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Naushad Panjwani quits Knight Frank India after 15 years

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News Point: After 15 years of stint with Knight Frank India, Naushad Panjwani floats business venture Mandarus Partners.

Naushad Panjwani, Knight Frank India,  IPC in India, Mumbai real estate, India real estate news, Indian property news, Track2RealtyNaushad Panjwani, Senior Executive Director, Knight Frank India has moved out of the international property consultancy after a 15 year long association. Naushad will now be floating Mandarus Partners as its Founder & Managing Partner.

At Knight Frank, Naushad has always been in leadership roles heading businesses across geographies. As the Senior Executive Director, his role encompassed a strategic focus on Business Development and he mentored an array of verticals and departments across geographies.

An ace dealmaker, in the last few years he has been a rainmaker for Knight Frank, clinching several important businesses. He is also the Past President of Bombay Chartered Accountants’ Society and on the boards of many institutions.

His new venture Mandarus Partners will focus on Cross Border Mergers & Acquisitions. It has a clutch of partners who are ex CEOs of reputed listed companies.

With a commerce background Naushad is a Fellow Chartered Accountant with the Institute of Chartered Accountants of India.  A former President (2013-14) of Bombay Chartered Accountants’ Society, he has experience of more than 23 years across geographies.

He has been with Knight Frank India since 2001 and has handled various portfolios from CFO to heading various businesses. Now as the Executive Director – Corporate Projects, he has focus on cross vertical collaboration and selling, sustainability of business model of all the verticals.

With strategic focus on the West and Special Projects, he has also mentored HR vertical, key client engagement initiatives and Residential Agency business.

Prior to joining Knight Frank, he ran a consulting firm specializing in tax, audits and management consultancy. He is a WIC member of Indo American Chamber of Commerce and member of British Business Group, European Business Group and Indo German Chamber of Commerce. Naushad is the co-author of the book ‘Real Estate Laws’, one of the ‘best seller’ in the domain having sold over 7000 copies.

Naushad is also in the jury board of Track2Realty Brand X Report.

Top 25 real estate companies Q2 revenues fall 4% to Rs 67.44 billion: Knight Frank India report

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india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, knight frank india, knight frank UK, real estate managementTrack2Realty:  India’s top 25 real estate companies have reported 4% year-on-year decline in cumulative revenues of Rs 67.44 billion in the second quarter ended September 30, another quarter highlighting the slump in the sector, a Knight Frank India report said.

The analysis of these realty developers’ quarterly performance indicates an improvement in sale momentum with focus on the residential sector. While the revenue of top 25 real estate companies declined by 18% in Q3FY12 and 9% in each of Q4 FY12 and Q1FY13, the margin of decline in Q2FY13 was lower at 4%

“The reason being the change in focus of developers on residential real estate which even in this tough economic environment fares better in comparison to commercial real estate,” the report said.

To track the growth in the sales volumes, Knight Frank has analyzed data for a set of 14 companies out of the top-25 companies that have consistently disseminated information on a quarterly basis. On a cumulative basis, this set of 14 companies has made sales of 18 million sq ft in Q2 FY13, which is a growth of 25.6% over a year ago.

The same period last year (Q2 FY12) witnessed sales decline by 30%. The sales volume data, indicator for the depth of the market, signals September’12 quarter was much better in comparison to the same period last year.

While the residential demand in major metros was the primary reason behind this uptick, improvement in state of project approvals in some western markets also helped the cause. On the backdrop of improved sentiment many developers accelerated residential project launches, Knight Frank said.

Top management change at Knight Frank

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india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, knight frank india, knight frank UK, real estate managementTrack2Realty: After 17 long year with Knight Frank, Pranay Vakil has decided to retire. The Indian business has gone from strength to strength under his leadership, increasing employee numbers from an initial 10 to over 800 and opening 7 offices across the Country and with more planned.

Nick Thomlinson, Group Chairman commented: “Pranay and I set up the business in 1995 and his unrivalled knowledge of the Indian property market and enthusiasm has ensured that Knight Frank is now a market leading firm across India. On behalf of the Knight Frank group we thank him for his continued dedication to the company and we wish him the very best for the future.

Pranab Datta will succeed Pranay as Chairman having been Vice Chairman & Managing Director of the firm for over five years when he spearheaded the growth and expansion of the firm.

“Shishir Baijal will join us in October as Country Head and Managing Director, responsible for the day-to-day operations of the company. He will also concentrate on business development, ensuring the company is best placed for the challenges that lie ahead. With his experience, and the full support of the company, I am confident that the Indian business will go from strength to strength.”

Revenues and profits dropped by 19% and 70% since FY08: Knight Frank

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india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, knight frank india, knight frank UK, real estate managementThe impact of slowdown is already being felt on the real estate market with residential segment witnessing sluggish demand across all the major cities.

The Economy and Realty Glance for the Month of October 2011 of Knight Frank India analyses the financials of the real estate industry.

Global economic slowdown and uncertainty in the financial markets is finally having its consequences on the Indian economy with all the lead indicators of growth showing a downward trend. Index of Industrial Production (IIP) grew at 4% in August 2011 which is at one of the lowest levels since April 2010. The manufacturing Purchasing Managers Index (PMI) is at its two year low of 50.4 for the month of September 2011 raising serious questions about the growth momentum of the economy.

PMI is a survey based compilation by HSBC of manufacturing sentiment and is considered a good indicator of factory output. An index level above 50 indicates expansion, and higher the index above that threshold greater the growth.

The impact of slowdown is already being felt on the real estate market with residential segment witnessing sluggish demand across all the major cities. Apart from demand slowdown, impact of rising cost of funds, increasing construction cost and delays in government approvals is worsening the already dismal condition of the sector. Like any other sector, the aforementioned factors clearly point towards a price correction in the real estate market.

However, residential prices in most of the cities have either remained steady or increased marginally in the past few quarters. This implies that demand-supply conditions are not having any significant impact on the residential market prices in the short term and there are other factors at play which are having a greater influence on price.

Financial condition or holding capacity of real estate players is one such factor which influences the price movement in the market to a great extent. A reasonable estimate of the stalemate between buyers and developers coupled with an understanding on the holding capacity will provide the direction in which prices may move in the market going forward. For the purpose of understanding this relationship, we have conducted a financial analysis on a group comprising leading 19 realty players.

Since FY08, revenues and profits have dropped by 19% and 70% respectively despite property prices witnessing an increasing trend. On the other hand, debt and interest outgo have increased by 1.5 and 2.3 times respectively in the same period. Although networth has also strengthened during this period, it happened mainly during FY08 when equity markets had a flair for real estate Initial Public Offerings (IPOs) and many realty companies raised large amount of equity through this route.

However, fund raising through this route has slowed down considerably in the last couple of years due unfavorable market conditions for realty companies. Since studying absolute debt and equity numbers does not provide much insight, it is better to analyze the liquidity ratios for understanding the financial stress of the sector.

Debt equity ratio of the industry has improved over the last five years from 1.9 to 0.8. Although this ratio has improved, the ability of the industry to service this debt has deteriorated over the years. Interest coverage ratio, which is a measure of the number of times a company could make the interest payments on its debt with its earnings before interest and taxes, has consistently fallen since FY08 from 12.5 to 2.7. Even the Debt Service Coverage Ratio (DSCR), which is a better measure of gauging liquidity since it takes into account both interest and principal repayments on debt, has dropped from 1.54 to 0.56 in the last four years. The lower the interest coverage ratio and DSCR, the higher is the company’s debt burden and greater the possibility of default.

In FY08, when the global economy was going through a recessionary period, the stress level of the sector was at its highest level and many developers were on the verge of defaulting on their debt payment. However, the Reserve Bank of India (RBI) had allowed banks to restructure the debts of these companies keeping in mind the recessionary condition of the economy and hence giving the much needed breather. But the possibility of this happening in the current scenario is very bleak and looking at the stress level of the industry in FY11, the road ahead for real estate industry looks bumpy.

The liquidity condition of the real estate industry may look grim but it does not necessarily imply that the players will default on their debt or interest payment. Ideally, the operating cash flow of a company should take care of the interest and debt repayments. However, when a company is not able to generate enough operating cash flows, it raises additional long term funds to meet the short term requirement.

Over the last two years, developers have raised huge amount of debt and equity through private routes and have now practically exhausted this option. Additionally, the rising interest rate scenario and dwindling sales volume have put further pressure on their capability to raise funds through this route. Even promoters who had pledged their shares in lieu of funds have already breached the comfort levels of investors and this may result into losing control over their company to lenders.

In order to overcome these challenges, developers have resorted to the last option available to them which is sell-off of assets in terms of land, Transfer of Development Rights (TDR), leased properties, SEZ land and others. Over the last couple of quarters many developers have either diluted their stake or completely sold off some of their assets in order to raise funds. We believe that till the time real estate players are able to raise additional long term funds in order to meet their short term obligations, residential prices will remain steady.

However, there is always the possibility of some players who are not able to raise fresh funds through any of the above mentioned sources and this will force them to reduce prices in their projects in order to meet the short term cash flow requirement. Going forward, although real estate market will not witness a significant fall in prices, there will be isolated pockets wherein developers may offer huge discount to existing prices in their projects for the purpose of improving their cash flow position.

Knight Frank study funds India 2nd in global realty price growth

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india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, knight frank india, knight frank UK, real estate managementA study by international property consultants Knight Frank finds real estate prices in India have risen by 21.3 per cent over the past one year, making it the country with the second highest rise in real estate prices globally. The Knight Frank report says over 30 per cent annual residential price increase in Mumbai.

The report projects India’s growth in residential realty rates second only to Hong Kong, which has seen a 26.5 per cent rise in the same period. As many as 21 of the 50 countries included in Knight Frank’s Global House Price Index have registered a decline in rates. The rest (except for four countries) have had a single digit per cent growth.

In an indicator of the extent to which many of the world’s economies are struggling, the report pegs the average annual growth in all the 50 countries at a marginal 1.7 per cent.

Gulam Zia, National Director for Research and Advisory Services, Knight Frank, said within India, Mumbai, with more than 30 per cent annual residential price increase, has witnessed the highest spurt.

Zia added Mumbai cannot remain insulated from the price meltdown that has started across the country.

“Prices are on the downside in Delhi and in the IT cities of Pune, Bangalore, Hyderabad. The jacking up of interest rates by the RBI, the tightening measures that are being enforced by the finance minister and the Planning Commission, are creating an ecosystem that will force developers to drop their rates further,” said Zia, adding that by January next year, two more sets of interest hikes are expected. However, he said the prices in Mumbai will go down only if there is an infusion of supply which is presently constrained owing to the pending policy decision on the areas calculations. “Once there is some clarity on that front, price will start decreasing in Mumbai too,” he said.

Indian realtors expected to face distress and debt trap, says Knight Frank

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knight frank india, knight frank UK, real estate management, realty news india, real estate news india, property news india, track2media, track2realty, ravi sinha, india property news, property news india, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.com,Indian real estate is expected to face “large-scale distress” amid rising borrowing costs and shrinking access to credit that may force developers into fire sales for assets, according to Knight Frank.

Indian developers will have to repay 1.8 trillion rupees ($40.8 billion) of debt to state-run banks, private equity funds and other lenders over the next two to three years, said Amit Goenka, National Director of capital transactions at the Indian unit of Knight Frank. Their cash flow may also be under pressure as creditors seek earlier repayments, he said.

“I see large-scale distress coming up,” Goenka said. “Right now it’s more of financial jugglery which is keeping builders alive for a few months before everything starts to cave in.”

Small privately held developers may go “belly up” and the industry will see large scale mergers and acquisitions and more distressed sales, Goenka said. The central bank’s interest rate increase this year to curb inflation has led to tighter liquidity and higher borrowing costs for developers. The Reserve Bank of India last month raised the repurchase rate to 6.75 percent from 6.5 percent and boosted the reverse repurchase rate by 25 basis points to 5.75 percent.

Many property companies raised capital at interest rates of between 21 percent and 25 percent from finance companies, while sales volumes dropped by about 50 percent, Sanjay Dutt, chief executive officer of business at the Indian unit of Chicago- based Jones Lang LaSalle Inc., said last month.

Unsold Homes
Home inventory levels have climbed to 28 months in Mumbai, the highest among the six cities tracked by Liases Foras, a real estate research company whose clients include Housing Development Finance Corp., India’s largest mortgage lender.

Developers who had access to cheap capital after the 2008 credit crisis are now facing a cash crunch as the equity fund raising route has been shunned by investors. Banks have also cut lending amid a bribery probe in November and the central bank has tightened provisioning rules.

Real estate debt outstanding with state-run banks is about 1.6 trillion rupees while those at private equity funds stand at almost 100 billion rupees, Goenka estimates. Private lenders are owed about 40 billion rupees, he said.

“It’s clearly a debt trap, the story has turned and will only get more dramatic this year,” Goenka said. “I do see shades of the 2008 crisis playing out with some failures in the industry.”

Mumbai, India’s most expensive real estate market had a record number of unsold housing units, Goenka said. Still, he doesn’t expect developers to slash prices. Land values have declined by as much as 40 percent from peak rates, he said.

Developers need to repay 220 billion rupees and some have defaulted, Goenka said, without naming any company. “There will be continued defaults this year.”

Brand Capital hires Knight Frank to managed real estate portfolio

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knight frank india, knight frank UK, brand capital, times of india, Bennett, Coleman and Co. Ltd, Times Private Treaties, real estate management, realty news india, real estate news india, property news india, track2media, track2realty, ravi sinhaFaced with the non-compliance by the real estate companies, Brand Capital, earlier known as Times Private Treaties, the ad-for-equity business of publishing group Bennett, Coleman and Co. Ltd (BCCL), has hired real estate consultant Knight Frank India Pvt. Ltd to manage its real estate portfolio. Brand Capital has a real estate portfolio of Rs.500 crore.

“This is the first initiative of its kind where we have taken up such asset management and advisory for a large corporate house,” said Amit Goenka, National Director, Capital Transactions, Knight Frank.

The end-to-end management and advisory solution that will be provided by Knight Frank includes optimizing value with timely exits, maintenance, reporting and analytics, valuation, assistance with leasing, compliance and collections.

The private treaties concept, in which equity is bartered for advertising space and time, was pioneered in India a few years ago by BCCL, publisher of The Times of India and The Economic Times.

The model is also followed by other media houses such as HT Media Ltd, publisher of Mint and the Hindustan Times; Network18 Group, which runs the CNBC-TV18 and CNBC Awaaz channels; DB Corp. Ltd, publisher of the Dainik Bhaskar and the Daily News and Analysis; and New Delhi Television Ltd, which runs the NDTV 24×7 and NDTV Profit channels.

According to Brand Capital’s website, it has 13 real estate firms in its portfolio, including Emaar MGF Land Ltd, Sobha Developers Pvt. Ltd, Nitesh Estates Ltd, Shriram Properties and Lavasa Corp. Ltd.

Companies, large family offices and trusts have engaged private bankers and wealth managers to professionally manage their financial investments in public and private equity, debt capital markets and other securities.

In India, investors have a large direct exposure to real estate, which can form over 40% of their total investment portfolio, according to Goenka. With increasing size and complexity, there has been a growing need to professionally manage real estate as an investment asset class.

“We are facing growing enquiries and have a few other such mandates in the pipeline from large financial institutions, ultra high net-worth individuals and family offices,” said Goenka.

Anshuman Magazine, chairman and managing director of CB Richard Ellis India Pvt. Ltd, a real estate consulting firm, attributes this trend to soaring real estate prices that have made holdings in land and property a very important part of any company’s total business.

“We have been managing real estate portfolios for various state governments,” he said. “However, in the private sector, the trend has recently picked up. Globally, the practice is very common because real estate is such a specialized field and people have realized the need for professional help.”

The role of portfolio managers has also changed and they now also advise companies on how to turn non-performing assets into income-generating ones.

Industry analysts point out that media houses and larger corporates that have a high exposure to real estate may not necessarily have the skill to manage it.

“Large companies such as the Birlas and the Tatas have gone into retail, which has a huge real estate cost and hence need professionals to help them,” said Sachin Sandhir, managing director and country head of the Royal Institution of Chartered Surveyors in India, an independent, representative professional body that regulates property professionals and surveyors.