It’s not just the consultants, funds and law firms that are coming to India. The booming real estate sector has attracted yet another important segment of the global industry—the architects. Celebrated British architect Lord Norman Foster, who shaped London’s 21st-century skyline with buildings such as the Gherkin, the new Wembley stadium, and has designed other structures like the Beijing airport and the Reichstag in Berlin, has entered India in tie-up with a Mumbai real estate firm, the Neptune group.
The Mahindra group’s real estate arm Mahindra City has roped in US-based architect and design firm HOK while Canadian firm Forrec, the lead architects behind Universal Studios, has tied up with Bombay Dyeing and Unitech. Lord Foster has tied up with the Neptune group to develop a 17-acre office complex called Evolution, near the Bandra-Kurla Complex (BKC). Neptune Group has reportedly paid Foster and Partner, Lord Foster ‘s firm $8 million for design alone.
“A city that works as hard as Mumbai deserves the best working environment possible. We will deliver a world class facility so far unmatched in the regions’ office property market,” Lord Foster was quoted as saying in a statement. Evaluation will be a low-rise structure, spread over 2 million square feet, easily accessible from the airport, three railway stations, two metro stations and two highways, with facilities like food court and health club.
Neptune group managing director Nayan Bheda said, “In each of our projects, we have tried to create a balance between little details and the big picture. We also believe that every piece of land has its unique potential. Fortunately, Lord Foster shares our vision and has agreed to come on board to unleash the potential.”
Similarly, the real estate and infrastructure development arm of the Mahindra Group, Mahindra Lifespaces has teamed up with US based HOK, one of the leaders in the global architecture and planning segment to develop the residential and social amenities zone at the Mahindra World City in Chennai.
HOK, which has developed landmark buildings including the Dubai Marina (the world’s largest planned waterfront community with a mix of residential, retail, hotel, office and recreational uses), is understood be working on other Mahindra projects as well, sources said.
HOK planning Group VP Jeff Davis said that the key challenge was to envision a master plan that would translate the vision of the Mahindra team while ensuring that it blended seamlessly with the natural surroundings. Forrec, the Canadian architectural firm, is a consultant to Unitech, DLF and Bombay Dyeing. Shapoorji Pallonji group has also teamed up with Craig Nealy for its joint venture projects in Pune.

Chennai-based real estate developer Rakindo Developers’ proposal to set up a wholly owned subsidiary with $250-million FDI from Dubai-based Rakeen Development is expected to get Cabinet clearance on Thursday.
Rakindo has plans of building a $1.5-billion (Rs 6,000- crore) integrated township at Coimbatore which will be ready for launch after the CCEA clears the FDI proposal. The plan envisages developing over 1,000 acres of property with an 18-hole golf course as the centerpiece. Rakindo is proposed to be a holding company that will promote investments in several SPVs to develop and operate townships. It is a joint venture company formed by Rakeen, a joint stock global business company promoted by the Ral Al Khaimah group, UAE and the Chennai based mineral conglomerate Trimex group owned by Koneru Prasad.
The newly formed real estate company has already obtained FIPB approval to invest and hold downstream investments in Companies formed for the Coimbatore project.
FIPB had considered the Rakindo proposal in March, which was subsequently approved by different ministries including the department of industrial policy and promotion, department of economic affairs and the ministry of urban development. Built around the concept of “walk to work culture”, the Coimbator project plans to have an IT SEZ, specialty hospital besides commercial and residential complexes. The CCEA will also consider another proposal by Essar Power Ltd Mumbai for FIPB approval to operate as a holding company.

MUMBAI: Over the next decade, the figure of dollar millionaires in India is likely to touch 4,11,000 from a negligible number at present.
According to a report by the Economist Intelligence Unit (EIU) on behalf of Barclays Wealth, these households are estimated to be worth $1.7 trillion, or over the country’s current market capitalization of about $1.3 trillion.
But as a percentage of the population these households will comprise just 0.2 per cent. In comparison, smaller countries such as Singapore and Hong Kong will have the highest concentration of millionaires with about forty per cent of the households in each country having wealth in surplus of $1 million.
In absolute terms, however, India is expected to have one of the fastest-growing prosperous markets in the world, making it the 8th largest wealth centre by 2017. The numbers of mass affluent, with wealth over $500,000, is predicted to rise from a negligible figure in 2007 to 1.9 million by 2017.
The 5-year bull run has contributed considerably to the rising fortunes, with many corporates and entrepreneurs tapping the markets to raise funds. Inherited wealth and rising corporate salaries are also key drivers.
As in many rising markets, the wealthy in India have kept much of their wealth in tangible goods. Fresh research by McKinsey tell s that Indian households hold over half their savings in physical assets like land, houses, cattle and gold.
Property accounts for 43 per cent of overall household wealth. The yellow metal has also been a popular investment tool among Indians, who are the world’s largest consumers of gold. Recent guess suggest that the population owns two hundred billion dollar in gold, equal to nearly half of the country’s bank deposits.
But over the next decade this might change, with the increasing popularity of financial instruments like REITs and real estate mutual funds as well as gold ETFs and bullion trading platforms. Investors are likely to shift to these avenues of holding traditional assets like property and gold.

The board of directors of Puravankara Projects has recommended a final dividend of forty percent, or two rupees share on equity share of five rupees each for the recent year. The payment is subject to the sanction of the shareholders at the yearly general meeting.
Puravankara Projects is leading real estate development companies in India with a center of attention on developing residential and commercial properties. Part of the Puravankara group, it was incorporated as Puravankara Constructions on 3rd june 86. It became a public limited company on 10th july 1992.
The company has operations in Bangalore, Kochi, Chennai, Coimbatore, Hyderabad, Mysore, Colombo (Sri Lanka) and United Arab Emirates.
Company shares declined by Rs 2.3 (less than one percent) to trade at Rs 289.5. The total value of shares traded was fifteen thousand seven hundred eighty two rupees at the BSE on Wednesday noon.

A week after Sebi announced guidelines for real estate mutual funds, officials at fund houses and real estate developers are awaiting clarity on certain issues before they go ahead with scheme launches. Industry experts point out that taxation, periodic calculation of net asset value (NAV), and absence of any benchmark indices are some of the contentious issues turning out to be stumbling blocks in the design of such products.
Mr. Pranay Vakil, chairman, KnightFrank India, asks that a quarterly valuation exercise would not be very easy to implement. “Let us assume that an REMF consists of 10 real estate assets and each asset has been acquired at different periods of a year. So, how one can calculate a composite NAV of fund, taking into consideration all these properties purchased?”.
Guidelines are also silent on the NAV on rented property, he points out. There is also a lot of confusion over whether these entities will be taxed as a debt fund or an equity-oriented fund. Mr. Milind Barve, MD of HDFC Mutual Fund, says, “As per the current regulations, given that REMF Schemes will invest directly in real estate projects, they are likely to be treated as debt funds for taxation”.
Dividends from equity funds are not taxed nor are long-term capital gains; unlike debt funds (these are taxed). He further says“However, as a part of giving an initial impetus to the real estate MFs, fund houses will request the authorities that REMFs be treated like equity diversified schemes”.
This confusion on taxation is also leading some experts to remind policy makers about the possibility of double taxation for the investor. If the entity investing in the real estate projects (say an SPV) is taxed while it distributes profits to the fund, and so is the latter when it gives away profits to the investor, the investor will be effectively taxed twice, experts point out.
Meanwhile, there is a debate on whether real estate developers will actually find entry into the segment attractive. Sebi has put onerous restrictions on the kind of properties that a REMF can invest in, like banning all “related party transactions”. Effectively, one cannot raise money from investors to deploy in one’s own assets.
A Balasubramanian, chief investment officer at Birla MF, says it is fair to assume that fund houses will be the first to launch such schemes, followed by developers as the time passes by. The only argument against Mr Balasubramanian’s comments is that most fund houses (other than a handful) may not have the required expertise (investment managers specialized to invest in real estate) to spot opportunities.
Mr. Jai Mavani, head of real estate at KPMG, says, “There is need to calibrate the foreign money flowing into the REMFs, as this can lead to spikes in asset prices”. He says that the capitalization rates (popularly called cap rates) in India are higher than abroad, and this could lead to an obvious “arbitrage opportunity” for foreign investors. Higher cap rates mean that for the same amount of rent, its value here is lesser.
Some of the other issues facing players planning REMFs are the lack of any proper real estate indices in India (working as benchmarks), enabling comparison between schemes, and the infancy of the mortgage-backed securitization market in India. More convenient options to exit from real estate projects will also have to be provided since Sebi has not allowed transfer of assets between two schemes, limiting liquidity.
No wonder that most developers are not willing to make any commitment on whether they will eventually launch REMFs. When quizzed on this, Rajeev Singh, MD of DLF, said, “We do not have any immediate plan to float an REMF. We are observing the situation and as and when time comes we will consider it.”

MUMBAI – Real estate firm Mahindra Lifespace Developers Ltd may consider private equity funding for some of its projects, but has no immediate plans to dilute its stake, a top official said.
The Mumbai-based firm may need cash for developing a planned special economic zone in Maharashtra and townships in the future, but has enough cash for ongoing projects, Vice-Chairman Arun Nanda told analysts late on Tuesday.
The company has developed a 1,400-acre special economic zone (SEZ) in Chennai, while its second SEZ, spread over 3,000 acres at Jaipur, will start operations by July 2008.
“Chennai has started generating cash, while Jaipur is self sufficient. When we go to Maharashtra, we will need to look for funds,” he said.
The company has planned a 3,000-acre multi-product special economic zone at Karla, near Pune. While it has received approvals, land acquisition for the project may only start later this year, Nanda said.
“There is no intention for Mahindra group to dilute equity. At best, we might bring in some private equity,” Nanda told analysts. “We are a zero-debt at company level and currently hold cash reserves of 250 crores (2.5 billion rupees).”
The Mahindra group holds 51 percent equity in the company.
Last month, the company formed a joint venture with private equity fund ARCH Capital to develop a 55-acre township project, within its Chennai SEZ.
Mahindra Lifespace, which on Tuesday outlined an investment of 5 billion rupees for a 25-acre residential project in Nagpur, is also planning four other large integrated township projects. However, Nanda declined to give details of these projects

Setting a good example of how demand shapes supply, even in the real estate sector, a Kolkata-based developer had taken a decision to venture into unexplored territory with the city’s first luxury studio apartment block with full-service back-up.
The city-based Siddha Group will construct a sixty crore rupees dedicated block with three hundred fourteen luxury studio apartments in the Rajarhat New Town area on a 2.5 acre plot neat to the area’s main arterial road.
“I have stay in similar studio apartment in New York and found the demand for similar convenience strong among young buyers and working peoples in the city”, said S. Jain, Siddha’s managing director.The idea was to offer buyers possession with a pain-free maintenance experience and in-house facilities, said Jain.
The project would creat new era because in the Kolkata real estate market, small apartments today stood for low-priced housing with poor construction quality, fittings and finish, said property consultant Arun Jhunjhunwala. Density was synonymous with low income group (LIG) housing in Kolkata.

Mahindra Lifespaces and B E Billimoria have won a bid to develop a 25 acre residential project at Multi-modal Internal Hub Airport (MIHAN) at Nagpur. The consortium will form a special purpose vehicle to implement the project with Mahindra Lifespaces holding 70% stake and 30% equity stake held by B E Billimoria.
The MIHAN project comprises of development of airport and aircraft maintenance area, special economic zone and support infrastructure. In the first phase, Mahindra Lifespaces will develop the 1.6 million square feet build up area over next 36 months.
The company reported total income of Rs 69.03 crore for the fourth quarter ended 31, March 08, up 83%, from Rs 37.80 crore during the corresponding period last year. Its total income for financial year 08 increased by 35% to Rs 219.96 crore compared to Rs 163.26 crore a year ago.

Finolex Industries has planned to sell off its special economic zone plot at Chinchwad near Pune .It is close to signing a deal with a US-based developer to sell the land for four hundred crore rupees.
The 950 crore rupees maker of PVC pipes and fittings had been weighing two options for the 78 acre plot, either to develop it as an information technology SEZ or dispose it off completely and unlock the value of the land.
The company is about to finalizing the details of the property. Talks with companies in the US is also going on.
One year ago, Finolex Industries was talking to Tishman Speyer India Ventures for land sale. The Finolex official had said in December that the modalities for the sale were decided and that Finolex was sure to sell the plot to Tishman Speyer India. But the developer took a very long time to take a firm stand and eventually the deal was called off.
A study to covert its fair weather port at Ratnagiri into an all weather port is also going on. Once the study is over, its arm, finolex Cables, plans to set up a mega power plant.

PUNE: On April 10, the Promoters and Builders Association of Pune (PBAP) pronounced that property prices in the city would be hiked by Rs50-400 per square foot from April 20 onwards, giving potential buyers ten days to take benefit of the then existing rates. But the buyers rejected to take the bait and sales are in fact showing a dip instead of the rise the builders had expected.
Indicating a genuine slowdown in the Pune property market, property registration figures available with the deputy inspector general of registration and deputy controller of stamps have shown a turn down.
From April 1 to April 10, a total of six thousand two hundred thirty seven property documents were registered in the city. The number declined to four thousand one hundred twenty six during April 11-20, the period in which the buyers were aware of the imminent price hike but had the opportunity to buy before the hike was applied.
Figures available between April 21 and April 29 suggest that there was no considerable increase in the number of new bookings either — a total of five thousand three hundred sixteen documents were registered during this period.
However, PBAP president Lalit Kumar Jain refused to confess the slowdown, rather he said that “The builders are getting a good response, which is better than that of last month,”.
Besides escalation in the price of steel and cement, Jain had previously cited the Pune Municipal Corporation’s charges on real estate developers as the cause for rising prices.

Real estate developer Nirmal Lifestyle is planning to develop 20 townships across India.
The company has marked an investment of $5 billion for the first phase, which includes five townships under the brand name of Lifestyle City, a company release said. Spread over 300-1,000 acre, the phase I townships will come up one each in Pune, Indore and Panvel, and two in Mumbai.
The company is looking at generating $10 billion from these five projects in the next 10 years.
Nirmal Lifestyle chairman and managing director Dharmesh Jain told that the houses in these projects would be priced between Rs 20 lakh and Rs 1 crore. He declared, “Houses in Mumbai cost much more than the price we have put to our projects. So we hope to successfully tap this market”. Nirmal Lifestyle, which has built over 50 lakh square feet of residential and commercial space, is one of the top real estate players in the Mumbai market.
It is known for developing Mulund, a central suburb of Mumbai, into a real estate hub. The company also operates the Nirmal Lifestyle shopping mall.
Each township will have a sports centre modeled on international standards, an IT SEZ, hotels and malls. Jain expects the projects to be completed in seven to nine years.
He said, “The construction of two townships will begin towards the end of this fiscal and for the others in early 2009″. He further added that private equity investment for one of the projects has been received and more is expected once construction begins. Nirmal Lifestyle is also looking at launching an IPO in the next 12-18 months.
Thanks to the steep rise in the cost of housing, the middle segment is seeing a boom, with many PE players eyeing mid-tier projects priced between Rs 35 lakh and Rs 70 lakh and premium projects with price tags of Rs 65 lakh to Rs 1 crore.
Sashi Makapatti, a senior investment officer at Rutley Capital Partners, the investment arm of global property consultant Knight Frank, said that the company was investing $300 million in mid-segment housing projects in tier II cities. He pointed out, “The demand is enormous in these regions. We are looking at Hyderabad, Indore and suburban Mumbai”.
According to Anuj Puri, country head and chairman of Jones Lang LaSalle Meghraj, investors are now realizing the potential of mid-segment projects. He added, “Projects in areas where land prices are Rs 2,000-3,000 per square feet are not feasible. This is why such projects are likely to succeed in suburbs, where land rates are low”.
Nirmal Lifestyle will invest $5billion in Phase I, which includes five townships under the brand name of Lifestyle City.
Spread over 300-1,000 acre, will be one each in Pune, Indore and Panvel, and two in Mumbai.
Houses in these townships, complete with sports centres, malls, IT SEZs and hotels, will be priced between Rs 20 lakh and Rs 1 crore.

Zero rentals for residential flat is fast gaining popularity in the extended suburbs of Vasai-Virar. But there’s a catch. Pay a heavy deposit, which is returned when the leave-and-licence agreement comes to an end, provided the house is returned to the owner in its original condition.
Owners are encouraging zero rentals in return for “heavy deposits” to the tune of Rs 2 to Rs 5 lakh so that they get back their flats in proper condition when the tenants leave.
A proper leave-and-licence agreement is drawn up and both the owner and the tenant do not need to contact each other until the agreement ends.
People looking for accommodation are increasingly getting attracted to the zero rent scheme. Especially newly-weds and those with transferable jobs are opting for the zero rent schemes.
Real estate agents say that while tenants find the zero rental scheme attractive, they also take good care of the flats to avoid deductions in the deposit amount. Flat owners also find it more lucrative to reinvest the lump sum deposit than collect a monthly rent, which is usually spent immediately.

Mumbai:- Real estate and retail player, Wadhawan Group is now betting big on food and beverages and lifestyle segments and planning to invest around three thousand five hundred crore rupees in launching new restaurants format and luxury retail expansion plans.
The group has currently entered into a tie-up with Dubai-based Jumeirah Group in order to bring in South East Asian cuisine restaurants for the first time in India, branded as ‘Noodle House’.
According to Srinath Sridharan, vice president & head – strategic alliances, Wadhawan Holdings, “Dish Hospitality Private Ltd, an enterprise of Wadhawan Holdings Private Ltd, promoted by the Wadhawan Group, is planning to set up thirty five Noodle House restaurants in India at an investment of one thousand five hundred crore rupees in the next four years.
Further, Sridharan also informed that Dish Hospitality is planning to foray into the international Markets such as Europe and UAE in order to set up luxury dine-in restaurant called ‘Aurus’. Explains Sridharan, “By setting up luxury restaurants in these Markets, we hope to garner a huge return in investments apart from more customers.” The company has set up a luxury ‘Aurus’ dine-in restaurant in Juhu, Mumbai where a dine-in for two costs over six thousand rupees.
Wadhawan Lifestyle Ltd is planning to set up four US-branded ‘Christian Audigier’ lifestyle apparel and accessories outlets each in Markets such as Delhi , Bangalore, Hyderabad and Chandigarh. Sridharan Says, “We are also looking at setting up two US branded ‘Ed Hardy’ lifestyle apparel stores in India. Each store will have an area size of two thousand two hundred square feet.”

DUBAI — An Indian hedge fund manager has described his country as being in a charming spot” of economic progress, telling investors in the hospitality and real estate industry that India will be able to carry on an yearly growth of ten percent for many years.
Investment level rose forty percent of the gross domestic product previous year — a jump from twenty five percent five years earlier — while employment is growing at around three percent yearly, said Surjit S Bhalla, chairman and managing director of Oxus Investments Pvt Ltd. He addressed on 3rd may the opening of the fourth Arabian Hotel Investment Conference (AHIC), where he also noted the increasing number of urban women joining the labour force — to eighteen percent in 2005 from fourteen percent in 2000.
“The hype about India is real,” said Bhalla, who manages Dh91.8 million ($25 million) in the Indian equity market through his company in New Delhi. “It is in a charming spot of growth, and this can last another decade or two.”
He told Arab investors at the conference that India lacks infrastructures, but is set to surpass China in terms of GDP growth by 2010. India had an annual growth of 5.6 % between 1980 and 2002, mainly due to its on the rise middle class.
The three-day event devoted its opening session to opportunities in India’s hospitality market, which shares many similarities with that in the Gulf region. Both markets are growing tremendously and calling for environment-friendly buildings and infrastructures. Homi S Aibara, a associate at a leading hospitality consultancy firm in India, Mahajan & Aibara, said that three hundred nine million square feet of commercial space is being planned or under construction all over Indian major cities to augment the existing one hundred seventy three million square feet.

Seven years after the proposal was first mooted, the Securities and Exchange Board of India (Sebi) came out with its draft guidelines for real estate mutual funds (MFs). This move has brought much joy and relief to the MF industry. Now, the industry is out to convince domestic investors that the move could not have come at a more opportune time. In these volatile times, real estate acts as a good diversification option due to its low correlation with equity and bonds. Besides, retail investors can now invest in actual real estate projects with amounts as low as a few thousand rupees.
Mr. Vineet K Vohra, MD & CEO, ING Investment Management, said, “Sebi’s move to launch realty MFs will not only foster diversification in the MF industry, but will also promote wider participation in the real estate sector”. Mr Vohra further said that the move will help bring the Indian market place closer to global norms. As for delivering returns, sample this… ING’s Global Real Estate Fund, which invests in shares of international real estate companies, emerged unscathed in the recent stock market turbulence.
The fund not only took the crash in its stride, but also delivered positive returns over the same time period. If you had invested Rs 10,000 separately in the BSE Sensex, BSE Realty index and ING Global Real Estate Fund on January 10, ’08, your investment would be worth Rs 7,900, Rs 5,500 and Rs 10,800, respectively, as on April 22, ’08. Sebi has given approval to two kinds of real estate funds. The first category is of real estate MFs, which will invest in real estate projects and mortgage-backed securities.
These will be closed-ended funds, listed on the exchanges. As their net asset values (NAVs) will be declared daily, investors will have the option to exit any day. So, you can now say goodbye to the old tradition of illiquidity in real estate investments. Real estate investment trusts (REITs, in short) constitute the second category of real estate funds. These products are very popular abroad. The most common version of this class of funds allows an investor to earn fixed income like returns through rents of commercial properties . Most REITs are listed on the exchanges and have tax incentives for investors.
Put simply, REITs work like fixed income instruments (rents as coupons), while realty MFs will seek capital appreciation (like a stock price going up) by investing in properties. For years, real estate was synonymous with lack of transparency in transactions and absence of an index, making it difficult to track prices. Various fund officials like ING’s Mr Vohra hope that the introduction of REITs in India will change all that. They are betting on such products ushering in greater liquidity to this asset class, as well as freeing up developer capital for further investment, changing the dynamics of the sector as well.
With the current real estate boom and no signs of any fall in demand for homes or offices, this may be the best time for investors to own a share of the lucrative realty sector. Real estate MFs and REITs offer the cheapest and most convenient way to do so. However, let’s hope that smoother legislative framework and a clear taxation policy will be put in place for these products, making them investor-friendly.

The demand for talented and skilled individuals to power the growing real estate industry has increased. “The Indian real estate sector is maturing from the short-sprint mindset and is gearing up for the long distance stakes of sustainable real estate development,” says Anuj Puri, chairman and country head, Jones Lang LaSalle Meghraj, real estate money management and services firm.
Aniruddha Joshi, executive director, Hirco Group, concurs, “The real estate sector is expanding beyond the basic bricks and mortar. Demand for real estate in growing segments like retail, hospitality, healthcare, biotech, ITES, etc, is driving the sector. In the same way, SEZs (Special Economic Zones), townships, and IT parks have created demand for skills beyond just the conventional fields of architecture, and civil and electrical engineering, to specialised knowledge on infrastructure and urban planning. People with specialisations in environmental aspects are also preferred as developers and consumers become increasingly aware of ‘green’ issues.”

AHMEDABAD: After pitching ‘Brand Amdavad’ at home, Amdavadi realtors are now cementing plans to hard sell Amdavad realty to non-resident Gujaratis (NRGs) right at their doorway.
For the Gujarat Institute of Housing and Estate Developers (GIHED) has joined hands with the Association of Indian Americans in North America (AIANA) to host their first international property show at the second ‘Chaalo Gujarat: World Gujarati Conference’ to be held at New Jersey in August 2008. The first conference was held in New Jersey in September 2006.
The three-day conference-cum-exposition, in which nearly 50,000 NRGs are expected to participate, will primarily see Ahmedabad-based realtors pitch Amdavad as well as upcoming residential and commercial property projects worth over Rs 20,000 crore to NRGs.
The property fair will also showcase a glitzy Amdavad of tomorrow, replete with jumbo projects like Gujarat International Financial Tec-City, Sabarmati riverfront project, Bus Rapid Transit System, new international airport as well as a 3-D colour laser show and special film.

The soaring land deals in prime location of metro cities, which had scaled astronomical levels in the past few years, seem to be losing steam. The deals being struck this year are at increasingly lower prices than the ones last year.

Parsvnath Developers  has bought 1.18 acre land, jointly owned by Mahajan Industries and Videocon group in Connaught Place  for Rs 200 crore. Compared to hotel major Leela group’s acquisition of 3 acres in Chanakyapuri last year for Rs 611 crore, Parsvnath land deal has come at a discount of almost 17 percent at Rs 169 crore per acre.
Parsvnath plans to develop retail and office space, while Leela is building a hotel. Real estate experts say Connaught Place and Chanakyapuri are comparable locations in the capital and should fetch similar rates if transactions happen at the same time.
In addition, the FAR (the ratio of developable space to total land) for both retail/office and hotels are the same at 1.5, according to Delhi’s new master plan.
Mr. Sanjay Verma, Cushman & Wakefield Asia executive managing director, said, “We have come to the end of one property cycle. Speculators have exited the market and we are seeing a softening in the housing market. This will now spread to the commercial market and then finally impact land prices. So with borrowing cost going up, and prices softening, the euphoria towards land acquisition has certainly died down”.
He cautions that there may still be several takers for prime properties such as those in Connaught Place in Delhi and Nariman Point in Mumbai. Mr. Verma said,“The land deals in prime city locations are very few and far between. So the prices, although, reflect the market sentiments, do not give you a trend”.
Parsvnath is planning to develop a luxury mall and office space in Connaught Place. The company plans to invest around Rs 100 crore in the construction of the mall, which is likely to be ready in the next 30 months.

After life insurance and property services, the $4.5-billion Old Mutual is planning to significantly increase its investments in the Indian real estate sector and plans to come up with four new funds that will invest One billion billion dollar each or more by 2015.
Colin Young, director, Old Mutual Investment Group Property Investments said “We have aggressive strategy and plan to have four funds of one billion dollar or more for India. We want to be among the leading retail developers in India by 2015 and one of the leading realty asset managers”.
Old Mutual also has plans to float a real estate investment trust (REIT) that will raise money locally and invest in yield-bearing office assets. Consequently, other core funds will buy properties developed by the offshore development funds.
OMIGPI, based in South Africa where it has developed a number of shopping centres, and Mumbai-based real estate firm ICS Realty, have floated their maiden five hundred million dollar property fund that will invest two-third of its corpus retail-centric real estate (in developing and managing shopping centres).
Triangle India Real Estate Fund, which was scheduling to raise five hundred million dollar and close by March 31, 2008, has managed to raise the seed capital of one hundred twenty five million dollar from Old Mutual, thanks to a difficult market.
Old Mutual is bullish on retail and is betting on tier-II and tier-III cities. “About eighty percent of the middle-class consumers live in these cities, where the penetration of organised retail is only fifteen percent. Here, people have the money to spend, but they are highly under-serviced by organized retail,” said Kanthawala.
“In these cities, land is existing at practical prices, and we have the chance to build large compelling centres. We buy huge parcels of land, and rope in big retailers to have their buy-in into the project,” added Kanthawala. The presence of big retailers acts as a hedge against competing centers that may come up.
The second fund from Old Mutual is likely to be a Sharia-compliant fund, which will be focused on offices and residential. Old Mutual will also set up a REIT once the government puts in the guidelines in place in the next one year, which will access local money and buy yield-bearing properties which are ready.
Old Mutual and ICS Realty have also set up Pioneer Property Zone, a property development firm to expand and administer shopping centres. This firm will now work completely for Old Mutual’s funds as its advisor in India.

Goldman Sachs, Deutsche Bank and another financial investor are thinking to make a shared investment of eight hundred million dollar in three special purpose vehicles being created by real estate major Emaar MGF. Each SPV will have one financial investor.
Delhi-based developer is in advanced talks with private equity players and is likely to close three separate deals within 30 days. No comment came from Emaar MGF on this issue. The deals will be the first big fund flow into the real estate firm since February.
Emaar MGF was enforced to withdraw its seven thousand crore rupees offering, due to poor market response. Poor market response has also enforced DLF, Unitech and Indiabulls to suspend the Singapore listing of their real estate investment trusts. Though the flow of funds into the real estate sector has not stopped, developers are not ready to go in for equity dilution at the parent company level fearing lower valuations. This has encouraged most companies to look for private equity funding at project or SPV level.