central portal that could act as a land bank housing information about all such assets that have been lined up for utilisation by strategic investors.
Sources said, the AMC/ARC model for asset monetisation would work as it can help in maximising value of public assets thereby giving better returns to government and the PSEs. Certain assets may need to be improved before putting it up for auction. This work can be taken up by the AMC that can then put assets up for sale and complete the transaction.
It is envisaged that only non-core assets may be taken over by the proposed SPV and it would basically support smaller PSEs or those with inadequate infrastructure to undertake monetisation on their own. Larger entities like the Railways or other PSEs can continue on their own to monetise assets.
Though asset monetisation in plan in bits have been undertaken in the past and few PSEs have initiated exercise on this front, the government has given importance to this plan this year in the Budget and is actively looking to create a vast pool state asset that would be sold off.
Bucking the pandemic private equity (PE) investments into the India real estate sector rose around 19 per cent in FY 2020-21 to over $6.27 billion, according to an Anarock report.
During the previous financial year, PE investments into the realty sector stood at $5.8 billion.
Indian real estate recorded its highest-ever private equity investments since in the last fiscal, since FY16, noted the Anarock Capital's 'Flux - FY20-21 Market Monitor for Capital Flows'.
Unlike earlier, FY21 saw private equity investors focus majorly on portfolio deals across multiple cities and assets, rather on specific projects or cities. Such portfolio deals constituted 73 per cent of the overall investments, with around $4.58 billion invested through portfolio deals in multiple cities.
The average ticket size of PE deals rose by 62 per cent from $110 million in FY20 to $178 million in FY21. Both structured debt and equity witnessed strong growth during the year at 84 per cent and 15 per cent respectively, said the report.
Structured debt was largely towards portfolio deals instead of project-level assets, it said.
Though FY21 was an unprecedented year due to the pandemic, foreign PE funds showed much optimism for India. As much as 93 per cent of the total PE investments pumped into Indian real estate were by foreign investors.
Investments by foreign PE funds almost doubled from $3 billion to $5.8 billion in FY21. In contrast, domestic PE funds invested merely $300 million compared to $420 million in FY20.
Shobhit Agarwal, MD & CEO of Anarock Capital said: "Foreign funds are evidently very upbeat about India. High-grade rental-generating assets have attracted foreign investors in a big way during the year."
Moreover, India has a strong underlying demand for office space with quality workforce and average rentals available at less than a dollar per square feet per month, he said.
"Alongside, the successful REIT listings have provided a good monetising option for PE investors, leading to a stronger demand for good quality rental earning office and retail assets," Agarwal said.
S&P Dow Jones Indices have decided to remove Adani Ports and Special Economic Zone Limited from Dow Jones Sustainability Indices due to the reported commercial relationship of the company with Myanmar's military.
The change will come into effect prior to the opening of the indices on Thursday.
In a statement, S&P Dow Jones Indices said that the decision was taken after an analysis was conducted on the company post the news reports over its alleged commercial link with the Myanmar military.
"Adani Ports and Special Economic Zone will be removed from the Dow Jones Sustainability Indices following a Media & Stakeholder Analysis triggered by recent news events pointing to heightened risks to the company regarding their commercial relationship with Myanmar's military, who are alleged to have committed serious human rights abuses under international law," said the statement.
On March 31, the company had said in a statement that media reports were misrepresenting the Adani Group's investments in Myanmar.
It noted that in 2020, APSEZ won the Yangon International Terminal project through a globally competitive bid.
The project fully owned and developed by APSEZ is an independent container terminal with no joint venture partners.
The statement said that the land acquisition for the project was facilitated by the Myanmar Investments Commission led by U Thaung Tun, its Chairman and Minister of Investment and Foreign Economic Relations under former State Counsellor Aung San Suu Kyi's National League for Democracy government.
"As a responsible corporate our intention is to create investment-friendly opportunities in Myanmar through trade and commerce which will have a multiplier effect on job creation for the local communities and contribute towards the nation's economic and social development goals," it said.
"We condemn violations of the fundamental rights of all people and would continue to work with our partners and stakeholders, including business leaders, government and non-government organisations, to foster a business environment that respects human rights."
It also said that it is working with independent think tanks to ensure mitigation of human rights violations risks and building equal opportunity platform through sustainable value creations powered by critical port infrastructure.
Buyers in Gurugram now will have to spend extra money while purchasing properties in upscale condominiums, licensed colonies and builder floors at the Haryana Shahari Vikas Pradhikaran (HSVP) sectors. The district administration has increased the circle rates for 2021-22, which come into force from Thursday.
The rate of an upscale condominium like DLF Aralias, Magnolias and Camellias on Golf course Road has seen the steepest increase which have been increased by 25 per cent from Rs 20,000 to Rs 25,000 per square feet. At the same time, the rate of flats of more than a dozen multi-storey societies at Sohna Road, MG Road and Golf course Road have also been increased from Rs 8,000 to Rs 9,000 per square feet.
In the licensed colonies and independent floors in Haryana Shahari Vikas Pradhikaran (HSVP) sectors, the circle rate was increased by about 20 per cent from Rs 5,500 to Rs 6,500 per square feet. The rate of flats in Group Housing Cooperative Societies of HSVP sectors was hiked from Rs 3,600 to Rs 7,500 per square foot.
However, there is no increase in the rates of plots in the licensed colonies and HSVP sectors.
The flat rate of group housing societies of licensed colonies from Sector-15, 27, 28, 30, 3, 32A, 39, 40, 41, 42, 43, 45, 46, 50, 51, 52, 53, 54, 55, 56 and 57 has been increased from Rs 5,000 to Rs 7,000 per square feet. Similarly, the circle rate of flats in the Licensed Group Housing Society in Sector 58 to 63A has been increased from Rs 3,500 to Rs 5,000 per square feet.
"We have uploaded the proposed circle rates for the 2021-2022 fiscal year on our website. These rates will be implemented from April 8, 2021. Registry happening from Thursday will have to be done as per the new circle rate," said Basti Ram, the district revenue officer (DRO).
Meanwhile, the rates of industrial and IT sectors have not been changed. Apart from this, there has not been any change in the rates of licensed commercial buildings and markets. The rate of residential plots at Chandan Nagar and the Silokhera village in Gurugram has been increased from Rs 18,000 to Rs 42,000 and Saini Khera village from Rs 20,000 to Rs 30,000 per square yard.
"Amid corona the Delhi government reduced circle rates by 20 per cent and in Maharashtra by 4-5 per cent, but the Haryana government increased the maximum registry floor by 20 per cent. The group housing society rates have also been increased. The government and district administration should reconsider these rates," Ramesh Singla, president of Gurugram Home Developers & Plot Holders Association said.
As the Supreme Court on Friday ended a long strecthed dispute between the Tatas and the Mistrys, the matter of the Mistrys-led Shapoorji Pallonji Group's (SP Group) exit from the Tata Sons still hangs on fire.
Although the top court on Friday alllowed all the appeals of the Tata Group and dismissed the appeal of the SP Group, it did not decide on the prayer of the latter for its exit from Tata Sons in lieu of "fair compensation", leaving the matter unresolved.
SP Group, which holds 18.4 per cent stake in Tata Sons, had sought separation from the conglomerate through a scheme of reduction of capital by extinguishing the shares held by the SP Group in lieu of fair compensation effected through a transfer of proportionate shares of the underlying listed companies, with the balance value of unlisted companies and intangibles, including brand value, being settled in cash.
The verdict of the apex court, in a way, comes as another major setback for the SP Group which was seeking to raise funds by selling its stake in Tata Sons and strengthen its weakened financial condition.
The three-judge bench headed by Chief Justice S.A. Bobde noted that the application was filed after Tata Group moved an application for restraining SP Group from raising money by pledging shares and this court had passed an order of status quo on September 22, 2020.
"For the first time, the SP Group seems to have realised the futility of the litigation and the nature of the order that the Tribunal can pass under Section 242. This is reflected in Paragraph 62 of the application, where SP Group has stated that they are seeking such an alternative remedy as a means to put an end to the matters complained of," it said.
The bench observed that SP Group should have sought such a relief from the tribunal (NCLT) at the beginning.
"But in an appeal under Section 423 of the Companies Act, 2013, this court is concerned with questions of law arising out of the order of NCLAT. Therefore, we will not decide this prayer," the top court said.
The apex court said that after attacking Article 75 before the NCLT, the SP Group cannot ask the Supreme Court to go into the question of fixation of fair value compensation for exercising an exit option.
According to Article 75 of the Tata Sons Articles of Association, the company may at any time by 'Special Resolution' resolve that any holder of ordinary shares do transfer his ordinary shares. Such member would thereupon be deemed to have served the company with a sale notice in respect of his ordinary shares.
The court said that what the Mistrys have sought in the application for separation of ownership interests require an adjudication on facts of various items. The valuation of the shares of SP Group depends upon the value of the stake of Tata Sons in listed equities, unlisted equities, immovable assets, among others, and also perhaps the funds raised by SP group on the security or pledge of these shares.
"Therefore, at this stage and in this court, we cannot adjudicate on the fair compensation. We will leave it to the parties to take the Article 75 route or any other legally available route in this regard," the court said in its 282-page judgement.
As the Supreme Court did not give a clear directive in the matter of SP Group's exit from Tata Sons and has left it to the two parties to resolve the issue, it seems that Tatas now have an upper hand in the matter, making it tough for debt ladden SP Group to exit and raise funds, legal experts said.
Two Indian cranes have arrived at Iran's Chabahar port, which is now rapidly developing into a major hub serving Iran, India, Central Asia and Russia.
Iran's state-run IRNA news agency is reporting that two 100 tonne cranes from India worth $7.5 million had arrived at the Shahid Beheshti port in the Chabahar complex.
It quoted Behrouz Aqaee, Managing Director of Ports and Maritime Organisation of Iran as saying that the shipment had been sent within the framework of the long-term build-operate-transfer (BOT) agreement between Iran and India.
The third part of the heavy-lift machinery will be shipped to Chabahar by the end of the year, he said.
Iran's Chabahar received the first shipment of port equipment from India a couple of months ago.
The arrival of the cranes, will advance the handling capacity of the Shahid Behishti port of the two-part Chabahar port complex.
Chabahar is now beginning to gain traction as an oceanic gateway for landlocked countries in the region.
Earlier this week, India and Iran celebrated Chabahar day, where representatives from key Central Asian states including Uzbekistan and Kazakhstan, the two regional heavyweights. Specifically, transport minister of Afghanistan Qudratullah Zaki, Armenia's Infrastructure minister Suren Papikyan, Iran's Minister of Roads Mohammad Eslami, Russia's Deputy Minister of Industry Oleg N Ryazantsev, Uzbekistan's Deputy Minister of Transport Choriyev Jasurbek Ergashevich and India's Minister of State for ports Mansukh Mandaviya were present at the virtual meet which was addressed External Affairs Minister, S. Jaishankar.
During the Chabahar ceremony, Jaishankar had proposed the integration of the Chabahar Port with the International North South Transport Corridor (INSTC), marking India's ambitions to develop a vast network of ports and freight corridors leading into Eurasia.
The International North–South Transport Corridor (INSTC) is a 7,200-km-long network of moving freight by ships, railways, and roads. The corridor aims to connect India, Iran, Afghanistan, Azerbaijan, Russia, Central Asia and Europe. The cities that would be interlinked by this corridor include Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan, and Bandar Anzali.
Integration between INSTC and Chabahar is compelling because of the limitation of the highly congested Bandar Abbas, a key Iranian port on the INSTC route. Chabahar, a deep water port therefore comes into the equation as it can ease the burden on Bandar Abbas.
Chabahar port is strategically located in the Gulf of Oman on the mouth of the strait of Hormuz, an important choke point through which oil and gas tankers drawing energy from the Gulf countries pass.
It is ideally located within a network of ports between Dubai and Mumbai. The marine distance between Chabahar and Dubai is 654 kilometres. Karachi is 845 km away, and Mumbai is 1,560 km afar. Pakistan's Chinese-funded deep sea port of Gwadar, the starting point of Beijing's Belt and Road Initiative (BRI) is only 76 nautical miles away.
From an Indian perspective, Chabahar provides an ideal exit for iron ore drawn from Afghanistan's Hajigak mine and other natural resources from the Central Asian countries including Kazakhstan, Turkmenistan, and Uzbekistan. It is a major conduit for Indian exports in the vast geopolitically important region.
The Adani Ports and Special Economic Zone (APSEZ) Ltd. is acquiring the 58.1 per cent stake held by D.V.S. Raju and family in the Gangavaram Port Limited (GPL).
The acquisition is valued at Rs 3,604 crore and subject to regulatory approvals. APSEZ, the transportation arm of Adani Group, had announced acquisition of Warburg Pincus's 31.5 per cent stake in GPL on March 3 and together with this acquisition, APSEZ would have 89.6 per cent stake in GPL.
GPL is located in the northern part of Andhra Pradesh next to Vizag Port. It is the second largest non-major port in Andhra Pradesh with a 64 MMT capacity established under concession from the Government of Andhra Pradesh (GoAP) that extends till 2059. It is an all-weather, deep water, multipurpose port capable of handling fully laden super cape size vessels of up to 200,000 DWT.
Currently, GPL operates nine berths and has free hold land of 1,800 acres. With a master plan capacity for 250 MMTPA with 31 berths, GPL also has headroom to support future growth.
GPL handles a diverse mix of dry and bulk commodities including Coal, Iron Ore, Fertilizer, Limestone, Bauxite, Sugar, Alumina, and Steel. GPL is the gateway port for a hinterland spread over eight states across eastern, southern and central India.
The acquisition will help GPL to benefit from APSEZ's pan-India footprint, logistics integration, customer centric philosophy, operational efficiencies and strong balance sheet to deliver a combination of high growth by enhancing market share and add additional cargo types and improved margins and returns.
In FY20, GPL had a cargo volume of 34.5 MMT, revenue of Rs 1,082 crore, EBITDA of Rs 634 crore (59 per cent margin) and PAT of Rs 516 crore GPL is debt free with a cash balance of over Rs 500 crore.
The company has a paid up share capital of 51.7 crore shares of which 58.1 per cent is owned by DVS Raju and Family (Promoter), 10.4 per cent by the Government of Andhra Pradesh and 31.5 per cent by Warburg Pincus.
APSEZ announced acquisition of 31.5 per cent stake of Warburg Pincus on March 3 for Rs 120/share and shall acquire the D.V.S. Raju stake of 30 crore shares (58.1 per cent) also at Rs 120/share which works out to a consideration of Rs 3,604 crore. The transaction implies EV/EBITDA multiple of 8.9x and P/E multiple of 12.0x (based on FY20 figures) and is a value accretive transaction for APSEZ shareholders.
Karan Adani, CEO and Whole Time Director of APSEZ said, "The acquisition of GPL is a further augmentation of our vision of capitalising on an expanded logistics network effect that generates greater value as it expands. Every additional node that we are able to add to our network allows us to deliver a greater level of integrated and enhanced solutions to our customers. In this context, GPL is a tremendous addition to our portfolio.
"The associated hinterland we will now be able to tap into is one of the fastest growing in the eastern region and with the logistic synergies APSEZ brings to the table, GPL has a potential to become a 250 MMT port. This will undoubtedly help accelerate the industrialisation of AP. The Raju family has built a great port and we will continue to expand the world class asset that has been initiated by them."
APSEZ, a part of globally diversified Adani Group has evolved from a port company to Ports and Logistics Platform for India. It is the largest port developer and operator in India with 12 strategically located ports and terminals -- Mundra, Dahej, Tuna and Hazira in Gujarat, Dhamra in Odisha, Mormugao in Goa, Visakhapatnam and Krishnapatnam in Andhra Pradesh, Dighi in Maharashtra and Kattupalli and Ennore in Chennai -- represent 24 per cent of the country's total port capacity.
Realty major DLF's Finance Committee on Wednesday approved an issue of redeemable non-convertible debentures (NCD) with principal amount of Rs 500 crore through private placement.
The debenture will be issued in one or more tranches to certain eligible investors permitted to invest in the NCDs as per applicable laws, the company said in a market filing.
The secured, rated listed and redeemable NCDs will carry a coupon rate of 8.25 per cent (ie annualised equivalent of 7.95 per cent per annum payable per month).
The company did not disclose the purpose of the private placement.