Mumbai, Jun 27 (UNI) Housing Development Finance Corporation (HDFC) Chairman Deepak Parekh today said the soaring real estate prices are not sustainable and will come down very soon.

”Real estate developers are offering various freebies to the consumers and it’s a prelude to the reduction of prices,” he said on the sidelines of the annual general meeting of HDFC in Mumbai.

However, he said there won’t be a drastic fall in the prices but there will be a correction in the rates.

According to him, the Reserve Bank of India (RBI) has also tightened its grips on the foreign investments in real estate which further points towards the reduction of rates.

”Due to strict regulation, no housing finance these days can lend money against lands, for developers borrowing money from housing finance is becoming increasingly difficult,” he said.

There are already indications of softening of real estate prices in certain areas like Bangalore, Gurgaon and Hydrabad where heavy construction is taking place.

Mr Parekh was also of the opinion that unless and until the soaring real estate prices comes down it will become difficult for real estate developers to sustain their market share in the country.

On low-cost housing, he said government should take the initiative in terms of acquiring cheaper land.

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DLF Limited, the largest real estate development company in India in terms of the area of its completed residential and commercial developments , proposes to enter the capital market on 11th June 2007 with a public issue of 175,000,000 equity shares of Rs.2 each through 100% book building process. The issue closes on 14th June 2007 and the price band has been fixed at Rs.500 to Rs.550 per equity share. The floor price of the band is 250 times the face value and the cap price is 275 times the face value. The issue will constitute 10.26% of the fully diluted post-issue capital of the company.Kotak Mahindra Capital Company Limited and DSP Merrill Lynch Limited are the global coordinators and BRLMs for the issue. Lehman Brothers Securities Pvt. Ltd. is the Senior BRLM, and Citigroup Global Markets India Pvt. Ltd., Deutsche Equities India Pvt. Ltd., ICICI Securities Primary Dealership Ltd. and UBS Securities India Pvt. Ltd. are the BRLMs for the issue. SBI Capital Market Ltd. is the Co-BRLM, while Karvy Computershare Pvt Ltd. is the registrar to the issue.

Out of this issue, 1,000,000 equity shares of Rs. 2 each will be reserved for subscription by employees, leaving a net issue of 174,000,000 equity shares for the public. The Issue is being made through the 100% Book Building Process wherein at least 60% of the Net Issue shall be allotted on a proportionate basis to Qualified Institutional Buyers (“QIBs”). 5% of the QIB Portion shall be available for allocation to only Mutual Funds and the remaining QIB Portion shall be available for allocation to the QIB Bidders including Mutual Funds. Further, not less than 10% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 30% of the Net Issue shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. The company has not opted for grading of the Issue. The equity shares are proposed to be listed on the NSE and the BSE.

There are two payment methods for applications. Only Retail Individual Bidders shall be eligible to bid under Payment Method-I, wherein they can pay Rs 150 on application, of which Re. 1 will be credited to face value and Rs 149 towards premium. The payment of the balance amount will be payable by the Due Date. Under the Payment Method-II applicable to any category, the payment of full application money will have to be made by the applicant. QIB bidders will be required to make a payment of 10% of the Bid Amount, with the balance being payable on allocation, but before Allotment.

Out of the net proceeds of the issue, DLF Limited proposes to utilize Rs. 3,500 crores for acquisition of land and development rights, Rs. 3493.4 crores for development and construction costs for existing projects and the remaining amount for prepayment of loans of the company.

http://dlf.in/corporates/media/media_pr_details.asp?id=40 

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