6 Indians among Asia's 15 youngest
billionaires
10 firms make it to Forbes list of 50
best Asia-Pac companies
In a nod to India Inc's rising global
superstardom, a slew of Indian entrepreneurs and companies have been
accorded top honours by Forbes magazine.
Close on the heels of three Indian women
achievers making it to the American magazine's coveted list of the world's
100 most powerful women, and another three topping the publication's list of
billionaire heiresses recently, comes yet another set of honours.
Forbes has now included six young (below
40) Indian men in its list of 15 youngest Asian billionaires, while in
another compilation 10 Indian companies - led by the state-run conglomerate
Bharat Heavy Electricals Limited (BHEL), telecom major Bharti Airtel and
Mukesh Ambani-led Reliance Industries Ltd (RIL) - have made it to the
magazine's list of 50 best companies in the Asia-Pacific region.
The Indian billionaires' list includes
brothers Malvinder Singh and Shivinder Singh, who command a net worth of
US$2.5 billion. The siblings control generic drug manufacturer Ranbaxy
Laboratories, founded by their ancestors, which was sold earlier this year
to Japan's Daiichi. Despite the sellout, Mr Malvinder Singh remains CEO of
Ranbaxy, while Mr Shivinder Singh straddles the Indian hospital chain Fortis
Healthcare, which went public in 2007.
Forbes has noted that India has
maintained its pace in the money race and its 'millionaires jumped 23 per
cent last year while the billionaire count soared to 53 from 36 the previous
year'. India boasts a competitive demographic advantage in a young
population, observed Forbes, and its six under-40 billionaires represent a
cumulative worth of US$8.3 billion.
In the billionaires' list, Vikas Oberoi -
of Oberoi Constructions - grabbed the second-richest young Indian honour
with a net worth of US$1.7 billion. In 1998, Mr Oberoi took over Oberoi
Constructions, set up by his father. Morgan Stanley paid US$152 million last
year for a stake in the company.
Anurag Dikshit, worth a whopping US$1.6
billion, is the third-richest Indian in the list. Mr Dikshit spearheaded the
development of technology that helped in the launch of online poker boom. He
co-founded Party Gaming, which owns PartyPoker.com, with a college roommate.
PartyPoker stock is off its 2005 high since US lawmakers cracked down on
online gaming, 'but Dikshit still has plenty of chips', Forbes said.
Girish Tanti, who has a personal wealth
of US$ 1.3 billion, is one of the founders of Suzlon Energy, the world's
most valuable wind power company. Mr Tanti has a 12 per cent holding in
Suzlon and manages its international business and human resources.
Sameer Gehlaut, with a net worth of
US$1.2 billion, is India's youngest self-made billionaire.
As far as the fabulous 50 companies go,
the 10 Indian outfits featured in the Forbes' list include BHEL, Bharti
Airtel and RIL.
'Indian companies once again had a strong
showing with 10 making our cut,' said Forbes. IT bellwether Infosys and
software exporter Wipro, perennial top performers, are back for the fourth
year. RIL, BHEL and engineering and infrastructure giant Larsen & Toubro
are back for the third year, while consumer-oriented companies such as
Bharti Airtel, HDFC Bank, car maker Mahindra & Mahindra and diversified
conglomerate ITC are growing with India's middle class.
Private-sector lender HDFC Bank features
at number 22, Infosys (25), ITC (27), Larsen & Toubro (30), Mahindra
& Mahindra (34), RIL (39), world's sixth-largest steel maker Tata Steel
(44) and Wipro (46).
BHEL, which is India's largest energy
equipment provider, holds about 65 per cent market share of the country's
power capacity additions. About Bharti, the report said that 'as many as 10
million new subscribers sign up every month for wireless access in India.
And one in four signs up with Bharti Airtel'.
Forbes mentions that RIL is India's
largest-private sector company, accounting for 3 per cent of the nation's
GDP and 13 per cent of its exports.
Tata Steel, according to the magazine,
had been morphed from a South Asian foundry by Ratan Tata into an enterprise
girdling Asia, Europe and the United States, and credited with the US$13
billion takeover of Anglo-Dutch Corus Group last year.
- 2008 September 8
China now India's biggest trade partner
China has emerged as India's largest
trade partner, overtaking the United States, according to the recent
government-drafted Economic Survey for 2007-2008. According to the survey,
China's trade share during the April-October period last year was even
higher than that of the United States by six billion rupees (S$205.3
million).
Trade between India and China rose to
almost US$39 billion in 2007. India is, however, the 10th largest trading
partner of China. The 2010 trade target of US$60 billion set by the two
countries should be easily achieved.
The survey highlights the emergence of
Sino-Indian business relations as a recent phenomenon. In 2001-2002, the
volume of trade between the two Asian giants was just a quarter of the trade
between the US and India. There was a time when even the UK, Belgium,
Germany, the United Arab Emirates and Switzerland were bigger trading
partners than China. Today, China has overtaken all nations and now
surpassed the US as well, according to the survey.
However, concerned about the rising trade
deficit with China, the Indian authorities, according to the survey, say
that the country's export policy with China needs to be carefully planned
and the trade basket broadened. -
2008 March 11 BUSINESS
TIMES
Investment in in the Indian real estate
sector continues to grow, albeit the pace may be slowing just a little.
Foreign developers as well as private equity funds remain bullish,
long-term, on India's property market.
Not only is investment flowing into the
'first-tier' cities, but attractive real-estate deals are also being
negotiated and signed in 'second-tier' cities such as Indore, Jaipur and
Cochin.
From a foreign investor's perspective,
the recent correction in real estate prices in some parts of India is good
news in that it could result in land being available at attractive values.
But although Indian property may make an
attractive investment for foreign investors, it is important that they
address some of the regulatory issues prior to making an investment.
According to India's current foreign
direct investment (FDI) policy, 100 per cent FDI is allowed under the
automatic route - that is, without requiring government approval - for the
construction and development projects that include housing, commercial
premises, resorts, educational institutions, recreational facilities, city
and regional-level infrastructure and townships.
But this is subject to certain
conditions:
- Minimum area for development under
each project should be:
i) 10ha in the case of services housing
plots; or
ii) 50,000 sq m in the case of
construction development projects.
iii) In case the project is a
combination of the two, any one of the two conditions would have to be
met.
- Minimum capitalisation of US$10
million for wholly owned subsidiaries and US$5 million for joint
ventures with Indian parties.
- The funds have to be brought in within
six months of commencement of business of the company.
- The original investment is subject to
a lock-in period of three years from the completion of minimum
capitalisation.
- At least 50 per cent of the project
must be developed within a period of five years from the date of
obtaining all statutory clearances.
- Investors would not be permitted to
sell undeveloped plots.
Though the investment policy seems
straightforward, investors still need to address some key issues and comply
with other regulatory requirements.
For example, when it comes to funding,
India's exchange control regulations permit external commercial borrowings (ECBs)
- that is, commercial loans in the form of bank loans, buyers' credits,
suppliers' credits, and loans from shareholders.
There are several restrictions on the end
use of ECB funds. One of these is that the proceeds of ECBs cannot be used
for the purpose of acquiring real estate in India. Accordingly, ECBs cannot
be used for real estate development in India.
Preference shares are also considered as
ECBs and, likewise, cannot be used to invest in a real estate project in
India.
The only exception is the use of
compulsory convertible preference shares or fully and mandatorily
convertible debentures, which would be treated as part of equity and would
be considered as FDI.
Therefore, apart from pure equity
funding, only compulsory convertible preference shares and fully and
mandatorily convertible debentures can be used. This would tend to minimise
the options available for funding a project in India because all funds would
have to be in the form of equity or instruments which can be converted into
equity.
As per the FDI regulations, a foreign
investor's original investment 'cannot be repatriated before a period of
three years from completion of minimum capitalisation'.
Original investment
The question therefore arises as to the
meaning of the term 'original investment'. Should the term be interpreted as
'minimum capitalisation' or should it be interpreted to mean the funds
brought into the company in the first six months?
Since the term is not defined, it becomes
important to have a correct interpretation, as the 'original investment' is
subject to a three-year lock-in period. The view that seems to be emerging
is that funds brought into the company in the initial six months - that is,
the minimum capitalisation of the commencement of business - is the original
investment and subject to the lock-in period.
However, the risk is that if an amount in
excess of the minimum capitalisation is invested during the first six
months, the entire amount would be treated as 'original investment' and
would be subject to lock-in. To minimise this risk, only funds to the extent
of minimum capitalisation should be invested during the first six months.
Investors in real estate have to bring
the funds into India within six months of 'commencement of business'. Again,
the term 'commencement of business' has not been defined. It can be
interpreted in various ways; for instance, in the construction business it
could mean the point at which construction actually commences.
The view emerging from Indian regulators
is that the term 'commencement of business' means when the shareholders
agreement or joint venture agreement is signed. Accordingly, the funds have
to be invested within six months upon signing the agreement.
Finally, there are questions surrounding
partially completed projects. The FDI guidelines do not clarify whether FDI
would be permitted into these.
The question would arise as to the
meaning of 'partially developed'. In this connection the view appears to be
that if the project is less than 25 per cent complete, FDI would be
permitted. However, in this case it may be prudent to seek prior approval of
the Foreign Investment Promotion Board before making an investment.
Given the fact that India desperately
needs good-quality housing and commercial space, the current slowdown in
deals in India is likely to be temporary.
In due course, growth in the Indian real
estate sector will resume with more acquisitions and consolidation. But
foreign investors planning to enter India's real estate sector need to
address a number of regulatory issues before they go in.
- 2008 August 27 BUSINESS
TIMES The writer Rolan Solanpakur is the head of tax of
BDO Raffles in Singapore. The views expressed in this article are his own
India property boom could end in
tears: US tycoon Sam Zell
Few can afford homes being built, he
warns
2007 April
26 :(MUMBAI) 'The
grave dancer', US tycoon Samuel Zell, was in a mood to spoil a two-year-long
party when he told a gathering of Indian property executives this week they
were 'on the brink of excess' and their boom would end in tears. The
developers and fund managers could only agree.
The man who earned his nickname, and a
US$4.5 billion fortune, picking up cheap offices in the 1990s US downturn
and packaging them into a property trust sold last year for US$39 billion,
said it was 'mental masturbation' to believe there were endless riches for
investors in India's one billion person market. Only a top sliver of the
population can afford to buy the homes being built.
'India's greatest asset today is
everyone's imagination,' Mr Zell said. Many in the audience nodded in
assent. The only difference of opinion among some of India's leading
property professionals at the conference in Mumbai was how far property
prices would drop, probably at some point in the next year - 10 per cent or
40 per cent?
The last time a property bubble burst in
India, prices slumped by as much as 70 per cent between 1995 and 2001. But
this time around, a raft of global funds raised by the likes of Citigroup,
Morgan Stanley and Credit Suisse are likely to step in looking for bargains
and cushion the fall.
'Our expectation is that sometime in the
course of this year you'll see a 30 to 40 percent drop in prices,' said Ajit
Dayal, chief executive of fund manager Quantum Advisors. An estimated US$10
billion was raised internationally for Indian property funds last year. But
rising mortgage rates and a doubling of property prices in major cities in
the past two years will lift home prices beyond the reach of even the 40
million richest Indians that developers are targetting, he said.
Since 2004, 10-year bonds have risen
around 300 basis points to 8 per cent, as the central bank seeks to control
inflation in an economy that is estimated to have grown by 9.2 per cent in
the year ended March 2007, its fastest pace in 18 years.
The price of a 100 sq m Bangalore flat
has jumped 60 per cent in two years to US$100,000. Prime residential prices
in Mumbai and New Delhi have doubled in that time to about 20 per cent lower
than Shanghai and 40 per cent below Singapore and Hong Kong.
'It's very scary, prices are sky-high,'
said Aditya Bhargava, an executive at fund manager Trikona Capital, which is
raising a US$400 million fund for Indian property. 'I don't know when the
correction will happen, but there's significant overheating.' -
Reuters
26 April 2007
Mumbai, New Delhi office rents surge
London's West End district remains the world's most
expensive business location by some distance, but Mumbai and New Delhi are
among locations that are catching up fast, data from CB Richard Ellis (CBRE)
showed.
Occupancy costs for prime offices in the two leading
Indian cities were between 75 and 100 per cent up on the previous year at
between US$81 (S$125) and US$106 per square foot (psf) per annum, the global
property services firm said.
That was still dwarfed by the US$212 psf typically
charged in London's West End, but nonetheless pushed Mumbai and New Delhi
into 7th and 11th place in the world rankings from 15th and 36th a year ago,
CBRE said.
It said tightening vacancies and strong demand for
space was fuelling rises in office rents worldwide thanks to diversified
global economic growth.
However, supply quirks were also a factor, notably in
New Delhi, where a crackdown on unauthorised use of non-commercial property
for office purposes had helped to drive up rents, CBRE said.
Other cities singled out by CBRE as having seen
exceptional rates of prime office rental growth in the last year were Abu
Dhabi, Singapore, Manila, and Perth.
Second and third in the overall CBRE prime office
occupancy cost list were inner central Tokyo and
London's City financial district on about US$145 psf each. The highest
placed United States location was Midtown Manhattan, New York, in 24th place.
- Reuters 2 December 2006
India's booming real estate sector
Property prices are likely to keep
climbing at around 10 per cent per annum
India's real estate market has been booming, with
most cities recording an annual price appreciation of 10 per cent.
Several factors have fuelled the growth, from the
rapid expansion of the middle class to affordable loans and attractive tax
advantages and the emergence of numerous second-tier cities favoured as
business centres by the IT sector.
A further fillip was provided by the proposal to
allow 100 per cent foreign direct investment (FDI) in real estate. It is now
estimated that foreign investment to the tune of 4,500 crore rupees (S$1.7
billion) will flow into the Indian construction industry annually.
Significantly, the Reserve Bank of India (RBI) has
raised the risk weight on real estate exposure. The hike in risk weight for
lending to the real estate sector has been to the tune of 125 per cent as
against the existing 100 per cent. This will result in banks charging higher
rates of interest and offering loans only to credit grade projects.
Noteworthy here is the fact that the boom has not
been restricted to big cities. Smaller towns and suburbs have also posted
sharp price upswings. The reason is the growing trend of big corporate names
setting up bases in these areas.
With this trend expected to continue, property
prices are likely to keep climbing at the current rate of around 10 per cent
per annum.
Let's take a tour around India's mega-cities:
MUMBAI: The
financial capital of India has clocked the highest real estate prices over
the years. Mumbai attracts newcomers each year which gives rise to a huge
demand for housing. TDR (Territorial Development Rights) is a concept which
has taken Mumbai completely in its sway and throughout the city one finds
buildings growing vertically. In other words, existing structures are being
taken over by builders and fresh floors are being added. Satellite townships
such as far-flung Dombivili, Ambernath, Virar, Vasai are areas which have
also recorded a fair upswing in real estate prices.
BANGALORE: The IT capital of India has
witnessed frenzied construction activity. Bangalore has been recording an
annual real estate disbursement to the tune of 4,000 crore rupees. Notably,
the city has posted a net absorption of about 4.7 million square feet of
commercial real estate in the first half of 2005 alone. Various foreign
investment companies and private equity funds are looking at this city which
is bound to impact the market positively.
CHENNAI: The city is still reeling from the
aftermath of last year's tsunami. With stricter norms enforced in the city,
there are no longer buyers to be found for unapproved land. Property prices
to the south of the city have begun to creep up by 5 to 10 per cent. Even
the coastal suburbs are said to be recording a steady rise in prices. On the
other hand, prices of constructions on unapproved land have taken a tumble
after the tsunami and even more after the tremors of mid-March.
KOLKATA: The former business capital of
India, which had been all but written off for various reasons, is finally
coming back to life, albeit slowly. The economic boom which is slowly taking
Kolkata into its sway encompasses most sectors, including property. After a
decade-long lull, construction activity in Kolkata is at an all-time high.
The once laid-back city has seen the setting up of many IT parks and is now
being promoted as an investment opportunity to non-resident Indians (NRIs)
as well as domestic and international investors.
It is noteworthy that almost all residential
construction coming up in and around Kolkata is practically sold out. IT and
commercial space is changing hands at unheard of prices in the city. A tour
of the city indicates a rapidly changing architectural texture and the
development of several self-contained housing complexes in areas such as
Jokha, Rajarghat, Tollygunj and Ballygunj.
The concept of condominiums is also fast catching
on which has encouraged builders to undertake development projects in the
suburbs.
NEW DELHI: Like most other cities, the
Indian capital has witnessed a surge in property prices. However, most of
the bigger projects are in satellite areas rather than in the city itself.
Over the years, townships such as Noida, Faridabad, Gurgaon and even Hindon
have seen furious construction activity and rising prices.
The concept of self-contained complexes is rapidly
catching on in Delhi and builders are also aiming to change the city from
bungalow living to a lifestyle with luxurious amenities such as pools,
gardens, jogging tracks, spas and round-the-clock security.
In fact, this is the marketing strategy adopted by
most big builders in the city. However, redevelopment within the city itself
has not taken place although the neighbouring areas are showing rapid
development. There is also the slow change in mindsets, whereby people do
not mind travelling into the city from the suburbs to work.
Industry experts expect the boom in India's real
estate sector to continue for another half decade or so. Overall then, the
economic boom in India is well reflected in its real estate market.
- 2005 November 22 SINGAPORE
BUSINESS TIMES Ashok Kumar
Calpers looking at property
investment in China, India
The California Public Employees' Retirement System (Calpers), the
biggest US pension fund with US$183 billion in equity, is considering
property investment in China, a country where its own corporate governance
and human rights rules prevent it from investment in stocks.
Calpers has only US$1.2 billion invested in
property outside the United States. But sensing a peak in the US property
market, Calpers is paring down the US portion of its US$22 billion property
portfolio by at least US$7.5 billion, according to its senior real estate
investment officer Michael McCook.
Meanwhile, it aims to raise the portion of its
foreign property assets to as much as half of total real estate investment
in five years, from about 10 per cent now, partially through purchases in
growth markets like China and India.
India was included this year on a list of
countries which satisfies Calpers stock market investment criteria on issues
such as human rights, market transparency and freedom of labour unions.
China failed to make the list.
Mr McCook said he would argue to the Calpers
investment committee in September that it was possible to ensure the fund's
standards were met by his proposed property investments and partnerships in
China. 'Say we do for-sale housing, we're providing a service people need
and we can control our project,' Mr McCook told Reuters in Singapore. He
said Calpers could, for example, make sure workers at any local partner
received adequate pay and benefits - which would be impossible when
investing in stocks.
Since Calpers started to invest in overseas
property in 2002, Mr McCook has voluntarily adhered to the fund's investment
policies for stock markets, but he said it was not obligatory.
Mr McCook is proposing an outlay of up to US$200
million for a partnership with a Chinese developer to build housing and
retail property. He wants to invest twice that much in a Japan-focused
property fund managed by AETOS Capital Japan, which has earmarked 25 per
cent of its funds for foreign investment, which will probably include China.
Mr McCook said he had been hopeful the Calpers
investment committee would agree to the investment, but reactions in the US
to a bid by Chinese oil firm CNOOC for US energy company Unocal had sowed
doubts in his mind.
The fund has sold US$6.5 billion of US property so
far this year and will sell another US$1 billion to US$2 billion from its
industrial and apartment portfolio by the end of the year, Mr McCook said.
Calpers plans to put at least US$500 million into
a fund to invest in real estate investment trusts outside the US and will
lift its investment in Asia, where US$800 million is now committed. Mr
McCook said he was looking at house building in India, which eased rules on
foreign investment in property early this year.
- Reuters
29 June 2005
UK school exam papers to be marked in
India
26
Apr 2005 - (LONDON) In a new
twist in the debate over outsourcing, some half a million exam papers from
Britain's main secondary school leaving certificate are to be graded in
India to save money, the Daily Telegraph newspaper said yesterday.
The paper said that AQA, one of the three boards
in charge of marking papers for the General Certificate of Secondary
Education (GCSE) examinations this year, had signed a contract to scan some
500,000 of the papers for history, French, German and Italian and have them
emailed to a firm in India.
The Daily Telegraph quoted a former employee of
AQA as saying that a number of papers which had already been sent to India
under the deal had been returned late, raising fears for the new operation.
'If there are delays when we send out a few thousand papers, what will
happen in the summer, when half a million go out?' he was quoted as saying.
The exam board, however, was optimistic. 'We are
not aware of any problems with the process and all papers have been returned
on schedule,' an AQA spokesman said. The board added that the papers being
outsourced for grading all required only one-word answers.
The Daily Telegraph said that the wages paid in
India to the people who marked the exam papers were a fifth of what would
have been paid in Britain. -
AFP
SNAPSHOT:
MUMBAI A penninsula cobbled together from seven
islands, Mumbai, formerly known as Bombay, is one of the most congested and
expensive cities in Asia. Yet sitting in its very heart are large areas of
idle land belonging to defunct cotton mills, a relic of the city's
once-glorious textile industry.
Now these lands will finally get a new lease on
life. In March, a new state government policy went into effect that frees up
textile mill land for development. Over the next five years, the process
potentially will lower property prices in the city and transform a large
part of Mumbai's core.
Consider the numbers: A soon-to-be published
report by New York-based property firm Cushman & Wakefield's Mumbai
office estimates that the mills occupy about 231 hectares of land.
Under the new policy, no more than a third of it
could be available for commercial development--but this figure, notably, is
still nearly double the entire size of Nariman Point, Mumbai's current
central business district.
Real-estate developers are reacting to the new
policy with cautious excitement. "There's a lot of interest,"says
Niranjan Hiranandani, managing director of Hiranandani Constructions, a
large Mumbai-based developer.
Today, the rusting gates of many mill compounds
open to reveal lonely smokestacks and decaying buildings, some without roofs
and filled with rubble. Their fate has long been one of the most contentious
issues facing the city's politicians. That's because Mumbai prospered
largely on the back of its textile industry, which began in the 19th century
and flourished until a few decades ago. The 58 once-thriving mills attracted
a community of migrant labourers, many of whom worked and lived on the
premises for generations.
But in the 1960s and 1970s, nearly all the mills
began to suffer from increased competition from abroad and a lack of
investment in new equipment.
By the time a debilitating industry-wide strike
took place in 1982, many were already in bad financial shape. But they were
still sitting on a valuable asset: land. Finding a workable solution on just
how to dispose of and develop it then took the Maharashtra state government
nearly two decades more.
While other industries have been free to sell
their land and relocate, "textile was taboo because Bombay was the
textile capital,"says Deepak Parekh, the chairman of Housing
Development Finance Corporation, one of the country's leading private
financial institutions.
Until last autumn, most politicians steered clear
of the issue because of the acrimony between owners and workers. "The
impression was that these were irreconcilable interests,"says A.P.Sinha,
principal secretary of the Urban Development Department of the Maharashtra
government.
Now, in an effort to appease all parties, the new
regulations divide a mill property into three equal sections: one third for
the city for public space; another third for low-cost residential housing,
including homes for former employees; and the last third for mill owners to
develop independently.
A flood of property will not come on the market
right away largely because many mill companies are heavily indebted to the
banks and in some cases the properties themselves are already mortgaged,
says HDFC's Parekh. All these debts would have to be settled in some form
before a sale.
While financiers see obvious problems going
forward, many real estate experts are largely enthusiastic. Because of the
amount of potential space available, they see a chance for new types of
development--large retail stores, for example--that would be impossible
elsewhere on the jam-packed peninsula, says Aashish Velkar, deputy managing
director of Cushman & Wakefield in Mumbai.
But Velkar also worries that the area's outdated
infrastructure--roads, water and sewerage--won't keep pace with the new
development. "Here is an opportunity to create an environment, not just
a building," says Velkar. "If the development is not planned,
there is a real danger it will be haphazard." And that would mean
wasting the last pocket of centralized available land in the city.
PROJECT: Mahindra Heights
DEVELOPER: Mahindra Realty
A 25-storey development in Tardeo, in the south of the city, with
two-bedroom apartments of 1,450 square feet and three-bedroom apartments of
1,920 square feet available for sale. Prices start at 9,000 rupees ($191)
per square foot and rise according to the floor. The 41 apartments and
penthouse have imported marble in the living, dining, bedroom and toilet
areas. The development also has its own swimming pool, health club and car
park.
PROJECT: Tytan
DEVELOPER: Gowani Developers
Tytan is a 32-storey tower on Nepeansea Road, Malabar Hill, in south Mumbai.
It is scheduled to be ready by the end of this year. Its 28 three-bedroom
flats measure 2,000 square feet and the majority of them are for lease only.
Rental prices range from 150,000-200,000 rupees a month. The purchase price
is 16,000 rupees per square foot. All rooms have good-quality marble-granite
flooring. Parking spaces are provided.
PROJECT: Crescent Heights
DEVELOPER: Shapoorji Pallonji
Due to be completed in June 2002, Crescent Heights is a 28-storey building
on Forjett Street in Tardeo. From the upper floors, there is a view of the
bay. All apartments have marble-granite flooring in all rooms. Two types of
three-bedroom units are available, with an area of either 1,476 square feet
or 1,777 square feet. Prices range from 9,000-16,000 rupees a square foot,
depending on the floor. Parking space is ample.
As every business traveller to Mumbai
knows, the city has traditionally had a limited number of full-service
luxury hotels. At busy times of the year, they can be full--and they're
almost always expensive. Not for long, however. From the end of 2000 to
2003, Mumbai is expected to see a 55% increase in luxury-hotel rooms--in
official hospitality terminology, that's 5-star and 5-star deluxe
accommodation.
Yeshwant Nadkarni, an associate with Jones Lang
LaSalle Hotels in Mumbai, takes a deep breath and ticks off the recent and
future openings: First the Regent in 1999; Le Royal Meridien in 2000; ITC
Grand Maratha Sheraton in January this year; the Renaissance in June; within
the next eight months, a JW Marriott and a Hyatt Regency; and within the
next two years, a Grand Hyatt and two InterContinentals.
With all these hotels set to open in a short
period of time, however, it's probably too much of a good thing. No one is
using the word glut, but it's clear that the abundant supply will outstrip
demand. For the next few years, the market is likely to be intensely
competitive as hotels jockey for customers. Older downtown hotels may be
less affected, but even they may feel some pressure on prices. A future tip
to the business traveller--be sure to bargain.
Today's luxury-hotel boom has its roots in 1991.
As the Indian economy opened to foreign investors, the demand for lodgings
for business travellers jumped. For existing 5-star properties, it was a
wonderful time; rooms were scarce and guests were plentiful. Even better,
most were travelling on their company's tab. The three years from 1993 to
1996 saw room-occupancy rates hover just below 80% while prices for a
night's stay rose steadily.
Like bees to honey, those market conditions began
to attract the interest of both multinational and Indian chains. Most of the
hotels now opening or under construction were conceived when the going was
very, very good. Mumbai was also seen as a gateway to India, jostling for
preeminence with the capital, New Delhi. If you're going to be in India,
went the logic, you should be in Mumbai.
"Unfortunately the supply is coinciding with
a downturn," says Nadkarni of Jones Lang LaSalle. Business travellers
simply aren't coming to the city in the same numbers as they used to. Over
the last three years, both occupancy rates and room rates have come down,
according to a JLL report. In 2000, the occupancy rate was 58% and likely to
drop slightly this year. The average room rate fell by 12% to $152 over the
12 months to March 2000. And the opening of new properties will keep those
rates under pressure for the foreseeable future.
Many developers are now hedging their bets by
diversifying their projects. Instead of just building a hotel, some are
including retail space, commercial offices and serviced apartments as part
of the property.
Still, the reality is that these refined
establishments will have to get down and dirty in their pursuit of
customers. "It's going to be challenging to see who gets the major
market share," says Ashwin Moodliar, sales and marketing manager at the
ITC Grand Maratha Sheraton Hotel and Towers. But for business travellers,
the news is all good: more choice, better prices, and maybe even a softer
pillow. - Far
East Economic Review
