DLF to focus on hotels, SEZ development

Delhi-based realty developer DLF expects to maintain strong operating profit margins in FY08.

Rajiv Singh, Vice-Chairman, DLF, expects volume growth to strengthen in times to come. The thrust in middle-income housing will take off next quarter, he said.

The company was cash flow positive and is focusing on hotels as well as SEZ development, Singh said. Revenues included money from sale of assets, he added.

Excerpts from CNBC-TV18’s exclusive interview with Rajiv Singh:

Q: Does the Rs 3,100 crore in revenues that you have clocked this quarter include any revenues or sales booked to DLF Assets?

A: They include revenues of sales booked to DLF Assets, in consistency with what we had started last year. As compared to last year, about 60% of operating profit has come from DLF Assets. In this quarter, that percentage is now under 50%. To that extent, the rest of operations have also started performing strongly this quarter.

Q: What exactly did DLF Assets contribute to revenues and operating profits?

A: For operating profit, it would have been under 50%. So, DLF Assets would have contributed around Rs 1,000 crore on an operating profit basis. Total revenue contribution would have been around Rs 1,600 crore.

Q: Could you break up the non-DLF Assets between residential and commercial for this quarter?

A: The bulk of them would be residential. Commercial revenues, which are retail revenues in a sense, are basically on a rental model. Retail revenues would not be in excess of Rs 250 crore and the balance would be residential.

Q: You spoke about annualized EPS of Rs 35. Do you think this is the kind of quarterly run-rate that you may have of revenues, about Rs 3,000 crore and Rs 1,500 crore in revenues and profit respectively? Can the numbers be extrapolated evenly for the remaining three quarters?

A: Ours is a lumpy business, so I hesitate to make that statement. We are not yet going on a vacation and hope to continue working for the next nine months. We hope to not only maintain that, but also to increase our mettle as we go forward.

Q: Are you saying, on a base case, that you can multiply the current quarter’s numbers by 4 and not be totally off the mark for full-year profit projections of Rs 6,000 crore?

A: I hope not to be totally off the mark. On the conservative side, pleasant surprises will await us in the quarters going forward. We are extremely optimistic about this year and the years ahead.

Q: Could you confirm whether the operating margin for this quarter has indeed been 56%? Are you saying that margins for the full year will be comparable give or take a bit?

A: Yes, give or take a bit. As our thrust into middle-income housing acquires more volume, margin dilution will naturally take place. This will be accompanied by a huge increase in revenues. This year, I don’t expect that to be significant, since we are just starting that. For this year, that statement may be generally correct.

Q: Of the Rs 1,600 crore in revenues that you booked from DLF Assets, from which properties would those revenues have come from.

A: These are from our office projects in Chennai, Hyderabad, and Gurgaon.

Q: The remaining Rs 1,500 crore has principally come from the residential area. Could you break it up between geographies?

A: At present, most of it would come from NCR and Gurgaon predominantly. A part of it has come in from Delhi. In terms of revenue, the break up would be about 60% and 40% for Gurgaon and Delhi respectively.

Q: What are the key projects that are coming on stream in terms of completion of projects? What would sales for the remaining three quarters be? Which are the major ones that you can highlight for the rest of the year?

A: We are starting several new large office complexes in Gurgaon, Kolkata, Nagpur, Ahmedabad, and Mumbai. That’s a major area. In offices, we will be opening a lot of new fronts within this year itself.

In retail, we have just started construction on our mall in Mumbai. This was the NTC mill land that we had won a couple of years back. That is a major move for us. Our mall in Gurgaon, which is the largest mall proposed in India, is now in active construction.

At present, we expect all our retail projects to be under construction. Moreover, we expect the first delivery of our new generation malls, within this financial year itself. In the late third quarter or early fourth quarter, we will see the first of these malls actually opening up and setting new standards for retail in India.

We will definitely be launching projects shortly in Bangalore, Chennai, and Indore. These are three centers where we will be launching in the near future. We hope to launch in and around Real Estate Chandigarh and other locations possibly in the third quarter.

Q: Do you hope that all of this will end up totaling something close to or in excess of Rs 12,000 crore in revenue for the full-year?

A: Yes, let’s see how things go. We are hoping to see interest rates stabilising and moderating. We are optimistic that things should be substantially better.

Source://moneycontrol.com

Lemon Tree to open 6 properties next year

Upscale hotel chain Lemon Tree is set to launch six properties across metro cities in India. It is also initiating talks with Nirula's for its F&B outlet - Potpourri - for its no-frills brand Red Fox.

The company plans to launch its Lemon Tree brand in Mumbai, Chennai, Ahmedabad, Jaipur, South Delhi and Hyderabad by 2008 and one property in East Delhi by the end of this year. Patu Keswani, chairman and managing director of Lemon Tree Hotels, said, "The properties in Hyderabad, Jaipur and East Delhi will be mixed-use developments. The East Delhi property is located above the East Delhi Mall (EDM)."

It plans to take the figure to 14 across 12 cities by 2010. "We are building Lemon Tree Hotels in Ahmedabad, Chennai, Hyderabad, Chandigarh, Bangalore, Delhi, Jaipur, Mumbai and Pune," he said. Keswani added that the group will also initiate talks with Nirula's to open its F&B brand in its Delhi Red Fox property, and will consider it for the other properties as well.

Red Fox is expected to open in Delhi, Jaipur, Hyderabad and Chandigarh within two years, according to Keswani. The group is also planning to open eight more Red Fox properties in Navi Mumbai, Coimbatore, Kolkata, Ranchi, Raipur, Nagpur, Bangalore and Mysore by 2011. Currently, Lemon Tree Hotels has four operating hotels - two in Gurgaon and one each in Pune and Goa.

source://expresshospitality

Real estate will now offer dimishing returns

Even though the real estate sector is at its all-time-high in the country and is apparently showing no signs of slowing down, total returns or operating profit from the sector is likely to moderate in future in comparison with those of the past three years. Moreover, despite the boom, the sector is unlikely to be able to fulfil the growing housing demands of the country, especially of the middle and lower income groups.

According to the ICICI Bank Global Investment Outlook for July, brought out by the bank’s Private Banking Research Division, operational income of the sector grew at a rate of 179 per cent over the past 5 quarters, with operating profits up by a massive 469 per cent. Average margins of constructors are now as high as 29 per cent with some real estate companies in the national capital region and the Mumbai-Pune belt earning an astronomical 200-170 per cent.
The report also points out that despite the boom, the sector will not be able to fulfil the demand for low and medium income group (LIG and MIG ) housing and there will be a shortage of about 27 million houses by 2012.

A prosperous middle class, higher incomes and fast urbanisation has presented numerous opportunities to develop the retail sector especially in India and China. The report foresees a huge growth in MIG and LIG housing. “Property prices have stabilised over 6 months as developers cannot afford to hoard flats. But there is maximum demand in the LIG and MIG sector which will result in a shortage of 27 million houses by 2012 estimated.”

However, North and West India is likely to see 15-20 per cent correction in realty prices and 50 per cent fall in real estate offtake may also be witnessed. “We expect global real estate securities to benefit from continued GDP growth and strong property fundamentals,” the researchers observed.

The sector will continue to have the potential to deliver attractive returns, albeit at lower levels than seen in the past three years. Citing reasons for the growth in the real estate india market the report observes:

“The retail market in India has been growing due to increasing demand from retailers, growing number of employed women, higher disposable incomes, media proliferation and growing consumerism.”
Source://thestatesman.net

Investors fancy real estate stocks in Punjab, Chandigarh

Realty stocks have caught the fancy of small investors in Punjab and Chandigarh according to stock brokers and financial experts.

Leading stock brokers told FE in Punjab people have always fancied land and now they had been lured by stocks floated by land developers.

Well know stock broker VKumar of Vikson Finance says retail investors in Punjab and Chandigarh are excited over listing of the stock of DLF, a real estate company.

He says the issue which was in the price band Rs 525–Rs550 got overwhelming response from this region. The next issue is offered to public in the was likely to open at about Rs 1000 per share. Kushal Pal Singh, would become the richest Indian in the world surpassing LN Mittal. Before the public issue, Singh held 99.5% of the total equity of the company amounting to Rs 5 billion $US.

Further he said, DLF had put life into other realty stocks providing much needed oxygen to it. He said that it was ironic real estate stocks were going upward when the real estate market was going down and there was sluggishness in the sale purchase of real estate in the country. Joshi says worldwide it had been proved that stock markets were indicators of things going to happen in future and were ahead of real happenings. He said that the strengthening of real estate stocks shows that real estate sector was likely to witness another boom in next few months.

Source://financialexpress.com

Chandigarh tops list of boom towns of tomorrow, Nagpur 2nd

Always wanted to buy a house but just can’t afford one any longer? Have a little surplus money that you’d like to invest in real estate but find land prices in your city completely out of reach? It might not be a bad idea to think beyond life in a metro and consider some of India’s smaller cities, which could be where the next big boom is coming.

That’s right. If you thought all the real estate action was in the metros, think again. A booming economy and surging service sector have ensured a surge in income and purchasing power even in smaller towns. And the need to keep costs in check is prompting many corporates to check out ‘B’ cities even as retail chains are eyeing potentially lucrative customer bases.

So which are the boom towns of tomorrow? A study of India’s emerging growth centres has come up with a list of 15 cities, all of which share the advantages of relatively low real estate cost, plenty of land available for development, an untapped pool of manpower and rising quality of life.

After assessing cities on the basis of five key parameters — real estate Chandigarh, people, physical infrastructure, social infrastructure and business environment — the study concluded that India’s hottest emerging city is Chandigarh. India’s first planned city got top ranking for the potential of its real estate market, physical infrastructure and business environment. While there is little space left within the city itself, Chandigarh scores because of the rapid development taking place on its outskirts, in areas like Panchkula, Mohali, Zirakpur and Dera Bassi on the Chandigarh-Ambala highway. Good connectivity, low operational costs and high disposable income also contributed to it being declared India’s hottest emerging city.

Chandigarh is followed by Nagpur, which has seen a boom in both commercial and residential construction. With efforts on to improve the city’s infrastructure, it has the potential for developing into a much sought after destination, especially since plentiful supply of educated manpower and lots of land for large campus developments are attracting many IT companies to the city. The study, conducted by real estate consultancy Knight Frank, puts Goa and Kochi at joint third place.

Source://indiatimes.com