Monthly Archives: February 2008

Singapore Realty Developer plans to tap Indian Market

Singapore’s largest private property developer, the $4-billion Far East Organization, is keen to get a toehold in India. The Singapore conglomerate is talking to prospective Indian partners for its proposed foray in the booming realty market, especially in major metros like Delhi, Mumbai, Kolkata and Chennai.

Mr.Chia Boon Kuah, executive director, said “We are talking to partners who will complement our property development expertise. Big realty players who know the four markets don’t need a partner, but regional ones who have the land and are in the business may find partnering with us beneficial”.

But discussions are at a preliminary stage; Mr Kuah added and declined to name realtors who are in talks with them. The Singapore firm has developed a string of high-end residential and commercial properties, including the iconic Fullerton Hotel in Singapore.

It is also building Orchard Central as part of $1.6-billion makeover of Orchard Road, the city state’s throbbing shopping district. Elaborating, Mr Kuah said, “We are very interested in coming to India. Ideally, we would look at the hospitality segment and high-end service apartments. We would like to develop four star and five star hotels in India and operate them.

Parsvnath Starts A New Housing Project

Parsvnath Developers has announced the construction of their new housing project in sonepat, Parsvnath Preston. They have predicted that this project will make a profit of Rs. 500 crore in three years. This project consists of 1200 units, out of which 500 units will be available in first phase. It has saleable area of 2.2 million square feet and it will provide housing solution with great efficiency.

Read More »

DE Shaw to invest $250 million in HDIL Group Company

Real estate firm Housing Development & Infrastructure (HDIL) on Wednesday said the private equity firm DE Shaw is investing $250 million in Mack Star Marketing, an HDIL group company.

Mack Star Marketing holds development rights for a 54,000-metre commercial complex being constructed in Andheri. Last week, HDIL had transferred its development rights to this complex to Mack Star for Rs 900 crore.

DE Shaw’s investment is in the form of equity and debt. HDIL managing director Sarang Wadhawan said DE Shaw will hold a minority stake, but declined to give details.

The investment comes at a turbulent time for India’s capital and real estate markets. The steep meltdown in January and the withdrawal of Emaar MGF’s IPO in February rattled real estate firms who rely on equity to fund their expansion projects.

PE money, which was always sought after, has become attractive now, but funds are being very selective and managements are also being forced to offer realistic valuations.

PE investment in the real estate sector is down 25-30% in the past year on a volume basis, a leading consultant said on Wednesday. Investment bankers said the real estate and private equity funds are very selective and all funds are now scouting for most viable projects.

Mr Wadhawan said, “Compared to other cities, the real estate story in Mumbai is different as the demand supply mismatch in the financial capital is very huge. Real estate funds and PE are happy to associate with real estate projects in Mumbai”. HDIL shares rose 2.3% to Rs 855.70 on BSE
on Wednesday.

HDIL had entered into a sale of development agreement with respect to its project named Kaledonia at Sahar Road, Andheri (East) with Mack Star Marketing for a consideration of Rs 900 crore.

HDIL, one of the leading real estate developers with operations in the Mumbai Metropolitan Region, is a part of the Wadhawan Group which has been involved in real estate development for almost three decades.

The company recently bagged the slum rehabilitation project of MIAL that aims at rehabilitating slums in and around Mumbai airport spread over an area of 276 acres.

The company has also been short listed by the state government for bidding for the prestigious Dharavi Slum Rehabilitation Project. The company is also in the process of executing commercial, residential, and retail projects across the country.

Indiabulls Real Estate buys entire stakes in UK unit

MUMBAI – Indiabulls Real Estate Ltd said on Thursday its board had approved acquiring the entire stakes in Dev Property Development Plc in a 138- million-pound sterling (10.9 billion rupees) share-swap deal.
Dev, which listed on London’s junior stock exchange in 2007, is promoted by the Indian property developer and holds stakes in several of Indiabulls projects in India.
Indiabulls Real Estate will issue their own shares to Dev’s investors, which include Farallon Capital, Fidelity, Govt of Singapore and Citigroup.
Dev shares closed on Wednesday at 75.50 pence, valuing the firm at around 120 million pounds sterling.
Several Indian developers, keen to expand in a booming urban real estate market, have raised funds from London’s AIM exchange in the past two years. These include Mumbai-based developers such as the Rahejas and Hiranandani group.

Realty sector seeks tax breaks on REITs in line with MFs

Realty sector hopes that Finance Minister P Chidambaram will provide tax breaks on REITs in line with the Mutual Funds while he unveils the Union Budget on February 29.

Market regulator SEBI has already come out with a draft guideline to allow Real Estate Investment Trusts (REITs), but there was no mention on the tax breaks that is imperative to popularise the REIT market to start with like any other global market.

Mr. Sushil Ansal, Ansal API Chairman, told “I believe that income of the investors under REIT should not be taxed, like in the US. This will attract investors to further invest in REITs”.

The country needs to introduce REITs as soon as possible, he said adding that this would help to bring in funds to the sector.

Mr. Pujit Aggarwal, CEO, Orbit Corporation said, “All the benefits that the Mutual Fund industry enjoys should be made available to REITs as well. Long-term capital gains on sale of REIT units could be made tax exempt and short-term capital gains could be taxed at 10 per cent, in line with equity-oriented mutual funds”.

Stating that the launch of REITs would enable the sector to take it to the next level, city-based real estate players feel REITs would boost the demand and development for ‘investment grade’ commercial buildings in the country.

Dubai Properties displayed at Mumbai Extravaganza aiming Indian Investor

Foremost master real estate developer Dubai Properties has participated at the premium luxury show ‘Mumbai Extravaganza 2008’ in Mumbai, India to showcase its most recent portfolio of realty developments including the latest to be announced ‘Mudon’ project, to an elite audience of high net worth visitors and top tier conglomerates.
Mohamed Binbrek, CEO, Dubai Properties, said, “Mumbai Extravaganza gave us an opportunity to present investors with instant information on the latest developments from Dubai Properties, as well as introduce our latest project launches to a new market. Indian nationals are amongst the top investors within the booming real estate market in Dubai”.
In 2007, Indian Nationals spent Dh4 billion on real estate in Dubai and over the past 10 years, they have spent a total of Dh6.5 Billion on the Dubai property sector. While the greater part of these buyers were Indians living within the UAE, 10% of them were living in India or otherwise, proving the existence of a substantial demand for Dubai real estate from outside the UAE.

Asian real estate board sees Singapore as major REITs centre

Singapore – The Asian Public Real Estate Association said on Tuesday told that a body which represents publicly traded Asia-Pacific real estate has set up a chapter in Singapore to ultimately serve as a major cross-border REITs centre.

Market capitalization of the city-state’s real estate investment trust (REIT) market amounts to 21.6 billion dollars, second to Japan with a capitalization of 46 billion dollars.

“For some players, 2008 will represent a period of good opportunities for companies that are well capitalized and don’t rely on credit, “The Business Times quoted Peter Mitchell, the association’s chief executive officer, as saying.

Hong Kong ranks as the third-largest REIT market with capitalization of 8.5 billion dollars, followed by Taiwan at 1.7 billion dollars, Malaysia at 1.l6 billion dollars and South Korea at 0.6 billion dollars.

Mitchell described the REIT sectors in Hong Kong, Japan and Singapore as mature. The general downturn in the economy could see a return to fundamentals,” he told the newspaper.

Mitchell said projections of another 10 REITs being listed in Singapore this year seems a bit optimistic amid the US subprime crisis and global credit crunch, but there are still opportunities in Asia.

The city-state has the potential to become a major centre for the region, Mitchell said, mentioning upcoming listings of Indian, Japanese, Chinese and Indonesian REITs.
The Singapore chapter follows those set up in Hong Kong and Japan.

Lobby group wants REITs for affordable housing

The new Securities and Exchange Board of India dispensation under chairman C B Bhave looks all set to carry on from where M Damodaran left off.

Senior officials of SEBI met with a team from the real estate committee of the Federation of Indian Chambers of Commerce and Industry on Thursday.

They later made about 15 suggestions, meant to make clear certain characteristics relating to the draft guidelines for real estate investment trusts put out by the regulator on December 28, 2007, when Damodaran was chairman.

One of the key suggestions was to make the tax structure on REITs favorable to investors. With REIT ordered to distribute 90 percent of the income they create as dividends, the view is that there should only be a dividend distribution tax, to be paid by the real estate investment management company, and not the investors.

REITs are fundamentally instrument that allows one to buy units of various properties and capture returns these properties generate, just like a mutual fund allows one to capture the returns of a pool of stocks.

By definition, REITs are also mandated to invest in income-generating property, as opposed to real estate funds that aim to capture the capital appreciation from projects they invest in.

From this, follows the second recommendation. While, according to the SEBI rules, income-generating property would confine investments to commercial projects, FICCI has suggested that there be committed REITs for affordable housing projects as well, so that it gives a much-needed boost to the housing section.

Fitch assigns ‘A-‘ rating to Ansal Properties

NEW DELHI: Credit rating agency Fitch on Monday assigned ‘A-‘ rating, indicating investment grade, to Ansal Properties & Infrastructure Ltd (API) for its long-term debt programme of Rs. 100 crore.

Fitch said in a release that the ratings assigned denote that the company’s financial leverage has improved substantially over the last two years.

The rating takes into account the company’s experience in the real estate market in Northern India. While API plans leasing commercial and retail properties, a majority of its current revenue is from the sales of residential properties, it said.

Realty seeks tax, input price relief

New Delhi: Real estate companies wish for taxes to be lowered and prices of construction materials controlled in the forthcoming budget.
Vipin Agarwal executive director of Omaxe Ltd states that they want tax breaks on infrastructure, which were there till last year. Infrastructure improvement is important for the improvement of the country. So they should get some encouragement in the form of tax breaks to invest in it.
Realty firms are also bothered about the towering prices of construction materials in India. Abhinandan Chatterjee, president and chief financial officer of BPTP Ltd told that the rocketing prices of steel and cement are affecting construction cost, the government should try to rationalize prices of construction materials so that the costs of developed properties remain under control and the benefit is passed on to the buyer.
Real estate firms want all incomes from rent to be exempted from income and service taxes.
“Service tax should be abolished as it is an unnecessary burden for us,” said Ashish Gupta of Aerens Goldsouk International Ltd. Developers also want a cut in lending rates in construction and housing finance. “I think interest rates on loans should be lowered substantially to make purchasing properties easier,” said Chatterjee. “The demand is low at the moment because of high interest rates,” he added.
However, interest rates are an outside-the-budget decision to be taken by banks.

BJP will Advise The Government For Real Estate Regulatory Authority

NEW DELHI: The BJP will represent to Prime Minister Manmohan Singh, now the need for setting up the Real Estate Regulatory Authority, in order to prevent fly-by-night builders from cheating innocent people, who put in their lifetime earnings into their dream house project.

Read More »

Finding Manhattan on india’s real estate map

In the Bangalore, anyone can hop from Tribeca to Brooklyn, stop off at the White House, and head out to Melrose in just a few minutes.

The miraculous journey unfolds in a new housing development in Bangalore’s Electronic City named “Concorde Manhattans”, which sits on prime real estate across from a Wipro Technologies campus. While location is the major draw, developer Concorde Group is also betting that its American naming scheme will help attract Wipro’s globe trotting employees.

Read More »

Monorail gets nod, to hit streets by 2010

One can expect to take a monorail through the congested lanes of the Walled City or hop onto a tram running at road level to catch an event at Jawaharlal Nehru Stadium during the Common wealth Games.

The technical feasibility reports for Light Rail Transit (LRT) and monorail are found to be suitable for Delhi conditions on the routes identified after making some minor changes. Read More »

Loans to get cheaper as SBI cuts rate again

SBI has decided to cut the home loan repayment rate. After going up for months, EMIs are set to come down. This follows a decision by four public sector banks, led by SBI, to cut their prime lending rates further by 0.25% to 0.50%. SBI’s new PLR will be 12.25%, effective from February 27. Canara Bank, Bank of India and Union Bank have all cut their PLRs to 12.75%.

Read More »

Major Land Auction In Jaipur

Jaipur Municipal Corporation has planned auction for land. The auction is for providing land for 99 years of lease. For participating in this auction, people have to submit demand draft or banker’s cheque for Rs. 70000. Auction will be held on 5th, 11th, 12th, 14th,18th, 19th, 25th, 26th and 28th March 2008 at Municipal Corporation, Mukyalaya Bhawan, Room No. 201. Auction will start on 11:30 AM. For further information, person may contact Room No. 405, Rajasva Adhikari (Bhoomi) Mukyalaya. Contact number – 0141-5108405, Extension – 239.

Investment In Promising Cities In India

India is internationally recognized as a booming economy, making it a  favored real estate investment destination for both commercial and residential properties. Still, there is always the confusion of whether to invest in an recognized area or in potentially more money-making area.

Read More »

Arizona State University Real-Estate Conference Fills Up

Arizona State University (ASU) real-estate conference featuring a range of specialists in mortgages, investments and risks has been filled up.

More than 300 people signed up for the seminar, titled “Risk, Reward and Real Estate: Remembering the Past, Facing the Future” and figured $250 to $290 per person, to know about the latest on the mortgage-market render down and how it affects the flow of capital.

The seminar, to be held Friday at the Arizona Biltmore, will feature talks by Gordon DuGan, president and chief executive officer of W.P. Carey & Co.; Kieran Quinn, chairman and CEO of Column Financial, an Atlanta mortgage-lending subsidiary of Credit Suisse and 2008 chairman of the Mortgage Bankers Association; and Jay Brinkmann, vice president of research and economics for the Mortgage Bankers Association.
Local speakers include Ivan Makil, head of Ivan Makil LLC, Seven-Generation Concepts and former president of the Salt River Pima-Maricopa Indian Community, and Conley Wolfswinkel, a Valley real-estate developer who has faced various legal troubles.

He will speak on “Remembering the Past: Lessons Learned.”

The seminar was created by Crocker Liu, director of the Center for Real Estate Theory and Practice at ASU.

Delay in land acquisition derails TML’s expansion plan

Excessive delay in land acquisition by the West Bengal government has disrupted the expansion plan of Tata Metaliks (TML) in Kolkata. Mr. Harsh K Jha, Managing Director, TML, told the reporter on Monday that the company had applied for 350 acres of land near the existing plant at Kharagpur for expansion in February 2005. Further he said “Three years have already passed. We are yet to get the land although we had paid 70% of the land value in advance”. He added that it was extremely disappointing for the company. He said on the strategy, “We are working on multiple projects and are looking for alternative sites outside the state”. Read More »

New Norms For Credit Cards Shortly

Reserve Bank of India plans to chalk out rules for companies dealing with credit card business and recommends making it obligatory for all players to register themselves with central bank prior to operating as issuers. Mr. V Leeladhar, RBI deputy governor, said “The regulations will have to be drawn out…They (companies) have to register”.

Credit card providers like Visa and Master Card are operating with banks though no timeframe was set for the new regulations. On that issue Mr. Leeladhar said, “This is a new area we will have to look at”. Further he said that Parliament has recently passed the Payment and Settlement Act, 2007, while the regulatory framework for implementing the law is currently being worked out.

New forum launched to boost India-Oman trade

A new Indian Business Forum has been launched in Oman to boost trade and commerce between India and the Gulf nation. An initiative of the Indian embassy in Oman, the forum is aimed at providing a platform to bring together Indians and Persons of Indian Origin (PIOs) in Oman, occupying prominent positions in business establishments, so that they can share ideas and information on trade and investment opportunities between India and Oman, according to India’s Ambassador to Oman Anil Wadhwa, “We have a lot of persons of Indian origin who are chief executives of prominent business establishments here in Oman. We hope to channelise their resources to increase business volumes between India and Oman”. Further he said that the formalities to give concrete shape to the forum, which was launched in the course of a four-day India Show 2008 trade exhibition would be completed soon.

Big Overseas Investments In Real Estate

Spanish real estate developer Metrovacesa plans to invest $5.7 billion in offices across Europe to become less dependent on Spain’s shrinking residential property market. Metrovacesa will spend the money in Germany, the U.K., France and its home market by the end of 2010.

Gulf Finance House E.C., Bahrain’s biggest investment bank, signed an agreement with Libya’s government to invest $3.8 billion in a business park for energy companies in the African state. Energy City Libya will span 528 acres in Sabratha, about 45 miles west of Tripoli.

Kardan, the Dutch-Israeli investor in real estate and finance companies, plans to invest around $1.2 billion to develop housing and commercial centers in China and India. Kardan presently has six real estate developments in China and one in India.

GMH Communities Trust, the U.S. provider of housing to students and the military, ready to be bought in two transactions for a overall of $787 million. GMH will sell its military housing unit to Balfour Beatty and the rest of the company will then be purchased by American Campus Communities.

RIL Vornado Joint Venture

Reliance Industries is in advanced discussion with the New York-based Vornado Realty Trust. It is one of the world’s top five real estate asset managers. Main aim of this discussion is to float a $1-billion plus fund. The proposed fund will acquire and manage properties, mainly in the retail space, across India. People familiar with the development said RIL and the New York Stock Exchange-listed real estate investment trust (REIT) were discussing the possibility of an equal joint venture.

Vornado has a market capitalization of nearly $14 billion. It owns and manages over 116 million square feet of realty assets in the US with significant concentration in New York and Washington districts.

It is supposed that the joint venture is likely to manage real estate for RIL’s rapidly-expanding retail arm Reliance Retail (RRL). The group could also consider taking realty assets off the balance sheet of RRL and its subsidiaries and park it under the management of the proposed joint venture. However, the likelihood of such a move could not be verified.

Reliance has been on the lookout for partnering a real estate manager for developing an asset base, primarily for expanding its retail play. It has been in talks with several international players, including Taubman Centre, another US-based player. However, the group has now adopted a more pragmatic approach of forming joint ventures to capitalize on the domain expertise or brand power that an international partner could bring in certain sectors.

Land acquisition becomes trend for corporate houses

February 17, Mumbai. As land prices is rising, large business houses now appear to be increasingly aware of their excess property holdings and the valuations it could fetch in addition to their regular stream of businesses.

Hindustan Unilever, A multi-national, has an extensive property portfolio. HUL has entered the property development business in a big way and is currently developing/selling about six million square feet across the country. Read More »

Housing Scheme Expands In Greater Noida

Greater Noida Industrial Development Authority has decided to launch a new expandable housing scheme. In this proposed scheme, 5000 single-storeyed houses will be allotted. They are going to announce the scheme soon. Mr. Lalit Srivastava said,” The total plot area of each house would be 120 square meter. It will have a covered area of around 100 square meters. These would be single-floor built-up houses. Allottees will hava the right to construct one- and-a-half storeys over it as per building byelaws. Further he said, “Total cost of each housing unit is expected to be around Rs 30 lakh. Payment terms have been relaxed. Earlier cash down applications were given preference, but then the needy persons were not able avail the scheme”. Read More »

Real estate funds good for small investors

A real estate mutual fund’s (REMF) purpose is to invest directly or indirectly in real estate. A REMF moreover functions like any other mutual fund. It gathers funds from investors and put in them in real estate. It will be administrated by the provisions and guidelines under the SEBI (Mutual Funds) Regulations 1996.

Housing and real estate comprise a substantive portion of national wealth. This sector is also speedily growing in the economy. The concept of REMF is quite popular and well-known in developed markets. This is a new concept here and a lot of financial and fund houses have shown an interest in launching a REMF here.

These funds invest although the real estate investment trust (REIT). A REIT owns and manages real estate properties like shopping complexes, apartment complexes, office complexes, hotels etc. REMFs will provide ample capital for developing infrastructure by channeling small investments into the construction sector.