India's largest real estate player, DLF, has sold its entire stake in Adone Hotels and Hospitality Limited (Adone) to Kolkata-based Avani Projects and Square Four Housing & Infrastructure for Rs 567 crore.
Buyers are looking for deals at half the price sellers are asking for.
CLSA has downgraded select real estate stocks and expects most counters from this sector to consolidate in the months ahead after the sharp run seen in them in the last few months. Most positive factors in terms of a pick-up in housing demand and office space absorption, it said, are already priced in. "We expect housing industry demand to grow around 12 per cent in 2024 and for large developers to outpace industry to grow at 15 - 20 per cent.
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Since the cash flows will be impacted in a big way, DLF will have to resort to selling non-core assets in a substantial and significant manner through the next few quarters.
In the March quarter analysts' presentation, the company had said it was targeting to raise a total of Rs 10,000 crore (Rs 100 billion) from non-core asset sales in the medium term.
The development comes close on the heels of DLF's closing the Rs 325-crore (Rs 3.25-billion) deal to sell 150 MW wind turbine project in Gujarat.
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DLF had bought 17.5 acres of land in 2005 from the National Textile Mills for about Rs 700 crore (Rs 7 billion).
DLF is to divest non-core assets, including hotels and plots of land, but not Hilton JV, Delhi Aman.
JM Financial Asset Management (Gurgaon) requires two summer trainees for the managing and empanelment of Distributors.
There has also been some easing of norms, allowing foreign direct investment to come into relatively small projects of 20,000 sq metres.
The developer needs to realise Rs 3,000 crore (Rs 30 billion) to Rs 3,500 crore (Rs 35 billion) from non-core asset sales, to reach its 2011-12 goal.
Shares of real estate firms have been outperforming over the past year. The rally, analysts say, may hit roadblocks in the near term amid stretched valuations, even as the long-term prospects for the sector remain ebullient. "Most of the positive news flow is already in the price. Hence, investors sitting on hefty profits may partially cash out at current levels," suggests V K Vijayakumar, chief investment strategist at Geojit Financial Services.
India's largest realty firm DLF on Friday said its net debt increased by nearly Rs 1,000 crore (Rs 10 billion) in the July-September quarter to Rs 22,519 crore (Rs 225.19 billion), mainly due to delayed receipt of payments related to non-core asset sales.
Early last year, the company had said it aimed to reduce its debt, which stood over Rs 21,000 crore then, to Rs 10,000-11,000 crore (Rs 100-110 billion) through the sale of non-core assets and improved cash flows.
Is looking to raise Rs 3,000 cr.
Experts, however, caution that though the moves are positive for the sector as a whole, they don't expect much gain in the near-term.
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Its net profit stood at Rs 100.05 crore (Rs 1 billion) in the year-ago period.
The BSE Realty index on Monday soared 4.3 per cent-most among the 19-sectoral sub-indices-buoyed by the proposal to formalise fractional ownership of real estate in the country. The Securities and Exchange Board of India (Sebi) on Friday issued a discussion paper proposing to regulate online platforms offering fractional ownership in real estate, a model already popular in countries such as the United States and UAE.
The company's profit stood at Rs 292.79 crore (Rs 2.92 billion) in the year-ago period.
It will raise the money by selling two non-core businesses - luxury hotel chain Amanresorts and wind energy business.
Analysts, however, suggest investors remain selective on realty stocks and buy only where there is revenue visibility and a credible promoter backing.
Home prices across the top six cities are set to jump 6-10 per cent this fiscal and 3-5 per cent in the next financial year because of a steep rise in raw material, labour and land costs, and relatively favourable demand-supply dynamics, a report said on Thursday. The report by Crisil also said large residential realtors are on course to log a robust 25 per cent sales growth in 2022-23 and 10-15 per cent in the next fiscal. The unsold inventory level is down to 2.5 years from four years pre-pandemic, and this has credit profile of the large realtors strengthening, the report said.
Ace investor Rakesh Jhunjhunwala on Thursday said real estate developers are afflicted with very low return on capital as compared to bluechip stocks. Jhunjhunwala, who runs RARE Enterprises and is set to be a major shareholder in an upcoming airliner, said only the affordable housing developers can look at listing because of the volumes which they can deliver. It can be noted that very few developers like Macrotech Developers formerly Lodha, and DLF are listed on the bourses. Jhunjhunwala cited the case of DLF, saying the stock price plummeted to Rs 80 from Rs 1,300 per piece to illustrate the risks associated.
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After his recently published autobiography Whatever the Odds, he's already looking forward to a biography, where he's known as a giver more than anything else.
Land costs constitute 50 to 60 per cent of a project's overall costs.
The real estate sector might have been caught off guard by the second wave of the Covid-19 pandemic, but large listed developers like Godrej Properties and Prestige Estates Projects soldier on undeterred. They aim to have sales bookings of Rs 10,000 crore in the next few years.
Global businesses still believe that India consumption story is intact despite the slowdown of the past couple of years.
But the Robert Vadra firm, which held luxury apartments in top DLF projects, sees income and profits dry up since FY11.
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Hilton has also hired Mallika Rao Bedi, former head of human resources at Oberoi and Trident Gurugram, as its regional head of human resources (Asia Pacific).
GIC entered Indian real estate in 2005, when it did a deal with residential developer XS Real, a Chennai-based developer
Many, including DLF, Suzlon, UB, the Tata and the Aditya Birla Group are selling stake or assets to reduce debt and the strain on their balance sheets. That's because they have been hit either by slowing sales, or have a big exposure to markets in the West where demand has contracted sharply as a result of the economic downturn.
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Whether it is DLF in the National Capital Region, or Godrej Properties and Oberoi Realty in Mumbai or Sunteck Realty, Prestige Estates and Sobha Realty in Bengaluru, most top players have launched or lined up a slew of new project launches during this season.
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