Real Estate Gurgaon

Worried over the substantial inflows of foreign funds into the real estate sector, the central bank has asked the government to allow FDI into the sector only after the clearance from Foreign Investment Promotion Board (FIPB).

At present, up to 100% FDI is allowed in realty projects on automatic route with certain conditions like a three-year lock-in on investments and minimum capitalisation of $5 million.

RBI wants real estate removed from the list of sectors where FDI can come in through the automatic route. RBI wants inflows routes like participatory notes (P-notes) and private equity contained. The market regulator Sebi is currently in the process of initiating moves to restrict investments coming in through P-notes.

Sources said the government, which has completely backed Sebi’s action to restrict P-note flows, may now not relent on other suggestions, especially restricting FDI. Also removing one sector from the automatic list, will be seen as a retrograde measure by foreign investors.

The reason for RBI’s concern stems from the fact that the sector witnessed a huge quantum of inflows in first four months of the current fiscal, surpassing the total inflow for the past two years. The FDI inflows in April-July, 2007, stood at $627 million, compared to $38 million in FY06 and $467 million in FY07.

The sector has witnessed substantial investor interest ever since FDI was allowed into the sector in 2005. There are also fears that some of the FDI could be ECB masquerading as FDI.

Since real estate companies are not allowed to raise external debt, there are reports of them using instruments like compulsory convertible debentures and offshore special purpose vehicles for borrowing abroad and then funnelling the funds to the parent in India as FDI.

This is not the first time, RBI has written to the government on the rising inflows into the sector. It had communicated its concern to the government last year as well. But, then it had not suggested any measures for a clamp down.

Source:http://economictimes.indiatimes.com/

High valuations of prime land and a robust outlook for housing and office space is spawning new wannabes in the country’s burgeoning realty sector. The latest to enter the fray is the Hero Group, a leading maker of two-wheelers and auto parts in the country.

“We have about 10 acre land at Gurgaon, Haryana, and we are exploring possibilities of developing it into a commercial property,” Naveen Munjal, chief executive officer of Hero Exports, the trading arm of the group.

The group is in talks with leading real estate companies in Delhi to develop the property, Munjal said.

Details of Hero Group’s realty plan are yet to be worked out, he said.

Over the last one decade, domestic and foreign companies have flocked to Gurgaon to set up their offices – driving real estate valuations in the satellite city of the National Capital as high as its landscape.

Source : Business Standard

Sobha Developers has entered in to a joint development agreement to develop Rs 2,000 crore integrated township spread over 192 acres in Gurgaon, Haryana.

The company said it has entered into an agreement with QVC Realty and Chintels India for the venture. This is an addition to the list of integrated township projects already launched by the company in Kochi and Thrissur.

According to J C Sharma, managing director, Sobha Developers, "The integrated township will consist of single-family homes, apartments, commercial, retail and office space. This is one of the company's largest development in north India and is strategically located in Sector 106-109 and well connected to Delhi and Gurgaon."

"Projected investment estimated to be over Rs 2,000 crore and the total development in excess of 6.5 million square feet," he added.

Source : Business Standard

Persistent demand and lack of fresh supply has fuelled an about 7 per cent increase in commercial property rentals in the city and the National Capital Region in the April-June quarter, says a new report.

"The rentals in the central business districts (CBDs) continue to rise due to lack of fresh supply," said the report by global realty consultant DTZ.

It, however, observed that the rentals in the secondary business districts (SBDs) have risen by 5-7 per cent in April-June quarter compared to 15 per cent growth in the last quarter.

Overall absorption of commercial 'grade A' office space in the quarter reduced to 8.1 lakh sq ft compared to 15 lakh sq ft last quarter.

It noted that Gurgaon alone has absorbed about 5.4 lakh sq ft of office space. Of this, 50-55 per cent demand has come from the IT/ITES sector. The rentals in the city were ranging in between Rs 80-150 per sq ft for a month.

"With continued demand and limited fresh supply over the next few months, rentals in CBDs and SBDs are expected to continue their upward movement," the report commented.

It further said that rentals in Noida are expected to increase marginally over the next 3-6 months with a number of Grade A structures getting ready during this period.

As the Delhi metro rail project to Gurgaon is in progress, fresh demand in this NCR city is likely to push up rentals further, the report added.

Source : The Economic Times

Real estate firm Ansal Properties and Infrastructure is planning to come out with a follow-on-public offer to raise about Rs 1,000 crore for its expansion plan and to meet the development cost of existing projects.

When asked about the company's plans to come out with a FPO, Ansal API Chairman Sushil Ansal said: "We have not yet decided on the timing of the issue."

He was speaking to reporters here on the sidelines of FICCI's press meet on real estate.

Ansal said the company would issue fresh equity to raise about Rs 1,000 crore.

"The promoters holding at present is 74 per cent and after the public issue it would be 55 per cent," he added.

The national-capital based company is also planning to raise $250-300 million fund from either London or the US for hospitality ventures.

On hospitality fund, Ansal said, "work is going on" and the company would raise around $250-300 million from either the US or London.

"Most probably it will be from the US," he added.

The company had earlier announced plans to develop about 30 hotels across the country and had floated a special purpose vehicle with Ambience Hospitality Management.

Ansal API has recently tied up with IL&FS Investment Managers for a township and an IT SEZ in Gurgaon with an investment of $125 million (about Rs 515 crore).

Source : The Economic Times

Real estate developer Uppal Housing Ltd said it will invest about Rs1,500 crore by March to expand its operations outside the Capital and its suburbs. The company is also considering a share sale in the near future.

Uppal, primarily a Delhi-based developer, plans to expand into Mumbai, Pune, Hyderabad and tier II or smaller cities such as Chandigarh. “We have always been a Delhi-focused company,” Gian Bansal, Uppal director and chief executive officer (infrastructure), said. “But we now want to have a wider presence.”

Real estate developers such as DLF Ltd, Unitech Ltd, and Parsvnath Developers Ltd are increasingly expanding their presence outside Delhi and its suburbs as real estate demand slows down in Delhi and its suburbs such as Gurgaon and Noida as real estate demand slows down in these areas.

Uppal plans to raise funds for its expansion through internal accruals and project-level private equity investments. Uppal is also looking at an initial public offer. “It is something we will do eventually...once we build the company’s valuation, we will look at diluting stake,” Bansal said.

The company is bringing in shareholders in project-specific special purpose vehicles, Bansal said. In June this year, Uppal which had formed a special purpose vehicle with Luxor Group for the development of a 67-acre special economic zone (SEZ) in Gurgaon diluted its stake in the SPV to Trinity Capital, a US-based boutique investment banking firm, for over Rs300 crore.

The company is now in talks with foreign investors to jointly develop its multiservice SEZ at Gurgaon. “The 263-acre zone will require an investment over Rs5,000 crore in five years,” Bansal said. “We will dilute our stake in the special purpose vehicle to raise funds.”

Uppal has received approvals for both the SEZs. Work on the multiservice zone will start in December, Bansal said.

Uppal will be developing three more SEZs. Land acquisition for the zones has been completed.
Uppal also plans to expand its hospitality and retail business by building five more hotels and three malls in Delhi and its suburbs

Source : LiveMint

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DLF Ltd has announced that DLF Hotels, the hospitality arm of the Company, on August 30, 2007 announced that it has reached an agreement with Four Seasons Hotels and Resorts to operate a proposed luxury hotel at DLF Golf Links, in Gurgaon.

Targeted to open by end 2010, Four Seasons Hotel Gurgaon will be located at the DLF Golf & Country Club in DLF City, Gurgaon. The 230 room Hotel will overlook the picturesque 18 - hole, Arnold Palmer Signature Golf Course, and will feature several dining options, a full feature spa, as well as facilities for meetings and functions.

This move further strengthens the DLF Hotels portfolio and the vision of developing, acquiring, financing and actively managing quality hotels. The company is well poised to achieve its target to build and "own" India's largest hotel assets with over 25,000 - 30,000 guest rooms in next 7 - 10 years. In November 2006, DLF Hotels had announced its first JV with The Hilton Hotels to develop 60 - 75 business hotels throughout India.

The Company is the largest real estate development Company in India in terms of area of completed residential and commercial development (Source AC Neilsen Report. The Group's existing range of business verticals span across the Homes, Offices, Shopping Malls, SEZs, Hotels and Infrastructure, which contributes towards ‘Building India’. DLF has projects with lettable or saleable area of approximately 44 million square feet under construction and Land Reserves across 31 cities.

Four Seasons is dedicated to perfecting the travel experience through continuous innovation and the highest standards of hospitality. Founded in 1960, Four Seasons has followed a targeted course of expansion, opening hotels in major city centres and desirable resort destinations around the world. Currently with 74 hotels in 31 countries, and more than 25 properties under development, Four Seasons continues to lead the hospitality industry with innovative enhancements, making business travel easier and leisure travel more rewarding.

Source: Equity Bulls

Hines India Real Estate, a wholly owned subsidiary of American realty giant Hines, has set up a $300 million fund dedicated for projects in India.

“We have an investment fund in India with $300 million of equity which should sponsor projects up to a billion dollars in total value,” said Yash Gupta, joint managing director, Hines India.

Hines is one of the largest real estate developers in the world. It is a privately-held firm with a presence in over 96 cities across the globe. Its portfolio consists of around 950 properties and the firm controls assets valued at approximately $16 billion.

The Indian office was opened last March and the firm has committed to only one project so far – a city centre spread over 15 acres in Gurgaon in equal partnership with DLF.

This complex will comprise a 30-storey high office tower, retail, restaurant and entertainment venues, a hotel. To attract crowds and make it the “Connaught Place” of Gurgaon, this city centre with also have landscaped exterior and interior public spaces.

“We are more interested in quality than quantity. Hines India will develop iconic landmarks in the country,” said Gupta.

The company has decided to stick to just the metros, as it believes this is where the true demand for quality exists.

It is keen to develop projects in the National Capital Region, Mumbai and Bangalore. “Our presence in Chennai, Hyderabad and Kolkata will be reactive to a good opportunity coming up,” said Gupta.

The company is looking to develop high-end office and residential space, integrated townships and IT/ ITeS special economic zones.

Source : Business Standard

THE government is planning to build 6-7 new IT townships, called knowledge townships, close to major urban centres and international airports. The residential townships will be based on the walk-to-work concept. This means the professionals working there will be encouraged to live close to the workplace.

The companies setting up units in the townships may be extended tax sops under either the software technology park (STP) or special economic zone (SEZ) scheme. Each township would have a minimum 10-hectare built-up area to make it compliant with FDI rules relating to investment in real estate. Each township is likely to entail an investment of Rs 500-650 crore, depending on the area.

A committee comprising members from the PMO, ministry of IT & telecom, urban development, civil aviation, Dipp along with Nasscom has identified several areas for setting up the knowledge hubs.

Sources in the committee said that these proposed townships will be extension of satellite towns like Gurgaon (to be called Gurgaon Plus). Similarly the township near Mohali will be called Mohali Plus. The first of these new townships is expected to come up by 2012 and the rest by 2015.

While manufacturing will be discouraged, services like IT and BPO will be encouraged in these units. “Nobody will like to live 100 ft away from a chemical plant but a software or BPO company will be welcome,” said a committee member.

Many domestic and foreign real estate players have expressed interest in owning land and build such townships.
“We want each township to be FDI compliant so that they can attract foreign expertise,” a senior DIPP official said. Every township would be a special purpose vehicle where states and developers would have stakes.

Urban development secretary M Ramachandran said that his ministry would advise the committee on facilities like water, electricity, drainage and other civic facilities. “We will also help in developing the structures,” he said.
“The townships may also have an IIT/IIM or such academic institutions to build an ecosystem. For tax sops, we are pushing for extension of STP scheme else the companies can also opt for SEZ status,” said Nasscom president Kiran Karnik. The townships will come complete with educational, recreational/amusement and healthcare infrastructure.

“The basic reason for proposing such townships is the existing saturation in real estate and infrastructure amongst existing IT hubs,” Mr Karnik added.

Gurgaon real estate rentals have shot up meteorically in the recent past while Bangalore doesn’t have any real estate. Hotel rentals in Bangalore are amongst the highest in the world.

Currently, Mohali, Mysore, Noida and Gurgaon have come up as satellite townships to major state capitals, most of which have international airports.

Tax breaks might be crucial for the proposed townships. SEZs offer a five-year 100% tax exemption with two subsequent five-year exemptions of 70% and 50% to units.

Source : The Economic Times

When the Indian government in a tie-up with the Confederation of Indian Industry (CII) launched the Overseas Indian Facilitation Centre (OIFC) a little while back, it had probably not bargained for the nature of the response it got.

If OIFC Chief Executive Harish Kirpal of the CII is to be believed, overseas Indians are flooding the OIFC’s mailboxes with investment related queries and not complaints or distress calls.

Well, one could argue that the primary objective of the centre was to lead Indian diaspora up the investment avenue, but one would certainly not have expected real estate to be the area of greatest interest. At least, not one in which NRIs would want OIFC help. But that’s exactly what’s happened.

“We are getting a lot of queries from overseas Indians about investing in property in India,” Kirpal was quoted by The Times of India as having said recently.

OIFC, a one-stop shop to help overseas Indians invest in India, was launched by the Ministry of Overseas Indian Affairs (MOIA) on May 28. The CII is the private sector partner and host institution of this not-for-profit trust.

Speaking about the response received by the centre since it was launched, Kirpal said going by the initial trend, real estate tops the list in terms of interest shown by overseas Indians while stock market investments come second.

With the surging demand for investment in real estate from domestic and overseas investors, real estate investment trusts when operational in India would enable a larger number of players to participate in investment grade buildings. These are currently worth $ 83 bn in India.

Currently, Indian REITs are entering the Singapore market. Ascendas India, the Business Park developer has already applied to the Monetary Authority of Singapore to raise $357m to invest in integrated real estate projects in India.

DLF and Unitech are also deliberating on this option. While Unitech is going in for an overseas listing, DLF Assets has kept its options open for an Indian listing if the trusts are allowed to operate in the next 12 months.

Bangalore’s Real Estate Bank International (REBI) has ambitious plans to reach out to overseas markets with an investment of Rs. 250 m, reports NRI Realty News.

Offices in Sri Lanka, US, UAE, Singapore, Malaysia and Australia will enable real estate services to reach out to non-resident Indians, while REBI’s domestic network will be expanded to 3000 franchises over the next three years.

Pearl Global is also venturing into real estate, as it ties up with Ansal Properties to develop 9.26 acres of commercial land in Gurgaon.

Earlier this month, the Bhoruka Group from Bangalore announced its intention to diversify from its existing power generation business to develop a premium residential project in south Mumbai. The defunct Mukesh Textile Mill property, covering 10 acres will be the site of the new project. The company will also construct an IT Park on 34 acres in Whitefield, Bangalore.

Kolkata based Bengal Shrachi Housing Development in a joint venture with two NRIs has announced the launch of a housing complex, Rosedale Garden, specially designed for non-resident Indians (NRIs). Tapping the desire for fully furnished ready-to-move in apartments for NRIs, the joint venture has invested Rs3bn in this mega project.

Premier realty firm Parsvnath Developers Ltd is set to develop their existing land bank over the next five years by investing over $4 bn. Launching over 100 real estate projects in all its segments, they aim at developing their saleable land bank of 153m sq feet.

They have six projects lined up for Delhi metro as well. Speaking in terms of growth, the company had reported a profit of Rs 2.92 bn in the financial year 2006-07 at an annual growth rate of 110 per cent.

The real estate sector has recorded commendable profit margins, evident from the profits posted by major real estate developing giants in the first quarter. The first quarter was beneficial for almost all real estate developers. Parsvnath Developers posted a record net profit of 179.56 per cent at Rs 1.02 bn against its previous Rs 365.5 m.

Unitech on the other hand has been registering a consistent growth of 8.6 per cent for the last four years. Ansal Properties and Infrastructure Ltd. (Ansal API) reported a net profit of 16 per cent.

Indian realty is growing at 30 per cent, particularly in Tier II and Tier III cities. The $15 bn realty market is expected to reach $ 90 bn within the next eight years. Chandigarh, Gurgaon, Vizag, Coimbatore, Kochi, Jaipur and Nagpur are some Tier II cities witnessing unprecedented boom.

Research has it that realty can give an average return of eight per cent. Realty prices are doubling in some Tier I cities like Bombay, Chennai, Bangalore etc. Residential prices have gone over Rs 5,000 per sq feet and commercial prices are over Rs 10,000 in Tier I cities.

Source://thepeninsulaqatar.com