Monthly Archives: August 2008

Prospect Of Real Estate In Jharkhand

Situated on the eastern part of Jharkhand, Dhanbad is fast rising, as a center of real estate business after Ranchi and Jamshedpur. It has a cosmopolitan culture as people from different parts of the country, mostly Gujarat and South India, have settled here because of the presence of Bharat Coking Coal (BCCL). This is the 3rd largest city of Jharkhand.

Experts say the city’s real estate sector started growing much before Ranchi and Jamshedpur and it is poised for a considerable growth in the future as more and more companies open centers here.

“A significant feature of this city is that the rates are realistic as the flats are not used as an investment tool,” says Shekhar Agarwal, a prominent builder of the city who runs Sristhi Builders. “Therefore, there is no scope for speculation,” he adds.

Besides BCCL, Indian Iron and Steel Company (IISCO) have its office here and Tata Steel has mostly underground mines. These companies have developed townships for its employees, with roads, water, and power and sanitation facilities.

Dhanbad has witnessed an entry of a number of branded companies, bank and insurance offices in the last few years. No wonder, Dhanbad, popularly called the ‘coal capital’ of India, has seen construction of about 20 lakh square feet in the last few years.

The City Centre, located at the Combined Building Square, has almost all the major branded shops, making it the hub of the city. The biggest Reliance store of the state was set up in the City Centre around eighteen months ago though now a new and bigger Reliance Mart is coming up at Ranchi.

According to estimates, as many as twenty five building are under construction while some residential colonies are in the pipeline. “The city has seen enough ‘ertical’ growth (apartments). Now there is a big demand for horizontal colonies. With the entry of more and more retail and telecom players, the real estate scenario is set to see a tremendous growth in the city,” Mr Agarwal adds.

Building Bylaws Violated In Jaipur

Violate building bylaws, construct residential or commercial complexes in blatant violation of regulation, just pay 10-20 % of the reserve price as penalties and enjoy it for ever. This is what the regulation 2000, a notification by the government of Rajasthan to deal with the unauthorized constructions across urban settlements in the state, envisages. The regulation has not only created a mess in urban areas but also offset the efforts of the town planners and the master plans.

Another aspect of the regulation deals with the change in land use. Any person who wishes to change the usability of a property other than the assigned use, the assignee only needs to apply for change in use in the respective local body and the latter will grant the permission subsequently. Notably the regulation has no technical rider for not granting the permission for change in use. At the same time there is no mechanism to stop the misuse of land earmarked for public utilities like parks, schools, colleges and other open spaces.

Cities like Jaipur have been adversely affected by the blatant violation of bylaws and irrational politically loaded regulations. The land use committee, which is the apex decision making body for the purpose, is headed by the mayor and other members are CEO JMC, local MLAs and senior town planners. Taking a leaf out of the irrational regulation the vested interests have got their residential properties changed into commercial ones. There are hundreds of applications lying in the JMC for such changes. This indiscriminate change in land use has created chaos in the city. Areas like Bani park, Govind Marg ,Bapu Nagar, Tilak Nagar JLN Marg have witnessed gross violations of commercial parameters.

In similar veins many hotels, restaurants and other commercial establishments have come up in residential areas, often nullifying the master plan and affecting the quality of life of citizens.

Ex-chief town planner B L Mehra said, “The regulations have been like a blank cheque for the offenders, which allow illegal unauthorized constructions and after paying a little bit of amount every thing becomes legal and ok. If this indiscriminate permission continues to be granted then what is the use of town planning and planned development. It affects the peace of ordinary residents of an area if commercial activities come up, besides it encourages speculative investment in real estate. If we alter plans like this then where is the scope for creating space for public utilities and green spaces, this trend also incurs loss to public exchequer as interested people will not prefer buying commercial plots earmarked by the government because converting their own residential premises in to commercial ones is easier and cheaper”.

Investment Agreement Between India And EFTA

The proposed trade and investment agreement between India and the European Free Trade Association (EFTA) — including Switzerland, Norway, Iceland and Liechtenstein — is likely to be in place by the middle of next year. Swiss ambassador to India Dominique Dreyer said that the pact will give a big boost to trade and investment between the two sides. Relaxation of business visa norms, however, may not be on the cards as Switzerland would merge its visa system with other Schengen countries by the end of the year and hence will not be able to take decisions independently, the ambassador said.

On the trade and investment agreement between India and EFTA, Mr Dreyer said it would boost trade in goods and services and would also strengthen the intellectual property rights regime. He added that Switzerland might not be able to give concessions in the area of business visas as it would soon follow the same visa procedures as other Schengen countries which includes most European countries except England.

When asked if it would be in a position to relax visa rules if India manages to get some concessions in the India-EU trade and investment agreement being negotiated, the ambassador said it was a possibility.

Mr Dreyer said it was likely that India’s trade pact with EFTA would be concluded sooner than the one with EU as it has fewer members. A negotiating group comprising officials from the EFTA countries will visit New Delhi next month to take the trade talks forward. “We are hopeful that it will be implemented some time next year,” he said.

On India’s nuclear deal with the US, Mr Dreyer said that his government recognised the importance of nuclear energy for India’s economic growth, but his country had not decided whether it would support the deal in the nuclear suppliers group (NSG) meeting later this month. “Government of Switzerland is very much in favour of India developing nuclear energy but it is also concerned about problem of non-proliferation,” he said talking to the media.

The NSG, which is an informal body of 45 nations, is not in favour of selling nuclear technology to countries which have not signed the nuclear non-proliferation treaty (NPT). India would need a waiver of the condition from all NSG members to go ahead with the nuclear deal with the US.

Switzerland, which is celebrating 60 years of Indo-Swiss friendship this year, will open a Consulate General office in Bangalore later this year. This will strengthen the bilateral ties between the two countries, he said.

A Mumbai Colony Is In The List Of Most Expensive Address In World

An old Mumbai neighborhood has made it to the list of the World’s ten most expensive addresses.
A survey conducted by Wealth Bulletin, a UK based online news service has named Altamount Road, as the tenth most expensive street address in the world and the residents believe the honor is fully justified.
Falguni Patode,Resident,Altamount Road, said, “No where else in Mumbai would you find so much greenery, where you can just look out of your window at a Koyal singing on a Gulmohar tree”.
Altamount Road is one of Mumbai’s most posh residential areas and is home to several old business families including the Mafatlals, the Khandelwals and the Tatas.
It is also the location for Mukesh Ambani’s upcoming multi million-dollar skyscraper Antilia.
Real Estate rates in the area are pegged Rs 60,000 per square feet.
However, what makes Altamount Road so special.
Pranay Vakil, Chairman, Frank Knight, said, “Apart from the view and the location, it’s the gentry”.
But things are changing in this quaint neighborhood. Rampant construction and lack of adequate parking space threaten to erode its old world charm. It can only be hoped that Altamount Road manages to hold on to its newly acquired distinction.

British Realty Aiming Indian Investors

British realty developer The Berkley Group is aiming Indian investors with its two exclusive London properties in the price range of Rs 2-8 crore per flat. It has coupled with global property consultant Jones Lang LaSalle Meghraj (JLLM), which sees investment by wealthy Indians in British residential properties growing up to 15 billion pounds by 2018.

In its report titled ‘UK-India Cross-Border Investment’, JLLM, which will market Berkley’s units in India, said that Indians could crack up 20,000-30,000 residential properties in UK over the coming ten years.

The property consultant said this is the correct time to invest in UK as house prices are expected to fall by twelve percent this year and by a further 6-8% in 2009. However, they are likely to go up by 8-9% per annum during 2010-13.

Raminder Grover, managing director, Homebay Residential (a JLLM subsidiary), said, “UK-based developers are highly interested in attracting investors from India. They are aiming not only the high-net individuals, but also the upper-middle segment. The UK represents a very amenable market for Indian investors the British pound is far more stable than the rupee, there is far greater clearness in the UK real estate market.” He said UK tenants sign long leases of up to twenty five years and their long-term income generation capacities are really stable, not to forget the London Olympics in 2012.

The number of Indians with financial assets of more than one million dollar is likely to grow to 400,000 from the current 123,000, with total wealth of $1.7 trillion, the broker forecast.

Their investments in the UK may be limited by India’s $200,000-a-year ceiling on capital outflows for resident Indians, it said.

Indians To Spend 15 Billion Pound To Buy Homes In UK

Fuelled by the country’s rapid economic growth and increasing number of high net worth individuals, residential investment by Indians in UK is likely to touch a whopping 15 billion pound over the next decade, says a report.

“Indians could potentially own 20,000-30,000 UK residential properties over a 10 year horizon and UK-India cross border Investment is all set to grow to 10-15 billion pound by 2018,” the latest Jones Lang LaSalle’s report titled ‘UK-India Cross-border Residential Investment’ said.

The report further highlighted the fact that with no restrictions on Indians investing in UK residential property and strong house price growth, the market would continue to see the current investment size of 0.6-1.2 million pound grow exponentially over the next decade.

Indian investors are particularly interested in UK property market as it offers greater transparency, long leases of up to 25 years, long-term income generation capacities are stable, the London Olympics in 2012 being in vicinity.

Beside steel czar Laxmi Mittal, who has bought a number of homes in the past couple of years, there has been a growing tide of lower-profile purchases by Indians.

The combined value of the three properties owned by Mittal family on London’s Kensington Palace Gardens is said to be valued at about 440 million pounds.

The number of such Indians with the propensity to invest in the UK residential market is likely to increase to 583 million by 2025 coupled with another 400,000 High Net Worth Individuals (HNWIs) by 2017.

New Investment Rules For Venture Capital And Private Equity

The government may soon come out with new investment norms for venture capital (VC), private equity (PE) and hedge funds to make their operations transparent and create a level-playing field for both the domestic and foreign players.

Joint secretary in the finance ministry KP Krishnan said government is likely to revisit norms for VC funds and talks have already been held with the market regulator SEBI towards this end.

Efforts are also on to create a legal framework so that venture fund investments should not land in a few sectors only and equitable distribution takes place. The government is specifically worried about huge fund inflow in sectors like real estate, which has affected investments in other hi-tech sectors like software and biotechnology. At the same time, it has led to appreciation in the prices of real estate in the country.

Government, it is learnt, is considering to give some new tax incentives to venture funds and PE funds to invest in high-risk areas.

Venture funds invest in the equities of high growth companies to earn hefty returns. At present, foreign funds have an advantage over their domestic counterparts under the existing tax system of the country.

Head of financial services at PWC India, Punit Shah said foreign VC funds are at an advantageous position against domestic ones, while investing other than nine hi-tech sectors like biotechnology, software and nano technology. Government gives tax sops (no capital gains tax on profit) to domestic funds if they invest in these nine sectors but not others.

But sectors like real estate is not included in this list. Therefore, when a domestic venture fund invests in an unlisted real estate company, he pays tax on the capital gains earned while exiting the company, Shah added.

But, foreign funds registered in tax heavens like Mauritius and Cyprus do not pay any tax on the capital gains earned such transaction because of the double tax avoidance treaty. The new initiative, according to Krishnan, would ensure that same tax rule apply on both foreign and domestic VC, PE funds to achieve a level-playing field. Besides, the move will also make the investments by these entities transparent. For this purpose, the government would like to redefine VC, PE and hedge funds.

On its part, SEBI will make it mandatory to register VCs and PEs after compiling data about their investments in sectors like real estate, ITeS, education. SNI director TC Nair said that at present the market regulator has no definite source about the exact investments of PEs and VCs.

Slowdown In The Real Estate Due To Slowdown Of The Economy

The general economic slowdown has started impacting the commercial real estate sector as was obvious by slower uptake during the April-June period of the year.

During the period, commercial real estate demand was only at 9.74 million square feet as against the supply of 18.07 million sq.ft, commercial real estate services firm Cushman & Wakefield (C&W) said in a report.

“There has been a slowdown in the real transactions, observed in the period 2008 due to a number of factors, primary amongst which is a general slowdown of the economy,” Cushman & Wakefield Director Kaustuv Roy said.

The IT/IteS sector, which has been one of the biggest consumers of commercial real estate, have deferred their expansion plans, leading to a slowdown in the uptake during the period, he said.

Most corporations, both Indian and multi-national, have been adopting a wait-and-watch policy throughout most of the period, he added.

During April-June quarter rental values across major micro markets in the major cities witnessed rental hikes in the range of 3-5 % over the earlier quarter.

Some peripheral locations in NCR and Chennai also saw a correction in rental values largely because of excessive supply as well as deferred development plans of various proposed projects, it said.

NBCC To Develop 38-Acre Township At Mozakulai Near Howrah

Burn Standard Company Ltd is looking to raise funds by unlocking the value of its real estate property in Alipore.
The land, which National Buildings Construction Corporation Ltd (NBCC) is set to buy at the current market rate, will be valued by an independent agency. NBCC plans to develop the plot for a premium housing complex.
The market value for the 11-acre plot could range between Rs 110 -160 crore.
“We have agreed to pay Burn Standard at the current market rate after the valuation is done by an independent agency. NBCC will develop the project on a self-sustaining basis and the profits will be equally shared between the two. Since both are public sector companies, we do not see any problem,” said Arup Roy Choudhury, chairman and managing director of NBCC.
However, Burn Standard, which is under the Board for Industrial and Financial Reconstruction (BIFR), is awaiting approval for the project.
The next BIFR meeting will take place on September 30. Burn Standard’s relief package is in excess of Rs 1,500 crore.
There are also other hurdles such as shifting the existing guest houses, residences and offices. Burn Standard has operations in Bengal, Jharkhand and Tamil Nadu.
NBCC is also developing a Rs 1,500-crore 38-acre township at Mozakulai near Howrah.
“Real estate is one of our major areas of focus in the coming years. We will be building complexes and townships across the country. Our township projects will be different as we plan to provide employment to the locals. Bengal is one of the states where we have a few projects lined up,” said Roy Choudhury.

NBCC has signed a memorandum of understanding with RK Millen in 2007 for a 50:50 joint venture for the Mozakulai project. The township will have commercial and residential spaces, IT parks and malls. There will also be a special employment centre for the local zari workers.

Property Investors Exit As Downturn Deteriorates

Rising interest rates, shrinking pool of home buyers and anticipated fresh supply of DDA flats has set off what could be termed as early signs of panic among real estate investors in Delhi and its suburbs.

A large number of investors are wary of holding the property any longer and are turning it back to developers or pushing property dealers to find buyers fast. Industry experts, however, feel end-users should not rush into buying property at present and wait till the festive season, following which there could be a major price correction.

HDFC executive said, “A rising home loan rate has badly dampened consumer sentiments. July was bad and August will be worse. The latest round of loan rate hike would sink in over the next few weeks and its impact on home buyers could be visible by the end of this month.

He said that home loan inquiries have fallen by 35-40% in Dwarka, one of the biggest colonies of Delhi, which offers a large supply of apartments. Dwarka, which has seen prices move up almost four times in the past five years, is witnessing fewer transactions these days. Besides rising borrowing cost, an anticipation of DDA house allotment too is keeping buyers out of the market, say property dealers. DDA is likely to allot 5,500 one, two and three bed room apartments across Delhi over the next few months.

A shrinking pool of buyers has made investors a little jittery in Delhi, Gurgaon, Noida and Ghaziabad. Many investors, fearing that the markets may worsen in the coming months, want to exit with the gains they have already made. Some of them have turned the property back to the developers. In many cases, investors have an option to sell the properties back to the developer at an agreed rate. In a market, where an investor thinks his property may not fetch more than the agreed price, he sells it back to developer. A Ghaziabad-based developer recently bought back over 25 apartments.

Despite early signs of scare setting in among investors, prices remain stable in Delhi but have corrected by 10-15% in suburbs. Experts feel a deeper correction could be in the waiting. Knight Frank India chairman Pranay Vakeel said, “What we are seeing today is only the tip of the iceberg. We may see a deeper correction in November”. He says end users should wait, as developer intend to hold prices till festive season. Further he said, “Developers are banking on festive season to lift sales. But if it fails, they will have no option but to cut prices to sell”.

Hotels In Chennai And Kolkata By ITC

ITC is ramping up its hospitality business with new hotels in Chennai and Kolkata. The tobacco-to-snacks major would build a 1.2 million sq ft hotel in Kolkata at an estimated investment of Rs 860 crore and has already started work on the 600-room property ‘Grand Chola’ in Chennai.

Besides, ITC has bought land for building hotels in Ahmedabad and Hyderabad and would construct another just outside Delhi, its chairman Y C Deveshwar said on the sidelines of the company’s e-choupal launch at Sivaganga.

“We invested Rs 4,000 crore in our hotels business in the last two years. We would invest more (than Rs 4000 crore) this year and next year,” he said. The company is investing not just in hotels but in several other assets and is open to joint investments in the space, he stated. ITC, which has a tie-up with Starwood Hotels & Resorts, would run the operations in several of the new hotels.

The Chennai hotel, coming on the ‘Campa Cola’ property in Guindy with an estimated investment of Rs 1,200 crore, is expected to be completed by 2010.

ITC’s second hotel in Bangalore would be ready in 2009. Though, the company had bought land for building a deluxe hotel in Hyderabad, it would require clearance from the Supreme Court, Deveshwar said.

HDFC Property To Buy Into Nitesh Mall

HDFC Property Ventures is investing $20-25 million into South India’s largest central business district (CBD) mall developed by Nitesh Estates in Bangalore. The move probably marks the $900-million HDFC Property Ventures’ foray into retail infrastructure in a rather tight-market environment.

HDFC Property Ventures will pick up around 20-25% stake in the 6-lakh sq ft Nitesh Mall, which is being designed by Seattle-based Callison. Nitesh Mall, which is the Bangalore-headquartered real estate firm’s first retail play, is estimated to be a Rs 300 crore project.

The Nitesh Mall will come up on a 5.5 acre patch near hotel Leela Palace, off the Indiranagar 100-feet road that is considered one of Bangalore’s high-street retail hubs, with most big brands operating their flagship stores there. When contacted Nitesh Estates’ director, development, LS Vaidyanathan declined to comment on the deal. HDFC Property Ventures CEO KG Krishnamuthy could not be contacted immediately.

The development comes at a time when private equity funds are believed to be staying away from real estate/retail investments on account of the weakening consumer sentiments and an economic slowdown. HDFC Property Ventures is Nitesh Estates’ third PE partner. Last year, the firm attracted investments from New-York based Och Ziff Capital and Citigroup Property Investors, with the latter co-developing the Ritz-Carlton hotel in Bangalore with Nitesh.

Nitesh Estates had announced that it has identified property in southern cities of Chennai, Thiruvananthapuram and Kochi for similar retails initiatives. Construction of the mall in Bangalore is expected to be completed by 2009-end.

The current retail rentals on Indiranagar’s 100ft Road is estimated at Rs 200/350 per square feet.

The Nitesh Mall will easily be the biggest retail infrastructure in Bangalore where the other prominent malls are The Forum (3.5 lakh square feet), Garuda (1.5 lakh square feet) and UB City'(1 lakh square feet). It must be mentioned that HDFC Property Ventures has signaled its interest in organized retail in the past, and interestingly, unconfirmed media reports earlier have linked HDFC Property Ventures to global retail biggies like Carrefour.

5000 DDA Flats For 40% Less Than Market Price

NEW DELHI: At a price almost 40% less than private developers, Delhi Development Authority’s offer to sell 5000 flats beginning Monday would mean a bonanza for the few who manage to get in.

Out of the 5,000 flats, 352 are three-bedroom flats, 889 two-bedroom ones, 3,231 one-bedroom and 286 expandable. In space-starved Delhi and amidst skyrocketing property prices, these flats will be available in areas like Vasant Kunj, Rohini, Dilshad Garden, Paschim Vihar, Motia Khan, Dwarka and Pitampura.

At a time when property prices and escalating EMIs have made the dream of owning a house in the capital a distant dream, these flats would cost anything between Rs 7.2 lakh and Rs 77 lakh.

According to DDA, 60% of these flats are new constructions. The rest include flats that were either allotted to the government and have now been vacated or the ones which have been surrendered owning to non-payment by the allottee.

There are also those which were under construction for some time.

There are 3,231 one-bedroom flats. The cheapest in this category is in Narela Sector 9A and carries a price tag of Rs 7.20 lakh while the costliest is in Dwarka’s Sector 18B and would cost around Rs 24.80 lakh.

DDA is expecting a big turnout this time considering that in 2006 when it had put up 3000 flats on sale, there were 1.90 lakh applications.

Of the 5,000 flats, 28% are reserved for various categories, including 17.5% for SCs, 7.5% for STs, 1% for war widows, another 1% for physically challenged and 1% for ex-servicemen.

Neemo Dhar, director, press and information, DDA, said, “Till date DDA has allotted 371215 flats of various categories under 42 schemes. On Monday it will throw open the application process which will continue till September 16. The DDA hopes to declare the result through a computerized draw of lots after three months from the last date of application”.

Among the areas where the flats are available are Shalimar Bagh, Jhilmil, Narela, East of Loni Road, Nand Nagri, Peeragarhi, Sarai Khalil, Lok Nayak Puram, Bindapur and Zafrabad. The size ranges from around 39.39 square meters plinth area in Rohini Sector 18 to about 158 square meters plinth area in Motia Khan.

Real estate observers said some people would get really lucky. The rates beign offered in Pitampura, Dwarka, Vasant Kunj and Rohini are almost 40% less than the market rate. The average rate per sq metre comes to around Rs 3000 while the market rate at which private developer sell at most of these places is around Rs 6000-7000.

According to DDA officials, the increase in cost of flats over 2006 when 3000 flats were sold is not more than 25%. DDA flats are cheap because there is no profit to be made.

In 2006, DDA had put up 3000 flats for sale in areas like Rohini and Dwarka and the costliest was around Rs 38 lakh in Dwarka. This time it’s Rs 77.80 lakh for a flat in Motia Khan. It’s because of its size and location.

Alchemist Group Will Invest Rs 1,300 Crore In Hospitality Sector

The Chandigarh-based Alchemist Group is planning a big bang foray into the hospitality sector with an investment of Rs 1,300 crore over the next two years. The plan includes a huge fine dining, quick services restaurant chain and five-star hotels.

The Rs 7,000-crore conglomerate, which has interests in real estate, food processing, healthcare, pharma and aviation, will build five brands including fine dining restaurants specialising in varied Indian cuisines. The group will open 100 restaurants under these brands in Indian cities and overseas markets like Geneva, Dubai, Los Angeles, New York and Chicago.

As a part of its debut in food & beverage (F&B) retail, Alchemist Group is also setting up 1,000 quick service restaurants (QSRs),Republic of Chicken (ROC),across the country at an investment of Rs 800 crore.

The group claims to be a quality supplier of safe poultry products and wants to carry the same marketing plank for ROC launch. Earlier this year, it had signed up actor Mithun Chakraborty as brand ambassador for the new brand. ROC will be franchise based, with outlets of varied format including takeaways and dine-in. The company has identified locations and will initially focus on the chain’s roll out in North India, particularly in NCR. “We see great potential in F&B retail and will go it solo in our foray,” says Alchemist Group chairman Kanwar Deep Singh.

According to industry sources, Indian food & beverage retail market is valued at Rs 25,000 crore growing at 25% per annum. Also on the anvil is expansion of the Group’s hospital chain. Currently, Alchemist operates two hospitals, one each in Gujarat and Punjab set up at a cost of Rs 100-crore each.

Matheran Realty’s Low-Cost Houses In Karjat

It could well be termed a lottery with a difference. Anyone who has chanced to buy a lottery ticket at some point is aware that the rewards are huge for an almost minimal charge. Matheran Realty is banking on this for its first phase of 2,000 flats. Situated about 100 km from Mumbai in picturesque Karjat, this project will have apartments at 300 square feet each.
So, how will this work? The mechanism is pretty simple actually, with a person having to fill an application form which is priced at Rs 100. To make sure there is no unfair advantage, a person can fill in just one form ensuring everyone is in with an even chance. Besides, there is no question of picking and choosing since you just take the flat that comes your way. All the 2,000 apartments will be given to the winners through the lottery method. The price tag is Rs 999 per sq ft.

Matheran Realty is working with UK’s Eredene Capital and Philippines’ Sterling Construction Systems (SCS). The township, called Tanaji Malasure City, is now witnessing the first phase of construction. The plans by any yardstick are gargantuan—in all, there will be 2 lakh houses with each having an area of 300-500 sq.ft. Come January 2009, the first set of owners will be ready to move into their dream home.

SCS is banking on the paucity of affordable housing in Mumbai to drive its mega township. SCS president (marketing) Harinder Bhalla said, “We expect a huge response to the scheme”. There seems to be hope for those who do not get their allotments in the first phase. They will get preference when booking starts for the second phase.

That effort may be worth it since the project will be home to schools, colleges, hospitals and a retail centre. The entire exercise is expected to be completed over the next 10 years. All this will be over 100 acres. Eredene Capital will fund the project to the extent of Rs 131.2 crore with SCS offering technical support.

The big worry for most people is what the house will eventually cost? At the end of it, it will work out to Rs 3 lakh. Those who opt for the monthly payment option will need to shell out Rs 2,000. Speaking of construction technology, SCS will use prefabricated Hardiflex fibre cement boards. This has been used with some success for housing projects in the Philippines, Australia, Jordan, Vietnam, and in India. Importantly, it lowers construction cost by 15-20%, and construction is much faster.

With a price tag of Rs 3 lakh, this form of housing could work well for those in the Rs 8,000-10,000 salary bracket. In terms of profitability, there is always a question mark. Park Lane Property Advisors managing director Akshaya Kumar said, “Such projects are profitable though the margins may be lower than what premium property developers get” . Others tracking the industry think that low-cost housing will have acceptable levels of production quality and succeeds in cutting down frills such as high quality paints, open space and parking.

Kolkata Realty Losing Charm

Realty firms seem to have lost their appetite for properties in Kolkata, where developers such as Emaar MGF Land Ltd and DLF Ltd were fighting to secure plots for building luxury hotels.
For the first time, a tender to lease out a prime 10-acre plot on the western fringes of the city is being scrapped because there was only one bidder. The Kolkata Metropolitan Development Authority (KMDA) had invited bids for two more properties, but the response to each was poor.
KMDA officials had claimed that developers such as Emaar MGF and DLF had enquired about the properties, but none of them bid even for the 10-acre plot, which was to be leased for building a five-star hotel.
Less than a year ago, Life Insurance Corporation of India (LIC) had set a new benchmark by buying a five-acre property on the eastern fringes of Kolkata for Rs276.20 crore, or Rs55.24 crore an acre. LIC has since announced it would build 50-storey towers on the plot.
A KMDA official, who didn’t want to be named, confirmed that the tender for the 10-acre plot would be cancelled, but he wasn’t sure what would be done with the bids for the other two plots one measuring five acres and the other 2.7 acres. “The bids aren’t attractive, but we haven’t decided yet,” he added.

Indians Show Interest For Foreign Property, Stocks

The savvy Indian investor is no longer content with restricting his investment horizon to the equity or property markets at home. A growing number of Indians are now buying property abroad and also taking an exposure to stocks of foreign firms and debt products. Hard numbers are a testimony to this fact.

From a mere $9.6 million in FY05, when the Reserve Bank of India (RBI) eased the norms for investing abroad by individuals, overseas remittances topped $440.5 million in FY08, according to recent data released by RBI. And there are signs that the momentum on outbound flows could well be carried forward. In April alone, individuals remitted $50 million abroad.

Wealthy Indians have been buying property in Dubai, a favorite location. Malaysia is another hot spot fascinating Indian investors. Those flush with funds are diversifying their portfolio to include either shares of global blue-chip firms or units of MF schemes, which have an exposure to several emerging markets. A host of firms now offer structured products to high net worth investors here.
Besides, more Indians are gifting to their relatives abroad and loosening their purse strings to see the world or to educate their kids overseas. Much of this has to do with increasing liberalization and economic well-being. For years, RBI and the government had followed a tight policy on overseas remittances, given the weakness in the external sector. But over the past five years, the pile up of forex reserves has prompted an easing of norms.

Used to close monitoring of outflows, RBI has since 2004 progressively encouraged outflows to neutralize the impact of the torrent of capital inflows. The annual limit for remittances by individuals was raised from $25,000 three years ago to $2,00,000 with leeway for investing in stocks, property and other assets.

The RBI data shows that of remittances, the amount spent in acquiring property abroad, rose from $0.5 million in FY05 to $39.5 million in FY08. Investment in overseas debt and equity went up seven-fold from $20.7 million in FY07 to $144.7 in FY08. Remittances in the form of gifts to relatives increased almost 10-fold to $70.3 million in FY08 from $7.4 million in FY07.

However, the outbound remittance figure pales in comparison with inward remittances, which is now over $30 billion, reckoned to be the highest in the world. But going by the current trend, outbound investments by individuals is gathering steam. The higher outward remittances figure may also be because of the fact that investing abroad is now a legitimate activity. It also helps that a new generation of economically well-off Indians are not hesitant to display their wealth unlike their parents.