India Investment Property

Current Fiscal FDI may miss target by 10 Billion Dollars

Rajani — Fri, 03 Oct 2008 12:55:29 +0000

The foreign direct investment to the country may miss the current fiscal target by as much as $10 billion in the backdrop of a global economic slowdown and the US financial crisis, CEOs said in a survey.

In a survey of CEOs by industry body Assocham, majority said India could optimally receive about $25-26 billion of FDIs in 2008-09 fiscal against the targeted volume of $35 billion.

Other factors that may hinder the investment flow includes, adverse sentiments in the stock market, bottlenecks on infrastructure, no initiatives on disinvestments, rising interest rates, it said.

The target of FDI in the last fiscal was USD 30 billion, of which the total investment received were about $25 billion.

About 300 CEOs opined that like last fiscal, sectors like services, computer software and hardware, construction, real estate and telecom would lead in getting FDI in 2008-09, Assocham President Sajjan Jindal said.

During January to June, India received FDI to an extent of $22 billion only. During this period, FDI flow from the US towards India stood at $1.3 billion, which is only 6.11% of total FDI of $22 billion received by India during the period.

Out of 400 CEOs interviewed, 280 said stock market would continue to remain in dampen mood as large number of investors have shifted their investments to traditional source of savings channels.

DS Kulkarni To Invest Rs 30 Million

Rajani — Tue, 30 Sep 2008 10:00:58 +0000

The board of directors of DS Kulkarni Developers at its meeting held on Sep. 27, 2008, has approved the investment in DSK Global up to Rs 30 million to make it a subsidiary.

The board has also approved the fixed deposit scheme of the company for the year 2008-2009.

DS Kulkarni Developers is a real estate developer. It was incorporated on Sept. 20, 1991. The company has developed real estate projects in and around Pune and Mumbai.

Shares of the company declined Rs 4.6, or 6.79%, to end at Rs 63. The total volume of shares traded was 8,020 at the BSE (Friday).

FII Stake Not Outside FDI Limit

Rajani — Mon, 29 Sep 2008 13:40:25 +0000

The finance ministry has blocked a proposal from the department of industrial policy and promotion (DIPP) to allow foreign institutional investors (FII) to invest over and above the sectoral caps on foreign investment. FII stake should not be taken into consideration while calculating FDI in sectors, for example telecom, which have a foreign investment cap, the department had suggested.
Several other departments also have reservations on the issue which is snowballing into a controversy, government sources said. Already, there are varying opinions over differences between FDI and portfolio investments, especially in a sector like real estate.
The proposal has huge implications for the telecom sector, stock exchanges, commodity exchanges, asset reconstruction companies and broadcasting, to name a few. In the telecom sector, overall FDI cap of 74% includes FDI, FII, and NRI stake, while in the asset reconstruction sector only FDI is permitted. In different segments of broadcasting, foreign investment limits include both FDI and FII.
The home, defence and external affairs ministries have reservations on allowing FII investment over and above FDI, government sources said. This could lead to a demand for hiking the foreign investment cap in sectors like telecom and stock exchanges, it is felt. It is learnt that national security advisor M K Narayanan also does not favour such a move. These ministries have demanded that the proposal should be shelved. The resistance has stalled the proposal from progressing further.

Golden Peacock Award To DLF

Rajani — Mon, 29 Sep 2008 11:03:28 +0000

The largest Indian real estate developer DLF Ltd has received ‘Golden Peacock Award’ for its excellence in corporate governance. The Golden Peacock Global Award for Corporate Governance was instituted by the World Council for Corporate Governance in January 2001 to promote competitiveness among businesses to get better quality of corporate governance.
A DLF spokesperson said, “We are happy to receive the Golden Peacock Award for excellence in corporate governance as it validates DLF’s focus on following policies and processes which serve shareholders and stakeholders of the company in the best possible manner”.

Overbuilding Promises A Kick In The Gut For Realtors

Rajani — Mon, 29 Sep 2008 05:31:53 +0000

Nipun Sahni, director and global head of commercial real estate at Merrill Lynch Capital, says the number of information technology parks and special economic zones in the 21-km Old Mahabalipuram Road — popularly known as OMR — in Chennai surpasses demand in the entire IT industry in India.
he said at a Ficci seminar, “It will be difficult for builders to raise finances for their other developments and in subsequent phases, projects will also be postponed”.
OMR, realty analysts say, is symptomatic of the overbuilding that has happened in far too many pockets.
Two other plum areas that are likely to face the same fate, they said, are Lower Parel in Mumbai and Noida in the National Capital Region, both of which are hotspots for A-grade office space. They predict high vacancy rates.
Lower Parel has a ready office space of 4.5 million square feet and will add a minimum 5 million square feet by 2009, taking the total commercial space to 9.5 million square feet.
Of this, DLF, India’s largest realtor, alone will add 3.8 million square feet through office space and a mall.
Indiabulls Real Estate, Peninsula Land and Orbit Corporation are also busy completing their projects in the locality.
To boot, top players such as DLF, Unitech, Emaar-MGF, Akruti City, Puravankara and others have expanded to states they were not present in, and have ended up in close proximity to each other, creating oversupply pockets.
What started as a building boom in 2007 across emerging markets such as Chennai, Hyderabad, Bangalore and Indore is a year later, a very different story thanks to the Reserve Bank of India’s rate hikes, the wealth-depletion effect of falling stock markets and economic headwinds.

Markets On Backfoot

Rajani — Sat, 27 Sep 2008 07:22:37 +0000

US President George W Bush and his men know that if the $700-billion rescue plan falls through, US bank Wachovia and a few more institutions will become history over the weekend.

The market meltdown has spread to high-street commercial banks, with Washington Mutual (WaMu) going down in the biggest-ever bank failure.

Staring at nearly $19 billion worth of losses on bad mortgage, WaMu’s branch network was acquired by JPMorgan Chase for $1.9 billion. There are growing fears that absence of a bailout could badly hit other institutions like Wachovia and Morgan Stanley.

The 50-share Nifty closed at 3985.25 points, down 124.30 points, or 3%, over the previous close. Market watchers said the latest downtrend could spark off a vicious circle, as traders sell off their long positions out of inability to meet margin requirements, thus deepening the fall.

Rumours are that many promoters, especially in the real estate sector, are facing margin calls on funds borrowed against pledged shares.

While leading traders have scaled down their activity over the past couple of weeks, the continuing slide could force even patient investors to book whatever profits available on their long-term holdings, brokers said. So far, leading broking firms have only deferred their expansion plans, and stopped fresh recruitment.

But if the downtrend continues for some more time, these firms could start firing employees, said market watchers. Domestic institutions pumped in Rs 543.57 crore on Friday, as per provisional data on the Bombay Stock Exchange (BSE).

The saving grace, so far, has been net inflows into mutual funds and unit-linked insurance plans (Ulips), and the absence of large-scale redemptions. But that has been of little help in the face of sustained selling by foreign institutional investors (FIIs), who have pulled out Rs 643 crore on Friday.

The total traded turnover on both exchanges fell to Rs 60,000 crore compared with the daily average turnover of around Rs 70,000 crore in the past couple of weeks. Reliance Industries, Tata Steel, State Bank of India, Mahindra & Mahindra, ICICI Bank and Infosys Technologies were among the prominent losers, shedding 3-5%.

Mahindra Lifespaces Mulls Entering Affordable Housing Segment

Rajani — Fri, 26 Sep 2008 05:14:01 +0000

Mahindra Group’s real estate arm Mahindra Lifespaces is likely to join the ‘affordable’ housing bandwagon in a year, aiming the middle-income group.

“We are looking at opportunities to enter into the affordable housing sector, but it is still at the discussion stage. It may take one year to concertise the plan,” Mahindra Lifespaces Managing Director and Chief Executive Officer Pawan Malhotra declared.

Affordable housing is making waves in the realty sector due to high cost of property, dearer home loan and its availability, high inflation and the huge gap between demand and supply.

A mapping of the supply trend of housing from private developers done by Ernst and Young shows that 70%-80% of it caters only to the higher-income groups.

In contrast, the Planning Commission expects that the housing shortage in the country to go up to 26.53 million units over the next four years. Of the total housing shortage, economically weaker sections and low-income groups account for about 99% of the shortfall in India.

Thus, anticipating volumes to make up for lower margins, a number of recognized real estate players, like Puravankara and Omaxe Ltd, have already plunged into the new asset class of the real estate sector.

In addition, Matheran Realty, Indu Projects, Shriram Properties, Jain Heights and Structures, Ansal Properties and Shapoorji Pallonji among others are either entered or are in the wings to enter into the creation of affordable housing.

Professionals Prefer To Live In Gurgaon

Rajani — Thu, 25 Sep 2008 13:22:36 +0000

The expansive skyscrapers and mounting infrastructure has made Gurgaon real estate one of the best places to invest. The commercial properties in Gurgaon have clutched the attention due to bang. The place is housing to diverse world class malls due to availability of ample spaces that is required for corporate industry and its connectivity to Delhi.
Commercial and residential real estate both are on its boom. Nowadays, a number of residential apartments are available that bring class and provide options that have completely changed the definition of Gurgaon real estate. Residential apartments, villas and town ships have made keeping in mind professional who wish to live away from the commotion of city life. On the other hand, commercial centers have made the city a commercial hub.

Akruti Looks For Bus Terminals And Warehouses

Rajani — Wed, 24 Sep 2008 07:16:04 +0000

Real estate firm Akruti City has identified some alternative growth spots. It has formalised JVs with the Gujarat government and the National Commodity and Derivatives Exchange of India (NCDEX) to redevelop public bus terminals and warehousing facilities, respectively.

While bus terminals will be converted into bus stations-cum-commercial and retail hubs, the company plans to set up 17 warehousing facilities for NCDEX across the country.

“Bus terminals are one of the ideal commercial and retail destinations,” said Akruti City MD Vimal Shah. “Compared to malls and other shopping centres, human mobility at bus terminals is comparatively high. Passengers would be offered more comfort.”

Many state governments and the Indian Railways have zeroed in on bus terminals and railway stations as ideal locations for development as the passenger traffic has been on the upswing.

Some state governments, including Maharashtra, have already started the redevelopment work for BEST terminals while the Railways has identified 22 stations to be converted into station-cum-malls and hotels through public-private participation.

In the first phase, Akruti City will redevelop 5-7 bus terminals in towns such as Baroda, Surat and Mehsana in Gujarat. Akruti, in turn, will get around 2-3 million square feet of area for commercial and retail development.

Currently, Akruti City has 107 million sq ft of developable land bank spread across Mumbai, Panvel, Pune and Baroda. Akruti, in association with TCG Realty, is developing a biotech park on 700 acres at Savli near Vadodara. Shares of Akruti City rose 3.64% to close at Rs 966.15 on the Bombay Stock Exchange.

On Akruti’s JV with NCDEX, Mr Shah said, “Warehousing is one of the new growth areas we have identified. The JV with NCDEX envisages development of 17 warehousing facilities for the commodity exchange at various locations in the country. We will develop and manage these facilities for NCDEX.”

Government In A Fix Over Lehman Realty Assets

Rajani — Fri, 19 Sep 2008 10:57:08 +0000

The department of industrial policy and promotion (DIPP) and the Reserve Bank will shortly meet to evaluate the situation arising out of Lehman’s collapse, as the US giant has $500-million investment in Indian real estate projects.

Foreign investment norms for real estate do not allow repatriation of funds within three years of investment. The RBI-DIPP meeting will discuss a mechanism to deal with cases like Lehman, when foreign investors in real estate go bust. One of the key questions is what happens to the failed investor’s assets, which are bound by certain lock-in periods.

Lehman has its real estate assets spread across the country.