Indian Property News on 'September, 2006'

The great Indian opportunity

Dubai: For many decades, Indian entrepreneurs seeking to make their fortune looked to the UAE, eager to take advantage of its potential as a global trading hub.But in the past 12 months, a steady stream of investment has been flowing in the opposite direction. UAE-based property developers and retailers are keen to exploit India’s 8.1 per cent economic growth (2005-06), a booming real estate sector, and a wealthy middle class expected to constitute 30 per cent of the population by 2010.

Now companies in the UAE with Indian roots, including property developers ETA Star and luxury goods retailer Rivoli, are directing a considerable amount of their investment towards India.

ETA Star is developing a shopping mall in the heart of Chennai and a one million-square foot tech park in the city’s IT corridor. The company has already launched The Gardens, a 10-tower residential development in Bangalore, while in Mumbai’s Juhu district, it has entered into a joint venture development with the Supra Group to develop serviced apartments, residential buildings and a shopping mall.

“The company is also spreading its operation in cities including Kolkata and Hyderabad, where land acquisitions are in progress and projects will be announced early next year,” said Abid A. Junaid, ETA Star’s executive director.

Even property company Emaar, which has no historical links to the country, has invested heavily in India, following the formation of a joint-venture company with MGF Developments Limited.

In December 2005, Emaar MGF announced India’s largest foreign direct investment (FDI) in real estate, amounting to over half a billion dollars for projects with a capital outlay of $4 billion. Developments are planned in Delhi, Andhra Pradesh, Karnataka, Tamil Nadu and Maharashtra.

“With the country poised to maintain a seven per cent plus GDP growth over the next 20 years, the world is beating a path to India,” a company statement said.

According to Pranay Vakil, chairman of property experts Knight Frank India, the Indian real estate sector offers the highest investment returns of any country in the world.

He highlighted figures showing growth of FDI in real estate, which stood at 4.5 per cent in 2003 and surged to 18 per cent two years later.

The development of real estate has not escaped the attention of Ryan Mahoney, managing director of Better Homes, the UAE’s big-gest real estate agency, which is setting up six offices in Mumbai offering brokerage services for mainly residential property.

The company has already opened its head office in the city centre (Lower Parel), while secondary locations are on the way in wealthy Nariman Point in southern Mumbai, Vashi in the Eastern commuter zone, Malad West in the northern outskirts, Thane East and Pune.

“This is a turning point in the Indian economy FDI restrictions have been relaxed and real estate sector now offers tremendous potential,” he said.

Maloney said the population’s expectations of quality have “changed dramatically” to one where services provided by the thousands of local brokers do not meet requirements.

“For the last 30 to 40 years, if a consumer wanted to buy a property, he would have one choice, the local brokers. There was a real lack of choice and no transparency of information and this is what we are trying to change we want to professionalise the industry,” he said.

But opportunities are not restricted to property. According to Vakil at Knight Frank, the size of India’s retail market stands at $210 billion and is growing at between five and seven per cent per year. He added that FDI in single-brand retailing is now permitted and future reforms will allow FDI in multi-brand stores.

Sudir Kumar, executive director for property at Dubai-based Morison Consulting, said the opportunities in India are too good to miss, a fact demonstrated by visits to India by global business leaders including Bill Gates.

The GulfNews has clearly mentioned how the Indian realty sector is proving to be the foreign investors and realtors playground.

Govt green light for 14 more SEZs

The Board of Approvals (BOA) under the stewardship of Union Commerce Minister Kamal Nath On Thursday approved 14 new proposals to set up Special Economic Zones (SEZs).

With this, the total number of SEZs approved by the Union government has gone up to 164.

A month back, the empowered group of ministers (e-GOM) headed by Defence Minister Pranab Mukherjee had lifted the cap on allowing SEZs that was earlier set at 150.

The panel had, however, put a rider on fresh approvals. Following reported resistance of Finance Minister P. Chidambaram citing revenue implications, the e-GOM had decided not to go ahead with fresh cases before at least 75 zones take off on the ground.

The panel had also decided to review the policy norms within five-six months before allowing the Commerce Ministry to approve fresh proposals for SEZs.

Commerce Minister Kamal Nath too had stated that though the cap on the number of SEZs had been lifted, new approvals have to wait till 75 zones take off on the ground. Yet, the BOA headed by Special Secretary in the Commerce Ministry Gopal Pillai cleared 14 new proposals, said a Finance Ministry official who requested anonymity.

However, Commerce Secretary S.N. Menon said: “there is no such rider for approving fresh cases”.

Referring to objections raised by the Finance Ministry, Gopal Pillai told reporters, “concerns over the revenue loss are misplaced since the incremental economic activity would more than make up for the tax incentives”.

Fresh cases approved by the BOA include a mega SEZ to be promoted by the Maharashtra Airport Development Company Ltd covering 2086 hectare at Nagpur.

Besides, DLF has been given the go-ahead to build IT-related zones in Gurgaon and Hyderabad while real estate player Parsvnath Developers would build IT zones at Dehradun and Indore. The Wellspun Group would promote a specialised textile zone in Gujarat.

Meanwhile, the Commerce Ministry has put in place stringent land use norms for SEZ developers, which leaves very little scope for misuse.

Amendment to SEZ Act on the cards

The commerce ministry is considering nominating the directors of software technology parks of India (STPIs) as development commissioners of information technology special economic zones. An amendment to the SEZ Act 2005 is being planned accordingly.

The information technology department has been pushing a proposal to treat STPIs on a par with SEZs. The department’s concern is that since the tax benefits of STPIs are in place only till 2009, there might be a migration of the existing units from the parks.

Meanwhile, the commerce ministry is thinking of fixing an indicative land area for construction of shopping malls, apartments and hotels in the non-processing portion of a SEZ.

“The government may decide to allow construction of shopping area up to 50,000 sq m in case of a multi-product zone. Any developer that decides to exceed this limit will not be eligible for any tax benefits,” an official said.

Similarly, the Board of Approval may decide to restrict the number and area of dwelling units inside a zone. In case of sector-specific zones, particularly IT SEZs, the view is that since the social infrastructure is in most cases a part of the main building block, there is no need for a bigger area to be demarcated for this purpose.

“We may, therefore, allow an IT zone to set aside not more than 10,000 sq m for social infrastructure,” an official said.

The government has so far notified 24 SEZs. Some of the new SEZs are expected to become operational within this calendar year.

These include Divi’s Laboratories’ pharma zone in Vishakapatnam, set up with an investment of Rs 200 crore, which is expected to begin production next month, and Apache’s footwear SEZ in Nellore with an investment of Rs 500 crore, expected to begin production in December.

DLF issue on hold till Nov

Company has withdrawn its prospectus on problems with minority shareholders.DLF Ltd, which planned India’s largest initial public offering (IPO) of Rs 13,600 crore, today withdrew its draft red herring prospectus in the backdrop of a dispute between the promoters and minority shareholders.

Bankers to the issue said the company could not get the “final observation” from the Securities and Exchange Board of India (Sebi) within three months of filing the prospectus. Consequently, the company withdrew the issue.

Ramesh Sanka, chief operating officer of DLF, said the withdrawal of the prospectus was exclusive of the company’s ongoing problems with its minority shareholders.

“The matter is before the Ministry of Company Affairs; so I cannot comment on how long it will take for this issue to be resolved,” he added. DLF’s minority shareholders had complained to Sebi that they were denied participation in the company’s rights issue in September 2005. The Rs 35 crore rights issue of debentures had raised the promoters’ stake in DLF to 99.5 per cent.

The company plans to file a new prospectus around November to re-start the IPO process. The minority shareholder issue is expected to be resolved before that.

A DLF executive as well as an official with the Ministry of Company Affairs said the company’s dispute with minority shareholders should be resolved shortly, before DLF filed its prospectus.

Stock market sources said DLF was also advised by bankers to rework the IPO valuation. The delay in its IPO had impacted DLF’s expansion plans, real estate sources told Business Standard.

Industry sources said land deals that DLF had originally planned to put through were on hold because the delay in the IPO had choked the anticipated flow of funds. The prospectus DLF had earlier filed with Sebi stated it would require Rs 2,886 crore for wrapping up ongoing deals.

DLF executives, however, refuted the industry’s claims about unfinished land deals. “For our plans in the next 10 years, we have 100 per cent land banking for our residential and office business,” said Saurabh Chawla, senior vice-president (finance), DLF.

“In the last four months, there have been many positive developments such as an increase in the land bank, forging of new joint ventures and winning new projects. We need to update our valuation and inform our potential investors,” said Sanka.

 “Our internal accruals and bank loans would be more than enough to finance the complete process of acquiring land,” he added. Some of the company’s new land acquisitions include 20,000 acres in Manesar and 5,000 acres in Kolkata. Besides this, DLF had doubled its land bank in Gurgaon by adding another 3,000 acres, DLF executives said. In the last few months, the company has taken loans in excess of Rs 2,500 crore. DLF’s debts today exceed Rs 7,000 crore.

Real estate scam: Uproar in Punjab Assembly

CHANDIGARH: The alleged real estate scandal in Ludhiana on Friday rocked the Punjab Assembly with main opposition Shiromani Akali Dal demanding a CBI probe into the issue after moving an adjournment motion in the House.

The house witnessed pandemonious scenes on the issue and Speaker Kewal Krishan had to adjourn the House twice after an uproar on the “scandal” from Akali legislators.

Leader of Opposition and SAD President Parkash Singh Badal demanded a CBI probe into the multi-crore Ludhiana City Centre scam, saying various rules had been bypassed to benefit a particular company.

Badal while speaking on the adjournment motion which was moved by him and four other Akali Dal MLAs said the project would result in huge financial loss to the state.

The House which has a total strength of 117 members witnessed pandemonium just before the motion was admitted by the Speaker, who said the issue raised needed discussion.

Chief Minister Amarinder Singh made a brief statement in the House, saying Badal had raised controversy without verifying the facts

Township For NRIs

Noida-based Shourya Towers Private Ltd, a unit of the Nitishree Group, is coming up with Shourya NRI City, spread over 150 acres in Amritsar with an initial investment of Rs 500 crore. The project is targeted at Non-Resident Indians, and is likely to be completed in two years from the date of commencement.

The township, comprising of both residential and commercial complexes, is just 8 km from the Golden Temple. The project has been conceptualized by world-renowned architects, SAA, Singapore.

The residential area will have modern infrastructure with apartments, kothies and villas. There will be other facilities like a premium club, a ladies’ club, a splash pool, an indoor games arena, a banquet hall, schools, petrol pumps, barbeque, banks and ATMs, a super-specialty hospital, and provision for a helipad. The township will also have platinum villas in varied sizes.

There will be green belts that would possess features like mediterranean façade, manicured gardens etc. Plots would be available in different sizes like 175, 250, 400 and 500 square yards and would cost about Rs 4,475 per square yard.

The township would also have provision for a magnificent mall with a difference comprising of a large-sized atrium. An ethnic touch will be created to increase the footfall in the mall and the shoppers can also enjoy laser shows from Suntech and Singapore Island.

World’s Largest Mall

Unfazed by a decrease in footfalls at Gurgaon malls and virtual halving of rental rates, DLF Universal has drawn up an ambitious plan. It is going to build what could be the biggest mall in the world, as far as the claim goes.

The location will still be Gurgaon. Called the Mall of India, this is set to be a humungous 40-lakh sq. ft. sprawling property spread over 32 acres of land. The average size of malls here is 2.5 lakh sq. ft. This one will be 16 times bigger. Parking space will be available for 10,000 cars. DLF believes that Gurgaon, where so many malls have sprung up, has the potential to become a mega shopping district in the NCR region.

Will it really be the biggest mall in the world? According to a DLF spokesperson, Kajal Aijaz, the world’s largest at present is Mall of America in Minneapolis, USA, which has a covered area of 38 lakh sq ft, followed by a mall in Shanghai with 30 lakh sq ft. The Mall of India would leave these two behind in so far as size is concerned.

The mall – located on the Delhi-Jaipur highway – has been designed by Jerde Partnership, which also did the job in Minneapolis and Shanghai. The construction work is expected to be over by 2007. The cost, property consultants estimate, may be in the region of Rs 1,500 crores.

In Tune With Nature

Spacious, open, airy and cheerful is an apt way to describe the picturesque Raheja Willows at Kandivli (East), a premium residential project of three, 21-storeyed towers offering 2 and 3 BHK apartments by the reputed K Raheja Universal group. An estate, which boldly attempts to recreate the beauty of nature in concrete, every apartment here overlooks the surrounding lush green hills, bringing indoors a feeling of freshness all through the day.

From its plush green views outside to its imposing new-age architecture inside, every home at Raheja Willows has been thoughtfully planned and offers the finest amenities and facilities. These include vitreous tile floorings and fancy bathroom fittings that add an extra touch of glamour to hi-tech security systems that make your home absolutely secure. Also on offer are a range of other top-notch facilities like a well-equipped health club, gym, games room, swimming pool, 3 high-speed elevators, intercom facility, children’s play area, a super store and a multi-purpose hall.

Mall In Delhi with ‘Winter Sports’ Complex

Suncity Projects (P) Ltd., a real estate company, has launched a Rs 150-crore destination mall named Vasant Square Mall (VSM) in Vasant Kunj in south Delhi. Earlier, it created CrossRiver Mall in east Delhi and North Square Mall in north Delhi.

A collaborative infrastructure development venture of Essel Group, Action Group and Odeon Builders, Suncity Projects assures the future customers of a truly ultimate shopping and entertainment experience. Strategically located on Mehrauli-Mahipalpur road, VSM is sure to attract the crowd from all over south Delhi and surrounding areas. It will be thrown open to the public in 2006.

VSM is spread across five acres of land and the covered area is 2, 50,000 sq. ft. There will be four floors offering an exciting, fun-filled experience to the mall crawlers and people who love to splurge into fun activities. The mall has been aesthetically designed with landscaped surroundings. The third floor, presenting a food court offering multi-cuisine restaurants, would be dedicated to the gourmet section. There will be an action-packed entertainment zone, serving enough options for adults and kids alike with lifestyle clubs, hi-tech virtual games and bowling alley. VSM will also flaunt India’s first ‘winter sports’ complex comprising adventure sports like skiing and sledding without snow.

For the first time, Delhi will have a mall with a 1,300-capacity amphitheater providing a platform for hosting cultural events, brand promotions, product launches, movie screenings and live shows. The shoppers can indulge themselves through a three-level department store, a supermarket and various shops offering a wide range of national and international brands in various categories. A traditional Meena Bazaar will also feature, besides a huge 25,000-square-foot atrium.

In the words of Ashok Bansal, Director, Suncity Projects (P) Ltd., VSM aims to redefine the ambience and atmosphere of a mall by generating excitement for people of all age groups.

GR Tech Park In Bangalore Beckons IT Firms

Something is taking shape on the main Whitefield Road in Bangalore. It is the GR Tech Park, Salarpuria Group’s latest gift to the IT industry and a new site for those infotech companies willing to base themselves in this city.

With clients such as SAPLABS and Sapient Technologies having already reserved their space here at the Phase I, the park is hoping to attract more clients as it offers the same infrastructure as ITPL but at 75 percent of the cost.

The park adheres to world-class standards in terms of quality and service. The facilities include landscaped gardens, gymnasium, ATM outlets, a travel desk, food court and a cafeteria.

Construction of the Phase II is likely to be over by June 2006.