New Delhi:The Center cleared twenty-three new special economic zones (SEZs), including seventeen projects for setting up information technology and IT-enabled services (ITeS) zones, besides giving in-principal approval to six proposals.
The Board of Approval of the Special Economic Zones, headed by Union Commerce Secretary G. K. Pillai, considered a total of thirty-four SEZ proposals, including three proposals for conversion of in-principle approvals into formal approvals.
It cleared four IT and ITeS Special Economic Zones in Kerala that would be set up by the Kerala State Information Technology Infrastructure Ltd., while two IT, ITeS and electronic hardware SEZs of Godrej Real Estate Private Ltd. and S2tech.com Private Ltd. were approved in Andhra Pradesh.

Maharashtra, also referred to as the ‘Power House of India’, is the industrial hub of India. Commanding the industrial development of the country, Maharashtra has already established a trend in the growth of real estate in India. Economic development has resulted in the rapid development of both residential and commercial property in Mumbai, Solapur, Pune and Nagpur. The demand for Maharashtra real estates is considerably high in Aurangabad and Nashik. Maharashtra Industrial Development Corporation has already come up with several industrial townships in different parts of Nagpur, Pune and Dhule.

As per ECA International report, Mumbai ranks seventh among the most expensive cities of the world. Owing to its perpetual hike in the property prices, the demand for real estate has gone up in Mumbai. Increased demand for residential property is one of the reasons for the hike in property cost. Growth of other business centers in India is another reason for such a rise in property prices. To meet the demands of the low-income group, Matheran Realty Pvt Ltd (MRPL) has declared a mega township project in Karjat.

Pune is also witnessing a on-going development in the real estate sector. The soaring land prices is the consequence of the great demand for land. The bonanza in Pune real estate market is promoted by government of India’s decision to grant 100% Foreign Direct Investment in the real estate sector.

The value of real estate is increasing day -by-day in Nagpur, Maharashtra. The real estate property brokers help their clients to evaluate the exact price of the property and sell it at a good rate. They also assist in finding out and purchasing suitable property with uncomplicated agreement terms. All these factors have led to more and more real estate investment.

A buoyant real estate market last year saw several realty firms foray into the hospitality sector. But with slowdown hitting real estate and choking cashflow, several small realty firms have been forced to put at least half a dozen hotel projects on the block.

A developer has put on the block a 200-room hotel project in Ahmedabad that has a management tie-up with a reputed international hotel brand. Work on the project is around 60% complete. Similarly, two mid-size hotel projects in Bangalore, which are in the early stages of construction, and one each in Pune, Chandigarh and NCR have been put on the block. Almost all the projects are mid-size. Some developers are looking at completely exiting the hotel projects while others are looking at stake sale.

Cushman And Wakefield director (hospitality) Akshay Kulkarni said, “The developers are looking for equity dilution and are now willing to settle for lower valuation in their hotel projects”.

Till six months back when the going was good, several realty developers, who had parcels of land at strategic locations, were trying to get into the glamorous hotel business. With hotel room shortage taking room revenue to new levels, the hospitality business looked very attractive. And with foreign hotel chains looking to aggressively expand in India, even small developers could easily tie up with them for a management contract.

“The initial excitement is over. The hotel room rates are sliding. Moreover, the hotel projects are capital-intensive and payback period is very long, compared to other assets such as housing or commercial,” says Knight Frank India chairman Pranay Vakeel. Most of the properties put up for sale belong to small developers, who don’t have the holding power. They are now approaching bigger developers for a buyout.

In several cases, where actual construction work has not begun, developers have deferred the projects. Marriott area vice-president Rajeev Menon said, “Developers are now looking at a longer timeframe for their new projects”. Marriott has six operational properties in India and plans to add 15 by the end of 2009. The company only has management tie-ups with local hotel owners and developers.

With one billion people in their home market, it may seem a little surprising Indians would look abroad for investment opportunities.
But Mumbai’s Kapil Wadhawan is one such person, and says Australia is an attractive place to expand his business.
Mr Wadhawan is chairman of Wadhawan Holdings Private Ltd, a diversified company with interests in real estate, food, hospitality and dining operating in India and United Arab Emirates.
Mr Wadhawan, who was in Australia this week to work on a real estate project in Melbourne’s inner city, said there was merit in doing business internationally.
He said Australia and India had been long-term trading partners, and was encouraged by the willingness of those in Australia to engage further with India.
“There is a growing sense when we talk to the people here – the policymakers within Australia – that you would like to get more aligned with India,” Mr Wadhawan said.
“Trade has been growing between our two nations over the last couple of years right across different areas.”
Mr Wadhawan’s focus is on a potential site in Melbourne’s inner city, where he plans to build between 800 and 1000 apartments, a small retail precinct and hotel.
He described Melbourne as the “fashion capital” of Australia and a city with great potential, given the diverse population and large number of foreign students.
And he was unconcerned about recent indicators of a slumping Australian property market.
“The city centre lends itself to good development irrespective whether there is a lull in the demand,” Mr Wadhawan said.
Austrade senior trade commissioner for South Asia, Peter Linford, said he expected the number of Indians coming to Australia for business to increase.
“It’s broad based and becoming more broad,” Mr Linford said from New Delhi.
Initially, the investments were mainly in the resource sector, but had diversified to include to banking, information technology, hotels, manufacturing and biotechnology.

The real estate sector in India has now become one of the most important sectors in the recent times, thanks to the rising prices of land.
Today real estate sector has become a reckoning force in the economy of India. This sector which till few years back were unknown to most of the investors and people suddenly has become a hot topic to discuss about in a group. The evidence of popularity of real estate in India can be determined from the fact that now to buy a piece of land in the metropolitan cities like New Delhi, Mumbai, Kolkata and Chennai requires a person to shell out a huge sum of money probably in crores. Nariman point, in Mumbai is the most expensive place in India. If that is about the Mumbai, then even New Delhi is not far behind. Yes most of the real estate developers have now shifted their focus on New Delhi and to the NCR areas.

These real estate developers are now investing huge amount of money to buy the large pieces of land in New Delhi and in the National Capital Region areas like Noida, Haryana and Ghaziabad. Ghaziabad is currently ruling the list of these real estate property developers as according to a recent survey that was organised across the whole world Ghaziabad is the sixth most dynamic city to live in the entire world. This has caught the imagination of all the real estate developers and hence now they are not shying away from the idea of investing more and more capital into this potential sector.
Thus it is quite evident that not only the metropolitan cities but the areas near to them are now fast catching up with them. This is why, the real estate property owners are now making merry by investing endlessly into it. Another symbol of this real estate boom in India can be seen with the emergence of more and more shopping malls in the cities across the world. According to a report there are around 21 shopping malls in the city of Ghaziabad alone while more projects are in the pipeline. Another pure example of this is the opening of more and more private engineering and management colleges in Ghaziabad, Noida and Haryana. Most of these colleges are of real estate property owners which are why the area near the capital has now turned into an ‘EDUCATION HUB’ and there are more to follow the trend. Not only that Special Economic Zone i.e. SEZ’s are now the hot favourite option among these real estate developers. But it is still to be seen whether these SEZ’s will have a positive or negative effect in the coming years. However the recent Nandigram issue has put a big question mark on the development of real estate in India. But still then real estate property sector continues to be a hot proposition for the new and budding investors who are looking forward to earn huge returns on their investment.
Thus it is quite obvious why more and more investors are willing to invest in the sector of real estate property in India. But due to this tremendous rise in the field of real estate it also has drawn some unwanted attention of the land mafia and the encroachers. Yes its true since nowadays law bodies have adopted a more stringent approach towards these people, therefore these people are now looking for new alternatives to raise capital to finance their dangerous motives and plans, which is why government has now made the laws stricter for the investors of real estate in India. But even then there is a lot of thing that needs to be done in this direction.
Overall real estate property owners are now playing an important role in the sector of real estate in India.

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.

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.

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.

Real estate firm Parsvnath Developers Ltd expects stake dilution in individual projects to help it control its debt and hold margins in a rising interest rate regime, a top official said.
The New Delhi-based developer reported a 16% drop in first quarter net profit at 712.9 million rupees. Net sales were also disappointing, up just 5% from a year ago, to 3.65 billion rupees.
“The bottomline was down because of higher interest costs and input costs,” Chairman Pradeep Jain said.
Parsvnath was mainly hit by a more than five-fold rise in its interest burden to 174 million rupees. The company is currently carrying debt of about 17 billion rupees, compared to 10 billion rupees a year ago, when interest costs were also lower by a third.
India’s central bank this week raised a key lending rate for the second time in two months, to a seven-year high, as part of efforts to cool down the economy and curb double-digit inflation. Banks have reacted by pushing up lending rates to customers to their highest in almost a decade.
Real estate developers in India have been hit by the rising rates as they struggle to cope with a large number of unfinished projects, but are faced with sharply lower demand as high rates bite property buyers dependent on home loans for funds.
“Our average cost of borrowing is 12.85% and has risen about 20 basis points in the last three months,” Jain said, adding that his firm is currently borrowing at rates in the 13.5-14% range.
“We are trying to reduce debt. We are looking at equity dilution in our SEZ (special economic zone) and hotel projects for this,” Jain said, adding the company was in talks with a few partners for due diligence.
Earlier this year, Parsvnath sold 30% in a Mumbai project to two real estate funds for 1.86 billion rupees. Several other large developers have also leaned on private equity deals in the past year, to unlock value in ongoing projects.
Parsvnath shares ended at 111.75 rupees, down 0.9% in a firm Mumbai market that ended 0.5% higher.

Red Fort Capital, a Cayman Islands-based private equity fund focused on real estate development, is in the advanced stages of negotiations with six developers for projects worth Rs 40 billion in the metropolitan areas across India.

The fund will be developing an information technology park in Kolkata with Godrej Properties, with Red Fort holding a 49 % stake. The project, dubbed Godrej Genesis, is expected to generate sales of over Rs 7.50 billion.

“We are in the process of closing a number of transactions in the National Capital Region, Mumbai and Bangalore. We are currently talking to six different developers in these cities,” Red Fort Capital director Kuldip Chawlla said.

Madhya Pradesh government initiated 12 investment proposals worth Rs 32,000 crore during a two-day Investors Meet here.

The memorandums of understanding signed on the first day of the meet included Rs 1,300 crore cement plant, Rs 1,000 crore real estate unit, Rs 10 crore sponge iron unit and Rs 450 crore bio-energy unit besides several others.

Addressing the function state Chief Minister Shivraj Singh Chouhan said concerted efforts would be made to restore the golden era of Gwalior in the industrial sector.

He announced that Gwalior region would be placed in ‘C’ catogery to accelerate the pace of industrialisation and Udyog Mitra Yojana would be extended for another six years to facilitate the entrepreneurs of the region.

Eminent industrialists V N Dhoot, Raghupati Singhania, Senapati, Sajjan Jindal, Vinod Mittal, Pankan Munjal, H Ikava among others were present on the occasion.

Chouhan said that investors’ meets are not a political move and the government and is very serious about it.

He said that investment Facilitation Bill has already been passed in the state and the SEZ Act 2003 for Indore has been extended to the entire state.

Referring to the power situation he said that the state is better placed in comparison to many other states in respect of power supply.

Power generation capacity has also been increased by 2,950 MW over last four and half years in the state.

Real estate firm Sunil Mantri said that it will invest Rs 2,000 crore on developing a 2,000-acre residential project in Gwalior over the next decade.

The company signed an MoU with the Special Area Development Authority, Gwalior, to carry out the project under public-private-partnership model, the company said in a statement.

As per the MoU, the realty firm would set up a Hi Tech city over an area of 2,000 acres, comprising 25,000 housing units.

The company has already acquired 375 acres for creating housing for the low and mid-income people.

Around 5,000 houses would be provided in this project and the developments work would be commissioned by October this year.

It is currently developing three new projects in Gwalior, consisting of residential, a shopping mall cum multiplex and commercial spaces.

In a joint venture with Apeejay Infra-Logistics Pvt Ltd (AILPL), UK-based Eredene Group, which has a 50 % stake, is set to develop an integrated logistics park in Haldia.

“In this view, the Haldia Development Authority has already earmarked ninety acres of land for them in its industrial zone area and the lease acquirement is in process. This logistics park site is just about 7km from the Port of Haldia and near to its petrochemicals centre. It will be developed to provide distribution warehousing and transport services in addition to ancillary facilities like commercial offices, hotels, retail outlets and light processing workshops,” said Mr Parwez Ahmed Siddiqui, chief executive officer of HDA.

Haldia is situated 90 km downstream from Kolkata at the confluence of the Haldi and Hooghly rivers, and ranks as the 5th largest port in India. It is a major petrochemicals centre with an oil refinery, fertiliser facilities, manufacturing plants and a mixture of light industries.

According to Mr Siddiqui “The West Bengal Industrial Development Corporation (WBIDC) and Tata Steel have formed a JV to build a coking plant for the production of 800,000 tonnes of coke per annum. Such a port-based industrial zone should have a logistics park and I think that this should have been built at least 15-20 years before,” .
Eredene has invested with Apeejay Surrendra Group, the owners of Typhoo Tea and a global Indian business which employs more than forty thousand people in real estate, tea, hospitality, shipping and retail.

Red Fort Capital, a private equity fund focused on real estate development, is in advance stages of negotiations with six developers for an equal number of projects worth Rs 4,000 crore in the metros across India.
The PE fund joined hands with Godrej Properties to develop an IT park in Kolkata, where Red Fort Capital has picked up 49 % stake. The project, Godrej Genesis, is expected to generate sales of over Rs 750 crore.
“We are in the process of closing a number of transactions in the NCR, Mumbai and Bangalore. We are currently talking to six different developers in these cities,” Red Fort Capital Director Kuldip Chawlla said.
Without divulging names of the possible builders, he said three of them are ‘big national developers’, while the rest are local players.
The company currently is evaluating one residential and one commercial project in each city, where the fund would pick up stake between 30 % and 80%, he added.
“The total project cost of all the six properties could be over Rs 4,000 crore. These projects will be developed in the next 2-4 years,” Chawlla said.
Elaborating on its IT park project in Kolkata, Chawlla said ‘Godrej Genesis’ would have a developable area of over one million sq ft.
“This is our first project in Kolkata. Already many domestic as well as international IT firms have shown their interests to set up offices in the complex,” he added.

Real estate companies observes their cost of borrowing rising by 1% age point as the central bank has increased the repo rate by 0.5 % and cash reserve ratio by 0.25 %.
The rate hike will push up the corporate lending rates. This, in turn, is anticipated to further strain the balance sheets of realty companies, already reeling under a fund crisis in the wake of slower property sales, higher lending rates, increase in input costs and the central bank’s measures to check conventional sources of funding.
“The borrowing rates will be 1% higher. The rate hikes will ultimately hurt the balance sheets of real estate companies. The cost of funds for our upcoming power projects will go up drastically,’’ said Ajith Mittal, president, corporate affairs, Indiabulls Group.
Indiabulls’ property arm Indiabulls Real Estate is into residential, commercial and retail realty development. It has ventured into power and is setting up power projects in Jharkhand and Maharashtra.
Hitesh Agrawal, head of research, Angel Broking, said, “We deduce the rate hike impact to be visible not only on the rate sensitive sectors like banking, realty and auto, but also on corporate profitability as a whole as most sectors and companies have embarked on huge capacity growth plans.
Property transactions in the major Indian cities such as Mumbai and Delhi have fallen 10 – 15 % because of higher lending rates in the previous 6 months, limiting the cash flows and execution skills of developers.
“Developers need to think in the hike in lending rates, which will lead to a dip in demand. Nevertheless, a rectification in real estate prices will make up for the dip in demand caused by increase in rates,’’ said Mittal.
The majority of real estate companies have been watchful in buying land and beginning new projects, given the tight monetary picture. Akruti City, another Mumbai-based developer, is concentrating on housing projects.

The question that bothers a lot of prospective home buyers is whether they will miss the bus if they wait any further. However, the right question should be: Can I afford to buy a house today? Even if you are one of those blessed ones, the thought should be: Is it a fair price for the house? Your house might not be an investment, but does that mean you should pay any price for it?

The prices currently being quoted are simply atrocious. From a time, not too long ago, when people talked about loans of Rs 10 lakh to Rs 50 lakh, today the average loan size is substantially higher.

A simple 2-bedroom house in Malad can cost up to Rs 1.2 crore (including stamp duty and registration charges). This is the price that sellers expect, but this does not mean they are actually getting it. The cost of a similar flat 4 years ago was close to Rs 30 lakh.

The entire real estate boom took off in 2003 on the back of very low interest rates and low prices. However, the situation has changed now with realty prices going up 3-4 times, while interest rates are 60-70% higher. Incomes have certainly not grown four-fold in the past four years. Today, even if you are earning Rs 25 lakh annually, it is extremely difficult to buy a 2-bedroom house in the suburbs.

Even if you make a down payment of Rs 20 lakh, you will still end up borrowing close to Rs 1 crore. This would mean an EMI of close to Rs 1 lakh per month. So, after tax and EMIs, a person with Rs 25 lakh gross income will be left with just Rs 5-6 lakh as disposable income for lifestyle and living expenses. Once you take EPF contributions, you will just be left with Rs 4 lakh annually.

Lifestyle inflation (driving a car, visiting malls, eating out & entertainment), which is much higher than normal living expenses, eats up a significant portion of one’s income. Hence, it is just not possible even for someone earning Rs 30 lakh to service an EMI of Rs 1 lakh every month. Even if you do manage to do it, you will be left with no savings.

Real estate prices, though location-specific, have been witnessing a slowdown in demand. One might argue that luxury accommodations might not be impacted by this. However, there is a visible slowdown in real estate and prices are down on an average by 10-15% in places like Mumbai.

Unlike the stock market, there is no index for the real estate market and no price-discovery mechanism. In fact, the price discovery is very subjective and identical properties in the same building can go for two different prices. If one had a real estate index, it would have had given details on number of transactions.

There have been several reports of builders borrowing at very high interest rates and some defaulting on their interest payouts. In fact, real estate stocks have been hammered the most and the basic assumptions on which their landbanks were valued are a matter of debate now.

Speculators have started to exit since late last year and investors trying to exit now are unable to get the price they could dictate some time back. With rising interest rates, demand should come down. However, location still rules and some premium commercial property could still fetch good money.

Not that it is any indicator, but if you look at the price-to-rent ratio (PR Ratio) similar to PE ratio, one can clearly see that the prices are in the bubble territory.

Since there are no margin calls in the realty space, the holding capacity of an investment can be substantially higher than a leveraged exposure in stock market, where margin calls have to be attended immediately. Hence, real estate prices generally do not fall drastically.

Small builders are cash-starved and are not getting into new projects. This is the case with mid-size developers. However, big builders with access to IPO funds and PE funds can wait for an extended period of time before cutting prices.

One can clearly see that the discounts offered in the form of stamp duty waivers or furnishings are nothing but a desperate attempt to get end-users.

Like in the stock market, it pays to be patient in the real estate market too. For realty market to sustain itself there should be a steady inflow of end-users. Speculators and investors can only take it to a certain level. End-users can only come when prices are affordable and for that at least 30% correction is a must.

The cloud on real estate mutual funds (REMF) has lifted. The finance ministry has brushed aside RBI’s concerns of REMFs violating foreign direct investment (FDI) norms in the realty sector. North Block has said the central bank’s concern stating that REMF scheme notified by Sebi in April contradicted FDI norms was unwarranted.

The finance ministry view could pave way for the launch of new investment avenues for small investors keen to tap the real estate sector’s growth potential. The doubts raised by RBI added to the hesitation in REMF launches.

Highlighting that the scheme allowed NRIs and FIIs to invest in real estate sector in conflict with the policy, the apex bank had asked finance ministry to intervene and take up the issue with Sebi.

The FDI policy prohibits investment in real estate but allows investment in construction and development sector with conditions like a three-year lockin , minimum capitalization of five million dollar for a wholly-owned subsidiary and ten million dollar for joint ventures, and development of at least ten hectares. The government had allowed 100% FDI in the construction and development sector on the automatic route in 2005 under the Press Note 2 issued that year.

In the reply to RBI, the ministry has stated that investment through REMFs could be allowed as there was no linkage between the investments made by a fund and its investors . REMF investors only own units in the fund and don’t drive its investments decisions on assets. Moreover, Sebi has prescribed several restrictions on investments by REMFs, government sources said.

The concerns expressed by RBI with regard to construction projects (as per Press Note 2, 2005) also did not hold much water as FII investment in pre-initial public offer are treated as FDI and face a three-year lockin , they said. There was no case for restricting NRIs investing in REMFs as they had been exempted from conditions applicable to FDI in the real estate sector.

Realty bucks have put a spring in the step of the sagging horse racing scene in Calcutta, with the Royal Calcutta Turf Club (RCTC) hoping the honeymoon lasts.

The deal inked by RCTC with real estate major Emaar MGF for a 300-room five-star deluxe hotel on the club’s 11 Russell Street premises with Park Hyatt as the hospitality partner, has injected fresh life into the racecourse, thanks to the initial funds flow.

“Yes, we could virtually double the stake money for the Monsoon Meeting, which started on July 16. This has in turn doubled the size of the field and we expect leading jockeys and trainers to turn their gaze back on Calcutta,” RCTC steward Kishore Bhimani said.

It is understood that Emaar MGF Land Pvt Ltd handed over a cheque for Rs 72 crore to the turf club last year as part of the joint-venture deal. The monthly profit-sharing bounty has also kicked in, and the turf club has received the first monthly cheque for Rs 61 lakh (after tax deduction at source and service tax) this month.

While the windfall has enabled RCTC to clear its dues (amounting to nearly Rs 18 crore), the turf club is worried over the delay in ground-breaking on Russell Street. Work on the campus, where the realtor is also committed to convert the heritage clubhouse building into a social club, is yet to commence, and the agreement is yet to be registered.

For the moment though, the welcome solvency has started manifesting on the racecourse, with the club completing construction of stables for 600 horses besides syces’ living quarters on the Kidderpore premises.

“The real renovation, however, can begin only after the army renews the lease for the racecourse,” says J.R. Mukherjee, the CEO of the turf club. The club management hopes to complete the entire renovation work by 2011.

“Once the lease is renewed, we plan to start work on the Monsoon Stands, followed by the Grand Stand,” says Boman Parakh, the secretary and chief financial officer of RCTC. While the condemned third enclosure will also be taken up for repair, the club is planning to set up “at least two restaurants and a well-appointed bar” at the racecourse.

Pune seems to be gradually losing its cost advantage among software companies. Many think that the rentals in the city are on their way up and could be a big deterrent for further investment.

Sunil Patil, president (Pune region), UBICS, a software company of the UB group, believes that the rentals may spoil the show. “Rentals in Pune for software companies have gone up 300% in three years. We are being offered space at Rs 65 per sq ft, which at $1.50 is the rate in Manhattan,” he said.

He was just echoing the prevailing sentiment among small and medium sized IT product firms that India’s cost competitiveness is slowly getting eroded. The shift in viewpoint clearly underlines the need to graduate to value arbitrage from cost, something many large companies have already achieved.

A CEO of a venture capital-backed software engineering services company tried to put it in perspective: “Outsourcing is a function of costs, in which productivity is a big factor. Overheads in the form of real estate and utilities costs in India are now 25% higher. The economic benefits of working in India are huge, otherwise why would anyone outsource work here? In the past, cost differences used to hover at 40-50%. So, despite the 25% higher overheads, it still made sense to offshore work here.”

Interestingly, he hinted at more of in-sourcing happening, that is work offers being sent back to the US, something which usually surfaces when a major political event in the US is round the corner. But Ganesh Natarajan, chairman, Nasscom, is categorical that India has still not lost her cost advantage. In Tier II cities, it’s all the more visible, he said.

Due to the depressed real estate market, all projects of small developers (grade C & D) are up for sale as no development has started because of severe cash crunch. And the big developers (grade A & B) are said to be scouting for these kinds of projects as they are proving to be more viable for them.
According to sources, this phenomenon is more evident in tier II cities but, slowly moving to metros as well.
Explaining the reasons, the sources said that whatever support was available in terms of short-term financing or private equity is now focused only on large developers with stronger balance sheets because of their ability to hold out longer.
Several smaller developers are so badly hit that they are choosing to sell their land parcels to larger developers. The cities that are witnessing these kind of transactions are Amritsar, Chandigarh, Karnal, NCR, Indore, Mumbai, Pune, Bangalore and Chennai.
In fact, small developers, reeling under the impact of cash crunch, feel that holding onto their projects will bleed them more, and thus they are forced to sell them to larger developers. A number of such damage-control transactions are expected in many smaller cities and metros.“Lack of liquidity is a very serious problem for almost all developers today.
The current environment is like a perfect storm for the developer community, as almost all sources of financing have dried up, at a time when the real estate markets may also be moving southwards. Having said that, it is the smaller developers who are worst affected — so badly hit that they are choosing to sell their land parcels to larger developers,” said Sandeep Singh, director, capital markets group, Cushman & Wakefield India:
A bigger impact of the liquidity crunch is from the bank-debt side. Banks are being very choosy about whom they are lending to and for what kind of project. While large developers are still able to get bank loans, it’s the smaller ones who are having a tough time. Most of the developers expanded so fast in the last three to five years that they do not now have any ability to pump in more of their personal equity in any given project.
Explains Pawan Swamy, MD, Jones Lang Lasalle Meghraj: “In this scenario, the smaller developer has an underperforming project that was not doing well to begin with. Regardless of the state of the market, he would wish to sell it off to a larger developer, since the project is not taking off in the first place. It is a straight forward transaction based on logic rather than the liquidity issue.”

A historical district of Haryana, may still be longing for true genesis of its nomenclature but the city is slowly opening up to real estate investments that were non-existence till a couple of years ago.

The city, divided between Ambala Cantt and Ambala City, is bringing up a few group housing schemes and commercial projects.The transit city between Chandigarh and Delhi caught the eye of realtors after the six-lane project was initiated.

The city is destined to shorten the travelling distance by around an hour after the road-widening project is completed.

The real estate scene here is expected to heat up further as companies such as Unitech, Reliance Industries and DLF are believed to be acquiring land for their SEZ in Naraingarh.

For the time being, Vatika Group is coming up with its group housing scheme that will be followed by commercial properties. The group has one of the largest land banks of over 170 acres in the city. The group is also into plotting with a rate of Rs 7,500 per square yard.

The plots are available in 240 yards, 300, 500 and 1,000 categories. The Vatika Group is likely to open its group housing project for booking by next month. The residential project, coming up on 10 acres, consists of around 500-700 apartments of three and two bedrooms. As much as 45% of land is to be kept as green space. The group is also planning to set up a multiplex.

A few other realtors are also mulling to set up malls. Colonies are also being developed in areas bordering Dera Bassi of Punjab, which have an approach road towards Ambala district, to cater to the residents in Haryana.

Projects such as Dreamland Colony, Defence City and Omaxe Greens have come up in Punjab even though they are practically an extension of Ambala and accessible from both Ambala Cantt and Ambala City. The new projects have proper wide roads, sewerage, water and street light facilities.

The Centre recently released over 11,00 acres of land falling in the Ambala cantonment to the Haryana government. Over the decades, a major part of the Cantt area remained out of bounds for not just realty players but also for residents who could not undertake new construction as the building structures belonged to residents whereas land was possessed by the Centre.

Haryana Urban Development Authority’s sectors 9, 10, 11 in Ambala city are fetching a price of Rs 8,000 to Rs 11,000 per square yard. The houses are six marla, 10 marlas and one kanal. In Ambala Cantt, private colonies such as Agrasen Nagar, Ekta Vihar and Rani Vihar are being sold at Rs 12,000 per yard. The plots range from four marlas (100 square yards) to one kanal (600 square yard).

Between the Cantt and City, HUDA has set up three new sectors — 32, 33 and 34. HUDA has plans to add 30 more sectors as part of its expansion. The going rates of government plot ranges from Rs 8,000 to Rs 10,000 per square yard.

Delta Township just built a brand new library that recently opened. It has plenty of events being offered this year for all ages. Delta has been a thriving and dynamic community that supports education, planned growth, safety and a positive community.

Delhi Township has mastered the art of balancing development and quality of life. Delta Township describes itself as a superb growing ground for children and teens. Holt School District boasts four Michigan Exemplary Schools, and Holt’s high school was recognized as one of the top 100 schools in the nation.

The housing market has been challenging this year to say the least, however compared to other communities; both Delta and Delhi offer a great selection of homes that will provide a solid long-term investment for the home buyer. They have also held their value better than some areas of the country, considering the numerous media articles that have focused on bank foreclosure filings that make up less than 2 % of the nations homes and 75% of those will never be foreclosed upon due to workouts.

There’s a big difference in buying a home that is for sale and buying a bank foreclosure, which will make another good post at a later date. Right now is a great time to buy a home for long term investment.

Milestone, India’s largest independent Real Estate Fund house is launching Milestone Ecofirst Advisory Services (MEAS) through a 50:50 Joint Venture with Ecofirst. Ecofirst, established with a multi million pound budget, is a J. Leon Group company based in UK.

With the launch of Milestone Ecofirst Advisory Services (MEAS), for the first time in the country, a real estate fund house will be offering its invested companies/projects specialized consultancy services for eco-friendly development.

V. P. Arya, Managing Director Milestone Capital Advisors told“We want to ensure that most of the development (approx. five million sq ft) being funded by Milestone across the country would be eco-friendly and meet global norms in sustainable development,”.

“MEAS will not just offer its services to developers in metros, but for the first time in India offer world class green building consultancy to developers in Tier II and Tier III cities”, Mr. Arya added.

Milestone has invested in over twenty five projects across Tier II and Tier III cities, including residential, commercial, mixed-use projects and townships.

Initially MEAS will provide consultancy to projects being funded by Milestone and later extend the service to third party developers as well.

India has emerged as the hottest new favorite destination for green buildings and ranks fourth after US, Australia and Canada in the amount of area under green construction. As per CII-Indian Green Building Council (IGBC), one hundred forty seven million square feet of green space has been registered in India to date across a total of two hundred thirty nine projects. IGBC is aiming one billion sq ft of green footprint by 2012.

Milestone has so far raised over Rs.2, 400 crore from the domestic market and has the highest deployment ratio in the sector having so far signed investment deals worth Rs.1,800 crore.

Milestone presently is in the process of raising Rs.500 crores for its domestic fund “Milestone Domestic Scheme II”.

In their bid to score over their rivals, many developers are now going abroad to hire noted architects who can design their new projects. Not withstanding the fact that currently the realty sector is seeing downward trend, still some of the noted design companies from other countries are opening their Indian offices to cater the real estate market.
The likes of Godrej Properties, Unitech, Omaxe, Hiranandani and many more are hiring foreign architect firms. As recently as last year, Godrej hired DP Architects of Singapore to design their 50-storey residential project in Mahalaxmi area of Mumbai. US-based Hellmuth Obata Kassabaum Inc (HOK), has already worked with Indian builders such as Unitech, Hiranandani and many other big firms. Will Roes, programme manager of HOK India says that they bring a global perspective and diverse expertise to a project.

It is true that hiring foreign designers and planners have many advantages. But, the negative side of hiring them is that in some cases they do not understand the complexities of doing business in India, including tax laws and also cultural consideration , feels Devinder Gupta of realty advisory Century 21 India.
In an interview, Niranjan Hiranandani, the managing director of the Hiranandani group says that there is a big difference in approach between Indian and foreign firms that undertake design jobs. He feels that international firms are more empathetic to developers’ needs and aspirations. “They find a solution which is required for a particular site, location and land. They are also more in tune with the land use demand,” says Hiranandani. “They are more open to new ideas. On the other hand, Indian firms have a trial and error approach to design and planning. They also try to impose their ideas on the developers.”

Singapore based firms like RSP Architects Planners and Architects 61 Ltd are also designing projects in many big cities in India and are serious of winning more projects here. RSP has reportedly opened their offices in Mumbai, Bangalore, and Hyderabad. It designed the international Tech Park in Bangalore.

It has also designed offices for IT giants like Wipro, Satyam and Microsoft. Devinder Gupta informs that legendry Unitech group has taken the services of great golfer Greg Norman to design the lush green golf course for their prestigious Unitech Grande project in Greater Noida. Clearly, the Indian realty firms are taking the services of foreign firms and experts to make their projects attractive.

Meanwhile, some Indian architects feel that global firms are definitely good when it comes to designing projects. But, they are critical of some of the mismatch. On many occasions, the initial designs done by them don’t make any sense. Finally, Indian architects have to enter the scene to undo the damage. CMD of Omaxe group, Rohtas Goyal says that with money starting to flow into Indian realty sector, it has become necessary to bring global architectural practices and expertise.

Moreover, customers fancy projects designed by overseas firms. From the developers’ point of view, it becomes a good marketing and sales proposition. It may be mentioned here that Omaxe has recently hired Indian Davis cup Star Leander Paes company to help them design the tennis courts in their residential projects. Those who follow the realty market of India feel that as competition hots up and properties get bigger, developers going to hire global architects to design their projects will become more frequent.

Moreover, builders are entrusting the design work for commercial projects and master planning of a mixed use developments to foreign firms.

It is also learnt that several developers choose foreign architects only for their large projects. Anil Sharma of Amrapali group said, “It is affordable to hire an international firm to master planning if there is a big volume of work. Time is never an issue with them. They keep their words”.
Meanwhile, there are some people in realty sector who feel that foreign firms will continue to win projects here, but they will be hired for a limited purpose. They would design the master plans of the projects, while the execution part would continue to be taken care by the Indian firms.

Realty player Suncity Projects today announced its plans to develop four retail cities in the country with an investment of around Rs 2,000 crore by 2011.The retail cities, under the brand name ‘Jewel of India’ would come up at Greater Noida, Indore, Jaipur and Mohali.

The first of these cities would become operational in Jaipur by 2011 and would be spread over an area of 40 lakh square feet. It would house premium retail brands like Lifestyle, Shoppers’ Stop, Pantaloon and Westside among many others.

Beside retail area, these cities would also house hotels, office places and entertainment zones.

Suncity Projects VP (Retail) Vijay Arora told, “This is one of the most ambitious projects in the retail space. ‘Jewel of India’ will house some of the most prominent brands of the country along with local handicraft of the region and will redefine the entertainment criteria for the customer”.

Further he added, The Jaipur retail city would house Johari Bazaar showcasing traditional Rajasthani jewelry, a five star hotel, business suites, food courts, six-screen multiplexes, besides other entertainment segments.