Ireo launches Grand Arch in Gurgaon

New Delhi: Ireo, the leading FDI from a private equity fund dedicated to the Indian real estate sector and a fully integrated real estate development company, has announced the commencement of its first signature property – The Grand Arch — in the Ireo City, Gurgaon. Ireo City is the first mega project of the company in North India, and the planned capital outlay for the development is Rs 10,000 crore.

Spread over 500 acres, Ireo City, the integrated township, will offer a unique mix of features such as an elevated walk way connecting the entire township, art centers, theatres etc. Ireo City development will also include schools, hospital, parks, luxury hotels, shopping malls, service apartments and office complexes.
The Grand Arch, spread over 20 acres, is designed to be Gurgaon’s new landmark residential complex. It will have world-class architecture with apartments open on all 4 sides, 10 foot high ceiling improving room aesthetics, two bedroom duplex apartment with double height ceiling over the lounge and dining area, double glazed windows and apartments equipped with VRV air conditioning, offering the best of temperature controlled and energy efficiency.

On the occasion of the launch of Ireo City, Lalit Goyal, vice chairman & managing director, Ireo, said, “The Grand Arch marks the launch of the Ireo City — the beginning of a new era in the Indian real estate sector with a planned launch of 10 million square feet area of its 3000 acres owned land in next twelve months across NCR, Haryana, Punjab, Tamil Nadu and Maharashtra. The unique facility of Ireo City – ‘Skywalk Network’ will integrate all developments within the township by providing safe and easy connectivity to the pedestrians.”

The Grand Arch will have an iconic 22 stories The Arch – East & West wing, four towers up to 29 stories and four mid-rise towers which will have duplex apartments. It will have a wide range of apartments, including duplex and pent houses offering views of the Aravali Hills. The size of the apartments will be between 1375 sq.ft and 9897 sq.ft.

The Grand Arch will have a total of 842 apartments and penthouses. The project is likely to be completed by the end of 2012.

http://economictimes.indiatimes.com/news/news-by-industry/services/property-/-cstruction/Ireo-launches-Grand-Arch-in-Gurgaon/articleshow/5077240.cms

Chances of India Allowing FDI in Multibrand Retail Seems Bleak

India is unlikely to allow foreign investment in multibrand retail at least in the next couple of years, a top industry ministry official said. “It’s a sensitive sector. I don’t see it happening… Certainly not in one or two years,” Department of Industrial Policy and Promotion Joint Secretary Gopal Krishna said during his interaction with Swedish industry captains. India does not allow foreign investment in multi-brand retail, although it does permit 51 per cent foreign direct investment (FDI) in single brand segment. World’s biggest furniture retailer IKEA of Sweden recently dropped its $1 billion investment plan to set up single-brand retail outlets in India after New Delhi showed no inclination to allow FDI beyond 51 per cent in that segment.

“Retail is the second largest employer in India and there is a fear that opening up the sector for foreign direct investment will bring in extreme form of competition and the fears are not unfounded,” Krishna said. Commerce and Industry Minister Anand Sharma along with officials from his ministry were in the Nordic country for a two-day visit. They were accompanied by Indian industrialists led by the Confederation of Indian Industry. “We have no social security net,” he argued. However, he said 90 per cent of sectors are open including the entire manufacturing sector with the exception of defence. DIPP is the nodal point for FDI guidelines. A Parliamentary Standing Committee has recommended a blanket ban on foreign investment in retail and has opposed even big domestic corporate entering the sector saying that it will lead to unemployment.

The committee, headed by Murli Manohar Joshi, feels that “opening of FDI in retail trade by allowing single brand foreign firms in India will result in unemployment due to slide-down of indigenous retail traders”. Further, Krishna said the insurance bill which awaits the report of the Parliament Standing Committee is likely to be taken up by the government in the next six months. The bill aims to raise the FDI cap to 49 from 26 per cent. Besides, he is hopeful that the RBI will relook into the roadmap for the private foreign banks, which was put on hold, charting out their entry and revisiting many restrictions such as acquisition and opening new branches.

Source : http://www.indianrealtynews.com/retail-market/chances-of-india-allowing-fdi-in-multibrand-retail-seems-bleak.html

FDI to flow into housing sector

Foreign investment in the real estate is likely to flow into the residential sector in India in the near-term as it has an enormous potential for growth due to the massive unmet housing demand.

A report by real estate service firm Jones Lang LaSalle says, “While risks may be higher for investment in real estate in India than in developing econo-mies, the returns on investment are significantly higher in India.

Speaking on the report, Mr Anuj Puri of Jones Land LaSalle Meghraj said, “Global capital flows are looking for existing and futuristic growth indicators and patterns and India has displayed both to a measurable degree. These factors, coupled with an already discernible return of positive sentiments in the real estate business, will result in enhanced interest by foreign real estate investors.”

The report was released at the conference on Turnaround in the Downturn- An insight into the current Real Estate Scenario organised by the Confederation of Indian Industry (CII) here.

Mr Arun Nanda, the executive director of Mahindra & Mahindra, said the revival of the Indian real estate sector lies in providing affordable housing by cross subsidisation and conscious effort on part of the developers to inculcate corporate social obligation.

Calling upon the stake holders of the Indian real estate sector to analyse the reasons of the downturn in the sector, he emphasised that with the reduction in interest rates from 14 per cent to eight per cent, the sector was now showing signs of revival. He also laid emphasis on development of satellite centres as a means to tackle the issue of growing urbanisation and urged the need to ensure balanced urbanisation.

Source : http://stockmarkettoday.in/2009/09/12/fdi-to-flow-into-housing-sector/

China’s Property Investment May Rise by 30% in 2010 (Update1)

Sept. 5 (Bloomberg) — China’s property investment growth may rebound to around 30 percent next year and support the nation’s economic recovery, central bank adviser Fan Gang said.

“As property developers rush to buy land and plan construction this year, investment activities will soon pick up pace,” Fan told the China CEO Forum in Beijing today. Fan is the academic member of the monetary policy committee at the People’s Bank of China.

China’s property sales surged 60 percent by value in the first seven months and home prices in 70 major cities rose the most in 9 months in July from a year earlier as Premier Wen Jiabao’s $585 billion stimulus and an explosion of lending spur home construction and purchases. Still, the 11.6 percent expansion of property investment in the first seven months was one-third the pace in 2007, before a housing slump started.

“A rebound in real estate investment will be the next engine supporting economic recovery after the government-led infrastructure construction plays a dominant role stimulating growth this year,” Lu Zhengwei, an economist at Industrial Bank Co., said by phone in Shanghai. “Growth of 20 percent to 25 percent in real estate investment is healthy, whereas a 30 percent pace may trigger concern about overheating in the property sector.”

Property investment accounts for a third of overall fixed- asset spending by the world’s third-largest economy.

Separately, Fan said the government’s recent “fine- tuning” of monetary policy is “no surprise” because the central bank has to prevent excessive liquidity, and that the decline of the stock market on concerns that loan growth will slow is “a very good sign”.

Bank lending in China fell in July to less than a quarter of June’s level, and concerns among investors that the government may start to rein in loan growth drove benchmark stock index into a bear market this week.

China’s investors “have finally learned to respond to risks rather than believing that the market will rise forever, which is a very good sign,” Fan said.

The global economy has escaped a repeat of the Great Depression, and yet may remain weak for another one or two years, Fan said. “A world economic recovery will be a prolonged process,” he said.

China’s exports, which have dropped for the past nine months, may return to growth in the last quarter of this year as global demand recovers, Fan said, without giving a specific forecast.

Source : http://www.bloomberg.com/apps/news?pid=20601080&sid=adpYcppjI6a0

Housing Development Says Demand From Overseas Indians Is Rising

Sept. 5 (Bloomberg) — Housing Development Finance Corp., India’s biggest mortgage lender, said home demand from Indians living overseas is rising as the global economy recovers and interest rates remain low.

Home loans to non-resident Indians currently account for 14 percent of Housing Development’s business, Joint Managing Director Renu Sud Karnad said today at a property exhibition in Singapore. The pace of increase in loans extended to non- resident Indians in Singapore could surpass the company’s 20 percent per annum rate of loan growth in the Middle East that contributes the biggest share of business overseas, Karnad said.

Consumer demand for home loans in India is reviving after the central bank cut its key rate by 425 basis points since October to the lowest on record in a nation that has a shortage of 24.7 million housing units. Housing Development in July reported a 21 percent increase in first-quarter profit to 5.65 billion rupees ($116 million) as a drop in borrowing costs and decline in property prices lifted demand for home loans.

“It’s a good time to invest now as prices have come off quite a bit due to the global crisis but have started to inch up already in the past two months, especially in Mumbai and Delhi,” Vice Chairman and Managing Director Keki Mistry, said at a press conference today. “Interest rates won’t be rising too much due to ample liquidity.”

Property prices in central Mumbai and New Delhi have risen 30 percent since May after falling 35 percent to 40 percent during the global crisis, Mistry said.

Source : http://www.bloomberg.com/apps/news?pid=20601091&sid=a2V.zYjgUvOE

Changes in Indian Real Estate Affairs

Real estate in India has always been the playing field for entrepreneurs. This industry has witnessed unprecedented highs and frightening lows over the years. One is often left dyspnoeic with the continuous shifts in this sector. Due to rise in demand in the IT/ITeS sector and significant increase in FDI, the commercial and retail real estate markets experienced tremendous growth in the first quarter of 2008. Land deals accrued around Rs 23,000 crore with additional deals worth Rs 10,000-crore in the pipeline. The highest recorded land deal was Mumbai’s Bandra-Kurla Complex. However, it has not been an easy journey for all in the property market. Last year, the global property collapse exacerbated by the credit bubble burst resulted in reduced finance and business activity. Equity markets also remained lacklustre and raising money through IPOs proved to be difficult. Both real estate giants, Unitech and DLF, delayed the plans to raise money through REIT issues after witnessing unfavourable initial response.

Consequently, lack of funds forced developers into high interest loans. High credit amounts proved to be detrimental for property companies. Most companies borrowed a large portion of their land-development outlays up front and relied on advance sales to repay these loans. However, poor sales led to delays and massive cost overruns. According to industry estimates, around Rs 8,000 crore worth of projects had faced considerable delay by June 2008. The collapse of Lehman Brothers, in September 2008, was perhaps the most significant event that spiflicated an already floundering property market in India. It triggered a shockwave that rippled through the liquidity centric commercial and retail real estate markets leaving a trail of defaults, delays, and losses. Even though property prices have corrected by 22-42% in major cities over the last few months, 10-15% downside is further expected. Commercial real estate demand has languished as corporate firms deferred expansion plans to deal with the credit situation.

Negative absorption rate aggravated by falling rentals led to decreasing margins. Companies like DLF, with 40% of its portfolio in the commercial and retail space, reported 29% y-o-y decline in 2009 revenues while its net profit plummeted by 43%. Similarly, the top line was also distorted for companies like Ansal (-26%), Parsvanath (-60%), etc. Timely and synchronised measures taken by central banks and governments around the world restored balance and prevented a total collapse of the financial system. Thus, markets saw a mild recovery. According to Rajeev Rai, vice-president of Corporate Assotech Ltd, “To counter decreasing demand and to gain confidence of all stakeholders of Indian real estate, associations like NAREDCO and CREDAI decided to bring down prices of various properties by reducing overheads and marketing costs.

In some cases, ticket size of the property was reduced with reduction in size of apartment to make it more affordable for the masses.” As per a report by Grant Thornton, the total number of PE deals announced during the first half of 2009 stood at 93 with a total announced value of $2.89 billion with the highest proportion invested in real estate and infrastructure management worth $1.61 billion. Bhim Yadav, CEO, Falcon Realty Services Pvt Ltd, reckons, “A higher FAR not only brings in more supply to the market, it is also vital for creating room for more affordable housing and control the steep rise in prices, ultimately benefiting the common man.” The Mumbai real estate saw a sharp price correction. Average peak rentals fell 40–60%. While there was a slight mismatch with excess supply, (supply of over 30mn sq ft over 2008–10E vs expected demand of 22mn sq ft), the demand in Mumbai has been healthy.

Unlike Mumbai, commercial and retail space in NCR is expected to languish due to weaker absorption rate. As per Centrum, the average vacancy rate in malls across India was about 9% in Q408 and NCR had the highest vacancy rate of around 25%. According a study by Knight Frank India, average rentals in Gurgaon was down from Rs 120/sq ft to the Rs 51/sq ft while rents in Noida dropped from Rs 90/sq ft to Rs 44/sq ft. In conclusion, as market conditions stabilise, the financial markets will slowly pick up resulting in an improved liquidity scenario, stable government, and affordable prices. This may well serve to bring back the shine to this lacklustre sector.

Source : http://www.indianrealtynews.com/real-estate-india/changes-in-indian-real-estate-affairs.html

India gets $7 bn FDI in first quarter

KOLKATA – India received $7 billion in foreign direct investment (FDI) during the first quarter of the current fiscal, a senior official said here Friday.

“For the April-June period there was an approximate $2 billion FDI inflow every month,” Gopal Krishna, joint secretary to the Department of Industrial Policy and Promotion, said during an interactive session organised by Indian Chamber of Commerce.

He described the $7 billion received so far as a satisfactory amount.

“Services including financial, non-financial, software, telecommunication, construction and real estate are the areas where we see a large amount of FDI inflows,” he added.

Talking about the annual projection of the FDI for the country, Krishna said the government is not setting any target for the year keeping in view the global economic slowdown.

He was confident the country would manage to bag 1.5 percent of the total global FDIs.

In 2009 it is projected that there would be total $1.2 trillion of FDI globally, down from $1.6 trillion in 2008 due to the economic slowdown.

Source : http://blog.taragana.com/n/india-gets-7-bn-fdi-in-first-quarter-139834/

Govt weighs 3-yr lock-in on FDI in real estate

NEW DELHI: The government is weighing the impact of a possible three-year ban on stake sale by foreign investors in real estate projects, a decision  that could affect future capital inflows into the sector.

Real estate developers had recently urged the government to reinterpret a provision in the foreign direct investment guidelines, so as to stop overseas investors from withdrawing their funds, beyond the minimum capital of $5 million, before three years of the initial investment.

This, they said, will help them tide over the current liquidity crisis. However, the commerce ministry is concerned that such a measure could be counter-productive. The government wants to keep the foreign investment policy as flexible as possible since the country now needs foreign capital to sustain the growth momentum. For any foreign investor, the exit strategy is as important as the entry strategy. If it is difficult to withdraw capital and redeploy it in another sector, then foreign investors could become reluctant to invest in real estate.

“We examined the proposal, but have not taken any decision and status quo continues. However, we cannot rule out any change in the future,” said an official, who asked not to be named, considering the sensitivity of the subject. The law says that in a cross-border JV in real estate, the foreign partner should bring in a minimum capital of $5 million. The funds would have to be brought in within six months of commencement of business.

It also says the “original investment” cannot be repatriated before a period of three years from the completion of “minimum capitalization.”

This has been interpreted in such a way that funds above the minimum capital requirement could be repatriated within the three-year lock in period. Real estate developers now want to restrict this as the sector got badly hit by the economic slowdown and drying up of sources of foreign capital. Besides, players in this sector have very few alternative sources of funding locally.

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/Govt-weighs-3-yr-lock-in-on-FDI-in-real-estate/articleshow/4823787.cms

Govt May Ease FDI to Aid Realty

The government is proposing easier rules to allow overseas investors to be a part of smaller real estate projects and lower capitalisation norms, which involve facilities related to hospitality or tourism. The Department Of Industrial Policy & Promotion (DIPP), which handles the FDI policy, in a note drafted for the Cabinet Committee on Economic Affairs (CCEA), has said that FDI should be allowed to flow into realty projects even if the area covered is only 10 acres. Currently, FDI is allowed in realty projects only if the minimum area covered is 25 acres (or 10 hectares).

Source : indianrealtynews.com

Ireo to invest $500m in Indian realty

The global investment fund Ireo announced its plans to invest $500 million in real estate projects across the country. The project mix will include both residential and commercial developments. The $500 million fo-rms part of the $2 billion tranche of fund available with the Ireo.
“We already have invested close to $1.5 billion towards development of 13 real estate projects in the country,” said Anurag Bhargava, chairman Ireo. He added that the company is now exploring options in tier I and II cities. “Residential projects will remain our priority though we are open to developing commercial projects like the SEZs,” Bhargawa explained.
The company has already completed three million square feet of residential development and has further plans to develop around eight million square feet residential and commercial pro-jects over the next one year.
At present, the company owns 3000-acre at Pune, Gurgaon, Mohali, Ludhinana, Ghaziabad, Noida, Chennai, Coimbatore, Goa and Jalandhar wherein it is developing thirteen realty projects that include development of IT-SEZ at Pune. The construction work of the IT-SEZ at Pune is expected to be complete by next year.
“Though the SEZs do not find favour with other developers in the changed economic environment, yet we feel that with right location and scale they still can be good business propositions,” quipped Bhargawa.
The company is also exploring options in the education and hospitality sectors. “The projects in these categories will largely be in and around the areas where we already are executing projects, as we have a fair amount of understanding of the market, he said.
The investor base of Ireo consists of several financial institutions such as JP Morgan Chase, TPG-Axon, Citadel Investment Group and sovereign wealth funds.

Source : http://www.mydigitalfc.com/companies/ireo-invest-500m-indian-realty-875

Govt may relax FDI norms for realty

The government department responsible for the promotion of industry is proposing easier rules to allow overseas investors to be part of smaller real  estate projects and lower capitalisation norms for those which involve facilities related to hospitality or tourism.

The department of industrial policy & promotion (DIPP), which handles the FDI policy, in a note drafted for the Cabinet Committee on Economic Affairs (CCEA), has said that FDI should be allowed to flow into realty projects even if the area covered is only 10 acres.

As of now, FDI is allowed in realty projects only if the minimum area covered is 25 acres (or 10 hectares).
The move will help realty projects in metros like Mumbai, Delhi, Bangalore, Chennai and Hyderabad to attract FDI.
Realty players feel that it is not possible to find 25 acres of land in these cities to make their projects comply with Press Note 2 of 2005, which defines guidelines for permitting FDI in this sector.

The industry is keen on business in the metros, as it attracts high-profile customers, but wants FDI to be allowed since the cost of land in these cities is high, making them expensive.

The DIPP has also proposed that the minimum capitalisation norms specified in Press Note 2 can be waived in the case of projects, which involve hospitality and tourism facilities, such as hotels, restaurants or entertainment facilities meant for tourists.

Press Note 5 specifies that minimum capitalisation should be $5 million for permitting FDI in realty projects, which involve an Indian partner. In case the project is implemented by a fully-owned subsidiary of an overseas firm, the minimum capitalisation specified is $10 million.

The waiver would be available in case 50% of the built-up area in a project is devoted to hotel and tourism businesses, such as food courts, resorts, restaurants.

If 20% of the total built-up area is used for hotel rooms, the waiver will be available. Veterans in the real estate business, who do not want to be identified, said the liberalisation moves were welcome changes that they have been waiting for.

These steps, when implemented, will provide relief to high-value projects in metros and projects being developed for the tourism sector.

The move comes as a relief at a time when realty players are struggling to managed debt and lull in business, they added.

However, the realty industry is upset that its demand for waiving off the three-year lock-in for FDI in real estate has not been accepted. Many fund houses keep off realty projects due to the three-year lock-in period, industry veterans feel.

Source : http://economictimes.indiatimes.com/Markets/Real-Estate/Govt-may-relax-FDI-norms-for-realty/articleshow/4764581.cms

Real Estate Still a Good Investment Option

The real estate sector plays a significant role in India’s economy. Almost 5% of the country’s gross domestic product (GDP) is contributed by housing alone and an unit increase in expenditure in this sector has a multiplier effect and the capacity to generate income as high as five times the increase in expenditure. According to Dun and Bradstreet Corp., a provider of credit information on businesses and corporations, the total value of real estate development in India was estimated to be around $14 billion (Rs67,480 crore), growing at an annual pace of 30%. This growth is fuelled by the growth in realty development in organized retail, followed by housing and information technology and information technology-enabled services.

While such statistics are praiseworthy, it is also relevant to remember that the ongoing slowdown had started with a bursting of a bubble in US real estate, driven by reckless demand and supply conditions. Real estate in India has been characterized by an increasing presence of a large number of public companies, along with the opening up of this sector to foreign direct investment (FDI) and private equity firms. This has increased the discipline and accountability of businesses undertaking large-scale real estate developments. On demand, Indians have an innate propensity to own homes. This, with rising income levels following India’s rapid growth, has resulted in a phenomenal increase in the demand for homes.

Moreover, the country has started viewing property as a preferred investment option, given that returns are pegged between 11% and 15%, compared with bank deposits, which seldom offer returns over 10% a year. Prices of homes, therefore, have increased at a steady pace in the past decade. In recent times, real estate has been seeing a plunge in demand with retail shying away from exorbitantly priced spaces or paying high rentals. Reduced consumer spending has also translated into a retail slowdown. Many firms have also decided to relocate from high to lower cost locations, leading to vacancies going up in retail and office space. Interestingly, a careful look at the performance of the sector reveals that the pace of activity has been shifting to smaller cities. Several reasons could cause this shift. First, speculative investments in real estate, which have been largely confined to the metros, resulted in greater price volatility in these cities.

Secondly, the high price of real estate in large cities has caused a number of offshore companies setting up operations in India to expand into smaller cities, resulting in a substantial increase in demand. Thirdly, builders and developers have mainly focused on high-end housing projects in large cities. The recent economic slowdown has meant large stock of unsold inventory. They have, therefore, shifted focus on developing projects aimed at medium-income, middle-class households. Lastly, the special economic zone policy has also resulted in a shift of activity from large to smaller cities. So, where are we headed? The advent of the private sector in real estate and the government’s proposal to offer fiscal concessions and creating an enabling environment for housing development have led to rapid growth in private investment in housing, with the emergence of developers mainly in metropolitan centres and other fast-growing towns. The growth has been fuelled by rising business opportunities in new and emerging enterprises, increasing income levels, low interest rates, employment generation and demographic changes.

The real estate market has also been boosted by a proposal to permit 100% FDI in the sector. Also, a significant factor that drove the growth of the housing market was easy availability of bank finance at affordable interest rates. Finally, it is important for policymakers to be vigilant and track the pace and economics driving the evolution of the sector. There should be adequate supervision to prevent reckless credit growth to fund its expansion. India’s favourable demography, low mortgage penetration, falling interest rates and ongoing infrastructure demand will keep the retail real estate downturn from being protracted. The fundamentals of the sector are good and its growth should continue in the foreseeable future.

Source : http://www.indianrealtynews.com/real-estate-india/real-estate-still-a-good-investment-option.html

Indian Retail inches up as preferred destination

India has moved up from 44th spot last year to 39th in terms of being the preferred designation ranking, according to global real estate consultant CB Richard Ellis (CBRE), which also adds that the ranking, does not justify the size of the country’s economy.

UK tops the global list while China is numero uno for the Asia Pacific region followed by Japan; India earns the 11th spot, Chairman and MD Anshuman Magazine  of CBRE reportedly said in a statement.

He said even China has moved to the 6th position globally from 10th place last year. Among the Asia Pacific countries too, India is behind the smaller countries like Singapore and Indonesia.

“This ranking is not only because FDI in retail is not allowed but also due to relatively lower purchasing power, cost and availability of real estate, besides infrastructure and supply chain management issues,” Magazine said.

However Magazine cautioned the retail business corporations outside India that adding a market like India could be not ignored too long and it would continue to move up in the ranking and attract more and more international players.

Addition to the organized retail will be a boom in disguise to the wine industry as it will increase the availability and ease the distribution blockages existing at the present moment. It is expected that states like Delhi will soon follow the example set by Maharashtra, Karnataka, Haryana, Punjab and Chandigarh

Source : http://www.indianwineacademy.com/item_4_300.aspx

FDI inflows in FY10 may cross FY09 figure

At this level, FDI inflows this fiscal will be marginally higher than the preliminary estimates of $27.5 billion for 2008-09. The government had fixed an FDI target of $30 billion for 2008-09.

“The investments may be delayed but the investor outlook remains optimistic,” said Gopal Krishna, joint secretary, Department of Industrial Policy and Promotion (DIPP), on the sidelines of a function organised by global consulting firm Booz & Company and the American Chamber of Commerce (AMCHAM).

If foreign firms reinvesting their profits in India are also taken into account, the total FDI inflow will touch the $40 billion mark in the current fiscal, the same level expected in the just ended financial year.

Though the ministry is optimistic of attracting more foreign investments in the current fiscal, the latest FDI numbers showed a sharp decline. FDI inflow is expected to decline to about $2.5 billion in March, compared with $4.4 billion in the year-ago period.

Commenting on the new press notes on FDI, he said it was an effort to simplify the complex foreign investment procedures, adding that investment through the automatic route had increased to 90 per cent in the last fiscal as against just 16 per cent in 2000.

The resilience of the Indian economy makes it a favourable destination for private equity by foreign investors, even as the financial crisis is leading to a global slowdown, said Atul Singh, president (India and South West Asia), Coca-Cola.

Source : http://www.business-standard.com/india/news/fdi-inflows-in-fy10-may-cross-fy09-figure/356222/

3 Year Lock-in for Foreign Investment in Real Estate

Foreign investors in Indian real estate cannot sell their stakes to another foreign investor before three years, the Foreign Investment Promotion Board (FIPB), the body that clears such proposals, has said. With this, FIPB has overruled a provision in FDI policy that exempts foreign players from the rule in cases where fund transfer is from one non-resident to another. Till now, this three-year lock-in was applicable only on foreign investment in real estate and not on investors.

The FIPB view is contrary to the stand taken by the department of industrial policy and promotion (Dipp), the nodal agency that formulates FDI rules in the country. Dipp’s view is that a foreign investor can repatriate funds if it offloads its stake to another foreign investor as the actual investment in a project would remain intact and only its ownership would change. “Though Press Note 2 of 2005 has an enabling clause to permit sale of investment between two non-residents before the end of lock in, it has not been allowed so far,” an official in the commerce & industry ministry said.

The issue came up in the last FIPB meeting, when the board took up private equity fund 2I Capital’s request to sell its investment in Delhi-based real estate firm Uppal Housing to Mauritius-based fund ICP Investments. The company had sought approval for transferring 1.9 crore shares in the Indian real estate company to the Mauritian company. According to the company’s proposal, the fund transfer involved no repatriation of funds but physical transfer of shares from one investor to another.

Though Dipp had recommended giving permission for sale of 2I Capital’s shares to ICP Investments, FIPB rejected it. Dipp argued the sale of shares was permissible between two non-residents within the lock-in period , but FIPB rejected it. In a missive to FIPB, ICP Investments said it has already invested $45 million in Uppal Housing and has plans to make substantial investments. However, if 2I Capital is not permitted to transfer its shares to ICP, Uppal Housing’s projects may be jeopardised, the company has stated. The joint venture between Uppal Housing and 2I Capital has been terminated and the company still holds its shares, given the policy logjam.

Source : http://www.indianrealtynews.com/fdi-india/3-year-lock-in-for-foreign-investment-in-real-estate.html

Huge foreign investment in construction sector likely

The international leaders have expressed their commitment to promote use of environment friendly materials in construction across the globe to present greener world for the posterity.

“At the end of our three-day high level Convention of International Federation of Asian and Western Pacific Contractors’ Associations (IFAWPCA) in Bangladesh where we have shared our experience took a pledge to build a greener world for our posterity,” the incoming president of IFAWPCA Herman H M Chen told BSS on Sunday.

The three-day convention, hosted by Bangladesh Association of Construction Industry (BACI) that ended on Saturday were participated by 270 construction experts and entrepreneurs including 220 foreigners from its 16 member countries.

The leaders of BACI, the local member of IFAWPCA, hoped that Bangladesh would witness huge volume of foreign investment in the construction sector as a follow up of this high level convention.

“After the convention we expect significant foreign investment will come to the country as the participated foreign delegates shown their keen interest to invest here,” the out going IFAWPCA President Engr Aminul Islam told BSS.

The convention helped to change the mind set of the prospective foreign investors who had no ideas about various existing investment opportunities in Bangladesh, he added.

Aminul said, a lot of small scale construction projects are being undertaken here which have a lot of potential for foreign investor.

“We may expect foreign investment in urban road construction to reduce the traffic congestion in the city,” he said. The member countries of IFAWPCA are Australia, Bangladesh, Thailand, Hong Kong, India, Indonesia, Japan, South Korea, Maldives, Taiwan, Malaysia, Nepal, New Zealand, Philippines, Singapore, Sri Lanka.

At the end of the convention, the builders of the 16 countries gave commitment to use environment-friendly quality construction materials at any development works for a greener world.

The out going general secretary of IFAWPCA Engr Mir Zahir Hossain said, the convention would encourage all the builders residing in the IFAWPCA member countries to carry out construction works in a more eco-friendly manner.

In the sideline of the convention, BACI organised a three-day international construction exhibition at Sheraton Hotel to showcase the activities and achievements of the local construction firm in the infrastructure development of Bangladesh.

The convention also decided that the 38th IFAWPCA convention will be held in Taiwan on April next year.

Source : http://nation.ittefaq.com/issues/2009/03/09/news0723.htm

Goa Top FDI Receiver

Who would have thought that the tiny west coast Indian state of Goa, known for its sunny beaches and laid-back lifestyle, would become the top FDI earner in the country? If some latest information placed before the Indian parliament is to be believed, that’s exactly what happened during 2008 even as the world was starting to reel under a major economic slowdown. The Minister for Overseas Indians Affairs, Vayalar Ravi, recently informed the Lok Sabha (the lower house of the Indian parliament), that the global recession had no impact on Foreign Direct Investments (FDI) from Indians abroad as it has registered a rise in the current fiscal.

Informing the lawmakers about investment figures from the states, Ravi said there had been no decline in investment due to global recession during 2008 as compared to 2007. Non-resident Indians (NRIs), Persons of Indian Origin (PIO) and Overseas Corporate Bodies (OCB) accounted for FDIs and Foreign Technology Cases (FTC) worth Rs 700 m during January to September 2008 in comparison to Rs 658 m for the period January to December 2007. Interestingly, Goa figured as the highest investment attracting state receiving Rs300m from the above mentioned categories of investors during 2008. West Bengal came in second among all Indian states, recording Rs203m in Foreign Direct Investments (FDIs). Goa was liberated from Portuguese rule in 1961 and went on to become the 25th state in the Indian Union in 1987.

People worldwide know Goa as a tourists’ paradise blessed by silvery and pristine beaches, historical temples and churches and a place of peace-loving people who cherish communal harmony. Very few would, however, fancy that Goa is today turning into a fast developing economy. The state has been ranked among the leading states on the developmental scale by national magazines. Goa’s economy is growing at a faster rate than that of the country as a whole. The Goan economy traditionally hinged on mining, Gulf remunerations and now on service sector mainly tourism.

It was ranked the best placed state by the Eleventh Finance Commission for its infrastructure, ranked on top for the best quality of life by National Commission on Population based on the 12 Indicators, placed in top three states in India for high rate of literacy and low rate of infant mortality and declared the second fastest growing state by CRISIL. Goa has been on the lookout to attract investments armed with a pro-active industrial policy, which identified biotech, food processing, agro-based industries, IT and IT-enabled services and entertainment sector as core areas of focus. After the State was declared a permanent venue for prestigious International Film Festival of India (IFFI), the entertainment industry led by state-owned Entertainment Society of Goa (ESG) is bringing entertainment to the forefront as a significant revenue generating sector.

At present, real estate seems to be the state’s top draw when in comes to investment by NRIs and PIOs. The new phase of real estate development in Goa has encouraged a multitude of investors to put sums of money. According to real estate experts, the prospects of real estate investment in Goa are bright. The strategic location of Goa and the availability land at good locations has attracted real estate developers. In recent years, Goa has also attracted huge investment for holiday homes by non-resident Goans (NRGs), NRIs and domestic buyers. According to The Times of India, real estate prices had boomeranged by 30 percent in 2004, and had been steadily increasing. Land value in Panaji doubled in the last one year while other places across the state have seen a steady 20 percent increase.

Nearly one in every four buyers in Goa were second home seekers looking for a good investment option. Real estate experts say that most property buyers in Goa are high-end clients looking for a villa ranging between Rs8m to Rs10m. NRIs and persons of Indian origin have particularly evinced interest in buying property here and constitute 15 per cent of the demand.

http://www.indianrealtynews.com/fdi-india/goa-top-fdi-receiver.html

Govt approves 29 FDI proposals of 616 crore

NEW DELHI: The government on Wednesday approved 29 foreign direct investment (FDI) proposals worth Rs 616 crore including AAPC Singapore’s Rs 365  crore hotel project.

AAPC plans to set up a wholly-owned subsidiary in India for its hospital-ity venture, a finance ministry statement said.

The government has also allowed ABG Bulk Handling’s plan to convert its operating company into an operating- cum-holding company. It pro-poses to make downstream investments of Rs 90 crore.

Other proposals cleared by the government include Rs 50 crore invest-ment proposal of Cinema Capital Ventures Fund, US-based Telcordia Technologies’ plan to induct foreign equity up to 74% in the mobile number portability solutions business and Telcordia plan to invest Rs 45 crore in its Indian operation.

Poltrona Frau’s proposal to set up a single brand retail joint venture (JV) with Tata group company Eward also got the government’s nod, the statement said. The foreign company would invest Rs 21 crore in the proposed JV.

FDI proposals are cleared by the government on the basis of Foreign In-vestment Promotion Board’s (FIPB) suggestions. The board, constituted by the top officials of economic ministries, screens such FDI proposals where prior government approval is required.

The FIPB, however, deferred Gurgaon-based real estate company Unitech’s proposal to make downstream investments in real estate sec-tor.

It also deferred 18 other applications including FDI proposals of John Deere Construction, BNP Paribas Securities Services, Yamaha Motor In-dia, Quippo Telecom Infrastructure and Hiranandani Realtors.

Source : http://economictimes.indiatimes.com/Economy/Govt-approves-29-FDI-proposals/articleshow/4224936.cms

Realtors likely to divert surplus FDI to Realty Projects

Commerce and industry ministry is likely to waive end-use restrictions and allow realty developers to divert surplus foreign direct investment to real estate projects where it was not allowed so far. According to the norms, FDI is allowed only in projects with a minimum investment of $10 mn (in wholly-owned subsidiaries) or $5 million in joint ventures, and which has a minimum area of 10 hectares.

As per the proposal, which will require a Cabinet approval before being implemented, a real estate company which has brought in FDI in a project meeting the mandated conditions can now use the surplus funds in another project which may not meet the prescribed conditions.

For example, a realty company that has raised FDI for a township in Faridabad which meets the minimum capitalisation and minimum area norms may now use a part of the surplus funds for a project in Gurgaon which may not have got a clearance from Foreign Investment Promotion Board (FIPB). Put simply, while the new norm does away with the end-use restrictions, it also nullifies the mandatory meeting of conditions for using FDI.

In the last FIPB meeting, the board deliberated that in view of the difficulties being faced by the real estate sector, some leeway is required, even if for a temporary period.

“We will soon issue the guidelines to be followed in case of requests for receiving FDI by realty companies engaged in various projects, not all of which are FDI-compliant as per Press Note 2 of 2005,” a senior official directly dealing with the new policy told ET. He asked not to be identified. The official added that the relief would be extended to the realty sector for a temporary period with an in-built sunset clause.

Interestingly, this comes even as the government had recently stepped up vigilance against companies channelling FDI money to projects that had not received FIPB clearance. While examining real estate company Keystone’s proposal in a meeting held in January, the board had asked the department of industrial policy and promotion (Dipp) to set up a monitoring cell to track FDI inflows into non-FDI compliant projects under the veil of FDI.

The board was apprehensive that in such cases, there could be a possibility of funds getting diverted to projects that had not been cleared by FIPB.

In fact, Dipp has prepared a draft Press Note on guidelines on induction of FDI into Indian real estate companies with both FDI-compliant and non-FDI-compliant projects, where FDI is required to flow into FDI compliant projects only. Officials say this would be the fourth PN to be issued by the present government before the polls.

So far, the government was wary of tweaking the FDI guidelines laid down under PN2 of 2005. It was of the view that if real estate companies are allowed to retain non-FDI-compliant projects while bringing in FDI, it would actually mean they are being exempted from Press Note 2 of 2005 guidelines which lay down the minimum capitalisation and minimum size norms for projects for being eligible for accepting FDI. The government has also specified a three-year lock-in period for such ventures.

In January, FIPB had rejected Delhi-based real estate company Vatika’s proposal to retain projects that do not comply with FDI guidelines for the real estate sector on the ground that such an exemption would defeat the purpose of PN2 of 2005. However, officials now say that with repeated pleas from the industry seeking relaxation of the policy in view the current economic downturn, tweaking norms would be a prudent step.

Source : http://www.indianrealtynews.com/real-estate-india/realtors-likely-to-divert-surplus-fdi-to-realty-projects.html

DIPP recommends changes in FDI norms for real estate

The Department of Industrial Policy and Promotion (DIPP) has recommended relaxation in foreign investment rules in the real estate sector in a bid to facilitate cash-strapped realtors get overseas funds.

The DIPP is backing changes in rules to facilitate foreign direct investment (FDI) in real estate projects that are not FDI-compliant, according to sources.

DIPP members who are part of the Foreign Investment Promotion Board (FIPB), in a meeting held on January 22, were of the view that in light of the current liquidity crunch, some leeway was required for the sector. The DIPP has directed that the matter be examined expeditiously.

At present, FDI in the sector is allowed only in partially completed and greenfield projects. There are also area specifications that developers have to comply with.

The DIPP is also examining the approach to be adopted in case of requests for receiving FDI by real estate companies that are engaged in various projects, not all of which are FDI-compliant according to Press Note 2 (2005) and which cannot be hived off.

Unitech has approached the FIPB for raising up to Rs 5,000 crore through global depository receipts. Unitech’s 10 per cent projects are not FDI-compliant. If the DIPP allows real estate companies to get FDI in non-compliant projects, it will help Unitech raise money without difficulty.

Source : http://www.business-standard.com/india/news/dipp-recommends-changes-in-fdi-norms-for-real-estate/00/42/349500/

Banks Allure NRIS into Real Estate with New Schemes

The booming real estate market in the country has prompted industry players to introduce a slew of innovative products to people willing to pay. From real estate developers to real estate fund managers, from banks to housing finance companies, it’s a party time for all. But behind those euphoric times, some banks, with operations in India and outside, are offering innovative products to non-resident Indians (NRIs), which could turn tricky in case Indian real estate market falls into a trough, sources said.

It involves the foreign and Indian operations of the same bank, the NRI and his friends, relatives and associates based in India. To start with, NRI, with the help of his friends and others, establishes an Indian company that could do business in the real estate sector. Now the bank in India gives some loan to the company to buy land in India.

On the other hand, the NRI keeps a fixed deposit with the wealth management division or private banking arm of the same bank’s overseas operation. Unofficially, the foreign branch of the bank, with FD in its books, stands guarantee to the loan given by the bank’s Indian operation to the company set up by the associates of the NRI. But the same is not officially shown as a guarantee in the books of the two branches involved. As per current FDI rules in real estate, any residential project in which foreign money in invested, should be on a land measuring 25 acres or more. For commercial properties, the minimum stipulated area should be 50,000 square metres.

However, market players said with the realty boom, NRIs find it tough to get land at market rate. Whenever the seller gets to know foreign money is involved, they demand prices higher than the market rates. The rates go up further when sellers get to know that the buyer wants adjoining plots which should aggregate at least 25 acres.

In such a situation, the company established by the associates of NRI buys smaller plots of adjoining land without raising the rates much or even raising suspicion of the sellers that an aggregation is on play or even foreign money is involved. Once enough number of plots are bought, those are aggregated (to at least 25 acres) and the company then transfers the same to the NRI to comply with FDI rule. While the NRI pays back the bank in India, his FD kept in the bank overseas is also released at the same time.

Source : http://www.indianrealtynews.com/nri/banks-allure-nris-into-real-estate-with-new-schemes.html

Meltdown heat on housing FDI

KOLKATA: The global meltdown has cast a shadow over what could have been the state’s first FDI venture in real estate.

Having blocked $8 billion for the Eden Lakeside project since 2006, the London-based REIT Asset Management — FDI partner for the Rs 340-crore housing township at Bonhooghly — has now pressed the panic button. It wants the state government and its partner, Eden Realty, to spell out whether the project is on.

Unfortunately, no answer is forthcoming.

The sprawling Eden Lakeside township project off B T Road — launched in 2006 in collaboration with the state refugee relief and rehabilitation (RRR) department — would have been a one-of-a-kind public-private-partnership (PPP) involving rehabilitation of some 800 families living in slums spread over 18 acres.
Had the project taken off, each poor family would have got a 645 sq ft flat (registered in their own names) free of cost. While 12 acres were marked for the housing township, the apartments for the poor would have covered the remaining six acres.

Ironically, even this project faced stiff political resistance. When the RRR department served eviction notices to the slumdwellers last year, only 160 families moved out. The rest moved high court. The state government won the case on July 31 this year, but couldn’t stop the agitations backed by Trinamul Congress and a section of CPM supporters. The aggrieved parties again moved court on September 27 — around the time the global meltdown happened.

“We were keeping our FDI partner posted on the developments. They knew about the first court case and the agitations backed by local political leaders. They are aware of the new case that has been moved.” Eden Realty managing director Sachchidanand Rai said.

“Even after the Tatas called off their Singur project, our FDI partner showed immense faith in the state government and continued to be upbeat. But now, faced with the global meltdown, they have decided that the funds can’t be left unused indefinitely. We have no answer for them. The project seems to have hit a deadlock.”

REIT India chairman David Cohen, who is also the chairman of Eden Infrastructure, the special purpose vehicle (SPV) floated for the project, made the companies stand clear in a recent communiqué sent to its Indian partner.
In the current context, the FDI partner’s impatience is but natural. As per India’s FDI guidelines, a foreign investor must capitalise within six months of a project’s launch. So the first dollars for the Bonhooghly project came in December 2006. By June, 2007, the entire amount had been deposited. But the project couldn’t take off. The agreement couldn’t be clinched either because the state government couldn’t give Eden Infrastructure the possession of the land. The RRR department had first to vacate the 18 acres occupied by the unauthorised occupants.

Reena Venkataraman, secretary, RRR department, said, “This was one project which didn’t have anything to do with agri land. It will be very unfortunate if the state were to lose it.” That’s understandable. Had the project taken off, the cash-strapped Buddhadeb Bhattacharjee government would have received an upfront payment of Rs 22 crore and another Rs 29 crore as guarantee money.

Source : Timesofindia.com

Sega may land deal for India re-entry with DLF

NEW DELHI: Global gaming and theme park leader Sega Corp, a subsidiary of the Tokyo Exchange-listed Sega Sammy, is in talks with DLF for a possible
India entry. A visiting delegation of the Japanese company met with DLF officials recently.

The talks are focused on developing indoor gaming complexes — a rage among all age groups in Western and South East Asian countries. Sega theme parks, Sega World, are popular in the UK (Piccadilly), China (Shanghai) and Australia (Sydney).

DLF group executive director Rajeev Talwar has confirmed talks with Sega. “We had talks with Sega last week when some of its senior executives were in India and have understood their business models across different geographies. However, no decision has been taken on what we would do with Sega in India and our business model,” Mr Talwar said.

Interestingly, it is learnt that Sega Corp had made a foray into India back in 1994 with late Manu Chabria-promoted Shaw Wallace Electronics. However, the company shut down its operations as the gaming business did not take off.
According to sources, the two companies have shown interest in indoor theme parks — a model which hasn’t yet taken off in India.

They say DLF is likely to offer its land and Sega will bring its domain expertise on the table. DLF has the largest land bank in the country. FDI up to 100% is allowed through the automatic route in theme parks and amusement parks projects in the country.

Recently, Dubai’s Emaar Properties and Sega Corp have tied up to develop theme parks in the Middle East, North Africa and South Asia. The parks will promote Sega games while providing entertainment based on its licenses.

The Japanese company is active in five business segments through its subsidiaries and associated companies across the world. The game machine segment is engaged in the development, manufacture, sale and maintenance of Japanese slot machines, peripheral devices and designing of game halls.

The amusement machine segment develops, designs and sells game machines for amusement facilities. The other segments deal with development and sale of gaming software, toys and entertainment content. The holding company Sega Sammy posted net sales of $3.5 billion for the period March-December, 2007.

Source : Economictimes.com

‘Core sector funding will be met’’

NEW DELHI: Even as he sought to reassure industry that the government would do its bit to boost domestic demand by enhanced spending on
infrastructure, FM P Chidambaram on Monday reiterated his earlier stance that the onus is also on India Inc to cut prices to spur growth.

Speaking at the Economic Editors Conference in the Capital, Chidambaram said though he was open to any suggestion from the industry on fiscal and monetary measures, he did not think cuts in excise duties or withdrawal of service tax from the housing and construction sector were called for at this stage.

Trying to allay fears that the current economic crisis might derail the government’s investment plans, the FM insisted that the planned $500 billion investment in infrastructure during the next five years would still be met. Of this, he said, $400 billion would be raised domestically and the rest would come from abroad.

Conceding that there was likely to be a shortfall during the current year in the quantum of foreign capital flows, Chidambaram said the government was in talks with the World Bank to double its lending to India from $3 billion to $6 billion this year. The domestic savings rate, he maintained, would remain at around 34% despite the economic crisis.

Investments won’t be a problem as the government was capable of raising fund both in the domestic and market abroad, Chidambaram said. “Following a record $32.4 billion of FDI received in 2007-08, the momentum continued with $19.3 billion received up to September 2008,” he added. Even the exports rose by 30% in dollar terms in the first six months of this year as against 29% growth in 2007-08.

Reacting to industry demands for fiscal incentives, Chidambaram argued that excise duty and service tax slabs are already on the lower side and any further cut would not really benefit industry since it would correspondingly reduce the duty drawback they get.

FM again asked for price cuts despite plea made last week having been rejected by most sectors as unrealistic. Asked whether he expected private banks to lower housing loan interest rates, the FM refused to give a direct answer but revealed his mind quite clearly. “The PSU banks have reduced PLRs by up to 0.75% on all loans to consumers.

Source : Timesofindia

Invest in real estate by getting home loans in India

The loans that actually exist seem to be a far cry when a potential borrower is bound by the constraints of income. But, in reality procuring such loans is not that difficult as it seems.

Right after the green signal for cent percent FDI in the real estate sector from the Indian government there has been a sea change in this sector in India. As such, FDI in the real estate sector has gone up from 4.5% in 2003- 2004 to 16% in 2005-2006 and it has been increasing since then.

This liberalisation of the Indian economy has led to the emergence of many lenders in the country. As such, this trend has brought about a favourable change for the potential borrowers as well i.e. the changes in the payback terms and conditions. Moreover, with the application of the information and communication technology procuring a loan has become much easier. All these factors have led to the elimination of the time that was required earlier to procure a loan and the processing fee.

There are various types of businesses within the domain of Real Estate. A large number of people earn their living with such businesses associated with Real estate. Such businesses may be professional valuation services, mediator, broker etc., between two parties in the business pertaining to real estate. There are also businessmen who do construction works on a land and management of these constructions and the real estates. There are also professionals who deal with the sales and marketing of this sector.

In order to procure a home loan in India an employed borrower must furnish documents pertaining to employment status and the salary slips of around last six months. When the borrower is a self employed man, he is generally required to furnish a balance sheet, profit and last account of at least three years etc. Further, an individual must have attained 18 year of age, possess permanent residential proof like PAN card, Voter ID card etc. In addition, a bank statement would put a client on an advantageous position.

A home loan in India can be utilised to construct new building, reconstruct already existing building and for various other purposes pertaining to house construction. Such loans are available in two different forms which are secured and unsecured. When it is a secured loan the prospective borrower should pledge an asset as security against the loan sought. Due to the involvement of the security the rate of interest of secured loan many reasonably be less and the debtor may bear the loan for a longer period. The debtor may also be in an advantageous position to bargain for more loan amount. Similarly, this security puts the lender also at the advantageous position by lowering the risk on his part to lend loans.

On the contrary, when it is an unsecured loan the prospective debtor need not pledge any security. Thus he may not be in a position to bargain for himself. Owing to the insecurity the client may need to bear higher rate of interest and shorter repayment period. Moreover, the credit amount may also be relatively smaller.

Home loan in India is offered by a number of banks like Punjab National Bank, HDFC, SBI, ICICI. These banks deliver the loans at relatively easy EMIs and decrease the burden on the borrower to pay of the credit.

Home loans are also very helpful in purchasing real estate property in India. It is because the population of the country is more than hundred corers and purchasing a real estate property here is definitely a big deal since the majority of the population of the land are not sound enough to purchase a real estate without the support of home loan in the country.

Source : www.loftyvistas.com

Fraser to manage 1,000 service residential units

Bangalore:Fraser Hospitality, the hospitality arm of Singapore-based Frasers Centrepoint Ltd, will acquire management contract of around 1,000 service residential units spanned across major cities in India in the next two-three years.

Signing a contract with Skyline Group to manage its 210 units of service residences coming up in two locations in Bangalore, Choe Peng Sum, chief executive officer of Fraser Hospitality said that the firm has also identified projects in Delhi, Noida, Gurgaon and Hy­derabad.

It is also negotiating deals in Chennai and Mumbai to manage around 700 units in the service residence space “We will announce the details in a month or two,”he said, adding that the company has also signed an agreement with real estate developer Minerva Properties to manage its 100 service residential units in Bangalore.

Fraser Hospitality, which is already present in 13 countries, is spreading its footprints in new regions including Bahrian, Bangalore, Chendu, Dubai, Edinurgh and Guangzhou. The company will focus more on India, said Sum. “We are studying actively pursuing other properties and developers in Chennai, Kolkata and Mumbai.

In our next stage of development, we will expand into secondary cities like Ahmedabad, Nagpur, Pune and Surat,”he informed. AvinashPrabhu, managing director of Skyline Group, said that the group will pump in Rs 100 crore to develop two projects to be managed by Fraserin Bangalore.

Healso said the service residences will be constructed according to standards set by Fraser. He noted that Bangalore attracts business visitors from across the globe, but suffers from a severe shortage of 5-starquality accom modation. “We are confident that the Fraser brand of luxury serviced residences will attract business class customers,” he commented.

Source: The Financial Express

JAL Hotels Co., Ltd. Plans New Nikko Hotels in India

JAL Hotels Will Operate Luxury Hotels for DB Hospitality Private Limited JAL Hotels Co., Ltd. has signed a comprehensive agreement with DB Hospitality Private Limited, based in Mumbai, to operate multiple luxury hotels for DB Hospitality in major Indian cities, such as Mumbai, Delhi, Kolkata, and Bangalore.

DB Hospitality Private Limited is the hospitality industry arm of the DB Group of companies, one of India’s leading business groups. According to the agreement, DB Group expects to expand its portfolio of hotel assets in India and to have JAL Hotels manage a substantial portion of those assets. DB Group is expected to invest over $1 billion to expand its portfolio of hotel assets in India over the next four years.

The two companies have agreed that JAL Hotels will take over operation of some hotels starting in 2010. Under JAL Hotels’ operation, these hotels will carry the Nikko Hotels International brand.

“JAL Hotels sees India as a rapidly growing, very attractive market, and looks forward to working with DB Hospitality Private Limited,” said Katsumi Chiyo, president and CEO, JAL Hotels Co., Ltd. “This agreement allows JAL Hotels to expand our Nikko Hotels brand throughout India’s major cities. We also intend to use this opportunity as a springboard, creating maximum synergy to speed up the growth of Nikko Hotels International in the Middle East and Europe. DB Hospitality is a good match for JAL Hotels, since it is very important to them for their luxury properties to be operated at the international, five-star level that our high-quality service can provide.”

About DB Hospitality Private Limited
DB Group is a leading diversified business group in India, headquartered in Mumbai, with businesses in the hotel, real estate, construction material manufacturing, dairy product manufacturing, telecommunications, and other industries. Among the hotels owned by DB Hospitality Private Limited are Le Royal Meridien in Mumbai and Le Meridien in Ahmedabad.
About Nikko Hotels International Nikko Hotels International is an international luxury hotel group operated by JAL Hotels Co., Ltd., headquartered in Tokyo. In addition to Nikko Hotels, JAL Hotels operates Hotel JAL City, a chain of 13 mid-priced hotels for business travelers in Japan. The company currently has 59 hotels with 18,829 rooms worldwide in Europe, the Middle East, the Americas, and throughout Japan and the Asia/Pacific region.

Future openings include three hotels in China: 388-room Hotel Nikko Shanghai in Summer 2009, 500-room Hotel Nikko Wuxi in 2010, and the 411-room Hotel Nikko Guangzhou in March 2010, as well as two Nikko Hotels International properties in the Middle East: 478-room Hotel JAL Tower Dubai in 2009, and 300-room Hotel JAL Bahrain Resort & Spa, also in 2009.

Source : www.marketwatch.com

INC Developers enters India with Rs 100 cr investment

US based INC Developers has entered the heavily slowed Indian real estate market with a super luxurious apartments scheme worth Rs 100 crore, which it would jointly develop in Pune with Amar builders over next 24 months. The super luxurious apartments with 6,500 square foot size each, would be priced between Rs 5 crore and Rs 6 crore.

INC Developers, incorporated three years back in California, have completed more than 30 residential projects worth more than $ 400 million. The newly announced project titled ‘Manhattan’ is its first entry in the Indian real estate sector. Speaking to reporters, INC Developers executive director Jay Kinra said, “Although the Indian real estate market has slowed down, it will have a temporary effect. And we are building super luxurious apartments, which would be sold very easily.”

The Manhattan project would have 18 apartments altogether, which would be customised as per the needs of the buyers. “We have already sold ffour apartments as people prefer to buy a Rs 6 crore flat as against a Rs 10 crore bungalow,” Kinra added.

The INC Developers are also setting up a 50,000 suqare foot huge commercial complex in Baner region. The complex would be launched in another six months and would be ready in 2011.

“The commercial complex would also be in the hi-tech luxurious segment. Considering the services and IT sector growth in Pune, this project also would receive a good response,” Kinra added.

Source : www.indianrealtynews.com

RBI against breach of FDI caps by FIIs

NEW DELHI: In a move that has virtually torpedoed the controversial proposal from the department of industrial policy & promotion (Dipp) to allow FIIs to invest beyond sectoral FDI caps, the Reserve Bank has said that Fema (Foreign Exchange Management Act) does not permit such flexibility.

The central bank has also rejected the liberal formula proposed for calculation of indirect foreign equity in Indian companies by stating that all foreign investment –– including FDI, FII investment, FVCI (foreign venture capital investment) and NRI investment –– should be taken into consideration on a ‘pro rata’ basis. The Dipp had suggested that FDI in holding companies should be taken into consideration for calculating indirect foreign equity in Indian companies, only if it exceeded 50%. In holding companies where FDI is below 50%, FDI in downstream should be treated as nil, according to the proposal.

The finance ministry is also opposed to the proposal and wants to indirect FDI to be calculated on a pro rata basis, a finance ministry official, who did not wish to be identified said. However, the proposals now face the danger of being put on ice. Dipp had sent the proposals for the consideration of the Cabinet Committee on Economic Affairs (CCEA), but it is unlikely to get the green signal due to lack of support from the finance ministry and the RBI. The home ministry and the defence ministry also have reservations and the liberalisation now faces rough weather, he said.

The RBI has argued that clearing the proposal would mean allowing 100% foreign investment in sensitive sectors like telecom though the sectoral FDI ceiling is 74%. The intent of the government was to keep 26% stake in telecom companies in the hands of Indian citizens, officials of the apex bank have said. The several other sectors like civil aviation, single-brand retail, banking and information & broadcasting would also see effective foreign holding breach the FDI limits set for these sectors. “The FII cap should be included within the FDI cap in sectors having composite FDI cap,” a letter from the RBI to the finance ministry has emphasised.

The apex bank has also said that FEMA regulations do not provide any mechanism to monitor indirect foreign investment in Indian companies. This comment is in response to Dipp’s suggestion that FIIs can report their indirect stake to Indian authorities and commit that stakes beyond the FDI limit would not entail board representation and management control.

“All foreign investments (FDI, FII, FVCI, NRI, etc) in an Indian company, irrespective of the percentage, should be considered for deciding whether a company is a foreign owned company for the purpose of determining indirect foreign investment,” says the letter.

Moreover, the finance ministry opposition stems from the fact that it in favour of adopting a comprehensive view needs on the issue of allowing FII over an above the FDI cap and calculation of indirect foreign holding. “The proposal could also lead to an anomalous situation in certain sectors such as private sector banks could theoretically have foreign investment up to 100%.

The same situation could arise in respect of sensitive sectors such as media, insurance, telecommunication, etc. Therefore, foreign investments should capture the entire investment through various routes –– FDI, FII, FVCI, PIS (portfolio investment scheme), etc,” says the communication.

Source : Economictimes

India story still attracts overseas fund managers

Amidst the global financial turmoil, long-term overseas institutional investors are keen to hear more about the India story. The attendance of these global fund managers in some of the recent investor meets held in India has gone up sharply – in some cases by 30 per cent compared to 2007.

The majority of them are long-term investors or private equity firm such as Genesis, Fidelity, Oppenheimers, Blackstone, Capital International, Soros fund among other private equity, pension and endowment funds.

Predictably, hedge funds whose survival is at stake did not participate in any of the investor conferences held over the last 10 days. These conferences were organized separately by CLSA, JP Morgan, UBS and ENAM.

Fund managers who participated in these meetings, were of the view that the India offers better opportunities once the global markets see some stability. “The current pullout by foreign institutional investors is a compulsion as most investors are facing redemption pressure in their home countries,” a senior fund manager said.

As many as 120 investors participated at the CLSA conference in Delhi last week, as against only 90 in 2007. “The response was a surprise to everyone, a senior official of CLSA said.

A senior ENAM official said these long-term investors are cash-rich and are evaluating the Indian market and companies which are resilient enough.

“In the current market, no investor is willing to commit a large amount of investment, so they are doing selective buying. Once sanity comes back to the global market, they may start investing,” he said.

Source : Business-Standard

Diwali deals prompt response on Indian new homes for sale

An Indian developer selling property investment plots has reported a good reaction to a Diwali scheme it used to spark sales.

Alpha G:Corp said it had an “exceptional response” while charging a nominal booking amount of Rs 1 lakh during the festive period on plots in three new townships.

The deal ran in Alpha International City projects in Karnal, Kurukshetra and Fatehabad.

Alpha is one of a number of companies looking to kick start sales during the festive period following a slowdown in the Indian real estate market.

S.K. Sayal, director of Alpha G:Corp, said:

“Our research before launching this festive scheme led us to expect a good response despite the general slowdown.”

He also said buyers were taking advantage of investment opportunities in the townships, snapping up units in the expectancy they will later sell for an increased price.

Marketing experts from the company also said Karnal in particular shows potential for growth thanks to government-sponsored commercial projects.

The government of Haryana is also planning to set up a civil aviation school at an airstrip in Karnal.

Alpha’s project in Karnal features a rainwater harvesting system as part of a drive to make the development eco-friendly.

The company also revealed it plans to build townships in other as-yet unnamed locations with “100 per cent direct foreign investment”.

Source: http://www.offplanpropertyexchange.com

Qatar to invest $5 bn in India

Qatar may invest USD 5 billion in energy and fertiliser projects in India as part of New Delhi’s efforts to use surplus funds from the energy-rich Gulf region to shore up slowing economic pace.

Prime Minister Manmohan Singh, on his way back from the three-day maiden visit to the region, said he discussed with the Qatari leadership the modalities of setting up the USD 5 billion fund dedicated for investments in India.

“We discussed the modalities of Qatar investing about USD 5 billion in India. In the next 2 or 3 months, we will work out modalities (and) identify projects in the area of energy, power, fertiliser and related activities,” he said.

The discussions over the next couple of months would enable the Government of Qatar to decide where it wants these funds to be invested in. Discussions on the Qatar Investment Fund followed India and Oman signing an agreement on November 8 to set up a U SD 100 million joint investment fund for financing projects in telecom, infrastructure, utilities, health and urban infrastructure.

The India-Oman Joint Investment Fund, with an equal contribution from each side, would eventually go up to USD 1.5 billion, the Prime Minister said. From Qatar, India is keen to source a minimum of 2.5 million tonnes of additional liquefied natural gas (LNG) and buying fertilisers on a long-term contract.

“We also discussed the possibilities (of Qatar) supplying fertilisers (to India through) either investments in fertiliser plants in India or expanding production fertiliser plants in Qatar with assured buyback in India. And it was agreed the two countrie s will explore possibilities,” he said. – PTI.

Source: http://www.thehindubusinessline.com

Realty Sector demands ‘stimulus package’

National Real Estate Development Council (Naredco) and the Confederation of Real Estate Developers’ Associations of India (Credai) has petitioned the Government to ease foreign direct investment and external commercial borrowing norms and formulate a policy for rescheduling of term or construction loans to facilitate the roll-over of existing debt.

The request has also to be seen in the context of the recent announcement by China that it would invest about $586 billion on boosting infrastructure and consumption including low-cost housing.

In a letter to the Prime Minister recently, Credai said that the high credit squeeze was forcing ongoing projects to a virtual halt, amid an “extremely negative sentiment in the market”.

“Capital of both developers and funds have significantly eroded with crashing valuations. Developers and funds are unable to raise loans from external sources to finance completion of ongoing projects due to ECB and other restrictions on real estate development,” Credai said.

Stressing on the need to define ‘affordable housing’, Credai said that the FDI and ECB rules need to be modified to encourage investment in affordable housing. The norms currently allow 100 per cent FDI in construction development projects including housing, commercial premises and resorts subject to conditions minimum capitalisation, and area for development. “The limits of 50,000 sq metres or 25 acres could be relaxed for this sector,” it said.

It further said that ECBs should be permitted for the real estate particularly for completion of all ongoing projects where there is already equity in form of FDI. Currently, the ECB is prohibited for real estate development.

“The monetary policies of the RBI for real estate projects and home loans by Indian banks, closure of ECBs and rise in interest rates together with stock market crash have lead to a situation where credit has dried up and buyers are hesitant to invest despite a strong demand,” said the Naredco Director-General, Brig. (Retd.) R.R. Singh.

Naredco has said that in cases where the land is purchased from Government agencies, banks should be allowed to finance the land cost in addition to construction costs.

The RBI, since October, has reduced several benchmark rates including mandatory deposit that banks keep with the central bank (cash reserve ratio), the amount which banks have to park in government securities (statutory liquidity ratio) and repo rate to unlock bank funds and trigger a low interest rate regime. However, the spate of negative news from the real estate sector shows no signs of waning. A report released by Cushman & Wakefield yesterday had pointed out that retail rentals fell by up to 20 per cent in the third quarter ended September 2008, as retailers moved cautiously on expansion plans.

Source : www.indianrealtynews.com

Missing out on FDI

The government is reportedly considering an overhaul of the FDI rules to boost capital inflows, which have slackened considerably of late. It would
do well to facilitate a better mergers and acquisitions (M&A) regime, apart from easing sectoral limits and ironing out procedural glitches.

Although India received large capital inflows last year, they were dominated by portfolio inflows. This was in sharp contrast to trends in other major developing countries such as China and Brazil where FDI was the dominant mode of capital inflow.

The consequences are all too obvious. A reversal in portfolio flows — FIIs have net sold shares worth over $12 billion in the calendar 2008 so far — together with a high merchandise trade deficit has caused a sharp depreciation of the rupee. India, clearly, needs to attract more of stable and less speculative FDI.

Globally, a large chunk of FDI now moves through cross-border M&As. Such foreign investment, however, frees up local and more informed capital which then moves into newer ventures. In India, too, acquisitions account for nearly a quarter of the FDI, but that is well below the potential.

India needs a friendlier M&A environment, including simpler FEMA rules and a more permissive regime for hostile takeovers. Financial institutions, which usually have large stakes in Indian companies, tend to be passive investors in India, siding with incumbent managements. This has discouraged the possibility of large investments through stake acquisition.

A government-nudged change in attitude will surely help. In fact, the government could begin by divesting large stakes in companies it holds through Special Undertaking of UTI. Press Note 1, which requires a foreign investor to seek a no objection certificate from its joint venture partner to strike out on its own, though much diluted now, is still a hurdle to FDI.

Lastly, we need to ensure that infrastructure projects, where both foreign debt and equity investment are involved, are able to take-off faster. Many SWFs, flush with readily investible cash, are interested in taking equity in major infrastructure projects. This must be encouraged. We must shed our past suspicions about allowing SWFs in infrastructure projects where the Indian partner has full management control.

Source : Economictimes.com

Real estate prices could go up in 2 years

Pune : Liquidity crunch, global upheaval and market phenomenon are likely to drive up the real estate prices in the next couple of years, according to Mr Lalit Kumar Jain, President, Promoters and Builders Association of Pune (PBAP).

Talking to presspersons at the PBAP exhibition, Mr Jain noted that liquidity is bothering developers as most banks were not lending money to most developers even for construction. He pointed out that this had severely affected cash flows and the only source remaining was customers.

FDI CASH

The rates in the open market were also high as also the FDI, which is at 25 to 35 per cent internal rate of return. The FDI investment in the country is about $7 billion, of which only about $200 million to $300 million had been used up in Pune.

Mr Jain also pointed out that the panic button pressed by the Reserve Bank of India to control inflation and reduce growth seemed far­fetched. “The biased approach of the bank towards real estate is unwarranted and unjust. Making home loan costlier is only creating resentment among urban population,” he said.

He noted that instead of increasing the supply of residential tenements through proactive policies, the Central and State Governments were making tenements costlier by introducing various taxes (37 per cent cumulative) and levies as well as interest on project loans, pushing developers to borrow from market or costly FDIs, ultimately increasing cost of tenement.

COST FACTORS

Mr Jain said scarcity of skilled labour and recent developments to discourage outside labourers have also resulted in delays and increase in construction costs, 60 per cent year-on-year on labour cost.

The increasing “material costs (barring small seasonal corrections) had made construction costs go up almost 40 per cent year-on-year.

He noted that during the past two years, interest rate had gone up to touch 11.75 per cent to 12.5 per cent as compared to 7 to 7.5 per cent offered by banks two years ago. Due to the increase in rate of interest, buying capacity has been compromised and this was another reason for the slack in the market. He said few markets, especially the metro cities, were operated by investors and under­writers.

These are primarily speculative in nature and much susceptible to global and stock markets’ trends. “As the global trends and stock markets have taken a hit, the speculations resulting in rate increase in multiples of thousands of rupees has to take the beating, where the genuine buyer found it beyond their reach and logic,” he noted.

PUNE MARKET

Pune is not an investor market and isolated from under­writers. The only investment attributed could be to the second home buying by IT professionals, residents of Mumbai or non-resident Indians.

DEMAND MORE THAN SUPPLY

Giving a glimpse of the residential apartments stock in Pune market, Mr Jain said the stock over the next three years would be 1,190 units for prices up to Rs 20 lakh, 7,597 units for up to Rs 35 lakh, 7,365 units for up to Rs 50 lakh, 4,402 units for Rs 75 lakh, 660 units for up to Rs 1 crore, 543 units for up to Rs 1.5 crore and 322 units above Rs 1.5 crore — totalling 22,079 units while the demand is around 35,000 units.

“This clearly goes to show that the stock available is minuscule compared to demand and, therefore, we should not be surprised if we see increase in sales prices as soon as the inflationary pressures subside,” he pointed out.

INTEREST RATE

Looking at the response for the exhibition, Mr Jain said about 90 builders were participating and were offering customers a rate of interest of 9.5 per cent for loans up to Rs 30 lakh and 10 per cent for above Rs 30 lakh.

He noted that this rate of interest would be applicable for two years and the financial institutions that have come forward include HDFC, ICICI and SBI.

He said about 1,100 applications had been distributed since Monday, when the exhibition began. Asked about the townships, he said seven townships have been approved in the city, six are in the pipe line, while many others were facing issues of consolidation. Over a period of seven years, he added, about 45,000 units would be added.

Source: The Hindu Business Line

Trikona TC extends its partnership with German fund manager

Trikona Trinity Capital PLC , a fund created for investing in Indian real estate and infrastructure, and managed by Trikona Capital, extends its strategic partnership with SachsenFonds Holdings GmbH (“SF”), a leading German fund manager with €4.7 billion of assets under management, by signing a Memorandum of Understanding (MoU) with a transaction value worth approximately £80 million. Under the terms of the MoU, SF will acquire certain assets from Trikona TC and co-invest in new projects. As part of the $150 million deal, Sachsen will join Trikona as co-investors in a $40 million investment in Mumbai to refurbish four acres of middle-class housing and build high-end luxury homes as part of Trikona’s urban rejuvenation platform. Sachsen will contribute 55% of the investment cost.