INRnews - Indian Real Estate News

The Federation of Hotel and Restaurant Associations of India (FHRAI) estimates that as compared to the present 97,000 hotel rooms in the country, India will need 30,000 additional rooms in various categories over the next three years. The current growth of hotel rooms is less than 2,000 rooms a year, and with high occupancy rates of 77%, hoteliers have doubled tariffs in the last two years.

With demand far exceeding supply, Indian majors are on an expansion binge. The Indian Hotels Company plans to add 1,500 rooms in India in 2007 and another 550 rooms in 2008 mainly under the Taj and Ginger brands. East India Hotels has announced 12 new projects in India and abroad, including a 437 room Trident Hilton in the Bandra Kurla Complex in Mumbai, a 150 room Oberoi hotel in Gurgaon, a 170 room Oberoi hotel and service apartments in Manesar near Delhi, a 225 room Oberoi hotel overlooking Hebbal lake in Bangalore and an Oberoi hotel on a 50-acre beachfront site in Goa. ITC will build hotels in Madras, Bangalore, Gurgaon, Hyderabad and Chandigarh, and it may build one in Goa and some state capitals as demand exceeds supply.

Foreign banks like Citigroup, Morgan Stanley and Goldman Sachs are also investing in the Indian hospitality sector attracted by the 20%-25% return on investment that can be achieved.

Citigroup Property Investors (CPI) has earmarked $350 million towards investments in real estate and hospitality in India. It recently signed a JV with Gera Developments to develop a hotel in Kharadi along with 600 residential apartments at a project cost of Rs. 550 crore. CPI is also looking to set up serviced apartments countrywide. Both Morgan Stanley and Goldman Sachs had earlier announced planned investments of $1 Billion each in the Indian real estate and hospitality over the next few years. Deutsche Bank, JP Morgan and ABN Amro are also scouting around for investments.

A preferred investment route for these foreign banks is a joint venture with smaller developers.

Other players such as Gulf-based Pegasus Realty are lining up investments in Indian real estate and hospitality. "We have earmarked $150 million for the realty sector in Pune, Hyderabad, Chennai and Coimbatore. We are holding talks with a Netherlands-based venture capitalist who has $US200 million for investments in the hospitality sector in India," the Gulf Today quoted Pegasus Realty Chairman Imitiaz Panjwani as saying.

This much-needed capacity expansion when it materialises will be welcome relief to travelers used to full hotels and expensive room rates.