Japan’s Sumitomo Enters Indian Realty Sector with $2 billion Gurgaon Projects

Japanese conglomerate Sumitomo Corp today announced USD 2 billion township project in Gurgaon as it forayed into Indian real estate sector in collaboration with local partner Krishna Group.

The 50:50 joint venture, Krisumi Corporation Pvt Ltd will build 5,000 flats, shopping mall, office space and educational institution at 65-acre land in Sector 36-A, Gurgaon abutting the Delhi-Mumbai industrial corridor's Global City.

The project, which will have a total built-up area of 18-18.5 million square feet, will be developed in phases, the two partners announced at a media round table today.

"I want to create a Japanese city here...The first phase will comprise 1.2 million square feet of

 built-up, consisting of 430-450 apartments and will be completed in 4-5 years," said Ashok                 Kapur,      Chairman, Krisumi Corp.

Krishna Group, a diversified business house with interests in auto components, media, travel, and entertainment seating, owns the 65-acre land parcel where the mini-township will be built, said Kapur, who is also the head of the Group.

"Idea is to create a niche which Indian market had not seen," Kapur said adding the apartment that may cost Rs 1-2.5 crore will have quality and facilities equivalent to those costing Rs 15-20 crore at present. Sumitomo Corp, which has done 300 real estate projects globally, will bring in the expertise and technology for Krisumi City. 

"India's real estate sector is going through an interesting phase. While consumer's expectations have evolved manifold, most of the traditional developers are finding it difficult to effectively cater to all their requirements," said Masahiro Narikiyo, Chairman and MD,

Sumitomo Corp India. Narikiyo said the Tokyo-based group has done projects in Japan, the US, China, Singapore, Indonesia and Vietnam. The company was attracted to India because it "is politically very stable among emerging markets," he said. "It is governed by democracy, the value we can share." Sumitomo Corp has sold over 50,000 (rpt) 50,000 condominiums in Kansai and in the Tokyo metropolitan area over the past 50 (rpt) 50 years. In the office building business, it operates about 3,30,000 square metres of office space in Tokyo and Osaka.

Kapur said the biggest challenge facing the Indian real estate industry today is quality, efficiency, and commitment to timelines, all of which is exactly what Japan is known for.

"Japan is already beyond RERA," he said .. adding that Sumitomo may enter into more such alliances in India later on. The project spread over 65 acres will be developed in 7-8 phases over 10 years. While the first phase with 1.2 million sq ft development will have over 450 apartments, the entire project will offer around 5,000 apartments.

“The biggest challenge facing the Indian real estate industry today is with regard to quality, efficiency and commitment to timelines, all of which are exactly what Japan is known for. We are certain that our partner, Sumitomo Corporation, part of the 400-year-old Sumitomo Group, with their extensive global experience in real estate development shall contribute tremendously in creating projects with endearing value for our clients as well as the local communities around it,” said Ashok Kapur, chairman, Krishna Group.

The joint venture company has got most of the approvals for the first phase, which will be launched later this year. The construction of the first phase of the project is also expected to commence this year.

Source : http://bit.ly/2EP74ZK

By 2020, Indian realty to provide $77 billion REIT investment opportunity: Report

MUMBAI: Indian real estate is likely to provide investment opportunity worth up to $77 billion through Real Estate Investment Trust (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 per cent) of total office stock in India, showed a Cushman & Wakefield-Global Real Estate Institute report.

In addition to completed stock, around 68 million sq. ft of additional REIT-eligible stock is expected to be completed by 2020 across these seven cities.

The commercial office stock, which accounts for the majority at around 70 per cent of the total value of REIT-eligible stock, is estimated to have a total value of $44 billion to $53 billion.

In retail assets, the estimated value of REIT-eligible stock (completed and under-construction malls) is $20 billion to $24 billion, with 52 million sq. ft malls eligible for REITs. About 78 per cent (41 msf) of these malls are completed and operational, while the remaining 11 million sq. ft are under construction and scheduled to be completed by 2018.

"The commercial office market is likely to be on an upward trajectory steered by an improving economic outlook, as well as strong demand from certain sectors such as IT-BPM, BFSI, FMCG and pharmaceutical sectors going ahead. In such a buoyant environment, the Indian market is well-placed to witness the listing of REITs, led by the government's steps to ease policies for the investment vehicle," said Anshul Jain, MD, Cushman & Wakefield India. "Over the last year, the government has not only streamlined the taxation policy of REITs, but also eased regulations that have warmed up investors to REITs in India," he added.

He highlighted the recent modifications to measures, including increasing the number of sponsors to five from three allowed earlier, easing the investment cap in under-construction assets allowing up to 20 per cent of the investment fund in such assets, from 10 per cent earlier and removal of dividend distribution taxes.

In commercial stock, the highest value of REIT-eligible stock, including under-construction, is seen in Bengaluru at $12.3 billion to $15 billion. Besides steady supply, the city is likely to witness continued momentum in demand from IT-BPM companies. Bengaluru is distantly followed by Mumbai $8.9 billion to $10.9 billion and Delhi-NCR with $8.7 billion to $10.6 billion in terms of value of REIT-eligible stock.

"In conjunction with the imminent introduction of REITs, investors have already started increasing their exposure to commercial office assets. With a few large deals for office portfolios in the closure stages in the fourth quarter, the year 2016 is expected to record the highest annual investments of $3.6 billion made in this asset class since 2008. REITs have a huge opportunity for developers and investors in India, given the potential in the Indian real estate market," said Diwakar Rana, Managing Director, Capital Markets, India Cushman & Wakefield.

Pune has the highest under-construction REIT-eligible stock of 19 million sq. ft by 2020; hence, the city's projects would hold weight amongst investors in the near future. Moreover, Pune is likely to emerge as a strong market led by IT-business process management (BPM) companies and entities conducting offshore activities in sectors such as BFSI. These companies prefer Pune due to its competitive rentals, availability of local talent and close proximity to Mumbai.

Hyderabad too is a prominent market that would be on investors' radar, with the city expected to account for roughly 11 per cent of the total under-construction REIT-eligible projects over the next four years. The city's commercial market has been on a path of revival since 2014 after the bifurcation of the state, bringing political stability to Hyderabad.

While in completed projects as of 2016, Delhi-NCR has the second-highest value of REIT-eligible stock, the city currently has the low under-construction stock that could curtail future investment opportunities for investors.

In total retail stock, the highest value of REIT-eligible stock is estimated in Mumbai, with value of $6.1 billion to $7.5 billion. Mumbai is followed by Delhi-NCR, with REIT-eligible malls valued at $4.7 to $5.7 billion, followed by Bengaluru with REIT-eligible malls valued at $2.8 to $3.4 billion.

The year to date private equity investments in retail assets during 2016 increased threefold to $569 million, from $156 million a year ago. Around 65 per cent of retail asset investments made during 2016 are concentrated in Mumbai, followed by Delhi-NCR at a distant second with 24 per cent share.

Source: https://goo.gl/N3NHDb