The domestic hospitality industry is undergoing rapid transformation, with several hotel groups investing in new properties across India and the globe. Additionally, real estate players are entering the industry through management contracts with established hotel chains.

This expansion in the hospitality business is taking place on account of the massive growth that India is likely to witness in the coming years. Currently, India’s travel and tourism industry is estimated at 6.1% of the gross domestic product (GDP) — below the world average of 9.9%.

The capacity for star-rated rooms in India is far shorter than its demand, and cities are now evolving from a single-business district to multiple-business districts, as growth spreads and cities get bigger. Moreover, new growth centres are emerging in previously untouched markets such as Orissa, Chhattisgarh, Jharkhand, Pune and West Bengal, among others. This has greatly expanded the market for star-rated hotel accommodation in the country.

The hospitality industry is divided into four segments: luxury, leisure, business and budget hotels. Major hotel chains like Indian Hotels Company (IHCL), Hotel Leela and ITC Hotels are aiming for a presence in most of these segments.

For instance, the market leader, IHCL, is following an integrated approach to offer rooms at all price points and in almost all million-plus cities in the country. This is being complemented by setting up hotels at strategic locations across the globe. The company plans to double its room inventory to over 20,000 in 3-5 years. This includes around 3,000 rooms under the ‘Ginger’ brand, which is IHCL’s budget chain of hotels.

Meanwhile, ITC Hotels is using a mix of owned investment and franchisee model to take a shot at market leadership. The company offers a choice of over 90 hotels across 77 destinations in India under four different brands — ITC Hotels, Welcome Group, Fortune and Welcome Heritage. It also has four properties under the Sheraton franchise, which adds up to an inventory of 6,000-plus rooms, with half of the room inventory being at the premium end.

Hotel Leela has already started constructing hotels in Udaipur, Chennai and Delhi, while it continues to expand its existing properties at Bangalore and Kovalam. East India Hotels (EIH) plans to set up one new hotel each at Mumbai, Gurgaon, Bangalore, Hyderabad and Khajuraho. Besides, it is expanding its flight kitchen services in Kolkata and Mauritius, and plans to refurbish its existing properties.

At a time when the real estate sector is hard-pressed for funds, the real estate mutual funds (REMFs) are yet to take off, in spite of being granted permission 3 months ago. This is due to unclear rules about their tax treatment.
REMFs, which were touted as key instrument enabling retail investors to take part in the booming realty sector, have been delayed partly because the Securities & Exchange Board of India (Sebi) and the finance ministry are still trying to sort out the tax ability of such scheme.
The Central Board of Direct Taxes (CBDT) has decided to provide it the same tax status as the equity oriented mutual funds, as was requested by the Sebi. This means that the REMFs will be freed from dividend distribution tax and investors spared from paying long-term capital gains while selling their shares.
Yet, as said by the Income Tax Act 1961, equity oriented mutual funds are those which have at least sixty five percent direct investment in securities of the listed companies.
Interestingly, in Sebi’s rules, REMFs must invest a at least of thirty five percent of their funds straight into real estate assets and the rest into mortgage-backed securities, debt and equity instruments floated by the realty companies, thereby making it hard for them to be eligible as equity oriented mutual funds.
“As per the REMF structure laid out by Sebi, these funds would more often than not be akin to debt funds,” an expert said. Unlike equity-linked funds, debt-funds magnetize both capital gains tax and dividend distribution tax. This creates problems as investors are indirectly being denied the tax incentives given to equity oriented funds, the officials said.
“For a clearer understanding and in order to take in REMFs, the finance ministry will have to change the description of equity oriented mutual funds in the IT Act,” A. Krishnan tax partner (real estate), Ernst & Young said.

Faced with a slowdown and increased competition, real estate players are trying to re-invent themselves by focusing on ‘personalized selling’.
Refusing to be lost in the clutter of ‘look-alike offerings’ in the real-estate market, a section of leading developers engaged in constructing properties in Bangalore, Mumbai, Hyderabad, Goa and Chennai is trying to carve out a niche by personally attending to the needs of each and every customer who strolls in to inquire about their projects.
Bangalore-based TSI Ventures director (sales and marketing) Jackbastian K Nazareth said, “The euphoria of inquiries witnessed since the past couple of years has now died down. But there are still quite a few genuine buyers. Now, in order to counter the strong competition and to stand apart from a string of look-alike offerings in the real-estate market one needs to make necessary marketing innovations and concentrate on personalized selling”.
While launching its much-talked about ‘Wave Rock’ project in Hyderabad, TSI has rolled out special cookies imported from New York and had distributed it among those who stepped-in for inquiries. Mr Nazareth said, “In India, buying a home is an emotional process and such personal treatment of probable customers helps in creating a lasting impression in their minds”. Further he added, “We will be launching similar schemes when we launch new township projects in Hyderabad and Chennai in the near future”.
Priti Chand, director (PR & Communications) of the group, which is building 200 villas at Madgaon and high-end apartments about 12 kms from Panjim, said, “Though we know that all inquiries will not materialize, we still design the product as per the requirements and choices so that we get tailor-made villas. We are marketing these projects as second-homes and we are therefore trying to get the homes tailor-made”. Further she added, “We live in a busy world and the time-starved customers expect personalized services such as carpeting, furniture and similar home decor jobs from us”. The Group, while recently launching its hotel projects in Goa, had organized fireworks display, fashion shows and had gifted wine bottles to visitors who graced the occasion. Ms Chand remarked, “We will be organizing similar displays when we launch our properties in Goa”.
Similarly, the Lodha Group which is currently in the process of selling a high-end villa project (each unit costing between Rs 3-3.5 crore) at Lonavala has also taken the ‘personalized’ route.
Lodha Group senior vice-president (marketing) R Karthik said, “We are providing first-hand experience of the villas to our guests. The customer while visiting our project gets an actual feel of the villa he or she is planning to buy”.
Further he said, “The company picks the guests willing to visit project site along with their family in a luxury vehicle. Right from being ushered in; the guest gets treated to the five-star experience which he/she will receive once the final product is ready. For instance, there are maids and butlers on call”. Further he added that the company has incorporated a ‘personal flavour’ while marketing and selling their products.

The Indian real estate market is set to witness the entry of investors like Gaziz Globe and Big Shopping Group from Israel, Mirax from Russia and a few others from Eastern and Western Europe. Together, these investors are likely to invest around Rs 10,000 crore in Indian property that is FDI compliant, in the coming months, through the PE route.
The move is expected to bring relief to developers who are increasingly finding it difficult to mobilize funds from banks. Jones Lang LaSalle Meghraj (JLLM) is currently working on these transactions. It is understood that a number of funds from Israel have bought large tracts of land in Goa and are scouting for more land and property elsewhere.
According to Anuj Puri, chairman & country head, JLLM, “Currently, there are liquidity issues in Indian real estate market. Hence, funds from Israel and Russia will bring relief to Indian developers. Since PE players are investing in Indian properties that are FDI compliant, the funds will be invested in the ongoing construction of properties over 50,000 sq m in size. They cannot invest in ready property.”
While Gaziz Globe is investing in various retail projects, Big Shopping Group is investing in new retail projects in Pune and Mumbai.
Meanwhile, Mirax, Russia, is evaluating the feasibility of investing in developments in Mumbai. Kardan Group, Israel, is also investing in an SEZ in Pune.

With real estate stocks being hit adversely by the market slowdown, the phenomenon is expected to have a spiraling effect on hospitality development in India. Most real estate majors with a series of hospitality developments in their portfolio are affected by this trend. This may lead to a stall or delay in the completion of projects as well as a revision of the project expenditure. Over the past few months, real estate stocks have seen a major downfall, with an average of 60 to 65% drop in the share prices during 2007-08.

Prem Subramaniam, Head, Infrastructure Development Finance Company (IDFC) said, “There is not only a slowdown in the market, but also an alteration in project costs with the configuration of interest rates”.

While financial market analysts expect the decline in real estate stocks to continue in coming months, they also speculate that hotel projects will be stalled due to lack of liquidity and equity funding in the markets. On the contrary, hospitality consultants feel that projects that are already secured with funds will not be affected.

Parsvnath Developers Ltd has no plans to reduce prices of its properties, a top official of the real estate company said on 16th July 2008.
“There is no question of reducing prices at all. Prices have to go up,” Pradeep Jain, chairman and managing director said.
He also said rising input costs would be passed on to the consumers.

For now, the next few quarters could be the acid test for the sector. The stock prices of many real estate companies are under duress. DLF’s offer for a share buyback comes at a time when the stock price has been adversely hit. While one could argue that the overall sentiment is on a low, the fall in these stocks has hit the investor really hard.

At such high price levels for property, the buyer is taking his time which does not augur well for the developers. It is precisely for this reason that the uncertainty has stepped in.

HDFC’s Karnad admits that there are some pockets in India where prices need to correct further. “However, today, the real estate sector is going through a stage of over-pessimism,” she argues.

The story of the aspiring Indian middle class is hard to ignore and that could be urge to own a home could still make sure there is a healthy level of demand. Overall, the impact of a global slowdown on India is slowly being felt. It may affect Indian realty sector in coming time. However, NRIs affections towards Indian properties will not likely to be vanish in near future.

Arrival of boom in real estate has seen mergence of many realtors and builders. Among the front runners, one is Amarapali group. Over a span of 12 years, the group has build scores of residential building, commercial complexes and corporate houses. It is now foraying encouragingly into the extremely challenging space of SEZs. This remarkable success of Amarapali group owes to number of factors namely man, machine and mantra.
Amarapali group is head by its chairman MD Mr. Anil Kr. Sharma, who is great visionary in his own right. After creating a vast repertoire of top class residential projects, malls, SEZs and IT parks, the group the set to take a giant leap by foraying into the high growth hospitality business in the country. In the first phase, the group is going to launch its international class 4-5 Stars hospitality projects in the cities of Virindavan, Bareilly, Jaipur, Udaipur, Indore and Greater NOIDA.

Indian company Sahara India Group said it will explore business prospects in the UAE. Subrata Roy chairman of Sahara will be in the UAE to look for prospective projects in different sectors.

Sahara India Group, which puts the market value of its property at more than fifty billion dollar, has diversified business interests in areas like finance, real estate, media and entertainment, tourism, and services.
Roy will meet well-known business people and industrialists of the region and look at a variety of large-scale ongoing projects in the UAE. The focus of his visit will be on discovering business and investment opportunities in UAE as well as in India, company spokesman Abhijet Sarckar said in a statement.

Sahara is a well-known player in the real estate industry of India and owns a huge land bank. It is developing two hundred seventeen townships across India ranging from 100 acres to 300 acres each.
Sahara owns three entertainment television channels, one national news channel, 36 regional news channels and publishes various newspapers and magazines in Hindi, English and Urdu.

India’s emergence as a leading IT and ITES destination has witnessed a huge demand for high quality office space. Again, the dependence on one sector could also have a serious impact. Knight Frank’s Vakil said that there is already a slowdown as far as commercial property is concerned.

The scenario presents a few interesting constituents. Vakil said, “There is no demand for an outright purchase and a lot of people are going for the lease option. In a falling market, that is a more practical solution”. IT and ITES, according to him, account for 80 % of all commercial space in India. Further he added, “Besides, 70% of that industry is dollar denominated”. That’s exactly what is affecting Bangalore, India’s IT capital and to an extent Hyderabad as well.

Retailers themselves are going easy and a lot of large players have been pretty vocal about it. With higher rentals, the pressure on margins is far greater. Retailers form a significant part of the overall commercial scene and that proportion is merely getting larger. Kishore Biyani, managing director, Future Group said, “Ultimately, it is a question of affordability in retail”.

There are not too many ways to get past the zooming commercial rates. Biyani, when questioned about this, points out that his group signed up for properties much before the boom. He added, “To that extent, we were protected. Actually, we have been quite docile over the last six months”.

A significant development was actually when five plots were offered for sale in Bandra Kurla Complex (BKC), Western Mumbai’s business district. That was in March this year. Out of the five plots, two each were for residential and commercial while one was reserved for a clubhouse. One of the commercial plots was picked up by Jet Airways at Rs 3.44 lakh per square meter against a reserve price of Rs 3 lakh. Strangely enough, there was no other bidder in the fray.

Both the residential plots were won by Star Light, a joint venture between the Ajay Piramal Group and Suntech Realty. Here, the price paid was in excess of three times the reserve bid price. The story did not quite end there. The worrying part was that one commercial plot and one for the clubhouse remained unsold. These two plots together had an area of a little over 12,500 square metres with a reserve price of Rs 3 lakh per square meter.

A report put out by Enam Securities after the bidding process was completed makes a clear mention of what could possibly have gone wrong. “The lack of interest among developers for commercial space in BKC, while disheartening, is primarily attributable to the high reserve price.

Indiabulls was another player in the news when a significant amount of mill land in central Mumbai was put on the block. That was in 2005 when the company acquired an impressive 22 acres of land for what was then a massive Rs 720 crore.

Today, with so much of talk on a slowdown in real estate — in more pessimistic quarters, the whispers of a crash as well — it will be interesting to see how the company has viewed that investment. Mr. Gagan Banga, CEO, Indiabulls Financial Services, declared, “We have had an encouraging response. We are getting rental offers at around Rs 300 per square feet which is in line with what we had set out for ourselves”.

Today, there is talk of a slowdown as buyers are taking just a little longer to decide if they want to go ahead and take that decision now. Pranay Vakil, chairman, Knight Frank said, “Without a doubt, interest rates have made a difference. After all, the monthly outgo will increase”.

Taking a closer look at what’s going on in Delhi and the National Capital Region (NCR), it is observed that transactional volumes for residential projects have witnessed a drop of 20-25% over the past six months. Among these are the upscale projects like Emaar MGF’s Palm Street project in Gurgaon, the Uppal Group’s Plumeria housing project in Greater Noida, Unitech’s project on Taj Express highway and BPTP’s Parklands project in Faridabad.

Developers themselves are not too kicked about the state of affairs. While maintaining that inflation and interest rates have been the key factors, they are not too optimistic about the way forward. Vipin Aggarwal, executive director, Omaxe said, “There is a slowdown and this will continue for at least a year and half. Besides, the real estate sector is itself facing a cash crunch. There are many companies that are focusing on completing the project at hand instead of increasing the size of their land-banks”.

By contrast, Mumbai story has been quite different and this has been led by the fact that demand far exceeds supply. According to Dharmesh Jain, chairman, Nirmal Group of Companies, that is a point that cannot be ignored. He pointed, “Supply is meager and that is a huge problem”. This demand-supply disequilibrium has helped the process of making Mumbai among the most expensive property locations globally.

Property prices in up-market areas like Malabar Hill in South Mumbai have moved up from around Rs 12,000 per square foot in 2003 to twice that figure this year. More importantly, there was a deal struck at Rs 60,000 per square feet earlier this year.

Across the country, there have been up-market projects coming up at a frenetic pace. Not surprisingly, a large player like DLF is playing down the slowdown story. “Our properties are developed according to the current market needs. In order to stimulate demand, we are also coming out with affordable housing and, therefore, we have not witnessed much of an impact on account of a slowdown,” says a DLF spokesperson.

India’s IT capital, Bangalore has also been witnessing a drop in sales volumes. According to J C Sharma, managing director, Sobha Developers, home sales have dropped this year compared to 2007. Further he said, “Like any other industry, real estate is going through a cycle”.

Although the debate for the renovation of a tea estate into a real estate project, Uttorayon township, a project of Luxmi Group, in partnership with Siliguri Jalpaiguri Development Authority (SJDC) and West Bengal Industrial Development Corporation (WBIDC), and managed by the Ambuja Group, at Chandmoni in Siliguri, has completed two phases of development, and is scheduled to be complete by 2011.
According to Rudra Chatterjee, executive director of Luxmi township Hotel Hindustan International, Kolkata-based five star hotel groups and the Elgin, heritage hotels operational in north Bengal, have been tied in for hotels in the township.
This apart, Neotia Elbit will be setting up a hospital and a City Center mall, which will be ready by 2009.
According to H. Neotia of Ambuja Realty Group, “Most of the flats in the first two phases of the project have been sold out. We look forward to another two phases to be completed in two years.”
The 17.6 million square feet zone will be sixty acres of parkland.
The direct project price of the township is about one thousand crore rupees with ancillary investments likely to be two thousand five hundred crore rupees, claimed Chatterjee.
“In the beginning the project took time to start. There was no precedence of something in this scale. Yet, the West Bengal Government, SJDA and WBIDC have played a important role in motivating this project to a state where it can practically provide the platform for the growth of IT, health and other knowledge networks in North Bengal,” said Chatterjee.

While the Indian real estate industry is growing by leaps and bounds where foreign investment and growth is concerned, the tremendous potential of something as important as fire safety, has not yet been understood yet. Optimists feel that this is changing slowly but surely. M C Muthanna, Chief Operating Officer, Firepro Systems, said, “India is a reasonably domestic consumption driven market. Gradually as awareness is setting in, people are realizing that fire safety actually touches all segments. Builders are moving beyond statutory needs, so also the consumers, who want more safety features”. In any case, the need to protect family and property will never change. So whether the properties concerned, is worth Rs 5,000 or Rs 50,000, there will always be the need and urge to protect it.  Differences in global and Indian practices come to the fore easily. In general, the Indian real estate industry is on par with the developed world, in providing some basic systems. The key difference is the amount of spending. Sophisticated systems like addressable fire detection systems and automatic gas suppression systems are being used in the protection of offices in commercial buildings. But in residential apartments, the spending for installing the life safety equipment is still very low and the equipment used is still basic in design.

Options in fire protection and suppression, in residential as well commercial property, are varied but useful to the core. In commercial property, hydrant and hose reels are used for the entire building premises, while addressable fire alarm systems are used extensively for office space, along with sprinkler systems. For data centre rooms/ control rooms which are manned by people, clean agent gas suppression systems are used. Water cannot be used for fire protection at such premises. So inert gases are used to avoid data loss or damage.

Fire protection and suppression systems in commercial spaces can be installed in retail malls, airports, cinema theatres and multiplexes, auditoriums, convention centres, convenience stores, storage warehouses, hotels and restaurants — thus, preventing loss of life and property to a great extent.

Real estate and infrastructure management sector saw Private Equity (PE) deals worth $2.32 billion in the first half of 2008, nearly 3% higher than the same period of previous year, even as the average deal size fell over 9% reflecting the sluggishness in the market.

According to Grant Thornton, 33 deals were inked in the first six months of the 2008 compared to 29 deals in the same period of 2007.

PE deals, during the month of June, stood at about $247.5 million, almost half the level seen in May 2008 when about $ 478 million of PE money was infused into different projects.

“The valuations are definitely down as the market is in the midst of a slowdown”.
“With access to capital market out of question and bank debt getting tighter, we see more and more developers tapping PE sources to bridge the fund gap for projects”.

“Although in the short-term PE players may take a careful stance, over a one year horizon, the number of PE deals is likely to go up,” says Mr Subhash Bedi, Director and Partner, Red Fort Capital

Red Fort Capital has concluded seven transactions in the first half of 2008 compared to six deals during entire 2007.

Earlier in June, Lehman Brothers Real Estate Partners had pronounced an investment of seven hundred forty crore rupees ($185 million) for 50 % stake in the initial phase of a Unitech project, located on the Western Expressway of Mumbai.

During the same month, Axis Bank too invested two hundred fifty crore rupees in Lavasa Corporation, a subsidiary of Hindustan Construction Company, in the form of convertible preference shares and convertible debentures.

An industry official pointed out that while investors were still interested in the real estate market, they had adopted a careful approach towards projects.

“With more projects on the negation table now, and given the current market sentiments, PE players will pick and choose. Only those projects which have the required approvals in place would hold their interest,” the officials said.

Maytas Hill County SEZ, the first IT/ITES SEZ of Maytas properties, a property development company headquartered in Hyderabad, has been launched.

The company is planning to build two more IT and ITES SEZs, each at Gopannapally and Gundlapochampalli. Coming up in a 74-acre plot at Bachupalli with an investment of Rs 2,500 crore, the Hill County SEZ will have a total built-up area of about 8 million square foot.

The first phase of the project bringing in 1.3 million square feet of built-up area will be ready for occupation by Oct-Dec next year and the company had already signed its first client, Wells Fargo & Co, US, in its incubation center, the first building coming up in the SEZ.

The total incubation space will be 60,000 square feet out of which the first client will have one-fourth area. The entire project to be taken up five phases will take 8-10 years to complete.

Maytas Properties CEO K Thiagarajan said that all the SEZs of the company would have adjoining integrated townships and promote walk-to-work, walk-to-shop and walk-to-restaurant concepts to avoid long commutes to work places and provide more time to spend with family.

Further he said that the Maytas Hill County Township, of which the SEZ is a part, offering apartments, villas, retail spaces and entertainment infrastructure, educational spaces, hospitality and medical facilities is fast coming up. Some of the dwelling units are ready for occupation.

On the affordability of living spaces in the township to lower-rung IT staff, the CEO said that the township would have various types of accommodation, including service apartments and rooms.

With rise in prosperity and disposable income of the middle class people in cities due to high economic growth, India is witnessing a retail boom.

This has led to the growth of organized retailing, which is changing the way shopping is done, particularly in big cities like Delhi, Mumbai, Bangalore, Pune, Chennai, Hyderabad among others.

The most visible symbols of organized retailing are the swanky malls, which have mushroomed in most of the large and medium size cities across the country. In cities like Delhi, with extreme weather conditions, malls have become a runaway success.

Even at the height of summer season, when temperature soars up to 42 degree Celsius, shopping is no more an unpleasant exercise. Instead, these malls in various part of the city have made it a pleasurable exercise, in fact, it has become a way to relax and chill out in an air-conditioned environment!

This mall phenomenon had given rise to apprehensions that high street shops were heading for an ignominious death. But, a recent survey done by Jones Lang LaSalle Megharaj, a global real estate consultancy firm, found that despite rise in number of malls in a city, high street shops continue to flourish.
The survey suggests that the presence of new malls within an established high street increase the retail appeal and attractiveness of the entire stretch. It allows malls and high streets to equally benefit from a growing footfall base of consumers flocking to such a street where they can find a combination of both high street retailing and climate controlled shopping in new malls.

The report says, “Though it is early days, the initial evidence does suggest the fact that departmental stores as well as malls and high streets can indeed play to each others strength.”

The report said that the anecdotal evidence of the complementarity of high streets and malls comes from the few instances that were found in Bangalore, Chennai, Hyderabad, Kolkata and Pune where informal feedback from retailers along the shopping high street as well those in the operational malls suggested that both of them are benefiting from the presence of the other.

A senior consultant with the firm Tanaji Chakraborty says that the high street shops, which were facing tough times some time back, have come back with a vengeance. Particularly, in the fully developed area, where further expansion of retail outlets is not possible, the existing high street shops have regained their charm.

In the last couple of years, since consumerism is on the rise, these high street shopping areas are getting revitalized either by the association of shopkeepers or by municipal corporations to enhance the consumer experience.

This results into augmentation of retail attractiveness. The report said that revitalization of streets globally is a very serious issue and often this is linked to the issue of regeneration of entire region. Typically stakeholders of streets, retailers, property owners, mall developers, development authorities, local council, all collaborate to map out a regeneration strategy with a view to improve the economic and image impact of the street.

Report said that this movement is at a very nascent stage, though undoubtedly as economic interest refocuses on prime inner city areas, which typically have superb locations but suffer from run down image, there would in future initiatives regenerate to unlock value.

Connaught Place in Delhi has been regenerated by NDMC. The process to beautify its Central Park has already been completed by the municipal authority. The walk-way and the main building are now also being done up by the concerned authority.

Similarly, Khan Market has been revitalized by the association of shopkeepers. The report said that with the possibility of shopping street revitalization becoming an increasing reality across markets in coming years, the retail pitch of high streets is expected to be enhanced in future, thereby allowing for inclusive growth of retail along these prime corridors in Indian cities.

This is also evident from the fact that rentals of high street shops have doubled in the last couple of years. The rentals in Khan Market, which was quoting at around Rs 650 per square feet per month in 2006, has gone up to Rs 1,300 per square feet per month in the first quarter of 2008.

The report said that the increase in prime shopping street rents have almost doubled across the board, with the rise in rentals ranging between 30% and 100% over the last few years. Rental value growth over the years in other leading cities has been no less impressive.

At such levels, the report said, some of the top-rung Indian shopping streets, especially the likes of Khan Market and Connaught Place in New Delhi, and Linking Road in Mumbai are slowly but steadily creeping into the league of expensive high streets of the world. However, Chakraborty said that this is not a very healthy sign as it suggests the lack of availability of good infrastructure and quality retail space in the country.

Chakraborty said that the development of high street mall takes time as it evolves with the growth in the population in the area. On the other hand, malls are developed on standalone basis. They attract customers from far-flung areas also.

Therefore, in most of the new townships, developers raise malls to provide shopping infrastructure to the inhabitants of the township, while at the same time they attract customers in the nearby catchments to survive in the initial years.

But, over a period of time, the high street shop will also come up and flourish in the same township. Therefore, he said that it is not either mall or high street shopping center but it will be both that will flourish as the economy will grow in the country.

According to Financial Chronicle’s interview with Prabhat Pani, CEO, Ginger Hotels, the Ginger Hotels group plans to launch 60 to 70 properties in India, within the next three to four years. The company has adopted a new method of refurbishing existing properties, instead of buying land for new hotels.

So far, investment in the Indian expansion has been Rs 250 Crores. The group’s first Delhi property (13th Indian property) is the hotel group’s maiden collaboration with a government body like the Indian Railway Catering and Tourism Corporation (IRCTC). Ginger Rail Yatri Niwas, which is an upgraded version of the pre-existing hotel, launched under a PPP model.

In North India, Ginger Hotels has a property under construction in Ludhiana, which is coming up on the fourth and fifth floor of a mall. The company is developing its business model, as well. The hotel group will look to enter Lucknow, Faridabad, Ajmer, Noida, Baddi, Kota, Bhilwara, Jodhpur, Gurgaon etc. Pani declined to comment on international developments.

Unitech International Real Estate Fund is learnt to have raised $300 mn which will be deployed in Unitech’s residential projects. The new fund will help the country’s second-largest, listed developer tide over the liquidity crunch dogging almost all real estate firms.

A senior Unitech executive, who didn’t wish to be named, told that an European pension fund, a Japanese bank and some Europe-based HNIs have invested in the Unitech fund. Unitech International Real Estate Fund is an independent fund launched by Unitech on the lines of Unitech Corporate Park (UCP). It is an AIM-listed entity which owns Unitech’s IT parks.

Unitech’s asset management arm, Unitech Realty Advisors, will advise on the deployment of fund, which has a horizon of 10 years. The entire corpus of $300 mn will be deployed in Unitech’s residential projects spread across the country in the next few months.

The real estate sector is facing a tough time, with residential segment being the worst hit. Housing sales have declined by up to 80% in most markets across the country leading to a major cash crunch for developers.

Residential projects in India generally work on the self-finance model, with home buyers making payment in advance for the houses to be delivered usually three years later. But with fewer home buyers in the market, several developers are stuck with projects, raising the probability of late deliveries. A sluggish demand and the rising cost of capital and construction have forced investors to shun real estate on Dalal Street too. The shares of realty firms have been in a free-float mode, touching all time-lows, in most cases.

Unitech’s scrip touched a 52-week low of Rs 135.10 on BSE on 16th July before closing at Rs 137, down 11% from the previous close. Unitech has lost almost 75% off its January peak. Country’s largest realty developer, DLF, is faring no better. The company was prompted to announce a buyback of its shares after its scrip plunged to Rs 350 on July 2, a decline of 71% this year.

Analysts have been routinely downgrading real estate sector, given the rising inflation and interest rates and sluggish demand. Credit Suisse cut its rating for DLF from ‘neutral’ to ‘under perform’ and Unitech’s to ‘neutral’.

After being scanned for Foreign Exchange Management Act (FEMA) violation, many foreigners intend to sell their properties in Goa and return back, but have to stay back as Goa authorities have banned any related transactions.
Few of the foreigners who have invested in Goa getting jittery after the show-cause notice from the directorate of enforcement and investigations into the deal intends to do away with the property.
But the state government has with-held any further transaction in their properties forcing them to sit with the fingers crossed.
This month itself, the notary services and state registrar department have received two applications by foreigners – UK and Russian each – who want to sale their properties. The applications contend that their property is legally purchased and hence should be allowed to be sold.
“We have forwarded their applications to the debt management unit who will have to take further stand on the issue,” a state registrar official stated.
Goa woke up to the grim reality of around 480 properties being purchased by the foreigners and the number swelling every passing month.
The authorities prima facie had found that the properties were purchased in violation of FEMA and scoring on the loopholes in Goa’s property registration system.
The state government-constituted Anupam Kishore committee had identified 480 such cases, of which 298 cases were referred to directorate of enforcement as prima facie FEMA violations were noticed in them.
The directorate of enforcement has begun investigating into all sale deeds including those executed by forming an Indian company with foreigners as its directors.
“After the issue has cropped up, we are not even allowed to move an inch. Our investment is blocked here,” a Russian national, whose property in Siolim, is in question, reacted.
The Russian, who refused to be identified, said that he had purchased an ancestral house in the name of the Indian company but the local authorities refuse him even to repair it.
“I am stuck here with my money. I can’t even sell off the property as sale deeds cannot be executed,” he said.
Few of the UK nationals, who invested in Goa, after reading the advertisement back in their country which lured them with good offers, feel cheated.
A south Goa-based foreign couple, who too do not want to be named, has written letter to the registration department seeking to sell their property after the probe began.
“How can they be allowed to sale the properties? Their old sale deed is being questioned that means the property may not have been legally transferred. So how can we allow them to sell it to next party,” Swapnil Naik, additional collector, who is also a member of Anupam Kishore committee, reacted.
He said that those properties which are not being questioned and are legally purchased can be sold out with proper permission.
The directorate of enforcement which is probing into the transactions has already asked the state government not to allow further transactions in case of seven properties – all in north Goa.
“The DE has specially instructed that there will be no further sale deed or transfer of the property,” Naik said.
The registration department, which was criticized for allowing innumerable properties being purchased without proper checks, feels that the state government should appoint an authority which will go into all the details of the application, when foreigners apply for buying the property.
“We can’t check his visa details. If we sit with it, we will be registering only one deed a day and then we will be accused of being slow and corrupt,” an official commented.
The law mentions that for a foreigner to buy property in Goa, he needs to be staying here for 182 days and should have business, vocational or employment visa. The reserve bank of India’s nod is also mandatory.

Emaar Properties, the leading real estate company in the Middle East, is set to inject $150 million for a 20-25 % stake each in three real estate developments in India.

According to Company spokesperson Emaar and MGF Developments of India set up a joint venture in 2005 called Emaar MGF, which presently accounts for India’s largest foreign direct investment in real estate through projects with a combined development value of US$1bn.

Emaar is now considering establishing three separate special purpose vehicles which will then develop two retail properties and one office property in Gurgaon and Mohali.
Emaar holds 41% in the Emaar-MGF joint venture while MGF holds 56%.

Real estate developer Parsvnath on 15th July tied up with Sabeer Bhatia, co-founder of  Hotmail, to develop a Rs 50,000-crore knowledge city project in Haryana.

The Parsvnath Nano City project would come up in Panchkula near Chandigarh. The realty firm would invest about Rs 400 crore in the form of equity and debt in the project, Parsvanath Developers (PDL) Chairman Pradeep Jain told reporters here.

“It is a public-private partnership project in which Haryana government will have 10% equity stake, Parsvnath developers will have 38 % and the remaining 52 % will be with Sabeer Bhatia promoted group,” he added.

The project, spread over 1,000 acres of land and modelled on Silicon Valley, would be completed in two phases over the next 10 years, where the company would develop 5,000 acres in the first phase and the remaining would be developed in the second phase.

Indo Rama Retail Holdings Pvt. Ltd, the retail venture of the promoters of Indo Rama Synthetics (India) Ltd will be setting up 200 stores across the country over the next three years.
Announcing the launch of the company’s store in Chennai, Mr Ashok Srivastava, chief operating officer, Indo-Rama Retail Holdings said, “Any company spends close to Rs 400 per employee on stationery and other office materials. With IT, education, financial, media sectors booming we are confident there will be a huge demand for our products.”
The company will be setting up close to 50 stores in tier-2 and tier-3 cities by the end of 2008. He pointed out, “Our investments per store would vary depending on the real estate value. We will be investing around Rs 15 lakh to Rs 40 lakh per store”. We are targeting cities such as Madurai, Coimbatore, Trichy and Salem in Tamilnadu. Further he said that the company is also eyeing entering SEZ’s in these cities. To a query on funding, he said that the funding would be through internal accruals.
The market for office products in India is estimated to be around $10 billion growing at 15% year on year. Office1 Superstore is targeting to capture 5% of market share in the organized sector.
The company clocked revenues worth Rs 5 crore last year and is confident of achieving Rs 1 crore business from each store that they set up.

In the biggest real estate deal in the redevelopment space, Mumbai-based Narang Developers is believed to have struck an agreement with Bombay Taximen Colony one of the oldest housing societies in Kurla, for around Rs 1,100 crore.
According to the source Bombay Taximen Colony, which consists of about six hundred residential flats and thirty commercial establishments, had opted for redevelopment early this year.
“The concluding deal is yet to be done. We are in initial talks with Narang Developers,” Bombay Taximen Colony secretary AR Siddique said. Narang Developers declined to comment on the deal. As per the contract, most of the society members will vacate their flats after accepting the deal offered by the developer.
According to sources, the nine hundred crore rupees deal which Pune-based Kumar Developers signed with residents of Khira Nagar in Santacruz (W) for redeveloping six hundred forty flats in sixteen buildings, was seen as the biggest in the redevelopment space. However, the deal got stuck because of title disputes.
Redevelopment of old buildings in Mumbai is seen as a big business opportunity, with the government introducing new incentives, including higher FSI and tax incentives. Mumbai has an estimated sixteen thousand buildings that qualify for redevelopment.
Under the redevelopment scheme, old and dilapidated buildings are knocked down to build taller residential buildings and produce space for commercial activities, thereby boosting returns from the project.
Residents of many housing societies, mainly in the western suburbs, have been signing agreements with numerous builders since January 2007 to move out of their apartments in exchange for megabucks running into a couple of crores.
The Bharatiya Bhavan Co-operative Housing Society, tucked away in a corner of 17th Road, Khar (W), received a fabulous offer from a little-known developer from Navi Mumbai called APA, who upstaged many prominent builders when he offered Rs 180 crore for the 37 flats in six buildings. The deal, however, fell through.
Another big housing society near Bandra Talao, Nutan Nagar, created waves when a developer offered the society a whopping Rs 451 crore for the cluster of low-rise residential buildings. This deal, too, failed to go through.

Ceylon Glass Company, a unit of India’s Gujarat Glass, has revealed it plans to sell a prime property valued at 700 million rupees near Colombo from where it has just shifted its production plant.

“The company plans to sell the 21 acre land located in the heart of Colombo in Ratmalana,” a company statement said.
“The land is strategically located, surrounded by roads on three sides and its proximity to the Galle Road (the main road into Colombo) gives an advantage to any potential developer or industrialist.”
The carrying value of investment property in the accounts is given as 703 million rupees.
Ceylon Glass net profit for the year ended 31st March 2008 fell to 35 million rupees from a re-stated profit of 104 million last year but exports have soared.
The profit came after capitalising 176.8 million rupees of interest relating to the relocation of the production plant to Horana, south of Colombo, from the Ratmalana site, according to the firm’s annual report.
The relocation cost is to be written off over the years.
The statement said that although turnover rose 8.5 % to 2,014 million rupees gross margins fell to 23 % from 25 % the previous year, partly because the firm had to import bottles.
“Due to capacity constraints in the early part of the year, this year too the company was compelled to import bottles at negligible or even negative margin rates in order to satisfy domestic customers and retain customer loyalty.

Exports shot up 160 % last year and now constitute 10 % of turnover, more than double the four percent of the previous year.
“Having more than doubled capacity (with the new plant), the company is now able to meet the demands of the local market as well as to pursue lucrative exports market,” the statement said.
“In exports, the company will be focusing on specialty beverage and food bottles, i.e. short run food and beverage bottles with colouring or decoration for value addition.”
The company said it is well positioned in the Asian market exporting boutique wine and specialty liquor bottles for leading brands in India.

State Bank of India is likely to report an improvement in its asset quality when it presents its first quarter results. According to top SBI sources, the bank has recovered bad loans worth around two thousand crore rupees during April-June 2008.

Top SBI executives, when contacted, refused to comment. SBI managing director S K Bhattacharya said, “We can’t divulge details before the first quarter results announcement”.

SBI’s credit quality had deteriorated during 2007-08, as it booked fresh bad loans worth Rs 2,700 crore, mainly on account of retail loans, and to some extent, mid-sized corporate loans. As on March 31, 2008, the bank had gross non-performing assets (NPAs) of Rs 12,837 crore compared with Rs 9,998 crore, a year back.

On the other hand, the bank is slated to make a provision of around Rs 1,000 crore against mark-to-market (MTM) losses of its investment. Out of this sum, around seven hundred crore rupees is expected to be provided for against depreciation of bonds the bank received from the government on account of its rights issue.

Banks are booking MTM losses against depreciation of bonds and equity investments during April-June 2008 period. Nevertheless, SBI is expected to clock double-digit growth in the first quarter to June 30, 2008 over the corresponding period a year back. This is despite the fact that demand for loans from sectors like commercial real estate and auto has slowed down.

Coming back to SBI’s bad loan management, government’s debt waiver-cum relief scheme would help SBI reduce its bad loans by another Rs 2,000 crore. SBI has waived overdues of around 25 lakh farmers, aggregating about Rs 7,000 crore. “It’s estimated that around 30% of the total waived sum had become NPAs,” another SBI insider indicated. Gross NPA stood at 3.04% as on March 31, 2008 while the net NPA stood at 1.78%.