Indian real estate developer DLF saw its biggest share gain on Wednesday after winning a government contract to help build a $15 billion township on the outskirts of Bangalore.
New Delhi-based DLF will carry out the work via a 50:50 partnership with Dubai-based land developer Limitless Holdings, a division of state-controlled Dubai World. The township will reportedly be spread over 9,000 acres.
DLF shares gained 16% on the Bombay Stock Exchange, closing at 889.40 rupees ($22.36), and helping push up the valuations of other real estate stocks. The benchmark Sensex also saw an intra-day high of 17,953, but later pared some of its gains, closing up 3%, at 17,847.04.
Capital isn’t a problem for DLF, which this July raised $2.3 billion in an initial public offering. “The project will be spread over five years, and as it develops, most of the money will come from customer advances,” said Bhuvan Yadav, real estate analyst at Karvy Stock Broking. DLF has about 615 million square feet of land under development, about half in Delhi and Mumbai.
Yadav said the main concern was where demand would come from. DLF’s flagship township in Gurgaon, on the outskirts of New Delhi, has seen about 6,000 acres urbanized in the last three decades. “You can argue that rapid demographic changes will make urbanization faster in Bangalore, but it’s likely to be some years before the township attracts demand up to its capacity,” he said.
Source: http://www.forbes.com/
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