Saturday, September 26, 2020

Ticker Tape - Construction

Steelmakers hike prices by `2,000 per tonne as demand improves


Indian steel sector seems to be on the road to recovery with companies increasing prices by around `2,020 per tonne across all products this month on the back of better demand and rising global prices, industry officials said.

This is the second hike in less than a month after companies raised the metal price by about `745 per tonne in July.

Domestic steel prices are following the international price trajectory that saw a strong recovery on increasing demand from China. Domestic demand is also on the rise.Besides better demand, what drove companies to increase steel prices was rising input costs.The industry sees room for further hikes as domestic prices still remain at a discount of almost `1,000/t or around 6-8% against international prices.Price hikes are generally rare in the monsoon quarter of July to September. But it’s different this time coming after a slump in the June quarter due to the national lockdown to contain the spread of the Covid-19 pandemic.Domestic hot-rolled coil (HRC) prices have increased about 5% from June 2020 lows after creeping up for five consecutive weeks, brokerage house Edelweiss said in a research report.




Krishna Group, Sumitomo JV to invest `650 crore in Gurugram township


Krisumi Corporation, a joint venture between Japanese conglomerate Sumitomo Corporation and Indian auto components major Krishna Group, will invest `650 crore to develop the first phase of the 65-acre township in Gurugram. The investment excludes the land cost. The JV hopes to complete the project by June 2024, with three towers and 433 apartments priced up to `2.5 crore. According to the company said that the entire township will take 10 years to complete and they are targeting NRIs who are ready to invest in India. Sumitomo has delivered over 300 projects across Japan, USA, China and Indonesia and this will be their first major investment in India. The integrated township is located in Sector 36A in Gurugram with a total area of 65 acres. The entire 18-million-sq-ft project will be developed in 7-8 phases over the 10 years. The joint venture company has secured RERA approvals for the first phase.




Indian Hotels Company scouts for partner to help build new hotel on Sea Rock land


Indian Hotels Company (IHCL) intends to bring in a partner to invest in a new hotel that will rise on the Sea Rock land in Mumbai. The Tata Group firm will assume charge of the property under a management contract signed with the partner. In July, IHCL, which runs luxury properties under the Taj and Vivanta brands, signed a binding agreement for the acquisition of a 14.28 percent stake from ELEL Hotels, paving the way for 100 percent ownership of the holding company, which has a 60-year lease on the Sea Rock land.




Construction software helped Bhubaneshwar authority to offer extra space at housing project


According to Global construction technology company Trimble, its construction software, Tekla Structures, has delivered 10% extra carpet area with the same budget for a large-scale housing project by Bhubaneswar Development Authority (BDA) at Ghatakia and Subudhipur. BDA had awarded Inventaa Industries with the construction of this affordable housing project, which involved construction of 1320 apartments spread over 33 Blocks of 5-storied apartment complex.

Inventaa chose Tekla Structures as Building Information Modelling (BIM) software for developing high-quality and low cost precast concrete structures for this project, which were instrumental in keeping the construction costs low.

The software enabled Inventaa to control the project in a centralized manner right from design to planning, monitoring and improving upon the execution of the project on-site. Trimble said that the tight block layouts at various parts and narrow approach for elements and crane positioning further added on to the already restricted site-space challenge.



Signature Global plans launch of 10,000 affordable housing units by March 2021


Gurgaon-based real estate developer, Signature Global Group, which is into affordable housing projects, plans to launch 10,000 units before March 2021 as per the target it had set in pre-COVID times.

This month it launched over 800 units under the Deen Dayal Jan Awas Yojana, a scheme by the Haryana government under which it intends developing two lakh affordable housing units by 2022. The company has invested `400 crore on this project so far.The company has launched around 19,200 units since last year and intends launching 10,000 more units before March 2021.



Embassy Office Parks REIT to invest `1,500 cr to develop office spaces


Embassy Office Parks REIT will invest `1,500 crore over the next two years to add 2.6 million square feet of commercial space to its already existing portfolio of 26 million square feet of operational office space.

This additional 2.6 million square feet of space is in the early stages of construction and will be a part of its existing integrated business parks and campuses.The earliest delivery will come in June of 2022. The Blackstone-backed REIT has another 5 million potential development in its existing parks.




Developer ESR acquires 39-acre land in Chennai for logistic park


Logistics developer ESR has invested `332 crore to develop an industrial park in Chennai’s Oragadam suburb where it has acquired a 39-acre land parcel. The warehousing space is witnessing high demand and the pandemic has boosted the sector further.The developer is also in talks to acquire another 60 acres of land in Chennai and 40 acres in Lucknow.

According to a Knight Frank India report, warehousing demand in India has seen strong growth over the last few years and has recorded a 44% increase in CAGR since 2017.At present, about 21,163 acres of land is committed for warehouses in the country, which has the potential of adding 63% more supply to the existing 307 million sq ft of warehousing stock. Chennai has 2,361 acres of warehousing land, the third largest in the country.

ESR India has so far acquired 16.6 million sq ft of space in Mumbai, Pune, Ahmedabad, Chennai, Bengaluru, Hyderabad, NCR, Kolkata, Nagpur and Rajpura. In January, the company had acquired 76.84 acres to build a logistics park in Sohna, Gurgaon. Warehousing demand in the NCR market has witnessed low vacancy levels at 13.9%. Bengaluru and Pune have vacancy levels of 29.7% and 21.8%, respectively.The ESR platform spans across the People’s Republic of China, Japan, South Korea, Singapore, Australia and India.



Cement demand to fall by 22-25% in FY 2021 according to rating agency Icra


Amid the prolonged nationwide lockdown and subsequent state and city specific restrictions disrupting construction activities, cement demand to de-grow by 22%-25% in FY2021, said rating agency Icra. Rural incomes have been stable due to healthy rabi harvest, timely onset of monsoon and expectation of normal rainfall to support the kharif crop sowing. Reddy added, “We do not entirely rule out the possibility of a recovery in demand beyond what we are projecting at the moment”. As per estimates, housing, including the affordable housing segment, accounts for around 65%-70% of the cement demand followed by infrastructure segment at 20%-23%, and commercial and industrial capex at 10%. While rural housing is likely to drive the demand in the current fiscal, the urban housing, infrastructure and commercial and industrial capex are likely to take a back seat.Prices stable, lesser impact on operating profitsDespite the expected significant decline in demand, the cement prices are likely to remain largely at similar levels or get only marginally corrected given that the industry exhibits pricing discipline, Icra noted.


Construction sector face s challenges. The residential real estate sector’s demand is likely to go down resulting in a substantial decline in new sales. The new launches too are likely to get deferred, not only due to operating issues like labour shortage, but also due to increasing economic uncertainties as per Icra., Icra . The construction sector is also expected to face near term challenges due to Covid-19 with low new order inflows, challenges in execution, and pressure on profitability and cash flows.




Sunteck Realty eyes `5,000 cr revenue


In the largest real estate transactions post the lockdown, realty developer Sunteck Realty has entered into an agreement to jointly develop around 50-acre sea-facing land parcel in Vasai near Mumbai. The deal indicates stress-led consolidation in the sector that is expected to gather pace amid the Covid-19 pandemic.In a bid to push their stalled projects, cash-starved companies and landlords are monetizing their land parcels by forming alliances with developers with strong financial muscle, entering into development management agreements and even looking to sell it on an outright basis. Sunteck will be developing the entire project in phases over the next 5-7 years and is estimated to have a total development potential of 4.5 million sq ft with revenue of `5,000 crore. The company will be developing the project along with the landlord through a revenue-share agreement. The landlord who will be responsible for the land parcel and approvals will get 25% revenue. Sunteck will get 75% revenue and will undertake planning, construction, execution, branding and sales & marketing efforts. The expenditure for construction and execution of the project is estimated to be around `2,000 crore.


The location has good connectivity, upcoming infrastructure developments and all major amenities around it, Khaitan said adding the project will be a key addition to Sunteck’s strong growth drivers including its projects in Signature Island at Bandra-Kurla Complex (BKC), SunteckCity at Oshiwara District Centre (ODC) in Goregaon and SunteckWorld at Naigaon. According to a recent analysis by ratings agency ICRA, large property developers with established market positions, strong balance sheets and adequate liquidity have weathered the ongoing uncertain business environment caused by Covid19 pandemic better than smaller entities.



Omaxe to use advanced steel structure technology for its commercial project in Delhi


In order to recover the time lost due to COVID-19, Realty developer Omaxe has decided to use advanced steel structure technology for its commercial project in Chandni Chowk. The technology will save 40% time and also help expedite delivery of the project by July 2022. Omaxe has signed an agreement with Jindal Steel and Power Ltd (JSPL). The company is developing a multi-level parking-cum-commercial project at Chandni Chowk under PPP model with North Delhi Municipal Corporation (North DMC). To ease the traffic and parking woes at Asia’s largest wholesale and retail hub, North DMC allotted about 4.5 acre land to Omaxe for providing parking for 2100+cars. It has been a long pending demand of local trade bodies. Omaxe is developing a 10 lakh sq. ft.project with 5 levels of parking and 3 levels of retail space. To fasten the completion of the project, Omaxe is using all modern technologies and has tied up with JSPL for supplying and erecting the building with modular steel structure. The building structure will be supplied by JSPL in knocked down form at the site. The structure can be erected at the site within ten months from the starting date.


The building is designed using high grade steel structure with fabricated beam column as compared to the conventional construction methodology which helps in not only granting additional strength to the building structure but also saving a lot of time. JSPL will supply 7000-8000 metric tonne of structure steel to Omaxe. Additionally, Omaxe is also deploying other time-saving measures to make up for the lost time in construction by adopting Diaphragm wall (D-wall) construction module, HDPE membrane for foundation waterproofing to name a few. These measures coupled with deploying additional manpower will reduce construction time by at least 40%.


Omaxe has a presence across 27 cities in eight states. It is looking to strengthen its presence in north India by monetising land holdings in south India. The company currently holds about 900 acres of land across the country. The Chandni Chowk project will be largely funded by internal accruals and customer advances. The total development under this project is about 1 million sq. ft., of which a quarter will be for retailing and 12.5% for food and beverages.



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