Author Archives: Rachna Ranjan

Demonetisation: REIT listing turns attractive with falling bond yields, interest rates

The government’s demonetisation move is likely to bolster the prospects of the much-awaited listings of Real Estate Investment Trusts (REITs) that has so far remained a non-starter. Owing to higher liquidity on account of expected transfer of liquidity from the informal sector to banking, government bond yields have seen a compression of 40 basis points since demonetisation was announced on November 8.

Such a change in yield implies a boost for prime office markets such as Bandra-Kurla Complex in Mumbai as office assets are likely to be revalued nearly 4% higher. Apart from this, expected reduction in interest rates through monetary policy is also likely to enhance returns from REIT structures that have so far remained unattractive for investors.

Prospects for Canadian commercial real estate

With interest shifting further northward in the wake of the U.S. presidential elections, the Canadian commercial real estate sector can expect sustained activity throughout 2017, according to the head of an urban environment management firm.

Last week, Allied Properties REIT chief executive officer Michael Emory stated that demand for commercial real estate in the country’s leading markets—and in Toronto, in particular—won’t slow down in the near future, especially considering Donald Trump’s surprise win.

Real estate fund-raising plans run into multiple roadblocks

Indian real estate funds are finding it tougher than usual to raise money as investors demand a more rigorous due-diligence process in an uncertain environment. Large pension funds and global investors are now seeking exclusive and direct partnerships with developers instead of parking money with fund managers who are essentially intermediaries.

“There are some uncertainties concerning the real estate sector right now,” said Shobhit Agarwal, managing director, capital markets and international director at property consultant JLL India. “India is on the radar and the government has done a lot of marketing to attract investments, but being good domestic fund managers does not automatically make them right to raise dollar-denominated funds,” he added.

Dubai hot favourite for realty investment

Indians have by far remained the most prolific foreign investors in Dubai realty, outshining capital inputs from British, Russians and all others. As per the data from Government of Dubai’s Land Department, Indians have once again topped the charts as the number one investor in Dubai realty with a whopping investment of Rs 13,600 crore ($2 billion) into the sector in the first half of 2016 alone.

“Dubai’s real estate market is becoming an attractive proposition to a multitude of international investors. However, no other nation invested more money into Dubai than India, with little over half-a billion dollars i.e Rs 3,400 crore worth of investments in 2011; the investments from Indians have gone up ten-times in the last four years.

Outlook for real estate market not as gloomy as feared

Real estate investors have not done well since a real estate mogul became president-elect in the US. It would be ironic indeed if Donald Trump were to preside over a slump in the commercial property market, but is that likely?

Shares of listed real estate companies are down almost 4 per cent since election night. The sharp rise in US bond yields has made the dividends on real estate investment trusts look relatively less appealing, and there are fears that higher borrowing costs will choke off the rise in property prices. Meanwhile, the holders of bonds backed by commercial mortgages are also nursing losses, for similar reasons.

Brookfield in talks to acquire Bharti Infratel

Brookfield Asset Management Inc has entered exclusive talks on a takeover of Bharti Infratel Ltd, India’s largest listed wireless tower owner, after submitting a bid valuing the company at about $11 billion, people with knowledge of the matter said.

Canada’s largest alternative asset manager offered to buy a majority stake in Bharti Infratel for around Rs 400 per share, the people said, asking not to be identified because the information is private. An investor group including KKR & Co, Canada Pension Plan Investment Board and Blackstone Group LP made an offer for a minority stake in the Gurgaon-based company, which is controlled by billionaire Sunil Mittal, according to the people.

Realty investment trusts have $77bn opportunity in India

Indian real estate is likely to provide investment opportunity worth up to $77 billion through REIT-eligible commercial office and retail properties across the country’s top seven cities by 2020.
Across these cities, including Mumbai, Delhi-NCR, Bengaluru and Pune, ready commercial space eligible for REIT investments amounts to 277 million sq ft, accounting for less than half (44%) of total office stock in India, showed a Global Real Estate Institute report.

Trump election victory could hit commercial property markets in Asia Pacific

The result of the US election is likely to lead to more uncertainty in the commercial property market in the Asia Pacific region with many markets already seeing rents fall. Overall prime commercial rents increased 0.6% quarter on quarter and 1% year on year at the end of the third quarter of 2016, according to the latest Asia Pacific prime office rental index from a international real estate firm.

But the index report points out that while the increase in the index was the result of rising rents in eight of the markets over the quarter, six of the 19 markets tracked saw rents fall. ‘While it is still early days, the results of the US election is likely to lead to more uncertainty across the region, with the likely end of the TransPacific Partnership (TPP) a blow to export dependent economies,’ said Oliver Holt, Asia Pacific head of research.

Houston has some of the priciest office space in U.S.

The average rent for space in a downtown tower is $47.43 per square foot, putting Houston in the top 10 of the nation’s most expensive office markets, according to a commercial realty firm. The national average is $43.79 per square foot.

Despite downtown’s strong rents, the report notes how Houston’s sublease glut and “economic freeze” is pushing down rents in buildings across the area:

“Altogether, more than 12 million square feet of space has hit the market in the past two years alone. Law firms and professional service tenants seeking quality space are taking high-priced blocks off the market, but that’s leaving available space with no short-term tenant demand.”

The most expensive U.S. market is New York City where the average rent is $86.75 per square foot.

Source: Chron.com

Japan’s Technology Major HORIBA Opens Tech Centre in Pune to Offer Engine Testing Facilities for Auto Makers

Automotive testing systems major HORIBA, inaugurated today its India Technical Centre at Chakan MIDC Phase 2 near Pune in Western India. Maharashtra Chief Minister Devendra Fadnavis inaugurated the 7000 sq mtrs facility which will be a comprehensive location for product demonstration and testing; a workshop for product customization and assembly; an office space and a training center for HORIBA India.

Kenji Hiramatsu, Japanese Ambassador to India, Atsushi Horiba, Chairman of HORIBA International and Jai Hakhu, Chairman and Managing Director of HORIBA India Private Limited were present at the occasion along with Shiroor MP Shivajirao Aadhalrao Patil and MLAs Suresh Gore and Sanjay Bhegade.