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